<PAGE>
File No. 33-62615
40 Act File No. 811-2271
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2
A. Exact name of Trust: NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 827
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)
- -----
- ----- 60 days after filing pursuant to paragraph (a)
- -----
- ----- on (date) pursuant to paragraph (a) of rule 485 or 486
E. Title and amount of securities being registered: An indefinite number of
Units as permitted by Rule 24f-2.
F. Proposed maximum offering price to the public of the securities being
registered: Not presently determinable.
G. Amount of filing fee: $500 in accordance with Rule 24f-2.*
H. Approximate date of proposed sale to the public:
As soon as practicable after the effective date of the Registration
Statement.
*Previously Paid
______
Check box if it is proposed that this filing will become effective
X on 9/28/95 at 1:30 p.m. pursuant to Rule 487.
______
<PAGE>
NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 827
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 Part-A Cover Page
(b) Title of securities issued )
2. Name and address of Depositor ) Information About the Sponsor
3. Name and address of Trustee ) Information About the Trustee
4. Name and address of principal ) Information About the Sponsor
Underwriter )
5. Organization of trust ) What Is The Nuveen Tax-Exempt
) Unit Trust?
6. Execution and termination of ) What Is The Nuveen Tax-Exempt
Trust Agreement ) Unit Trust?
) Information About the Trustee
) 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 ) Summary of Portfolios
trust's securities ) Why and How are the Bonds
Insured?
When Are Distributions
Made to Unitholders?
) Ownership and Transfer of Units
) How Units May Be Redeemed
Without Charge
) How Bonds May Be Removed From
) The Trusts
) Information About the Trustee
) Information About the Sponsor
) Other Information
) What Is The Tax Status of
) Unitholders?
11. Type of securities comprising ) What Is The Nuveen Tax-Exempt
units ) Unit Trust?
) Summary of Portfolios
) Composition of Trusts
) What Are The Objectives Of
) The Trusts?
Why and How are the Bonds
Insured?
12. Certain information regarding ) *
periodic payment certificates )
13. (a)Load, fees, expenses, etc. ) Part A - Essential Information
) How Is The Public Offering Price
) Determined?
) Market For Units
) What Is Accrued Interest?
) What Are Estimated Long Term
) Return And Estimated Current
) Return?
) How Was The Price Of The Bonds
) Determined At The Date of Deposit?
) What Are Normal Trust Operating
) Expenses?
) Summary of Portfolios
) When Are Distributions Made
) To Unitholders?
) How Detailed Are Reports To
Unitholders?
<PAGE>
(b)Certain information regarding ) *
periodic payment certificates )
(c)Certain percentages ) How Is the Public Offering Price
) Determined?
) Market For Units
) What Are Estimated Long Term
) Return And Estimated Current
) Return?
) How Was The Price of the Bonds
) Determined At The Date of Deposit?
) What is Accrued Interest?
(d)Certain other fees, etc. ) How Was The Price Of The Bonds
payable by holders ) Determined At The Date of Deposit?
) What Are Normal Trust Operating
) Expenses?
) Ownership and Transfer of Units
(e)Certain profits receivable ) Composition of Trusts
by depositor, principal under- )
writer, trustee or affiliated ) How Units May Be Purchased By
persons ) The Sponsor
(f)Ratio of annual charges
to income *
14. Issuance of trust's securities ) Summary of Portfolios
) When Are Distributions Made
) To Unitholders?
) Ownership and Transfer of Units
) How Units May Be Redeemed
) Without Charge
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and Disposition of ) What Is The Nuveen Tax-Exempt
Underlying Securities ) Unit Trust?
) Summary of Portfolios
) Composition of Trusts
) Why and How are the Bonds
Insured?
) How Units May Be Redeemed
Without Charge
) How Bonds May Be Removed From
) The Trusts
) Other Information
17. Withdrawal or redemption ) Market For Units
) How Units May Be Redeemed
) Without Charge
) How Units May Be Purchased By
) The Sponsor
18. (a)Receipt and disposition of income ) Summary of Portfolios
) When Are Distributions
Made To Unitholders?
) How Detailed Are Reports To
) Unitholders?
(b)Reinvestment of distributions ) Accumulation Plan
(c)Reserves or special funds ) Summary of Portfolios
) When Are Distributions
) Made To Unitholders?
(d)Schedule of distributions ) *
19. Records, accounts and reports ) When Are Distributions Made
) To Unitholders?
) How Detailed Are Reports To
) Unitholders?
20. Certain miscellaneous provisions of ) Information About the Trustee
Trust Agreement ) Information About the Sponsor
) Other Information
<PAGE>
21. Loans to security holders ) *
22. Limitations on liability ) Summary of Portfolios
) Composition of Trusts
) 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 ) Information About the Sponsor
26. Fees received by Depositor ) *
27. Business of Depositor ) Information About the Sponsor
28. Certain information as to officials ) *
and affiliated persons of Depositor )
29. Voting Securities of Depositor ) 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 ) How Units of The Trusts Are
) Distributed To The Public
(c)Selling agreements )
39. (a)Organization of principal )
underwriter )
) 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 ) Part A - Essential Information
) How Is The Public Offering Price
) Determined?
) How Was The Price Of The Bonds
) Determined At The Date of Deposit?
) What Are Normal Trust Operating
) Expenses?
(b)Schedule as to offering price ) *
(c)Variation in offering price to ) How Is the Public Offering Price
certain persons ) Determined?
) What Is Accrued Interest?
) How Was The Price Of The Bonds
) Determined At The Date of Deposit?
<PAGE>
45. Suspension of redemption rights ) *
46. (a)Redemption valuation ) Unit Value and Evaluation
) How Units May Be Redeemed
) Without Charge
) How Units May Be Purchased By
) The Sponsor
(b)Schedule as to redemption price ) *
47. Maintenance of position in underlying ) How Is the Public Offering Price
securities ) Determined?
) How Units May Be Purchased By
) The Sponsor
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of Trustee) Information About The Trustee
49. Fees and expenses of Trustee ) Part A - Essential Information
) What Are Normal Trust Operating
) Expenses?
50. Trustee's lien ) What Are Normal Trust Operating
) Expenses?
) 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 ) What Are Normal Trust Operating
respect to selection or elimination) Expenses?
of underlying securities ) How Units May Be Redeemed With-
) out Charge
) How Bonds May Be Removed From
) The Trusts
(b)Transactions involving elimination ) *
of underlying securities )
(c)Policy regarding substitution or ) Summary of Portfolio
elimination of underlying ) Composition of Trusts
securities ) How Bonds May Be Removed From
) The Trusts
(d)Fundamental policy not otherwise ) *
covered )
53. Tax status of trust ) 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>
SEPTEMBER 28, 1995
SUBJECT TO COMPLETION
A
NUVEEN NUVEEN NATIONAL INSURED TRUST 305
(NUVEEN TAX EXEMPT UNIT TRUSTS SERIES 827)
CUSIP NUMBERS:
Monthly: 6710A4 348
Quarterly: 6710A4 355
Semi-Annually: 6710A4 363
PROSPECTUS--PART A (SPECIFIC TERMS) -- SEPTEMBER 28, 1995
THIS PART A OF THE PROSPECTUS MAY NOT BE DISTRIBUTED
UNLESS ACCOMPANIED BY THE PART B OF THE PROSPECTUS.
BOTH PARTS OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
National Insured Trust, Series 305 (the "Trust") consists of a portfolio of
interest-bearing obligations issued by or on behalf of States, certain United
States Territories or authorities and political subdivisions thereof which, in
the opinion of recognized bond counsel to the issuing authorities, provide
income which is exempt from Federal income tax, to the extent indicated in "WHAT
IS THE TAX STATUS OF UNITHOLDERS?" in Part B of this Prospectus.
The objectives of the Trust are income exempt from Federal income tax and
conservation of capital. The objectives are, of course, dependent upon the
continuing ability of the issuers, obligors and/or insurers to meet their
respective obligations.
The Portfolio of the Trust consists of 11 long term (approximately 15 to 40
year maturities) obligations issued by entities located in 7 states. The Bonds
in the Trust are either general obligations of the governmental entity issuing
them and are backed by the taxing power thereof or 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 the
Bonds are divided as follows:
<TABLE>
<CAPTION>
NUMBER OF PORTFOLIO
ISSUES PURPOSE OF ISSUE PERCENTAGE
--------------- ----------------------------------------------------
<C> <S> <C>
3 College and University Revenue 28 %
3 Water and/or Sewer Revenue 25
2 Health Care Facility Revenue 20
1 Electrical System Revenue 10
1 Transportation Facility Revenue 10
1 Dedicated-Tax Supported Revenue 8
</TABLE>
Approximately 17.5% of the aggregate principal amount of the Bonds in the
Trust (accounting for approximately 17.2% of the aggregate offering price of the
Bonds) are original issue discount bonds. See "RISK FACTORS" in Part B of this
Prospectus for a discussion of the characteristics of such obligations and of
the risks associated therewith.
All of the Bonds in the Trust are covered by policies of insurance obtained
from the MBIA Insurance Corporation guaranteeing payment of principal and
interest when due. As a result of such insurance, the Bonds in the Trust have
received a rating of "Aaa" by Moody's and both the Bonds in the Trust and the
Units of the Trust have received a rating of "AAA" by Standard & Poor's.
Twenty-three percent of the principal amount of Bonds in the Trust consists
of issues of entities located in the State of California; such concentration may
involve more risk than if such Bonds were issued by issuers located in several
states.
The Trust is considered to be concentrated in Bonds of College and
University Revenue Issuers whose revenues are subject to certain risks including
declines in "college age" individuals and the possible inability to raise
tuition and fees. The Trust is also considered to be concentrated in Bonds of
Water and/or Sewer Revenue Issuers whose revenues are subject to certain risks
including problems obtaining timely and adequate rate increases and population
decline resulting in decreased user fees. For a discussion of the risks
associated with investments in the bonds of various issuers, see "RISK FACTORS"
in Part B of this Prospectus.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities 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 these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
- ----------
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.
1 of 6
<PAGE>
ESSENTIAL INFORMATION
REGARDING THE NUVEEN NATIONAL INSURED TRUST 305
ON THE BUSINESS DAY PRIOR TO THE DATE OF DEPOSIT, SEPTEMBER 27, 1995
Sponsor and Evaluator........ John Nuveen & Co. Incorporated
Trustee...................... The Chase Manhattan Bank, N.A.
------------------------------------------------
The income, expense and distribution data set forth below have been calculated
for Unitholders receiving monthly, quarterly or semi-annual distribution
options.
<TABLE>
<S> <C>
Principal Amount of Bonds in Trust.................. $ 10,000,000
Number of Units..................................... 100,000
Fractional Undivided Interest in Trust Per Unit..... 1/100,000
Public Offering Price--Less than 500 Units
Aggregate Offering Price of Bonds in Trust...... $ 9,516,844
Divided by Number of Units...................... $ 95.17
Plus Sales Charge 4.9% (5.152% of the Aggregate
Offering Price of the Bonds per Unit).......... $ 4.90
Public Offering Price Per Unit(1)............... $ 100.07
Redemption Price Per Unit (exclusive of accrued
interest)......................................... $ 94.68
Sponsor's Initial Repurchase Price Per Unit
(exclusive of accrued interest)................... $ 95.17
Excess of Public Offering Price Per Unit over
Redemption Price Per Unit......................... $ 5.39
Excess of Public Offering Price Per Unit over
Sponsor's Repurchase Price Per Unit............... $ 4.90
Average Maturity of Bonds in the Trust(2)........... 25.7 years
<CAPTION>
MONTHLY
SEMI-ANNUAL ---
QUARTERLY
--
------------------------------
<S> <C> <C> <C>
Calculation of Estimated Net Annual
Interest Income Per Unit
Annual Interest Income(3)............ $ 5.7013 $ 5.7013 $ 5.7013
Less Estimated Annual Expense........ $ .2336 $ .2016 $ .1826
----------- ----------- -----------
Estimated Net Annual Interest
Income(4).......................... $ 5.4677 $ 5.4997 $ 5.5187
Daily Rate of Accrual Per Unit........... $ .01518 $ .01527 $ .01532
ESTIMATED CURRENT RETURN(5).............. 5.46% 5.50% 5.51 %
ESTIMATED LONG TERM RETURN(5)............ 5.53% 5.56% 5.58 %
Trustee's Annual Fees(6)................. $ 1.5869 $ 1.2669 $ 1.0769
</TABLE>
<TABLE>
<S> <C>
Date of Deposit.................................................................................September 28, 1995
Settlement Date....................................................................................October 3, 1995
Mandatory Termination Date....................................See "OTHER INFORMATION" in Part B of this Prospectus
Minimum Value of Each Trust...................................See "OTHER INFORMATION" in Part B of this Prospectus
Sponsor's Annual Evaluation Fee.........................................$0.17 per $1,000 principal amount of Bonds
Estimated Annual Organizational Expenses(7).......................................................$.03240 per Unit
- ----------
<FN>
The evaluation time for purpose of sale, purchase or redemption of Units is 4 p.m. Eastern time. (See "HOW IS THE PUBLIC OFFERING
PRICE DETERMINED?" in Part B of this Prospectus.)
(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 three 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, $.08 of accrued interest to the Settlement Date will be added to the Public Offering Price. (See "WHAT IS ACCRUED
INTEREST?" in Part B of this Prospectus.)
(2) The Average Maturity of Bonds in the Trust is calculated based upon the stated maturities of the Bonds in the 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 Bonds in the Trust may increase or decrease from time to time as Bonds mature
or are called or sold.
(3) Assumes delivery of all Bonds. (See "COMPOSITION OF TRUSTS" appearing in Part B of this Prospectus.) Interest income does not
include accretion of original issue discount on "zero coupon" Bonds, Stripped Obligations or other original issue discount
Bonds. (See "RISK FACTORS" in Part B of this Prospectus.)
(4) The amount and timing of interest distributions from the Trust under the various plans of distribution are set forth below.
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. 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.
(5) Estimated Long Term Return for the Trust represents the average of the yields to maturity (or call) of the Bonds in the
Trust's portfolio calculated in accordance with accepted bond practices and adjusted to reflect a compounding factor,
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 "WHAT ARE ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN?"
in Part B of this Prospectus.
(6) Each Trustee annual fee is per $1,000 principal amount of the underlying Bonds in the Trust for that portion of the Trust
that represents a particular plan of distribution.
(7) The Trust (and therefore Unitholders) will bear all or a portion of its organizational costs (including costs of preparing
the registration statements, the trust indenture and other closing documents, registering Units with the Securities and
Exchange Commission and states, the initial audit of the Trust portfolio, legal fees and the initial fees and expenses of the
Trustee but not including the expenses incurred in the printing of preliminary and final prospectuses, and expenses incurred
in the preparation and printing of brochures and other advertising materials and any other selling expenses) as is common for
mutual funds. Total organizational expenses will be amortized over a five year period. See "WHAT ARE NORMAL TRUST OPERATING
EXPENSES?" in Part B of this Prospectus and "Statement of Condition." Historically, the sponsors of unit investment trusts
have paid all the costs of establishing such trusts.
</TABLE>
2 of 6
<PAGE>
INTEREST DISTRIBUTION
Details of interest distributions per Unit of the 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
1995 1996 PER YEAR
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------- --------------
Record Date*.......................... 11/1 2/1 5/1 8/1
Distribution Date..................... 11/15 2/15 5/15 8/15
- --------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan............. $ .5009(1) $ 5.4677
-------- $.4554 every month --------
Quarterly Distribution Plan........... $ .5009(1) $ 1.3743(2) $ 1.3743 $ 1.3743 $ 5.4997
Semi-Annual Distribution Plan......... $ .5009(1) $ 2.7576(3) $ 5.5187
- --------------------------------------------------------------------------------------------------------------------
<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. Distribution Dates under each
distribution plan are the fifteenth day of the month in which the respective Record Date occurred. For additional information
see "WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?" in Part B of this Prospectus.
(1) The first distribution will be paid to all Unitholders, regardless of the distribution plan selected. Such distribution may
be more or less than a regular monthly distribution.
(2) Regular 3-month distribution.
(3) Regular 6-month distribution.
</TABLE>
TAX STATUS
For a discussion of the tax status of income earned on Trust Units, see
"WHAT IS THE TAX STATUS OF UNITHOLDERS?" in Part B of this Prospectus.
3 of 6
<PAGE>
NUVEEN NATIONAL INSURED TRUST 305
(NUVEEN TAX-EXEMPT UNIT TRUST SERIES 827)
SCHEDULE OF INVESTMENTS AT THE DATE OF DEPOSIT, SEPTEMBER 28, 1995
<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
<C> <C> <S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
$ 750,000 California Educational Facilities Authority, 2005 at 102 AAA Aaa $ 730,643
Revenue Bonds (University of Redlands),
Series 1995, 5.875% Due 10/1/15.
750,000 Castaic Lake Water Agency (California), 2004 at 102 AAA Aaa 738,750
Refunding Revenue Certificates of
Participation (Water System Improvement
Projects), Series 1994A, 6.00% Due 8/1/18.
750,000 The City of Los Angeles, California, Wastewater 2004 at 102 AAA Aaa 727,193
System Revenue Bonds, Series 1994-A, 5.875%
Due 6/1/24.
1,000,000 City of Chicago (Illinois), Chicago-O'Hare 2004 at 102 AAA Aaa 866,910
International Airport, General Airport Second
Lien, Revenue Refunding Bonds, 1993 Series C,
5.00% Due 1/1/18.
750,000 Metropolitan Pier and Exposition Authority 2004 at 102 AAA Aaa 739,448
(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 Indiana Educational Facilities Authority 2003 at 102 AAA Aaa 888,190
Educational Facilities Revenue Bonds, Series
1993 (Valparaiso University Project), 5.125%
Due 10/1/15.
1,000,000 Massachusetts Water Resources Authority, 2004 at 101 1/2 AAA Aaa 993,120
General Revenue Bonds, 1994 Series A, 6.00%
Due 8/1/24.
1,000,000 Board of Trustees of Oakland University, 2005 at 102 AAA Aaa 958,310
Michigan, General Revenue Bonds, Series 1995,
5.75% Due 5/15/26.
1,000,000 City of Royal Oak Hospital Finance Authority 2003 at 102 AAA Aaa 893,260
(Michigan), Hospital Revenue Refunding Bonds
(William Beaumont Hospital), Series 1993G,
5.25% Due 11/15/19. (Original issue discount
bonds delivered on or about December 16, 1993
at a price of 94.197% of principal amount.)
1,000,000 Harris County Health Facilities (Texas), 2004 at 101 AAA Aaa 1,025,830
Development Corporation Hospital Revenue
Bonds (Hermann Hospital), Series 1994, 6.375%
Due 10/1/24.
1,000,000 The City of Seattle, Washington, Municipal 2005 at 102 AAA Aaa 955,190
Light and Power Revenue Bonds, 1995, Series
A, 5.70% Due 9/1/20.
- ----------- ---------------
$10,000,000 $ 9,516,844
- ----------- ---------------
- ----------- ---------------
</TABLE>
- ------------
(1) The Sponsor's contracts to purchase Bonds were entered into on September
27, 1995. Other information regarding the Bonds in the Trust on the Date of
Deposit is as follows:
<TABLE>
<CAPTION>
ANNUAL
PROFIT INTEREST
COST TO (OR LOSS) INCOME TO BID PRICE
TRUST SPONSOR TO SPONSOR TRUST OF BONDS
---------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NATIONAL INSURED TRUST 305.............. $ 9,477,106 $ 39,738 $ 570,125 $ 9,467,781
</TABLE>
In addition, the difference between the Trustee's determination of Offering
Price and Bid Price (as a percentage of principal amount) is .49%. 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. 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.
(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 specified in the instruments setting forth the terms
and provisions of such Bonds. See "COMPOSITION OF TRUSTS", "WHAT IS THE TAX
STATUS OF UNITHOLDERS?" and "RISK FACTORS" in Part B of this Prospectus.
(3) All the Bonds in the Insured Trusts, as insured by the Insurer, are
rated AAA by Standard & Poor's and Aaa by Moody's. The insurance obtained by the
Trust guarantees the payment of interest and principal on the Bonds when due but
does not cover certain market risks associated with fixed income securities such
as accelerated payments, premiums payable on mandatory redemptions or interest
rate risks. (See "WHY AND HOW ARE THE BONDS INSURED?" in Part B of this
Prospectus and "Description of Ratings" in the Information Supplement.)
4 of 6
<PAGE>
Statement of Condition
NUVEEN NATIONAL INSURED TRUST 305
(Nuveen Tax-Exempt Unit Trust, Series 827)
AS OF SEPTEMBER 28, 1995
<TABLE>
<S> <C>
TRUST PROPERTY
Sponsor's contracts to purchase Tax-Exempt Bonds,
backed by an irrevocable letter of
credit(1)(2).................................... $ 9,516,844
Accrued interest to September 28, 1995 on
underlying Bonds(1)............................. 161,780
Organizational costs(3)........................... 16,200
--------------
Total................................. $ 9,694,824
--------------
--------------
LIABILITIES AND INTEREST OF UNITHOLDERS
LIABILITIES:
Accrued interest to September 28, 1995 on
underlying Bonds(4).......................... $ 161,780
Accrued organizational costs(3)............... 16,200
--------------
Total................................. $ 177,980
--------------
--------------
INTEREST OF UNITHOLDERS:
Units of fractional undivided interest
outstanding (100,000)
Cost to investors(5)........................ $ 10,007,152
Less: Gross underwriting commission(6).... (490,308)
--------------
Net amount applicable to investors............ $ 9,516,844
--------------
Total................................. $ 9,694,824
--------------
--------------
- ------------
(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 on
the Date of Deposit. The amount of such letter of credit and
any cash deposited exceeds the amount necessary for the
purchase of the Bonds plus accrued interest to the Date of
Deposit. At the Date of Deposit, Bonds may have been delivered
to the Sponsor pursuant to certain of these contracts; the
Sponsor has assigned to the Trustee all of its rights, title
and interest in and to such Bonds.
(2) Aggregate value (at offering prices) as of the Date of Deposit
of the Bonds listed under "Schedule of Investments" herein,
and their aggregate cost to the Trust are the same. Such
offering prices were determined by Kenny S&P Evaluation
Services, a division of J.J. Kenny Co., Inc., as of the close
of business on the business day prior to the Date of Deposit.
(See "HOW WAS THE PRICE OF THE BONDS DETERMINED AT THE DATE OF
DEPOSIT?" in Part B of this Prospectus.) Insurance coverage
providing for the timely payment, when due, of all principal
of and interest on the Bonds in an Insured Trust has been
obtained by the Sponsor or by the issuers of such Bonds. Such
insurance does not guarantee the market value of the Bonds or
the value of the Units. Both the bid and the offering prices
of the underlying Bonds and of the Units may include value
attributable to such policies of insurance.
(3) The Trust (and therefore Unitholders) will bear all or a
portion of its estimated organizational costs which will be
deferred and amortized over five years from the Date of
Deposit.
(4) Representing, as set forth in "WHAT IS ACCRUED INTEREST?" in
Part B of this Prospectus, advancement by the Trustee of an
amount equal to the accrued Bond interest as of the Date of
Deposit.
(5) Aggregate Public Offering Price (exclusive of accrued
interest) computed as set forth under "HOW IS THE PUBLIC
OFFERING PRICE DETERMINED?" in Part B of this Prospectus.
(6) The gross underwriting commission of 4.90% of the Public
Offering Price has been calculated on the assumption that the
Units sold are not subject to a reduction of sales charge for
quantity purchases. In single transactions involving 500 Units
or more, the sales charge is reduced. (See "HOW IS THE PUBLIC
OFFERING PRICE DETERMINED?" in Part B of this Prospectus.)
</TABLE>
5 of 6
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF JOHN NUVEEN & CO. INCORPORATED AND UNITHOLDERS OF
NATIONAL INSURED TRUST 305:
We have audited the accompanying statement of condition and the schedule of
investments at date of deposit (included in Part A of this Prospectus) of
National Insured Trust 305 (contained in Nuveen Tax-Exempt Unit Trust, Series
827), as of September 28, 1995. These financial statements are the
responsibility of the Sponsor. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of the irrevocable letter of credit arrangement for the purchase of
securities, described in Note (1) to the statement of condition, by
correspondence with the Trustee. An audit also includes assessing the accounting
principles used and significant estimates made by the Sponsor, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the statement of condition and the schedule of investments
at date of deposit referred to above present fairly, in all material respects,
the financial position of National Insured Trust 305 as of September 28, 1995,
in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
September 28, 1995.
6 of 6
<PAGE>
SEPTEMBER 28, 1995
SUBJECT TO COMPLETION
A
NUVEEN NUVEEN CALIFORNIA INSURED TRUST 255
(NUVEEN TAX EXEMPT UNIT TRUSTS SERIES 827)
CUSIP NUMBERS:
Monthly: 67064W 341
Quarterly: 67064W 358
Semi-Annually: 67064W 366
PROSPECTUS--PART A (SPECIFIC TERMS) -- SEPTEMBER 28, 1995
THIS PART A OF THE PROSPECTUS MAY NOT BE DISTRIBUTED
UNLESS ACCOMPANIED BY THE PART B OF THE PROSPECTUS.
BOTH PARTS OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
California Insured Trust, Series 255 (the "Trust") consists of a portfolio
of interest-bearing obligations issued by or on behalf of the State of
California, certain United States Territories or authorities and political
subdivisions thereof which, in the opinion of recognized bond counsel to the
issuing authorities, provide income which is exempt from Federal income tax and
California income tax, to the extent indicated below.
The objectives of the Trust are income exempt from Federal and state income
taxes, and conservation of capital. The objectives are, of course, dependent
upon the continuing ability of the issuers, obligors and/or insurers to meet
their respective obligations.
The Portfolio of the Trust consists of 8 obligations issued by entities
located in California. The Bonds in the Trust are either general obligations of
the governmental entity issuing them and are backed by the taxing power thereof
or 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 the Bonds are divided as follows:
<TABLE>
<CAPTION>
NUMBER OF PORTFOLIO
ISSUES PURPOSE OF ISSUE PERCENTAGE
--------------- ----------------------------------------------------
<C> <S> <C>
2 College and University Revenue 29 %
2 Water and/or Sewer Revenue 29
2 Electrical System Revenue 19
1 General Obligations 14
1 Municipal Lease Revenue 10
</TABLE>
Approximately 10.0% of the aggregate principal amount of the Bonds in the
Trust (accounting for approximately 9.2% of the aggregate offering price of the
Bonds) are original issue discount bonds. See "RISK FACTORS" in Part B of this
Prospectus for a discussion of the characteristics of such obligations and of
the risks associated therewith.
All of the Bonds in the Trust are covered by policies of insurance obtained
from the MBIA Insurance Corporation guaranteeing payment of principal and
interest when due. As a result of such insurance, the Bonds in the Trust have
received a rating of "Aaa" by Moody's and both the Bonds in the Trust and the
Units of the Trust have received a rating of "AAA" by Standard & Poor's.
The Trust is considered to be concentrated in Bonds of College and
University Revenue Issuers whose revenues are subject to certain risks including
declines in "college age" individuals and the possible inability to raise
tuition and fees. The Trust is also considered to be concentrated in Bonds of
Water and/or Sewer Revenue Issuers whose revenues are subject to certain risks
including problems obtaining timely and adequate rate increases and population
decline resulting in decreased user fees. For a discussion of the risks
associated with investments in the bonds of various issuers, see "RISK FACTORS"
in Part B of this Prospectus.
ESSENTIAL INFORMATION
REGARDING THE NUVEEN CALIFORNIA INSURED TRUST 255
ON THE BUSINESS DAY PRIOR TO THE DATE OF DEPOSIT, SEPTEMBER 27, 1995
Sponsor and Evaluator........ John Nuveen & Co. Incorporated
Trustee...................... The Chase Manhattan Bank, N.A.
------------------------------------------------
The income, expense and distribution data set forth below have been calculated
for Unitholders receiving monthly, quarterly or semi-annual distribution
options.
<TABLE>
<S> <C>
Principal Amount of Bonds in Trust.................. $ 3,500,000
Number of Units..................................... 35,000
Fractional Undivided Interest in Trust Per Unit..... 1/35,000
Public Offering Price--Less than 500 Units
Aggregate Offering Price of Bonds in Trust...... $ 3,314,863
Divided by Number of Units...................... $ 94.71
Plus Sales Charge 4.9% (5.152% of the Aggregate
Offering Price of the Bonds per Unit).......... $ 4.88
Public Offering Price Per Unit(1)............... $ 99.59
Redemption Price Per Unit (exclusive of accrued
interest)......................................... $ 94.23
Sponsor's Initial Repurchase Price Per Unit
(exclusive of accrued interest)................... $ 94.71
Excess of Public Offering Price Per Unit over
Redemption Price Per Unit......................... $ 5.36
Excess of Public Offering Price Per Unit over
Sponsor's Repurchase Price Per Unit............... $ 4.88
Average Maturity of Bonds in the Trust(2)........... 25.9 years
</TABLE>
- ----------
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.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities 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 these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
1 of 7
<PAGE>
ESSENTIAL INFORMATION (CONT.)
<TABLE>
<CAPTION>
MONTHLY QUARTERLY SEMI-ANNUAL
----------- ----------- -----------
<S> <C> <C> <C>
Calculation of Estimated Net Annual
Interest Income Per Unit
Annual Interest Income(3)............ $ 5.6993 $ 5.6993 $ 5.6993
Less Estimated Annual Expense........ $ .2531 $ .2211 $ .2021
----------- ----------- -----------
Estimated Net Annual Interest
Income(4).......................... $ 5.4462 $ 5.4782 $ 5.4972
Daily Rate of Accrual Per Unit........... $ .01512 $ .01521 $ .01527
ESTIMATED CURRENT RETURN(5).............. 5.47% 5.50% 5.52 %
ESTIMATED LONG TERM RETURN(5)............ 5.53% 5.56% 5.58 %
Trustee's Annual Fees(6)................. $ 1.6535 $ 1.3335 $ 1.1435
Date of Deposit.................................................................................September 28, 1995
Settlement Date....................................................................................October 3, 1995
Mandatory Termination Date....................................See "OTHER INFORMATION" in Part B of this Prospectus
Minimum Value of Each Trust...................................See "OTHER INFORMATION" in Part B of this Prospectus
Sponsor's Annual Evaluation Fee.........................................$0.17 per $1,000 principal amount of Bonds
Estimated Annual Organizational Expenses(7).......................................................$.03029 per Unit
- ----------
<FN>
The evaluation time for purpose of sale, purchase or redemption of Units is 4 p.m. Eastern time. (See "HOW IS THE PUBLIC OFFERING
PRICE DETERMINED?" in Part B of this Prospectus.)
(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 three 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, $.08 of accrued interest to the Settlement Date will be added to the Public Offering Price. (See "WHAT IS ACCRUED
INTEREST?" in Part B of this Prospectus.)
(2) The Average Maturity of Bonds in the Trust is calculated based upon the stated maturities of the Bonds in the 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 Bonds in the Trust may increase or decrease from time to time as Bonds mature
or are called or sold.
(3) Assumes delivery of all Bonds. (See "COMPOSITION OF TRUSTS" appearing in Part B of this Prospectus.) Interest income does not
include accretion of original issue discount on "zero coupon" Bonds, Stripped Obligations or other original issue discount
Bonds. (See "RISK FACTORS" in Part B of this Prospectus.)
(4) The amount and timing of interest distributions from the Trust under the various plans of distribution are set forth below.
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. 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.
(5) Estimated Long Term Return for the Trust represents the average of the yields to maturity (or call) of the Bonds in the
Trust's portfolio calculated in accordance with accepted bond practices and adjusted to reflect a compounding factor,
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 "WHAT ARE ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN?"
in Part B of this Prospectus.
(6) Each Trustee annual fee is per $1,000 principal amount of the underlying Bonds in the Trust for that portion of the Trust
that represents a particular plan of distribution.
(7) The Trust (and therefore Unitholders) will bear all or a portion of its organizational costs (including costs of preparing
the registration statements, the trust indenture and other closing documents, registering Units with the Securities and
Exchange Commission and states, the initial audit of the Trust portfolio, legal fees and the initial fees and expenses of the
Trustee but not including the expenses incurred in the printing of preliminary and final prospectuses, and expenses incurred
in the preparation and printing of brochures and other advertising materials and any other selling expenses) as is common for
mutual funds. Total organizational expenses will be amortized over a five year period. See "WHAT ARE NORMAL TRUST OPERATING
EXPENSES?" in Part B of this Prospectus and "Statement of Condition." Historically, the sponsors of unit investment trusts
have paid all the costs of establishing such trusts.
</TABLE>
2 of 7
<PAGE>
INTEREST DISTRIBUTION
Details of interest distributions per Unit of the 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
1995 1996 PER YEAR
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------- --------------
Record Date*.......................... 11/1 2/1 5/1 8/1
Distribution Date..................... 11/15 2/15 5/15 8/15
- --------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan............. $ .4989(1) $ 5.4462
-------- $.4536 every month --------
Quarterly Distribution Plan........... $ .4989(1) $ 1.3689(2) $ 1.3689 $ 1.3689 $ 5.4782
Semi-Annual Distribution Plan......... $ .4989(1) $ 2.7486(3) $ 5.4972
- --------------------------------------------------------------------------------------------------------------------
<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. Distribution Dates under each
distribution plan are the fifteenth day of the month in which the respective Record Date occurred. For additional information
see "WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?" in Part B of this Prospectus.
(1) The first distribution will be paid to all Unitholders, regardless of the distribution plan selected. Such distribution may
be more or less than a regular monthly distribution.
(2) Regular 3-month distribution.
(3) Regular 6-month distribution.
</TABLE>
CALIFORNIA RISK FACTORS
The financial condition of the State of California is affected by various
national, economic, social and environmental policies and conditions.
Additionally, limitations imposed by constitutional amendments, legislative
measures, or voter initiatives on the State and its local governments concerning
taxes, bond indebtedness and other matters may constrain the revenue-generating
capacity of the State and its local governments and, therefore, the ability of
the issuers of the Bonds to satisfy their obligations. The State faces 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.
The economic vitality of the State and its various regions and, therefore,
the ability of the State and its local governments to satisfy the Bonds, are
affected by numerous factors, such as natural disasters and cutbacks in federal
defense spending. The California economy continues to show weakness in
manufacturing, particularly aerospace, construction, services and trade.
California's population increase has resulted in traffic congestion, school
overcrowding and high housing costs which have caused an increase demand for
government services and which may impede future economic growth.
The State is a party to numerous lawsuits in which an adverse final decision
could materially affect the State's governmental operations and consequently its
ability to pay debt service on its obligations. On December 7, 1994, Orange
County, California, together with its pooled investment fund (the "POOLED FUND")
filed for protection under Chapter 9 of the federal Bankruptcy Code. Many
governmental entities kept moneys in the Pool Fund.
All outstanding general obligations bonds of the State are rated "A" by
Standard and Poor's and "A1" by Moody's.
Further information concerning California risk factors may be obtained upon
written or telephonic request to the Trustee as described in "OTHER INFORMATION
- -- Supplemental Information" appearing in Part B of this Prospectus.
TAX STATUS
For a discussion of the Federal tax status of income earned on Trust Units,
see "WHAT IS THE TAX STATUS OF UNITHOLDERS?" in Part B of this Prospectus.
In the opinion of Orrick, Herrington & Sutcliffe, special California counsel
to the Trust, under existing California income and property tax law applicable
to individuals who are California residents:
The Trust is not an association taxable as a corporation and the income
of the Trust will be treated as the income of the Unitholders under the
income tax laws of California.
Interest on the underlying securities (which may include bonds or other
obligations issued by the governments of Puerto Rico, the Virgin Islands,
Guam or the Northern Mariana Islands) which is exempt from tax under
California personal income tax and property tax laws when received by the
Trust will, under such laws, retain its status as tax-exempt interest when
distributed to Unitholders. However, interest on the underlying
3 of 7
<PAGE>
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 Trust will have
a taxable event when the Trust disposes of a security (whether by sale,
exchange, redemption or payment at maturity) or when the Unitholder redeems
or sells Units. Because of the requirement that tax cost basis be reduced to
reflect amortization of bond premium, under some circumstances a Unitholder
may realize taxable gain when Units are sold or redeemed for an amount equal
to, or less than, their original cost. The total tax cost of each Unit to a
Unitholder is allocated among each of the bond issues held in the Trust (in
accordance with the proportion of the Trust comprised by each bond issue) in
order to determine his per unit tax cost for each bond issue; and the tax
cost reduction requirements relating to amortization of bond premium will
apply separately to the per unit cost of each bond issue. Unitholders' bases
in their Units, and the bases for their fractional interest in each Trust
asset, may have to be adjusted for their pro rata share of accrued interest
received, if any, on securities delivered after the Unitholders' respective
settlement dates.
Under the California personal property tax laws, bonds (including the
bonds in the 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 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 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.
4 of 7
<PAGE>
NUVEEN CALIFORNIA INSURED TRUST 255
(NUVEEN TAX-EXEMPT UNIT TRUST SERIES 827)
SCHEDULE OF INVESTMENTS AT THE DATE OF DEPOSIT, SEPTEMBER 28, 1995
<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
<C> <C> <S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
$ 500,000 State of California, Various Purpose General 2004 at 102 AAA Aaa $ 493,710
Obligation Bonds, 6.00% Due 8/1/19.
500,000 California Educational Facilities Authority, 2005 at 102 AAA Aaa 487,095
Revenue Bonds (University of Redlands),
Series 1995, 5.875% Due 10/1/15.
350,000 County of Alameda, California, 1993 Refunding 2003 at 100 AAA Aaa 306,250
Certificates of Participation (Santa Rita
Jail Project), 5.00% Due 12/1/15. (Original
issue discount bonds delivered on or about
April 13, 1993 at a price of 91.00% of
principal amount.)
500,000 Castaic Lake Water Agency (California), 2004 at 102 AAA Aaa 492,500
Refunding Revenue Certificates of
Participation (Water System Improvement
Projects), Series 1994A, 6.00% Due 8/1/18.
500,000 Department of Water and Power of The City of 2003 at 102 AAA Aaa 418,985
Los Angeles (California), Electric Plant
Revenue Bonds, Second Issue of 1993, 5.00%
Due 10/15/33.
500,000 The City of Los Angeles, California, Wastewater 2004 at 102 AAA Aaa 484,795
System Revenue Bonds, Series 1994-A, 5.875%
Due 6/1/24.
150,000 The City of San Diego, California, Industrial 2003 at 102 AAA Aaa 146,313
Development Revenue Refunding Bonds (San
Diego Gas & Electric Company), 1993 Series C,
5.90% Due 9/1/18.
500,000 The City of Turlock (California), Auxiliary 2006 at 102 AAA Aaa 485,215
Organization Revenue Certificates of
Participation (California State University,
Stanislaus Foundation), Series 1995, 5.875%
Due 6/1/22.
- ----------- ---------------
$ 3,500,000 $ 3,314,863
- ----------- ---------------
- ----------- ---------------
</TABLE>
- ------------
(1) The Sponsor's contracts to purchase Bonds were entered into on September
27, 1995. Other information regarding the Bonds in the Trust on the Date of
Deposit is as follows:
<TABLE>
<CAPTION>
ANNUAL
PROFIT INTEREST
COST TO (OR LOSS) INCOME TO BID PRICE
TRUST SPONSOR TO SPONSOR TRUST OF BONDS
---------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CALIFORNIA INSURED TRUST 255............ $ 3,304,831 $ 10,032 $ 199,475 $ 3,297,988
</TABLE>
In addition, the difference between the Trustee's determination of Offering
Price and Bid Price (as a percentage of principal amount) is .48%. 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. 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.
(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 specified in the instruments setting forth the terms
and provisions of such Bonds. See "COMPOSITION OF TRUSTS", "WHAT IS THE TAX
STATUS OF UNITHOLDERS?" and "RISK FACTORS" in Part B of this Prospectus.
(3) All the Bonds in the Insured Trusts, as insured by the Insurer, are
rated AAA by Standard & Poor's and Aaa by Moody's. The insurance obtained by the
Trust guarantees the payment of interest and principal on the Bonds when due but
does not cover certain market risks associated with fixed income securities such
as accelerated payments, premiums payable on mandatory redemptions or interest
rate risks. (See "WHY AND HOW ARE THE BONDS INSURED?" in Part B of this
Prospectus and "Description of Ratings" in the Information Supplement.)
5 of 7
<PAGE>
Statement of Condition
NUVEEN CALIFORNIA INSURED TRUST 255
(Nuveen Tax-Exempt Unit Trust, Series 827)
AS OF SEPTEMBER 28, 1995
<TABLE>
<S> <C>
TRUST PROPERTY
Sponsor's contracts to purchase Tax-Exempt Bonds,
backed by an irrevocable letter of
credit(1)(2).................................... $ 3,314,863
Accrued interest to September 28, 1995 on
underlying Bonds(1)............................. 43,572
Organizational costs(3)........................... 5,300
--------------
Total................................. $ 3,363,735
--------------
--------------
LIABILITIES AND INTEREST OF UNITHOLDERS
LIABILITIES:
Accrued interest to September 28, 1995 on
underlying Bonds(4).......................... $ 43,572
Accrued organizational costs(3)............... 5,300
--------------
Total................................. $ 48,872
--------------
--------------
INTEREST OF UNITHOLDERS:
Units of fractional undivided interest
outstanding (35,000)
Cost to investors(5)........................ $ 3,485,645
Less: Gross underwriting commission(6).... (170,782)
--------------
Net amount applicable to investors............ $ 3,314,863
--------------
Total................................. $ 3,363,735
--------------
--------------
- ------------
(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 on
the Date of Deposit. The amount of such letter of credit and
any cash deposited exceeds the amount necessary for the
purchase of the Bonds plus accrued interest to the Date of
Deposit. At the Date of Deposit, Bonds may have been delivered
to the Sponsor pursuant to certain of these contracts; the
Sponsor has assigned to the Trustee all of its rights, title
and interest in and to such Bonds.
(2) Aggregate value (at offering prices) as of the Date of Deposit
of the Bonds listed under "Schedule of Investments" herein,
and their aggregate cost to the Trust are the same. Such
offering prices were determined by Kenny S&P Evaluation
Services, a division of J.J. Kenny Co., Inc., as of the close
of business on the business day prior to the Date of Deposit.
(See "HOW WAS THE PRICE OF THE BONDS DETERMINED AT THE DATE OF
DEPOSIT?" in Part B of this Prospectus.) Insurance coverage
providing for the timely payment, when due, of all principal
of and interest on the Bonds in an Insured Trust has been
obtained by the Sponsor or by the issuers of such Bonds. Such
insurance does not guarantee the market value of the Bonds or
the value of the Units. Both the bid and the offering prices
of the underlying Bonds and of the Units may include value
attributable to such policies of insurance.
(3) The Trust (and therefore Unitholders) will bear all or a
portion of its estimated organizational costs which will be
deferred and amortized over five years from the Date of
Deposit.
(4) Representing, as set forth in "WHAT IS ACCRUED INTEREST?" in
Part B of this Prospectus, advancement by the Trustee of an
amount equal to the accrued Bond interest as of the Date of
Deposit.
(5) Aggregate Public Offering Price (exclusive of accrued
interest) computed as set forth under "HOW IS THE PUBLIC
OFFERING PRICE DETERMINED?" in Part B of this Prospectus.
(6) The gross underwriting commission of 4.90% of the Public
Offering Price has been calculated on the assumption that the
Units sold are not subject to a reduction of sales charge for
quantity purchases. In single transactions involving 500 Units
or more, the sales charge is reduced. (See "HOW IS THE PUBLIC
OFFERING PRICE DETERMINED?" in Part B of this Prospectus.)
</TABLE>
6 of 7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF JOHN NUVEEN & CO. INCORPORATED AND UNITHOLDERS OF
CALIFORNIA INSURED TRUST 255:
We have audited the accompanying statement of condition and the schedule of
investments at date of deposit (included in Part A of this Prospectus) of
California Insured Trust 255 (contained in Nuveen Tax-Exempt Unit Trust, Series
827), as of September 28, 1995. These financial statements are the
responsibility of the Sponsor. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of the irrevocable letter of credit arrangement for the purchase of
securities, described in Note (1) to the statement of condition, by
correspondence with the Trustee. An audit also includes assessing the accounting
principles used and significant estimates made by the Sponsor, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the statement of condition and the schedule of investments
at date of deposit referred to above present fairly, in all material respects,
the financial position of California Insured Trust 255 as of September 28, 1995,
in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
September 28, 1995.
7 of 7
<PAGE>
SEPTEMBER 28, 1995
SUBJECT TO COMPLETION
A
NUVEEN NUVEEN FLORIDA INSURED TRUST 218
(NUVEEN TAX EXEMPT UNIT TRUSTS SERIES 827)
CUSIP NUMBERS:
Monthly: 6706H4 349
Quarterly: 6706H4 356
Semi-Annually: 6706H4 364
PROSPECTUS--PART A (SPECIFIC TERMS) -- SEPTEMBER 28, 1995
THIS PART A OF THE PROSPECTUS MAY NOT BE DISTRIBUTED
UNLESS ACCOMPANIED BY THE PART B OF THE PROSPECTUS.
BOTH PARTS OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
Florida Insured Trust, Series 218 (the "Trust") consists of a portfolio of
interest-bearing obligations issued by or on behalf of the State of Florida,
certain United States Territories or authorities and political subdivisions
thereof which, in the opinion of recognized bond counsel to the issuing
authorities, provide income which is exempt from Federal income tax and Florida
intangibles tax, to the extent indicated below.
The objectives of the Trust are income exempt from Federal income tax and
Florida intangibles tax, and conservation of capital. The objectives are, of
course, dependent upon the continuing ability of the issuers, obligors and/or
insurers to meet their respective obligations.
The Portfolio of the Trust consists of 7 obligations issued by entities
located in Florida. The Bonds in the Trust are either general obligations of the
governmental entity issuing them and are backed by the taxing power thereof or
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 the Bonds are divided as follows:
<TABLE>
<CAPTION>
NUMBER OF PORTFOLIO
ISSUES PURPOSE OF ISSUE PERCENTAGE
--------------- ----------------------------------------------------
<C> <S> <C>
2 Electrical System Revenue 29 %
2 Health Care Facility Revenue 29
1 Dedicated-Tax Supported Revenue 14
1 Bridge and Toll Road Revenue 14
1 Water and/or Sewer Revenue 14
</TABLE>
Approximately 42.9% of the aggregate principal amount of the Bonds in the
Trust (accounting for approximately 41.1% of the aggregate offering price of the
Bonds) are original issue discount bonds. See "RISK FACTORS" in Part B of this
Prospectus for a discussion of the characteristics of such obligations and of
the risks associated therewith.
All of the Bonds in the Trust are covered by policies of insurance obtained
from the MBIA Insurance Corporation guaranteeing payment of principal and
interest when due. As a result of such insurance, the Bonds in the Trust have
received a rating of "Aaa" by Moody's and both the Bonds in the Trust and the
Units of the Trust have received a rating of "AAA" by Standard & Poor's.
The Trust is considered to be concentrated in Bonds of Health Care Facility
Revenue Issuers whose revenues are subject to certain risks including increased
governmental regulation, fluctuating occupancy levels and increased competition.
The Trust is also considered to be concentrated in Bonds of Electrical System
Revenue Issuers whose revenues are subject to certain risks including increased
competition, reduction in future demand and environmental considerations. For a
discussion of the risks associated with investments in the bonds of various
issuers, see "RISK FACTORS" in Part B of this Prospectus.
ESSENTIAL INFORMATION
REGARDING THE NUVEEN FLORIDA INSURED TRUST 218
ON THE BUSINESS DAY PRIOR TO THE DATE OF DEPOSIT, SEPTEMBER 27, 1995
Sponsor and Evaluator........ John Nuveen & Co. Incorporated
Trustee...................... The Chase Manhattan Bank, N.A.
------------------------------------------------
The income, expense and distribution data set forth below have been calculated
for Unitholders receiving monthly, quarterly or semi-annual distribution
options.
<TABLE>
<S> <C>
Principal Amount of Bonds in Trust.................. $ 3,500,000
Number of Units..................................... 35,000
Fractional Undivided Interest in Trust Per Unit..... 1/35,000
Public Offering Price--Less than 500 Units
Aggregate Offering Price of Bonds in Trust...... $ 3,293,115
Divided by Number of Units...................... $ 94.09
Plus Sales Charge 4.9% (5.152% of the Aggregate
Offering Price of the Bonds per Unit).......... $ 4.85
Public Offering Price Per Unit(1)............... $ 98.94
Redemption Price Per Unit (exclusive of accrued
interest)......................................... $ 93.59
Sponsor's Initial Repurchase Price Per Unit
(exclusive of accrued interest)................... $ 94.09
Excess of Public Offering Price Per Unit over
Redemption Price Per Unit......................... $ 5.35
Excess of Public Offering Price Per Unit over
Sponsor's Repurchase Price Per Unit............... $ 4.85
Average Maturity of Bonds in the Trust(2)........... 26.9 years
</TABLE>
- ----------
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.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities 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 these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
1 of 7
<PAGE>
ESSENTIAL INFORMATION (CONT.)
<TABLE>
<CAPTION>
MONTHLY QUARTERLY SEMI-ANNUAL
----------- ----------- -----------
<S> <C> <C> <C>
Calculation of Estimated Net Annual
Interest Income Per Unit
Annual Interest Income(3)............ $ 5.4821 $ 5.4821 $ 5.4821
Less Estimated Annual Expense........ $ .2474 $ .2154 $ .1964
----------- ----------- -----------
Estimated Net Annual Interest
Income(4).......................... $ 5.2347 $ 5.2667 $ 5.2857
Daily Rate of Accrual Per Unit........... $ .01454 $ .01463 $ .01468
ESTIMATED CURRENT RETURN(5).............. 5.29% 5.32% 5.34 %
ESTIMATED LONG TERM RETURN(5)............ 5.37% 5.40% 5.42 %
Trustee's Annual Fees(6)................. $ 1.6192 $ 1.2992 $ 1.1092
Date of Deposit.................................................................................September 28, 1995
Settlement Date....................................................................................October 3, 1995
Mandatory Termination Date....................................See "OTHER INFORMATION" in Part B of this Prospectus
Minimum Value of Each Trust...................................See "OTHER INFORMATION" in Part B of this Prospectus
Sponsor's Annual Evaluation Fee.........................................$0.17 per $1,000 principal amount of Bonds
Estimated Annual Organizational Expenses(7).......................................................$.02800 per Unit
- ----------
<FN>
The evaluation time for purpose of sale, purchase or redemption of Units is 4 p.m. Eastern time. (See "HOW IS THE PUBLIC OFFERING
PRICE DETERMINED?" in Part B of this Prospectus.)
(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 three 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, $.07 of accrued interest to the Settlement Date will be added to the Public Offering Price. (See "WHAT IS ACCRUED
INTEREST?" in Part B of this Prospectus.)
(2) The Average Maturity of Bonds in the Trust is calculated based upon the stated maturities of the Bonds in the 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 Bonds in the Trust may increase or decrease from time to time as Bonds mature
or are called or sold.
(3) Assumes delivery of all Bonds. (See "COMPOSITION OF TRUSTS" appearing in Part B of this Prospectus.) Interest income does not
include accretion of original issue discount on "zero coupon" Bonds, Stripped Obligations or other original issue discount
Bonds. (See "RISK FACTORS" in Part B of this Prospectus.)
(4) The amount and timing of interest distributions from the Trust under the various plans of distribution are set forth below.
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. 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.
(5) Estimated Long Term Return for the Trust represents the average of the yields to maturity (or call) of the Bonds in the
Trust's portfolio calculated in accordance with accepted bond practices and adjusted to reflect a compounding factor,
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 "WHAT ARE ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN?"
in Part B of this Prospectus.
(6) Each Trustee annual fee is per $1,000 principal amount of the underlying Bonds in the Trust for that portion of the Trust
that represents a particular plan of distribution.
(7) The Trust (and therefore Unitholders) will bear all or a portion of its organizational costs (including costs of preparing
the registration statements, the trust indenture and other closing documents, registering Units with the Securities and
Exchange Commission and states, the initial audit of the Trust portfolio, legal fees and the initial fees and expenses of the
Trustee but not including the expenses incurred in the printing of preliminary and final prospectuses, and expenses incurred
in the preparation and printing of brochures and other advertising materials and any other selling expenses) as is common for
mutual funds. Total organizational expenses will be amortized over a five year period. See "WHAT ARE NORMAL TRUST OPERATING
EXPENSES?" in Part B of this Prospectus and "Statement of Condition." Historically, the sponsors of unit investment trusts
have paid all the costs of establishing such trusts.
</TABLE>
2 of 7
<PAGE>
INTEREST DISTRIBUTION
Details of interest distributions per Unit of the 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
1995 1996 PER YEAR
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------- --------------
Record Date*.......................... 11/1 2/1 5/1 8/1
Distribution Date..................... 11/15 2/15 5/15 8/15
- --------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan............. $ .4798(1) $ 5.2347
-------- $.4362 every month --------
Quarterly Distribution Plan........... $ .4798(1) $ 1.3158(2) $ 1.3158 $ 1.3158 $ 5.2667
Semi-Annual Distribution Plan......... $ .4798(1) $ 2.6424(3) $ 5.2857
- --------------------------------------------------------------------------------------------------------------------
<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. Distribution Dates under each
distribution plan are the fifteenth day of the month in which the respective Record Date occurred. For additional information
see "WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?" in Part B of this Prospectus.
(1) The first distribution will be paid to all Unitholders, regardless of the distribution plan selected. Such distribution may
be more or less than a regular monthly distribution.
(2) Regular 3-month distribution.
(3) Regular 6-month distribution.
</TABLE>
FLORIDA RISK FACTORS
The financial condition of the State of Florida is affected by various
national, economic, social and environmental policies and conditions.
Additionally, Constitutional and statutory limitations imposed on the State and
its local governments concerning taxes, bond indebtedness and other matters may
constrain the revenue-generating capacity of the State and its local governments
and, therefore, the ability of the issuers of the Bonds to satisfy their
obligations. The State Constitution and statutes mandate that the State budget,
as a whole, and each separate fund within the State budget, be kept in balance
from currently available revenues each fiscal year. Additionally, the State
Constitution prohibits issuance of State obligations to fund State operations.
The economic vitality of the State and its various regions and, therefore,
the ability of the State and its local governments to satisfy the Bonds, are
affected by numerous factors. The State continues to be dependent on the
construction and construction related manufacturing industries. These industries
tend to be highly cyclical and there is no assurance that Florida's rapid
population growth, which drove these industries in the past, will continue.
Tourism is also one of the State's most important industries. Because many
international travelers visit Florida, an increase in the value of the U.S.
dollar adversely affects this industry. Moreover, Florida could be impacted by
problems in the agricultural sector, including crop failures, severe weather
conditions or other agricultural-related problems, particularly with regard to
the citrus and sugar industries.
The State is a party to numerous lawsuits in which an adverse final decision
could materially affect the State's governmental operations and consequently its
ability to pay debt service on its obligations.
The State maintains a bond rating of Aa and AA from Moody's and Standard &
Poor's, respectively, on the majority of its general obligation bonds, although
the rating of a particular series of revenue bonds relates primarily to the
project, facility, or other revenue resource from which such series derives
funds for repayment.
Further information concerning Florida risk factors may be obtained upon
written or telephonic request to the Trustee as described in "OTHER INFORMATION
- -- Supplemental Information" appearing in Part B of this Prospectus.
TAX STATUS
For a discussion of the Federal tax status of income earned on Trust Units,
see "WHAT IS THE TAX STATUS OF UNITHOLDERS?" appearing in Part B of this
Prospectus.
The assets of the Trust will consist solely of interest-bearing obligations
issued by or on behalf of the State of Florida, its political subdivisions and
authorities or by the Commonwealth of Puerto Rico, Guam, the Virgin Islands,
American Samoa, or the Northern Mariana Islands (the "Florida Bonds").
In the opinion of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A.,
special counsel for the Trust for Florida tax matters, under existing law:
3 of 7
<PAGE>
For Florida state income tax purposes, the Trust will not be subject to the
Florida income tax imposed by the Florida Code so long as the Trust has no
income subject to federal taxation. In addition, political subdivisions of
Florida do not impose any income taxes.
Because Florida does not impose an income tax on individuals, non-corporate
Unitholders will not be subject to any Florida income tax on income realized by
the Trust. Each corporate Unitholder will be subject to Florida income taxation
on its share of the income realized by the Trust notwithstanding the tax exempt
status of the interest received from any bonds under Section 103(a) of the
Internal Revenue Code of 1986 or any other federal law, unless the interest
income constitutes nonbusiness income. Nevertheless, any corporate Unitholder
that has its commercial domicile in Florida will be taxable under the Florida
Code on its share of the Trust income which constitutes nonbusiness income.
Trust Units will be subject to Florida estate tax only if owned by Florida
residents, certain natural persons not domiciled in Florida, or certain natural
persons not residents of the United States. However, the Florida estate tax is
limited to the amount of the credit allowable under the applicable Federal
Revenue Act (currently Section 2011 (and in some cases Section 2102) of the
Internal Revenue Code of 1986, as amended) for death taxes actually paid to the
several states.
Neither the Florida Bonds nor the Units will be subject to the Florida ad
valorem property tax or Florida sales or use tax.
Because Bonds issued by the State of Florida or its political subdivisions
or by the Commonwealth of Puerto Rico, Guam, the Virgin Islands, American Samoa
and the Northern Mariana Islands are exempt from Florida intangible personal
property taxation under Chapter 199, Florida Statutes, as amended, the Trust
will not be subject to Florida intangible personal property tax. In addition,
the Unitholders will not be subject to Florida intangible personal property tax
on the Units.
4 of 7
<PAGE>
NUVEEN FLORIDA INSURED TRUST 218
(NUVEEN TAX-EXEMPT UNIT TRUST SERIES 827)
SCHEDULE OF INVESTMENTS AT THE DATE OF DEPOSIT, SEPTEMBER 28, 1995
<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
<C> <C> <S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
$ 500,000 State of Florida, Department of Transportation, 2005 at 101 AAA Aaa $ 473,630
Turnpike Revenue Bonds, Series 1995A, 5.50%
Due 7/1/21.
500,000 Hillsborough County Industrial Development 2004 at 102 AAA Aaa 510,015
Authority (Florida), Pollution Control
Revenue Refunding Bonds (Tampa Electric
Company Project), Series 1994, 6.25% Due
12/1/34.
500,000 Kissimmee Utility Authority (Florida), Electric 2003 at 102 AAA Aaa 459,365
System Improvement and Refunding Revenue
Bonds, Series 1993, 5.25% Due 10/1/18.
(Original issue discount bonds delivered on
or about June 17, 1993 at a price of 94.257%
of principal amount.)
500,000 Pinellas County (Florida), Health Facilities 2003 at 102 AAA Aaa 468,905
Authority, Hospital Revenue Bonds, Series
1993 (Morton Plant Health System Project),
5.50% Due 11/15/18.
500,000 City of St. Petersburg, Florida, Professional 2005 at 101 AAA Aaa 488,750
Sports Facility Sales Tax Revenue Bonds,
Series 1995, 5.75% Due 10/1/25.
500,000 City of Tampa, Florida, Allegany Health System 2003 at 102 AAA Aaa 440,825
Revenue Bonds, St. Mary's Hospital, Inc.
Issue, Series 1993, 5.125% Due 12/1/23.
(Original issue discount bonds delivered on
or about January 4, 1994 at a price of
94.522% of principal amount.)
500,000 City of Tampa, Florida, Water and Sewer Systems 2003 at 100 AAA Aaa 451,625
Revenue Bonds, Series 1993A, 5.00% Due
10/1/14. (Original issue discount bonds
delivered on or about June 24, 1993 at a
price of 92.236% of principal amount.)
- ----------- ---------------
$ 3,500,000 $ 3,293,115
- ----------- ---------------
- ----------- ---------------
</TABLE>
- ------------
(1) The Sponsor's contracts to purchase Bonds were entered into on September
26, 1995. Other information regarding the Bonds in the Trust on the Date of
Deposit is as follows:
<TABLE>
<CAPTION>
ANNUAL
PROFIT INTEREST
COST TO (OR LOSS) INCOME TO BID PRICE
TRUST SPONSOR TO SPONSOR TRUST OF BONDS
---------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
FLORIDA INSURED TRUST 218............... $ 3,296,957 $ (3,842 ) $ 191,875 $ 3,275,615
</TABLE>
In addition, the difference between the Trustee's determination of Offering
Price and Bid Price (as a percentage of principal amount) is .50%. 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. The Sponsor participated as either the sole underwriter
or manager or as a member of the syndicates which were the original underwriters
of 14.3% of the aggregate principal amount of the 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 specified in the instruments setting forth the terms
and provisions of such Bonds. See "COMPOSITION OF TRUSTS", "WHAT IS THE TAX
STATUS OF UNITHOLDERS?" and "RISK FACTORS" in Part B of this Prospectus.
(3) All the Bonds in the Insured Trusts, as insured by the Insurer, are
rated AAA by Standard & Poor's and Aaa by Moody's. The insurance obtained by the
Trust guarantees the payment of interest and principal on the Bonds when due but
does not cover certain market risks associated with fixed income securities such
as accelerated payments, premiums payable on mandatory redemptions or interest
rate risks. (See "WHY AND HOW ARE THE BONDS INSURED?" in Part B of this
Prospectus and "Description of Ratings" in the Information Supplement.)
5 of 7
<PAGE>
Statement of Condition
NUVEEN FLORIDA INSURED TRUST 218
(Nuveen Tax-Exempt Unit Trust, Series 827)
AS OF SEPTEMBER 28, 1995
<TABLE>
<S> <C>
TRUST PROPERTY
Sponsor's contracts to purchase Tax-Exempt Bonds,
backed by an irrevocable letter of
credit(1)(2).................................... $ 3,293,115
Accrued interest to September 28, 1995 on
underlying Bonds(1)............................. 69,832
Organizational costs(3)........................... 4,900
--------------
Total................................. $ 3,367,847
--------------
--------------
LIABILITIES AND INTEREST OF UNITHOLDERS
LIABILITIES:
Accrued interest to September 28, 1995 on
underlying Bonds(4).......................... $ 69,832
Accrued organizational costs(3)............... 4,900
--------------
Total................................. $ 74,732
--------------
--------------
INTEREST OF UNITHOLDERS:
Units of fractional undivided interest
outstanding (35,000)
Cost to investors(5)........................ $ 3,462,776
Less: Gross underwriting commission(6).... (169,661)
--------------
Net amount applicable to investors............ $ 3,293,115
--------------
Total................................. $ 3,367,847
--------------
--------------
- ------------
(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 on
the Date of Deposit. The amount of such letter of credit and
any cash deposited exceeds the amount necessary for the
purchase of the Bonds plus accrued interest to the Date of
Deposit. At the Date of Deposit, Bonds may have been delivered
to the Sponsor pursuant to certain of these contracts; the
Sponsor has assigned to the Trustee all of its rights, title
and interest in and to such Bonds.
(2) Aggregate value (at offering prices) as of the Date of Deposit
of the Bonds listed under "Schedule of Investments" herein,
and their aggregate cost to the Trust are the same. Such
offering prices were determined by Kenny S&P Evaluation
Services, a division of J.J. Kenny Co., Inc., as of the close
of business on the business day prior to the Date of Deposit.
(See "HOW WAS THE PRICE OF THE BONDS DETERMINED AT THE DATE OF
DEPOSIT?" in Part B of this Prospectus.) Insurance coverage
providing for the timely payment, when due, of all principal
of and interest on the Bonds in an Insured Trust has been
obtained by the Sponsor or by the issuers of such Bonds. Such
insurance does not guarantee the market value of the Bonds or
the value of the Units. Both the bid and the offering prices
of the underlying Bonds and of the Units may include value
attributable to such policies of insurance.
(3) The Trust (and therefore Unitholders) will bear all or a
portion of its estimated organizational costs which will be
deferred and amortized over five years from the Date of
Deposit.
(4) Representing, as set forth in "WHAT IS ACCRUED INTEREST?" in
Part B of this Prospectus, advancement by the Trustee of an
amount equal to the accrued Bond interest as of the Date of
Deposit.
(5) Aggregate Public Offering Price (exclusive of accrued
interest) computed as set forth under "HOW IS THE PUBLIC
OFFERING PRICE DETERMINED?" in Part B of this Prospectus.
(6) The gross underwriting commission of 4.90% of the Public
Offering Price has been calculated on the assumption that the
Units sold are not subject to a reduction of sales charge for
quantity purchases. In single transactions involving 500 Units
or more, the sales charge is reduced. (See "HOW IS THE PUBLIC
OFFERING PRICE DETERMINED?" in Part B of this Prospectus.)
</TABLE>
6 of 7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF JOHN NUVEEN & CO. INCORPORATED AND UNITHOLDERS OF
FLORIDA INSURED TRUST 218:
We have audited the accompanying statement of condition and the schedule of
investments at date of deposit (included in Part A of this Prospectus) of
Florida Insured Trust 218 (contained in Nuveen Tax-Exempt Unit Trust, Series
827), as of September 28, 1995. These financial statements are the
responsibility of the Sponsor. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of the irrevocable letter of credit arrangement for the purchase of
securities, described in Note (1) to the statement of condition, by
correspondence with the Trustee. An audit also includes assessing the accounting
principles used and significant estimates made by the Sponsor, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the statement of condition and the schedule of investments
at date of deposit referred to above present fairly, in all material respects,
the financial position of Florida Insured Trust 218 as of September 28, 1995, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
September 28, 1995.
7 of 7
<PAGE>
SEPTEMBER 28, 1995
SUBJECT TO COMPLETION
A
NUVEEN NUVEEN GEORGIA INSURED TRUST 47
(NUVEEN TAX EXEMPT UNIT TRUSTS SERIES 827)
CUSIP NUMBERS:
Monthly: 67101M 702
Quarterly: 67101M 710
Semi-Annually: 67101M 728
PROSPECTUS--PART A (SPECIFIC TERMS) -- SEPTEMBER 28, 1995
THIS PART A OF THE PROSPECTUS MAY NOT BE DISTRIBUTED
UNLESS ACCOMPANIED BY THE PART B OF THE PROSPECTUS.
BOTH PARTS OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
Georgia Insured Trust, Series 47 (the "Trust") consists of a portfolio of
interest-bearing obligations issued by or on behalf of the State of Georgia,
certain United States Territories or authorities and political subdivisions
thereof which, in the opinion of recognized bond counsel to the issuing
authorities, provide income which is exempt from Federal income tax and Georgia
income tax, to the extent indicated below.
The objectives of the Trust are income exempt from Federal and state income
taxes, and conservation of capital. The objectives are, of course, dependent
upon the continuing ability of the issuers, obligors and/or insurers to meet
their respective obligations.
The Portfolio of the Trust consists of 7 obligations issued by entities
located in Georgia. The Bonds in the Trust are either general obligations of the
governmental entity issuing them and are backed by the taxing power thereof or
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 the Bonds are divided as follows:
<TABLE>
<CAPTION>
NUMBER OF PORTFOLIO
ISSUES PURPOSE OF ISSUE PERCENTAGE
--------------- ----------------------------------------------------
<C> <S> <C>
2 Health Care Facility Revenue 29 %
2 Water and/or Sewer Revenue 29
1 Dedicated-Tax Supported Revenue 14
1 Electrical System Revenue 14
1 General Obligations 14
</TABLE>
Approximately 14.3% of the aggregate principal amount of the Bonds in the
Trust (accounting for approximately 13.5% of the aggregate offering price of the
Bonds) are original issue discount bonds. See "RISK FACTORS" in Part B of this
Prospectus for a discussion of the characteristics of such obligations and of
the risks associated therewith.
All of the Bonds in the Trust are covered by policies of insurance obtained
from the MBIA Insurance Corporation guaranteeing payment of principal and
interest when due. As a result of such insurance, the Bonds in the Trust have
received a rating of "Aaa" by Moody's and both the Bonds in the Trust and the
Units of the Trust have received a rating of "AAA" by Standard & Poor's.
The Trust is considered to be concentrated in Bonds of Health Care Facility
Revenue Issuers whose revenues are subject to certain risks including increased
governmental regulation, fluctuating occupancy levels and increased competition.
The Trust is also considered to be concentrated in Bonds of Water and/or Sewer
Revenue Issuers whose revenues are subject to certain risks including problems
obtaining timely and adequate rate increases and population decline resulting in
decreased user fees. For a discussion of the risks associated with investments
in the bonds of various issuers, see "RISK FACTORS" in Part B of this
Prospectus.
ESSENTIAL INFORMATION
REGARDING THE NUVEEN GEORGIA INSURED TRUST 47
ON THE BUSINESS DAY PRIOR TO THE DATE OF DEPOSIT, SEPTEMBER 27, 1995
Sponsor and Evaluator........ John Nuveen & Co. Incorporated
Trustee...................... The Chase Manhattan Bank, N.A.
------------------------------------------------
The income, expense and distribution data set forth below have been calculated
for Unitholders receiving monthly, quarterly or semi-annual distribution
options.
<TABLE>
<S> <C>
Principal Amount of Bonds in Trust.................. $ 3,500,000
Number of Units..................................... 35,000
Fractional Undivided Interest in Trust Per Unit..... 1/35,000
Public Offering Price--Less than 500 Units
Aggregate Offering Price of Bonds in Trust...... $ 3,259,670
Divided by Number of Units...................... $ 93.13
Plus Sales Charge 4.9% (5.152% of the Aggregate
Offering Price of the Bonds per Unit).......... $ 4.80
Public Offering Price Per Unit(1)............... $ 97.93
Redemption Price Per Unit (exclusive of accrued
interest)......................................... $ 92.65
Sponsor's Initial Repurchase Price Per Unit
(exclusive of accrued interest)................... $ 93.13
Excess of Public Offering Price Per Unit over
Redemption Price Per Unit......................... $ 5.28
Excess of Public Offering Price Per Unit over
Sponsor's Repurchase Price Per Unit............... $ 4.80
Average Maturity of Bonds in the Trust(2)........... 24.0 years
</TABLE>
- ----------
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.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities 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 these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
1 of 7
<PAGE>
ESSENTIAL INFORMATION (CONT.)
<TABLE>
<CAPTION>
MONTHLY QUARTERLY SEMI-ANNUAL
----------- ----------- -----------
<S> <C> <C> <C>
Calculation of Estimated Net Annual
Interest Income Per Unit
Annual Interest Income(3)............ $ 5.3821 $ 5.3821 $ 5.3821
Less Estimated Annual Expense........ $ .2405 $ .2085 $ .1895
----------- ----------- -----------
Estimated Net Annual Interest
Income(4).......................... $ 5.1416 $ 5.1736 $ 5.1926
Daily Rate of Accrual Per Unit........... $ .01428 $ .01437 $ .01442
ESTIMATED CURRENT RETURN(5).............. 5.25% 5.28% 5.30 %
ESTIMATED LONG TERM RETURN(5)............ 5.37% 5.40% 5.42 %
Trustee's Annual Fees(6)................. $ 1.5848 $ 1.2648 $ 1.0748
Date of Deposit.................................................................................September 28, 1995
Settlement Date....................................................................................October 3, 1995
Mandatory Termination Date....................................See "OTHER INFORMATION" in Part B of this Prospectus
Minimum Value of Each Trust...................................See "OTHER INFORMATION" in Part B of this Prospectus
Sponsor's Annual Evaluation Fee.........................................$0.17 per $1,000 principal amount of Bonds
Estimated Annual Organizational Expenses(7).......................................................$.02457 per Unit
- ----------
<FN>
The evaluation time for purpose of sale, purchase or redemption of Units is 4 p.m. Eastern time. (See "HOW IS THE PUBLIC OFFERING
PRICE DETERMINED?" in Part B of this Prospectus.)
(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 three 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, $.07 of accrued interest to the Settlement Date will be added to the Public Offering Price. (See "WHAT IS ACCRUED
INTEREST?" in Part B of this Prospectus.)
(2) The Average Maturity of Bonds in the Trust is calculated based upon the stated maturities of the Bonds in the 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 Bonds in the Trust may increase or decrease from time to time as Bonds mature
or are called or sold.
(3) Assumes delivery of all Bonds. (See "COMPOSITION OF TRUSTS" appearing in Part B of this Prospectus.) Interest income does not
include accretion of original issue discount on "zero coupon" Bonds, Stripped Obligations or other original issue discount
Bonds. (See "RISK FACTORS" in Part B of this Prospectus.)
(4) The amount and timing of interest distributions from the Trust under the various plans of distribution are set forth below.
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. 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.
(5) Estimated Long Term Return for the Trust represents the average of the yields to maturity (or call) of the Bonds in the
Trust's portfolio calculated in accordance with accepted bond practices and adjusted to reflect a compounding factor,
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 "WHAT ARE ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN?"
in Part B of this Prospectus.
(6) Each Trustee annual fee is per $1,000 principal amount of the underlying Bonds in the Trust for that portion of the Trust
that represents a particular plan of distribution.
(7) The Trust (and therefore Unitholders) will bear all or a portion of its organizational costs (including costs of preparing
the registration statements, the trust indenture and other closing documents, registering Units with the Securities and
Exchange Commission and states, the initial audit of the Trust portfolio, legal fees and the initial fees and expenses of the
Trustee but not including the expenses incurred in the printing of preliminary and final prospectuses, and expenses incurred
in the preparation and printing of brochures and other advertising materials and any other selling expenses) as is common for
mutual funds. Total organizational expenses will be amortized over a five year period. See "WHAT ARE NORMAL TRUST OPERATING
EXPENSES?" in Part B of this Prospectus and "Statement of Condition." Historically, the sponsors of unit investment trusts
have paid all the costs of establishing such trusts.
</TABLE>
2 of 7
<PAGE>
INTEREST DISTRIBUTION
Details of interest distributions per Unit of the 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
1995 1996 PER YEAR
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------- --------------
Record Date*.......................... 11/1 2/1 5/1 8/1
Distribution Date..................... 11/15 2/15 5/15 8/15
- --------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan............. $ .4712(1) $ 5.1416
-------- $.4284 every month --------
Quarterly Distribution Plan........... $ .4712(1) $ 1.2933(2) $ 1.2933 $ 1.2933 $ 5.1736
Semi-Annual Distribution Plan......... $ .4712(1) $ 2.5956(3) $ 5.1926
- --------------------------------------------------------------------------------------------------------------------
<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. Distribution Dates under each
distribution plan are the fifteenth day of the month in which the respective Record Date occurred. For additional information
see "WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?" in Part B of this Prospectus.
(1) The first distribution will be paid to all Unitholders, regardless of the distribution plan selected. Such distribution may
be more or less than a regular monthly distribution.
(2) Regular 3-month distribution.
(3) Regular 6-month distribution.
</TABLE>
GEORGIA RISK FACTORS
The financial condition of the State of Georgia is affected by various
national, economic, social and environmental policies and conditions.
Additionally, Constitutional and statutory limitations imposed on the State and
its local governments concerning taxes, bond indebtedness and other matters may
constrain the revenue-generating capacity of the State and its local governments
and, therefore, the ability of the issuers of the Bonds to satisfy their
obligations. Historically, the State has experienced significant revenue
shortfalls.
The economic vitality of the State and its various regions and, therefore,
the ability of the State and its local governments to satisfy the Bonds, are
affected by numerous factors. Recent widespread flooding in central and southern
Georgia has caused extensive damage and destruction of farmland, private
residences, businesses and local and state government facilities.
The State is a party to numerous lawsuits in which an adverse final decision
could materially affect the State's governmental operations and consequently its
ability to pay debt service on its obligations.
All outstanding general obligation bonds of the State are rated "AA+" by
Standard and Poor's and "Aaa" by Moody's.
Further information concerning Georgia risk factors may be obtained upon
written or telephonic request to the Trustee as described in "OTHER INFORMATION
- -- Supplemental Information" appearing in Part B of this Prospectus.
TAX STATUS
For a discussion of the Federal tax status of income earned on Trust Units,
see "WHAT IS THE TAX STATUS OF UNITHOLDERS?" appearing in Part B of this
Prospectus.
In the opinion of Chapman and Cutler, counsel to the Sponsor, under existing
law:
For Georgia income tax purposes, the Trust is not an association taxable
as a corporation, and the income of the Trust will be treated as the income
of the Unitholders. Interest on the Georgia Bonds which is exempt from
Georgia income tax when received by the Trust, and which would be exempt
from Georgia income tax if received directly by a Unitholder, will retain
its status as tax-exempt interest when distributed by the Trust and received
by the Unitholders.
If the Trustee disposes of a Georgia Bond (whether by sale, exchange,
payment on maturity, retirement or otherwise) or if a Unitholder redeems or
sells his Unit, the Unitholder will recognize gain or loss for Georgia
income tax purposes to the same extent that gain or loss would be recognized
for federal income tax purposes (except in the case of Georgia Bonds issued
before March 11, 1987 issued with original issue discount owned by the Trust
in which case gain or loss for Georgia income tax purposes would be
determined by accruing said original issue discount on a ratable basis). Due
to the amortization of bond premium and other basis adjustments required by
the Internal Revenue Code, a Unitholder, under some circumstances, may
realize taxable gain when his or her Units are sold or redeemed for an
amount equal to their original cost.
3 of 7
<PAGE>
Because obligations or evidences of debt of Georgia, its political
subdivisions and public institutions and bonds issued by the Government of
Puerto Rico are exempt from the Georgia intangible personal property tax,
the Trust will not be subject to such tax as the result of holding such
obligations, evidences of debt or bonds. Although there currently is no
published administrative interpretation or opinion of the Attorney General
of Georgia dealing with the status of bonds issued by a political
subdivision of Puerto Rico, we have in the past been advised orally by
representatives of the Georgia Department of Revenue that such bonds would
also be considered exempt from such tax. Based on that advice, and in the
absence of a published administrative interpretation to the contrary, we are
of the opinion that the Trust would not be subject to such tax as the result
of holding bonds issued by a political subdivision of Puerto Rico.
Amounts paid by the Insurer under an insurance policy or policies issued
to the Trust, if any, with respect to the Georgia Bonds in the Trust which
represent maturing interest on defaulted obligations held by the Trustee
will be exempt from State income taxes if, and to the extent as, such
interest would have been so exempt if paid by the issuer of the defaulted
obligations 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 obligations, rather than
the insurer, will pay debt service on the obligations.
We express no opinion regarding whether a Unitholder's ownership of an
interest in the Trust is subject to the Georgia intangible personal property
tax. Although the application of the Georgia intangible personal property
tax to the ownership of the Units by the Unitholders is not clear,
representatives of the Georgia Department of Revenue have in the past
advised us orally that, for purposes of the intangible property tax, the
Department considers a Unitholder's ownership of an interest in the Trust as
a whole to be taxable intangible property separate from any ownership
interest in the underlying tax-exempt Georgia Bonds.
Neither the Georgia Bonds nor the Units will be subject to Georgia sales
or use tax.
4 of 7
<PAGE>
NUVEEN GEORGIA INSURED TRUST 47
(NUVEEN TAX-EXEMPT UNIT TRUST SERIES 827)
SCHEDULE OF INVESTMENTS AT THE DATE OF DEPOSIT, SEPTEMBER 28, 1995
<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
<C> <C> <S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
$ 500,000 Municipal Electric Authority of Georgia, Power No Optional Call AAA Aaa $ 468,210
Revenue Bonds, Series Z, 5.50% Due 1/1/20.
500,000 Hospital Authority of Albany-Dougherty County, 2003 at 102 AAA Aaa 438,655
Georgia, Revenue Bonds (Phoebe Putney
Memorial Hospital), Series 1993, 5.00% Due
9/1/20. (Original issue discount bonds
delivered on or about August 19, 1993 at a
price of 89.269% of principal amount.)
500,000 Metropolitan Atlanta Rapid Transit Authority 2003 at 102 AAA Aaa 452,805
(Georgia), Sales Tax Revenue Bonds (Second
Indenture Series), Series 1993A, 5.125% Due
7/1/17.
500,000 City of Atlanta, Georgia, General Obligation 2003 at 102 AAA Aaa 481,135
School Improvement Bonds, Series 1993, 5.60%
Due 12/1/18.
500,000 City of Atlanta, Georgia, Water and Sewerage 2004 at 102 AAA Aaa 451,235
Revenue Bonds, Series 1993, 5.00% Due 1/1/15.
500,000 Columbus, Georgia, Water and Sewerage Revenue 2003 at 102 AAA Aaa 485,000
Refunding Bonds, Series 1993, 5.70% Due
5/1/20.
500,000 Hospital Authority of Gordon County (Georgia), 2005 at 102 AAA Aaa 482,630
Revenue Anticipation Certificates, Series
1995 (Adventist Health System/ Sunbelt
Obligated Group), 5.75% Due 11/15/25.
- ----------- ---------------
$ 3,500,000 $ 3,259,670
- ----------- ---------------
- ----------- ---------------
</TABLE>
- ------------
(1) The Sponsor's contracts to purchase Bonds were entered into during the
period from September 25, 1995 to September 26, 1995. Other information
regarding the Bonds in the Trust on the Date of Deposit is as follows:
<TABLE>
<CAPTION>
ANNUAL
PROFIT INTEREST
COST TO (OR LOSS) INCOME TO BID PRICE
TRUST SPONSOR TO SPONSOR TRUST OF BONDS
---------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
GEORGIA INSURED TRUST 47................ $ 3,260,990 $ (1,320 ) $ 188,375 $ 3,242,795
</TABLE>
In addition, the difference between the Trustee's determination of Offering
Price and Bid Price (as a percentage of principal amount) is .48%. 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. The Sponsor participated as either the sole underwriter
or manager or as a member of the syndicates which were the original underwriters
of 14.3% of the aggregate principal amount of the 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 specified in the instruments setting forth the terms
and provisions of such Bonds. See "COMPOSITION OF TRUSTS", "WHAT IS THE TAX
STATUS OF UNITHOLDERS?" and "RISK FACTORS" in Part B of this Prospectus.
(3) All the Bonds in the Insured Trusts, as insured by the Insurer, are
rated AAA by Standard & Poor's and Aaa by Moody's. The insurance obtained by the
Trust guarantees the payment of interest and principal on the Bonds when due but
does not cover certain market risks associated with fixed income securities such
as accelerated payments, premiums payable on mandatory redemptions or interest
rate risks. (See "WHY AND HOW ARE THE BONDS INSURED?" in Part B of this
Prospectus and "Description of Ratings" in the Information Supplement.)
5 of 7
<PAGE>
Statement of Condition
NUVEEN GEORGIA INSURED TRUST 47
(Nuveen Tax-Exempt Unit Trust, Series 827)
AS OF SEPTEMBER 28, 1995
<TABLE>
<S> <C>
TRUST PROPERTY
Sponsor's contracts to purchase Tax-Exempt Bonds,
backed by an irrevocable letter of
credit(1)(2).................................... $ 3,259,670
Accrued interest to September 28, 1995 on
underlying Bonds(1)............................. 52,114
Organizational costs(3)........................... 4,300
--------------
Total................................. $ 3,316,084
--------------
--------------
LIABILITIES AND INTEREST OF UNITHOLDERS
LIABILITIES:
Accrued interest to September 28, 1995 on
underlying Bonds(4).......................... $ 52,114
Accrued organizational costs(3)............... 4,300
--------------
Total................................. $ 56,414
--------------
--------------
INTEREST OF UNITHOLDERS:
Units of fractional undivided interest
outstanding (35,000)
Cost to investors(5)........................ $ 3,427,608
Less: Gross underwriting commission(6).... (167,938)
--------------
Net amount applicable to investors............ $ 3,259,670
--------------
Total................................. $ 3,316,084
--------------
--------------
- ------------
(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 on
the Date of Deposit. The amount of such letter of credit and
any cash deposited exceeds the amount necessary for the
purchase of the Bonds plus accrued interest to the Date of
Deposit. At the Date of Deposit, Bonds may have been delivered
to the Sponsor pursuant to certain of these contracts; the
Sponsor has assigned to the Trustee all of its rights, title
and interest in and to such Bonds.
(2) Aggregate value (at offering prices) as of the Date of Deposit
of the Bonds listed under "Schedule of Investments" herein,
and their aggregate cost to the Trust are the same. Such
offering prices were determined by Kenny S&P Evaluation
Services, a division of J.J. Kenny Co., Inc., as of the close
of business on the business day prior to the Date of Deposit.
(See "HOW WAS THE PRICE OF THE BONDS DETERMINED AT THE DATE OF
DEPOSIT?" in Part B of this Prospectus.) Insurance coverage
providing for the timely payment, when due, of all principal
of and interest on the Bonds in an Insured Trust has been
obtained by the Sponsor or by the issuers of such Bonds. Such
insurance does not guarantee the market value of the Bonds or
the value of the Units. Both the bid and the offering prices
of the underlying Bonds and of the Units may include value
attributable to such policies of insurance.
(3) The Trust (and therefore Unitholders) will bear all or a
portion of its estimated organizational costs which will be
deferred and amortized over five years from the Date of
Deposit.
(4) Representing, as set forth in "WHAT IS ACCRUED INTEREST?" in
Part B of this Prospectus, advancement by the Trustee of an
amount equal to the accrued Bond interest as of the Date of
Deposit.
(5) Aggregate Public Offering Price (exclusive of accrued
interest) computed as set forth under "HOW IS THE PUBLIC
OFFERING PRICE DETERMINED?" in Part B of this Prospectus.
(6) The gross underwriting commission of 4.90% of the Public
Offering Price has been calculated on the assumption that the
Units sold are not subject to a reduction of sales charge for
quantity purchases. In single transactions involving 500 Units
or more, the sales charge is reduced. (See "HOW IS THE PUBLIC
OFFERING PRICE DETERMINED?" in Part B of this Prospectus.)
</TABLE>
6 of 7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF JOHN NUVEEN & CO. INCORPORATED AND UNITHOLDERS OF
GEORGIA INSURED TRUST 47:
We have audited the accompanying statement of condition and the schedule of
investments at date of deposit (included in Part A of this Prospectus) of
Georgia Insured Trust 47 (contained in Nuveen Tax-Exempt Unit Trust, Series
827), as of September 28, 1995. These financial statements are the
responsibility of the Sponsor. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of the irrevocable letter of credit arrangement for the purchase of
securities, described in Note (1) to the statement of condition, by
correspondence with the Trustee. An audit also includes assessing the accounting
principles used and significant estimates made by the Sponsor, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the statement of condition and the schedule of investments
at date of deposit referred to above present fairly, in all material respects,
the financial position of Georgia Insured Trust 47 as of September 28, 1995, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
September 28, 1995.
7 of 7
<PAGE>
SEPTEMBER 28, 1995
SUBJECT TO COMPLETION
A
NUVEEN NUVEEN PENNSYLVANIA INSURED TRUST 203
(NUVEEN TAX EXEMPT UNIT TRUSTS SERIES 827)
CUSIP NUMBERS:
Monthly: 6706H8 316
Quarterly: 6706H8 324
Semi-Annually: 6706H8 332
PROSPECTUS--PART A (SPECIFIC TERMS) -- SEPTEMBER 28, 1995
THIS PART A OF THE PROSPECTUS MAY NOT BE DISTRIBUTED
UNLESS ACCOMPANIED BY THE PART B OF THE PROSPECTUS.
BOTH PARTS OF THE PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
Pennsylvania Insured Trust, Series 203 (the "Trust") consists of a portfolio
of interest-bearing obligations issued by or on behalf of the State of
Pennsylvania, certain United States Territories or authorities and political
subdivisions thereof which, in the opinion of recognized bond counsel to the
issuing authorities, provide income which is exempt from Federal income tax and
Pennsylvania state and local income taxes, to the extent indicated below.
The objectives of the Trust are income exempt from Federal and state income
taxes, and conservation of capital. The objectives are, of course, dependent
upon the continuing ability of the issuers, obligors and/or insurers to meet
their respective obligations.
The Portfolio of the Trust consists of 7 obligations issued by entities
located in Pennsylvania. The Bonds in the Trust are either general obligations
of the governmental entity issuing them and are backed by the taxing power
thereof or 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 the Bonds are divided as follows:
<TABLE>
<CAPTION>
NUMBER OF PORTFOLIO
ISSUES PURPOSE OF ISSUE PERCENTAGE
--------------- ----------------------------------------------------
<C> <S> <C>
2 Electrical System Revenue 29 %
2 Health Care Facility Revenue 29
1 Water and/or Sewer Revenue 14
1 College and University Revenue 14
1 General Obligations 14
</TABLE>
Approximately 28.6% of the aggregate principal amount of the Bonds in the
Trust (accounting for approximately 26.4% of the aggregate offering price of the
Bonds) are original issue discount bonds. See "RISK FACTORS" in Part B of this
Prospectus for a discussion of the characteristics of such obligations and of
the risks associated therewith.
All of the Bonds in the Trust are covered by policies of insurance obtained
from the MBIA Insurance Corporation guaranteeing payment of principal and
interest when due. As a result of such insurance, the Bonds in the Trust have
received a rating of "Aaa" by Moody's and both the Bonds in the Trust and the
Units of the Trust have received a rating of "AAA" by Standard & Poor's.
The Trust is considered to be concentrated in Bonds of Health Care Facility
Revenue Issuers whose revenues are subject to certain risks including increased
governmental regulation, fluctuating occupancy levels and increased competition.
The Trust is also considered to be concentrated in Bonds of Electrical System
Revenue Issuers whose revenues are subject to certain risks including increased
competition, reduction in future demand and environmental considerations. For a
discussion of the risks associated with investments in the bonds of various
issuers, see "RISK FACTORS" in Part B of this Prospectus.
ESSENTIAL INFORMATION
REGARDING THE NUVEEN PENNSYLVANIA INSURED TRUST 203
ON THE BUSINESS DAY PRIOR TO THE DATE OF DEPOSIT, SEPTEMBER 27, 1995
Sponsor and Evaluator........ John Nuveen & Co. Incorporated
Trustee...................... The Chase Manhattan Bank, N.A.
------------------------------------------------
The income, expense and distribution data set forth below have been calculated
for Unitholders receiving monthly, quarterly or semi-annual distribution
options.
<TABLE>
<S> <C>
Principal Amount of Bonds in Trust.................. $ 3,500,000
Number of Units..................................... 35,000
Fractional Undivided Interest in Trust Per Unit..... 1/35,000
Public Offering Price--Less than 500 Units
Aggregate Offering Price of Bonds in Trust...... $ 3,289,710
Divided by Number of Units...................... $ 93.99
Plus Sales Charge 4.9% (5.152% of the Aggregate
Offering Price of the Bonds per Unit).......... $ 4.84
Public Offering Price Per Unit(1)............... $ 98.83
Redemption Price Per Unit (exclusive of accrued
interest)......................................... $ 93.47
Sponsor's Initial Repurchase Price Per Unit
(exclusive of accrued interest)................... $ 93.99
Excess of Public Offering Price Per Unit over
Redemption Price Per Unit......................... $ 5.36
Excess of Public Offering Price Per Unit over
Sponsor's Repurchase Price Per Unit............... $ 4.84
Average Maturity of Bonds in the Trust(2)........... 27.4 years
</TABLE>
- ----------
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.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities 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 these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
1 of 7
<PAGE>
ESSENTIAL INFORMATION (CONT.)
<TABLE>
<CAPTION>
MONTHLY QUARTERLY SEMI-ANNUAL
----------- ----------- -----------
<S> <C> <C> <C>
Calculation of Estimated Net Annual
Interest Income Per Unit
Annual Interest Income(3)............ $ 5.5183 $ 5.5183 $ 5.5183
Less Estimated Annual Expense........ $ .2454 $ .2134 $ .1944
----------- ----------- -----------
Estimated Net Annual Interest
Income(4).......................... $ 5.2729 $ 5.3049 $ 5.3239
Daily Rate of Accrual Per Unit........... $ .01464 $ .01473 $ .01478
ESTIMATED CURRENT RETURN(5).............. 5.34% 5.37% 5.39 %
ESTIMATED LONG TERM RETURN(5)............ 5.42% 5.46% 5.48 %
Trustee's Annual Fees(6)................. $ 1.5829 $ 1.2629 $ 1.0729
Date of Deposit.................................................................................September 28, 1995
Settlement Date....................................................................................October 3, 1995
Mandatory Termination Date....................................See "OTHER INFORMATION" in Part B of this Prospectus
Minimum Value of Each Trust...................................See "OTHER INFORMATION" in Part B of this Prospectus
Sponsor's Annual Evaluation Fee.........................................$0.17 per $1,000 principal amount of Bonds
Estimated Annual Organizational Expenses(7).......................................................$.02971 per Unit
- ----------
BECAUSE CERTAIN OF THE BONDS IN THE TRUST WILL NOT BE DELIVERED TO THE TRUSTEE UNTIL AFTER THE SETTLEMENT DATE FOR
A PURCHASE OF UNITS MADE ON THE DATE OF DEPOSIT, INTEREST THAT ACCRUES ON THOSE BONDS BETWEEN THE DATE OF DEPOSIT
AND SUCH DELIVERY DATE WILL BE TREATED AS A RETURN OF PRINCIPAL RATHER THAN AS TAX-EXEMPT INCOME. THE AMOUNT OF
ANY SUCH RETURN OF PRINCIPAL IS NOT INCLUDED IN THE ANNUAL INTEREST INCOME SHOWN ABOVE. FOR THE TRUST, THE
FOLLOWING SETS FORTH THE LATEST SCHEDULED BOND DELIVERY DATE, THE AMOUNT PER UNIT THAT WILL BE TREATED AS A RETURN
OF PRINCIPAL TO UNITHOLDERS WHO PURCHASE ON THE DATE OF DEPOSIT, AND THE ESTIMATED CURRENT RETURN UNDER THE
MONTHLY DISTRIBUTION PLAN AFTER THE FIRST YEAR, ASSUMING THE PORTFOLIO AND ESTIMATED ANNUAL EXPENSES DO NOT VARY
FROM THAT SET FORTH ABOVE (SEE "WHAT ARE NORMAL TRUST OPERATING EXPENSES?" IN PART B OF THIS PROSPECTUS AND THE
"SCHEDULE OF INVESTMENTS"). THE ESTIMATED CURRENT RETURN AFTER THE FIRST YEAR WILL ALSO BE HIGHER UNDER THE
QUARTERLY AND SEMI-ANNUAL DISTRIBUTION PLANS:
LATEST SCHEDULED PER UNIT ESTIMATED CURRENT RETURN
DELIVERY DATE RETURN OF PRINCIPAL AFTER THE FIRST YEAR
------------------ -------------------- -------------------------
PENNSYLVANIA INSURED TRUST.... OCTOBER 10, 1995 $ .01 5.35 %
<FN>
The evaluation time for purpose of sale, purchase or redemption of Units is 4 p.m. Eastern time. (See "HOW IS THE PUBLIC OFFERING
PRICE DETERMINED?" in Part B of this Prospectus.)
(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 three 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, $.07 of accrued interest to the Settlement Date will be added to the Public Offering Price. (See "WHAT IS ACCRUED
INTEREST?" in Part B of this Prospectus.)
(2) The Average Maturity of Bonds in the Trust is calculated based upon the stated maturities of the Bonds in the 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 Bonds in the Trust may increase or decrease from time to time as Bonds mature
or are called or sold.
(3) Assumes delivery of all Bonds. (See "COMPOSITION OF TRUSTS" appearing in Part B of this Prospectus.) Interest income does not
include accretion of original issue discount on "zero coupon" Bonds, Stripped Obligations or other original issue discount
Bonds. (See "RISK FACTORS" in Part B of this Prospectus.)
(4) The amount and timing of interest distributions from the Trust under the various plans of distribution are set forth below.
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. 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.
(5) Estimated Long Term Return for the Trust represents the average of the yields to maturity (or call) of the Bonds in the
Trust's portfolio calculated in accordance with accepted bond practices and adjusted to reflect a compounding factor,
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 "WHAT ARE ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT RETURN?"
in Part B of this Prospectus.
(6) Each Trustee annual fee is per $1,000 principal amount of the underlying Bonds in the Trust for that portion of the Trust
that represents a particular plan of distribution.
(7) The Trust (and therefore Unitholders) will bear all or a portion of its organizational costs (including costs of preparing
the registration statements, the trust indenture and other closing documents, registering Units with the Securities and
Exchange Commission and states, the initial audit of the Trust portfolio, legal fees and the initial fees and expenses of the
Trustee but not including the expenses incurred in the printing of preliminary and final prospectuses, and expenses incurred
in the preparation and printing of brochures and other advertising materials and any other selling expenses) as is common for
mutual funds. Total organizational expenses will be amortized over a five year period. See "WHAT ARE NORMAL TRUST OPERATING
EXPENSES?" in Part B of this Prospectus and "Statement of Condition." Historically, the sponsors of unit investment trusts
have paid all the costs of establishing such trusts.
</TABLE>
2 of 7
<PAGE>
INTEREST DISTRIBUTION
Details of interest distributions per Unit of the 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
1995 1996 PER YEAR
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------- --------------
Record Date*.......................... 11/1 2/1 5/1 8/1
Distribution Date..................... 11/15 2/15 5/15 8/15
- --------------------------------------------------------------------------------------------------------------------
Monthly Distribution Plan............. $ .4844(1) $ 5.2867
-------- $.4404 every month --------
Quarterly Distribution Plan........... $ .4844(1) $ 1.3293(2) $ 1.3293 $ 1.3293 $ 5.3187
Semi-Annual Distribution Plan......... $ .4844(1) $ 2.6676(3) $ 5.3377
- --------------------------------------------------------------------------------------------------------------------
<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. Distribution Dates under each
distribution plan are the fifteenth day of the month in which the respective Record Date occurred. For additional information
see "WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?" in Part B of this Prospectus.
(1) The first distribution will be paid to all Unitholders, regardless of the distribution plan selected. Such distribution may
be more or less than a regular monthly distribution.
(2) Regular 3-month distribution.
(3) Regular 6-month distribution.
</TABLE>
PENNSYLVANIA RISK FACTORS
The financial condition of the Commonwealth of Pennsylvania is affected by
various national, economic, social and environmental policies and conditions.
Additionally, Constitutional and statutory limitations imposed on the State and
its local governments concerning taxes, bond indebtedness and other matters may
constrain the revenue-generating capacity of the Commonwealth and its local
governments and, therefore, the ability of the issuers of the Bonds to satisfy
their obligations. Historically, the Commonwealth has experienced significant
revenue shortfalls.
The economic vitality of the State and its various regions and, therefore,
the ability of the State and its local governments to satisfy the Bonds, are
affected by numerous factors. The economy of the Commonwealth continues to be
dependent on heavy industry and manufacturing. These sectors tend to be cyclical
and are facing increasing competition from foreign producers.
The Commonwealth is a party to numerous lawsuit in which an adverse final
decision could materially affect the Commonwealth's governmental operations and
consequently its ability to pay debt service on its obligations.
All outstanding general obligation bonds of the Commonwealth are rated AA-
by Standard and Poor's and A1 by Moody's.
Further information concerning Pennsylvania risk factors may be obtained
upon written or telephonic request to the Trustee as described in "OTHER
INFORMATION -- Supplemental Information" appearing in Part B of this Prospectus.
TAX STATUS
For a discussion of the Federal tax status of income earned on Trust Units,
see "WHAT IS THE TAX STATUS OF UNITHOLDERS?" appearing in Part B of this
Prospectus.
In the opinion of Dechert Price & Rhoads, special Pennsylvania counsel to
the Trust, under existing law:
Units evidencing fractional undivided interests in the Trust are not subject
to any of the personal property taxes presently in effect in Pennsylvania to the
extent of that proportion of the Trust represented by Bonds issued by the
Commonwealth of Pennsylvania, its agencies and instrumentalities, or by any
county, city, borough, town, township, school district, municipality and local
housing or parking authority in the Commonwealth of Pennsylvania or issued by
Puerto Rico, the Virgin Islands, Guam or the Northern Mariana Islands
("Pennsylvania Bonds"). The taxes referred to above include the County Personal
Property Tax, the additional personal property taxes imposed on Pittsburgh
residents by the School District of Pittsburgh and by the City of Pittsburgh.
The City of Pittsburgh, the School District of Pittsburgh and Allegheny County
cannot impose personal property taxes as of January 1, 1995. Trust Units may be
taxable under the Pennsylvania inheritance and estate taxes.
The proportion of interest income representing interest income from
Pennsylvania Bonds distributed to Unitholders of the Trust is not taxable under
the Pennsylvania Personal Income Tax or under the Corporate Net
3 of 7
<PAGE>
Income Tax imposed on corporations by Article IV of the Tax Reform Code. Nor
will such interest be taxable under the Philadelphia School District Investment
Income Tax imposed on Philadelphia resident individuals.
The disposition by the Trust of a Pennsylvania Bond (whether by sale,
exchange, redemption or payment at maturity) will not constitute a taxable event
to a Unitholder under the Pennsylvania Personal Income Tax if the Pennsylvania
Bond was issued prior to February 1, 1994. Further, although there is no
published authority on the subject, counsel is of the opinion that (i) a
Unitholder of the Trust will not have a taxable event under the Pennsylvania
state and local income taxes referred to in the preceding paragraph (other than
the Corporate Net Income Tax) upon the redemption or sale of his Unit to the
extent that the Trust is then comprised of Pennsylvania Bonds issued prior to
February 1, 1994 and (ii) the dispositions by the Trust of a Pennsylvania Bond
(whether by sale, exchange, redemption or payment at maturity) will not
constitute a taxable event to a Unitholder under the Corporate Net Income Tax or
the Philadelphia School District Investment Income Tax if the Pennsylvania Bond
was issued prior to February 1, 1994. (The School District tax has no
application to gain on the disposition of property held by the taxpayer for more
than six months.)
Gains on the sale, exchange, redemption, or payment at maturity of a
Pennsylvania Bond issued on or after February 1, 1994, will be taxable under all
of these taxes, as will gains on the redemption or sale of a unit to the extent
that the Trust is comprised of Pennsylvania Bonds issued on or after February 1,
1994.
4 of 7
<PAGE>
NUVEEN PENNSYLVANIA INSURED TRUST 203
(NUVEEN TAX-EXEMPT UNIT TRUST SERIES 827)
SCHEDULE OF INVESTMENTS AT THE DATE OF DEPOSIT, SEPTEMBER 28, 1995
<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
<C> <C> <S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
$ 500,000 Pennsylvania Higher Educational Facilities 2005 at 102 AAA Aaa $ 491,320
Authority (Commonwealth of Pennsylvania),
Saint Joseph's University Revenue Bonds,
Series of 1995, 5.875% Due 7/15/25.
500,000 * Doylestown Hospital Authority (Commonwealth of 2004 at 102 AAA Aaa 432,765
Pennsylvania), Doylestown Hospital Revenue
Bonds, 1993 Series A, 5.00% Due 7/1/23.
(Original issue discount bonds delivered on
or about January 5, 1994 at a price of
92.743% of principal amount.)
500,000 Lancaster County Hospital Authority, Lancaster, 2004 at 102 AAA Aaa 435,490
Pennsylvania, Health Center Revenue Refunding
Bonds, Series of 1994 (Masonic Homes
Project), 5.00% Due 11/15/20. (Original issue
discount bonds delivered on or about March 1,
1994 at a price of 92.378% of principal
amount.)
500,000 County of Lawrence, Pennsylvania, General 2004 at 100 AAA Aaa 443,895
Obligation Bonds, Series 1994, 5.00% Due
8/1/18.
500,000 Lehigh County Industrial Development Authority, 2005 at 102 AAA Aaa 506,240
Pollution Control Revenue Refunding Bonds,
1995 Series A (Pennsylvania Power & Light
Company Project), 6.15% Due 8/1/29.
500,000 Northampton County Industrial Development 2005 at 102 AAA Aaa 505,000
Authority (Pennsylvania), Pollution Control
Revenue Refunding Bonds, 1995 Series A
(Metropolitan Edison Company Project), 6.10%
Due 7/15/21.
500,000 Pittsburgh (Pennsylvania) Water and Sewer 2005 at 100 AAA Aaa 475,000
Authority, Water and Sewer System First Lien
Revenue Bonds, Series A of 1995, 5.60% Due
9/1/22.
- ----------- ---------------
$ 3,500,000 $ 3,289,710
- ----------- ---------------
- ----------- ---------------
</TABLE>
* These Bonds, or a portion thereof, have delivery dates beyond the normal
settlement date. Their expected delivery date is October 10, 1995. Contracts
relating to Bonds with delivery dates after the date of settlement for
purchase made on the Date of Deposit constitute approximately 14% of the
aggregate principal amount of the Trust. (See "COMPOSITION OF TRUSTS" in Part
B of this Prospectus.)
- ------------
(1) The Sponsor's contracts to purchase Bonds were entered into on September
26, 1995. Other information regarding the Bonds in the Trust on the Date of
Deposit is as follows:
<TABLE>
<CAPTION>
ANNUAL
PROFIT INTEREST
COST TO (OR LOSS) INCOME TO BID PRICE
TRUST SPONSOR TO SPONSOR TRUST OF BONDS
---------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
PENNSYLVANIA INSURED TRUST 203.......... $ 3,287,282 $ 2,428 $ 193,625 $ 3,271,585
</TABLE>
In addition, the difference between the Trustee's determination of Offering
Price and Bid Price (as a percentage of principal amount) is .52%. 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. 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.
(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 specified in the instruments setting forth the terms
and provisions of such Bonds. See "COMPOSITION OF TRUSTS", "WHAT IS THE TAX
STATUS OF UNITHOLDERS?" and "RISK FACTORS" in Part B of this Prospectus.
(3) All the Bonds in the Insured Trusts, as insured by the Insurer, are
rated AAA by Standard & Poor's and Aaa by Moody's. The insurance obtained by the
Trust guarantees the payment of interest and principal on the Bonds when due but
does not cover certain market risks associated with fixed income securities such
as accelerated payments, premiums payable on mandatory redemptions or interest
rate risks. (See "WHY AND HOW ARE THE BONDS INSURED?" in Part B of this
Prospectus and "Description of Ratings" in the Information Supplement.)
5 of 7
<PAGE>
Statement of Condition
NUVEEN PENNSYLVANIA INSURED TRUST 203
(Nuveen Tax-Exempt Unit Trust, Series 827)
AS OF SEPTEMBER 28, 1995
<TABLE>
<S> <C>
TRUST PROPERTY
Sponsor's contracts to purchase Tax-Exempt Bonds,
backed by an irrevocable letter of
credit(1)(2).................................... $ 3,289,710
Accrued interest to September 28, 1995 on
underlying Bonds(1)............................. 46,820
Organizational costs(3)........................... 5,200
--------------
Total................................. $ 3,341,730
--------------
--------------
LIABILITIES AND INTEREST OF UNITHOLDERS
LIABILITIES:
Accrued interest to September 28, 1995 on
underlying Bonds(4).......................... $ 46,820
Accrued organizational costs(3)............... 5,200
--------------
Total................................. $ 52,020
--------------
--------------
INTEREST OF UNITHOLDERS:
Units of fractional undivided interest
outstanding (35,000)
Cost to investors(5)........................ $ 3,459,196
Less: Gross underwriting commission(6).... (169,486)
--------------
Net amount applicable to investors............ $ 3,289,710
--------------
Total................................. $ 3,341,730
--------------
--------------
- ------------
(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 on
the Date of Deposit. The amount of such letter of credit and
any cash deposited exceeds the amount necessary for the
purchase of the Bonds plus accrued interest to the Date of
Deposit. At the Date of Deposit, Bonds may have been delivered
to the Sponsor pursuant to certain of these contracts; the
Sponsor has assigned to the Trustee all of its rights, title
and interest in and to such Bonds.
(2) Aggregate value (at offering prices) as of the Date of Deposit
of the Bonds listed under "Schedule of Investments" herein,
and their aggregate cost to the Trust are the same. Such
offering prices were determined by Kenny S&P Evaluation
Services, a division of J.J. Kenny Co., Inc., as of the close
of business on the business day prior to the Date of Deposit.
(See "HOW WAS THE PRICE OF THE BONDS DETERMINED AT THE DATE OF
DEPOSIT?" in Part B of this Prospectus.) Insurance coverage
providing for the timely payment, when due, of all principal
of and interest on the Bonds in an Insured Trust has been
obtained by the Sponsor or by the issuers of such Bonds. Such
insurance does not guarantee the market value of the Bonds or
the value of the Units. Both the bid and the offering prices
of the underlying Bonds and of the Units may include value
attributable to such policies of insurance.
(3) The Trust (and therefore Unitholders) will bear all or a
portion of its estimated organizational costs which will be
deferred and amortized over five years from the Date of
Deposit.
(4) Representing, as set forth in "WHAT IS ACCRUED INTEREST?" in
Part B of this Prospectus, advancement by the Trustee of an
amount equal to the accrued Bond interest as of the Date of
Deposit.
(5) Aggregate Public Offering Price (exclusive of accrued
interest) computed as set forth under "HOW IS THE PUBLIC
OFFERING PRICE DETERMINED?" in Part B of this Prospectus.
(6) The gross underwriting commission of 4.90% of the Public
Offering Price has been calculated on the assumption that the
Units sold are not subject to a reduction of sales charge for
quantity purchases. In single transactions involving 500 Units
or more, the sales charge is reduced. (See "HOW IS THE PUBLIC
OFFERING PRICE DETERMINED?" in Part B of this Prospectus.)
</TABLE>
6 of 7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF JOHN NUVEEN & CO. INCORPORATED AND UNITHOLDERS OF
PENNSYLVANIA INSURED TRUST 203:
We have audited the accompanying statement of condition and the schedule of
investments at date of deposit (included in Part A of this Prospectus) of
Pennsylvania Insured Trust 203 (contained in Nuveen Tax-Exempt Unit Trust,
Series 827), as of September 28, 1995. These financial statements are the
responsibility of the Sponsor. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of the irrevocable letter of credit arrangement for the purchase of
securities, described in Note (1) to the statement of condition, by
correspondence with the Trustee. An audit also includes assessing the accounting
principles used and significant estimates made by the Sponsor, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the statement of condition and the schedule of investments
at date of deposit referred to above present fairly, in all material respects,
the financial position of Pennsylvania Insured Trust 203 as of September 28,
1995, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
September 28, 1995.
7 of 7
<PAGE>
B
NUVEEN Tax-Exempt Unit Trusts
PROSPECTUS -- PART B
(GENERAL TERMS)
SEPTEMBER 1, 1995
THIS PART B OF THE PROSPECTUS MAY NOT BE DISTRIBUTED UNLESS ACCOMPANIED BY PART
A. BOTH PARTS OF THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
FURTHER DETAIL REGARDING CERTAIN OF THE INFORMATION PROVIDED IN THE PROSPECTUS
MAY BE OBTAINED WITHIN FIVE BUSINESS DAYS OF WRITTEN OR TELEPHONIC REQUEST TO
THE TRUSTEE AT 770 BROADWAY, NEW YORK, NY 10003 OR (800) 257-8787.
INTEREST INCOME TO A TRUST AND TO UNITHOLDERS, IN THE OPINION OF COUNSEL, UNDER
EXISTING LAW IS EXEMPT FROM FEDERAL INCOME TAX. CAPITAL GAINS, IF ANY, ARE
SUBJECT TO TAX. 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.
THIS NUVEEN TAX-EXEMPT UNIT TRUST SERIES consists of the underlying separate
unit investment trust set forth in Part A to this Prospectus. 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 "Schedule of Investments"
appearing in Part A of this Prospectus). Except in specific instances as noted
in Part A of this Prospectus, the information contained in this Part B shall
apply to each Trust in its entirety. All obligations in each Traditional Trust
are rated in the category "A" or better by Standard & Poor's, a division of the
McGraw Hill Companies ("Standard & Poor's") or Moody's Investors Service, Inc.
("Moody's") 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 and the Bonds in the Insured Trusts and
the Units of each such Trust have received a rating of "AAA" by Standard &
Poor's. INSURANCE RELATES ONLY TO THE BONDS IN THE INSURED TRUSTS AND NOT TO THE
UNITS OFFERED HEREBY OR TO THEIR MARKET VALUE. (See "WHY AND HOW ARE THE BONDS
INSURED?".)
THE OBJECTIVES of a Trust are tax-exempt income and conservation of capital
through a diversified investment in tax-exempt Bonds. 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 a Trust's objectives will be
achieved. (See "RISK FACTORS".)
DISTRIBUTIONS of interest received by a Trust will be made semi-annually unless
the Unitholder elects to receive them monthly or quarterly. (See "WHEN ARE
DISTRIBUTIONS MADE TO UNITHOLDERS?".) 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 Part A of this
Prospectus and "WHAT ARE ESTIMATED LONG TERM RETURN AND ESTIMATED CURRENT
RETURN?".)
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 "HOW IS THE PUBLIC
OFFERING PRICE DETERMINED?".) 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 three
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 "HOW IS THE PUBLIC OFFERING PRICE DETERMINED?".)
A UNITHOLDER MAY REDEEM UNITS at the office of the Trustee 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 "HOW UNITS MAY BE REDEEMED WITHOUT
CHARGE?".) 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 "MARKET FOR UNITS".) RETAIN BOTH
PART A AND PART B OF THIS PROSPECTUS FOR FUTURE REFERENCE.
RISK FACTORS. An investment in a Trust should be made with an understanding of
the risks associated therewith, including, among other factors, the inability of
the issuer or an insurer to pay the principal of or interest on a bond when due,
volatile interest rates, early call provisions, and changes to the tax status of
the Bonds. See Part A of this Prospectus and "RISK FACTORS."
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 PAGE
<C> <S> <C> <C>
WHAT IS THE NUVEEN TAX-EXEMPT UNIT TRUST? 3
WHAT ARE THE OBJECTIVES OF THE TRUSTS? 3
SUMMARY OF PORTFOLIOS 3
RISK FACTORS 4
COMPOSITION OF TRUSTS 6
WHY AND HOW ARE THE BONDS INSURED? 7
HOW IS THE PUBLIC OFFERING PRICE DETERMINED? 8
MARKET FOR UNITS 11
WHAT IS ACCRUED INTEREST? 11
WHAT ARE ESTIMATED LONG TERM RETURN AND ESTIMATED
CURRENT RETURN? 12
HOW WAS THE PRICE OF THE BONDS DETERMINED AT THE
DATE
OF DEPOSIT? 12
WHAT IS THE TAX STATUS OF UNITHOLDERS? 13
WHAT ARE NORMAL TRUST OPERATING EXPENSES? 14
WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS? 15
ACCUMULATION PLAN 16
HOW DETAILED ARE REPORTS TO UNITHOLDERS? 17
UNIT VALUE AND EVALUATION 17
HOW UNITS OF THE TRUSTS ARE DISTRIBUTED TO THE
PUBLIC 17
OWNERSHIP AND TRANSFER OF UNITS 19
HOW UNITS MAY BE REDEEMED WITHOUT CHARGE 19
HOW UNITS MAY BE PURCHASED BY THE SPONSOR 20
HOW BONDS MAY BE REMOVED FROM THE TRUSTS 20
INFORMATION ABOUT THE TRUSTEE 21
INFORMATION ABOUT THE SPONSOR 22
OTHER INFORMATION 22
</TABLE>
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<PAGE>
WHAT IS THE NUVEEN TAX-EXEMPT UNIT TRUST?
This 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. The underlying unit investment trusts contained in this
Series are combined under one Trust Indenture and Agreement. Specific
information regarding this Trust is set forth in Part A of this Prospectus. The
various Nuveen Tax-Exempt Unit Trusts are collectively referred to herein as the
"Trusts"; the trusts in which few or none of the Bonds are insured are sometimes
referred to as the "Traditional Trusts", the trusts in which all of the Bonds
are insured as described herein are sometimes referred to as the "Insured
Trusts", and the state trusts (both Traditional and Insured) are sometimes
referred to as the "State Trusts." This Series was created under the laws of the
State of New York pursuant to a Trust Indenture and Agreement dated the Date of
Deposit (the "Indenture") between John Nuveen & Co. Incorporated (the "Sponsor")
and The Chase Manhattan Bank, N.A. (the "Trustee").
The Sponsor has deposited with the Trustee delivery statements relating to
contracts for the purchase of municipal debt obligations together with funds
represented by an irrevocable letter of credit issued by a major commercial bank
in the amount, including accrued interest, required for their purchase (or the
obligations themselves) (the "Bonds"). See "Schedule of Investments" in Part A
of this Prospectus, for a description of the Securities deposited in a Trust.
See "SUMMARY OF PORTFOLIOS" and "RISK FACTORS" for a discussion of zero coupon
bonds and stripped obligations included in the Trusts, if any. Some of the
delivery statements may relate to contracts for the purchase of "when issued" or
other Bonds with delivery dates after the date of settlement for a purchase made
on the Date of Deposit. See the "Schedule of Investments" in Part A of this
Prospectus and "COMPOSITION OF TRUSTS". For a discussion of the Sponsor's
obligations in the event of a failure of any contract for the purchase of any of
the Bonds and its limited right to substitute other bonds to replace any failed
contract, see "COMPOSITION OF TRUSTS."
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 "WHY AND HOW ARE THE BONDS INSURED?".) 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 which represent
ownership of the entire Trust, 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 set forth in "Essential
Information" in Part A of this Prospectus. Units may only be sold in states in
which they are registered. 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.
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 and certain state income tax and
intangibles taxes, if any, for purchasers who qualify as residents of that State
in which Bonds are issued. Insurance guaranteeing the timely payment, when due,
of all principal and interest on the Bonds in each Insured 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 and "AAA" by Standard & Poor's. (See "WHY AND
HOW ARE THE BONDS INSURED?".) 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 or Moody's (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. 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 the Appendices to the
Information Supplement of this Prospectus.
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 "WHAT ARE
THE OBJECTIVES OF THE TRUSTS?" 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. (See "WHY AND HOW ARE THE BONDS INSURED?".)
3
<PAGE>
RISK FACTORS
An investment in Units of any Trust should be made with an understanding of
the risks that such an investment may entail. Each Trust consists of fixed-rate
municipal debt obligations. As such, 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. The Sponsor cannot predict
the extent or timing of such fluctuations and, accordingly, their effect upon
the value of the debt obligations. Additional risk factors include the ability
of the issuer, or, if applicable, an insurer, to make payments of interest and
principal when due, "mandatory put" features, early call provisions and the
potential for changes in the tax status of the Bonds. As set forth in Part A of
this Prospectus, the Trusts may contain or be concentrated in one or more of the
types of bonds discussed below. The following paragraphs briefly 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, and
which also therefore 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. The Bonds
described below may be subject to special or extraordinary redemption
provisions. For economic risks specific to the individual Trusts, see Part A of
this Prospectus and the Appendices to the Information Supplement of this
Prospectus.
HEALTH FACILITY OBLIGATIONS are obligations of issuers whose revenues are
derived from services provided by hospitals or other health care facilities,
including nursing homes. The ability of such issuers to make debt service
payments on these obligations is dependent on various factors, including
occupancy levels of the facility, demand for services, wages of employees,
overhead expenses, competition from other similar providers, government
regulation, the cost of malpractice insurance, and the degree of governmental
financial assistance, including Medicare and Medicaid.
HOUSING OBLIGATIONS are obligations of issuers whose revenues are primarily
derived from mortgage loans on single family residences or housing projects for
low to moderate income families. Housing obligations are generally prepayable at
any time and therefore their average life will ordinarily be less than their
stated maturities. The ability of such issuers to make debt service payments on
these obligations is dependent on various factors, including occupancy levels,
rental income, mortgage default rates, taxes, operating expenses, governmental
regulations and the appropriation of subsidies.
INDUSTRIAL REVENUE OBLIGATIONS are industrial revenue bonds ("IRBs"),
including pollution control revenue bonds, which are tax-exempt securities
issued by states, municipalities, public authorities or similar entities to
finance the cost of acquiring, constructing or improving various industrial
projects. Debt service payment on IRBs is dependent upon various factors,
including the creditworthiness of the corporate operator of the project and, if
applicable, corporate guarantor, revenues generated from the project, expenses
associated with the project and regulatory and environmental restrictions.
ELECTRIC UTILITY OBLIGATIONS are obligations of issuers whose revenues are
primarily derived from the sale of electric energy. The ability of such issuers
to make debt service payments on these obligations is dependent on various
factors, including the rates for electricity, the demand for electricity, the
degree of competition, governmental regulation, overhead expenses and variable
costs, such as fuel.
TRANSPORTATION FACILITY REVENUE OBLIGATIONS are obligations of issuers which
are payable from and secured by revenues derived from the ownership and
operation of airports, public transit systems and ports. The ability of issuers
to make debt service payments on airport obligations is dependent on the
capability of airlines to meet their obligations under use agreements. Due to
increased competition, deregulation, increased fuel costs and other factors,
many airlines may have difficulty meeting their obligations under these use
agreements. Bonds that are secured primarily by the revenue collected by a
public transit system typically are additionally secured by a pledge of sales
tax receipts collected at the state or local level, or of other governmental
financial assistance. The revenue of issuers of transit system obligations will
be affected by variations in utilization, which in turn may be affected by the
degree of local governmental subsidization, competition from other forms of
transportation, and increased costs. Port authorities derive their revenues
primarily from fees imposed on ships using the facilities which may fluctuate
depending on the local economy and on competition from competing forms of
transportation such as air, rail and trucks. The revenues of issuers which
derive their payments from bridge, road or tunnel toll revenues could be
adversely affected by increases in fuel costs, competition from toll-free
vehicular bridges and roads and alternative modes of transportation.
WATER AND/OR SEWERAGE OBLIGATIONS are obligations of issuers whose revenues
are payable from user fees from the sale of water and/or sewerage services. The
problems of such issuers include the ability to obtain rate
4
<PAGE>
increases, population declines, the limitations on operations and increased
costs and delays attributable to environmental considerations, the difficulties
obtaining new supplies of fresh water, the effect of conservation programs and
in "no-growth" zoning ordinances.
UNIVERSITY AND COLLEGE REVENUE OBLIGATIONS are obligations of issuers whose
revenues are derived mainly from tuition, dormitory revenues, grants and
endowments. General problems faced by such issuers include declines in the
number of "college" age individuals, possible inability to raise tuitions and
fees, the uncertainty of continued receipt of Federal grants and state funding,
and government legislation or regulations which may adversely affect the
revenues or costs of such issuers.
DEDICATED-TAX SUPPORTED OBLIGATIONS are obligations of issuers which are
payable from and secured by tax revenues from a designated source, which
revenues are pledged to secure the bonds. The various types of Bonds described
below differ in structure and with respect to the rights of the bondholders to
the underlying property. Each type of dedicated-tax supported Bond has distinct
risks, only some of which are set forth below. One type of dedicated-tax
supported Bond is secured by the incremental tax received on either real
property or on sales within a specifically defined geographical area; such tax
generally will not provide bondholders with a lien on the underlying property or
revenues. Another type of dedicated-tax supported Bond is secured by a special
tax levied on real property within a defined geographical area in such a manner
that the tax is levied on those who benefit from the project; such bonds
typically provide for a statutory lien on the underlying property for unpaid
taxes. A third type of dedicated-tax supported Bond may be secured by a tax
levied upon the manufacture, sale or consumption of commodities or upon the
license to pursue certain occupations or upon corporate privileges within a
taxing jurisdiction. As to any of these types of Bonds, the ability of the
designated revenues to satisfy the interest and principal payments on such bonds
may be affected by changes in the local economy, the financial success of the
enterprise responsible for the payment of the taxes, the value of any property
on which taxes may be assessed and the ability to collect such taxes in a timely
fashion. Each of these factors will have a different affect on each distinct
type of dedicated-tax supported bonds.
MUNICIPAL LEASE OBLIGATIONS are obligations that are secured by lease
payments of a governmental entity and are normally subject to annual budget
appropriations of the leasing governmental entity. A governmental entity that
enters into such a lease agreement cannot obligate future governments to
appropriate for and make lease payments but covenants to take such action as is
necessary to include any lease payments due in its budgets and to make the
appropriations therefor. A governmental entity's failure to appropriate for and
to make payments under its lease obligation could result in insufficient funds
available for payment of the obligations secured thereby.
ORIGINAL ISSUE DISCOUNT OBLIGATIONS AND STRIPPED OBLIGATIONS are bonds which
were issued with nominal interest rates less than the rates then offered by
comparable securities and as a consequence were originally sold at a discount
from their face, or par, values. In a stable interest rate environment, the
market value of an original issue discount bond would tend to increase more
slowly in early years and in greater increments as the bond approached maturity.
Certain of the original issue discount obligations in a 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. Zero coupon bonds are subject to
substantially greater price fluctuations during periods of changing market
interest rates than are securities of comparable quality that pay interest
currently.
Original issue discount obligations, including zero coupon bonds, may be
subject to redemption at prices based on the issue price plus the amount of
original issue discount accreted to redemption (the "accreted value") plus, if
applicable, some premium. Pursuant to such call provisions, an original issue
discount bond may be called prior to its maturity date at a price less than its
face value. See the "Schedule of Investments" appearing in Part A of this
Prospectus for more information about the call provisions of portfolio Bonds.
Certain of the Bonds in a 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 ("Stripped Obligations"). Each
Stripped Obligation has been purchased at a discount from the amount payable at
maturity. A Stripped Obligation therefore has economic characteristics similar
to zero coupon bonds, as described above.
Unitholders should consult their own tax advisers with respect to the state
and local tax consequences of owning original issue discount bonds or Stripped
Obligations. Under applicable provisions governing determination of state and
local taxes, interest on original issue discount obligations or Stripped
Obligations may be deemed to be received in the year of accrual even though
there is no corresponding cash payment.
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<PAGE>
Certain bonds may carry a "mandatory put" (also referred to as a "mandatory
tender" or "mandatory repurchase") feature pursuant to which the holder of such
bonds will receive payment of the full principal amount thereof on a stated date
prior to the maturity date unless such holder affirmatively acts to retain the
bond. The Trustee does not have the authority to act to retain Bonds with such
features; accordingly, it will receive payment of the full principal amount of
any such Bonds on the stated put date and such date is therefore treated as the
maturity date of such Bonds in selecting Bonds for the respective Trusts and for
purposes of calculating the average maturity of the Bonds in any Trust.
COMPOSITION OF TRUSTS
Each Trust initially consists of delivery statements relating to contracts to
purchase Bonds (or of such Bonds) as are listed under "Schedule of Investments"
in Part A of this Prospectus and, thereafter, of such Bonds as may continue to
be held from time to time (including certain securities deposited in the Trust
in substitution for Bonds not delivered to a 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. Certain of
the contracts relate to Bonds which have not been issued as of the Date of
Deposit and which are commonly referred to as "when issued" or "when, as and if
issued" Bonds. Although the Sponsor believes it unlikely, if such Bonds, or
replacement bonds described below, are not acquired by a Trust or if their
delivery is delayed, the Estimated Current Returns and Estimated Long Term
Returns shown in Part A of this Prospectus may be reduced. Certain of the
contracts for the purchase of Bonds provide for delivery dates after the date of
settlement for purchases made on the Date of Deposit. Interest on such "when
issued" and "delayed delivery" Bonds accrues to the benefit of Unitholders
commencing with the first settlement date for the Units. However, in the opinion
of counsel, Unitholders who purchase their Units prior to the date such Bonds
are actually delivered to the Trustee must reduce the tax basis of their Units
for interest accruing on such Bonds during the interval between their purchase
of Units and the delivery of the Bonds because such amounts constitute a return
of principal. As a result of such adjustment, the Estimated Current Returns set
forth in Part A of this Prospectus (which are based on the Public Offering Price
as of the business day prior to the Date of Deposit) may be slightly lower than
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" in Part A of this Prospectus. 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 "Schedule of Investments" in Part A of
this Prospectus.
LIMITED REPLACEMENT OF CERTAIN BONDS. Neither the Sponsor nor the Trustee
shall be liable in any way for any default, failure or defect in any Bond. In
the event of a failure to deliver any Bond that has been purchased for a 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 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 must satisfy the criteria previously described for the
Trusts and shall be substantially identical to the Failed Bonds they replace in
terms of (i) the exemption from federal and state taxation; (ii) maturity and;
(iii) cost to the Trust. In addition, Replacement Bonds 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.
To the extent Replacement Bonds are not acquired, 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 "Schedule of Investments" in Part A of
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<PAGE>
this Prospectus and in most cases pursuant to sinking fund, special or
extraordinary redemption provisions. See the discussion of the various types of
bond issues, above, for information on the call provisions of such bonds,
particularly single family mortgage revenue bonds.
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. The exercise of redemption or call provisions is
more likely to occur in situations where when the Bonds have an offering side
evaluation which represents a premium over par (as opposed to a discount from
par). (In the case of original issue discount bonds, such redemption is
generally to be made at the issue price plus the amount of original issue
discount accreted to the date of redemption; such price is referred to herein as
"accreted value"). Because Bonds may have been valued at prices above or below
par value or the then current accreted value at the time Units were purchased,
Unitholders may realize gain or loss upon the redemption of portfolio Bonds.
(See "WHAT IS THE TAX STATUS OF UNITHOLDERS?" and "WHEN ARE DISTRIBUTIONS MADE
TO UNITHOLDERS?" in Part B and the "Schedule of Investments" in Part A of this
Prospectus.)
CERTAIN TAX MATTERS; LITIGATION. Certain of the Bonds in a Trust's
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.
WHY AND HOW ARE THE BONDS INSURED?
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 the Bonds from the MBIA Insurance Corporation
(the "Insurer"). Certain of the Bonds in an 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 claims-paying ability of both
the Insurer and the Association was rated "AAA Prime Grade" by Standard &
Poor's. Moody's rates all bond issuers insured by either the Insurer or the
Association "Aaa" and short-term loans "MIG 1," both designated to be of the
highest quality. 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).
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 and/or "AAA" by Standard & Poor's in recognition of such
insurance.
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<PAGE>
If a Bond in a Traditional Trust is insured, the "Schedule of Investments"
appearing in Part A of this Prospectus will identify the insurer. The Sponsor to
date has purchased and presently intends to purchase insurance for Bonds in
Traditional Trusts exclusively from the Insurer. There can be no assurance that
any insurer listed therein will be able to satisfy its commitments in the event
claims are made in the future. However, Standard & Poor's and/or Moody's have
rated the claims-paying ability of each insurer "AAA" or "Aaa," respectively.
The Insurer is the principal operating subsidiary of MBIA, Inc., a New York
Stock Exchange listed company. MBIA, Inc. is not obligated to pay the debts of
or claims against the Insurer. The Insurer is a limited liability corporation
rather than a several liability association. The Insurer is domiciled in the
State of New York and licensed to do business in all 50 states, the District of
Columbia, 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 June 30, 1995 the Insurer had admitted assets of $3.6 billion
(unaudited), total liabilities of $2.4 billion (unaudited), and total capital
and surplus of $1.2 billion (unaudited) 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.
The Association is comprised of the five insurance companies set forth in
the following table, which provides certain unaudited financial information with
respect to each of the five insurance companies comprising the Association.
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>
Insurance companies are subject to extensive regulation and supervision
where they do business by state insurance commissioners who regulate the
standards of solvency which must be maintained, the nature of and limitations on
investments, reports of financial condition, and requirements regarding reserves
for unearned premiums, losses and other matters. A significant portion of the
assets of insurance companies are required by law to be held in reserve against
potential claims on policies and is not available to general creditors. Although
the federal government does not regulate the business of insurance, federal
initiatives including pension regulation, controls on medical care costs,
minimum standards for no-fault automobile insurance, national health insurance,
tax law changes affecting life insurance companies and repeal of the antitrust
exemption for the insurance business can significantly impact the insurance
business.
The above ratings are not recommendations to buy, sell or hold the Bonds,
and such ratings may be subject to revision or withdrawal at any time by the
rating agencies. Any downward revision or withdrawal of either or both ratings
may have an adverse effect on the market price of the Bonds. See the Information
Supplement--for further information concerning insurance.
Because the insurance on the Bonds, if any, will be effective so long as the
Bonds are outstanding, such insurance will be taken into account in determining
the market value of the Bonds and therefore some value attributable to such
insurance will be included in the value of the Units of the Insured Trusts. The
insurance does not, however, guarantee the market value of the Bonds or of the
Units.
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
8
<PAGE>
Trustee) plus a sales charge set forth in "Essential Information" in Part A of
this Prospectus, 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. See "UNIT VALUE AND EVALUATION."
The sales charge applicable to quantity purchases is reduced on a graduated
scale for sales to any purchaser of at least $50,000 or 500 Units and will be
applied on whichever basis is more favorable to the purchaser. For purposes of
calculating the applicable sales charge, purchasers who have indicated their
intent to purchase a specified amount of Units of any Trust in the primary or
secondary offering period by executing and delivering a letter of intent to the
Sponsor, which letter of intent must be in a form acceptable to the Sponsor and
shall have a maximum duration of thirteen months, will be eligible to receive a
reduced sales charge according to the following tables based on the amount of
intended aggregate purchases as expressed in the letter of intent. Due to
administrative limitations and in order to permit adequate tracking, the only
secondary market purchases that will be permitted to be applied toward the
intended specified amount and that will receive the corresponding reduced sales
charge are those Units that are acquired through or from the Sponsor. By
establishing a letter of intent, a Unitholder agrees that the first purchase of
Units following the execution of such letter of intent will be at least 5% of
the total amount of the intended aggregate purchases expressed in such
Unitholder's letter of intent. Further, through the establishment of the letter
of intent, such Unitholder agrees that Units representing 5% of the total amount
of the intended purchases will be held in escrow by the Trustee pending
completion of these purchases. All distributions on Units held in escrow will be
credited to such Unitholder's account. If total purchases prior to the
expiration of the letter of intent period equal or exceed the amount specified
in a Unitholder's letter of intent, the Units held in escrow will be transferred
to such Unitholder's account. 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 TRUSTS LONG INTERMEDIATE TRUSTS INTERMEDIATE
TRUSTS
----------------------------- ----------------------------- ------------
<S> <C> <C> <C> <C> <C>
PERCENT PERCENT PERCENT PERCENT PERCENT
OF OF NET OF OF NET OF
OFFERING AMOUNT OFFERING AMOUNT OFFERING
NUMBER OF UNITS* PRICE INVESTED PRICE INVESTED PRICE
- ---------------------------------------- ------------ ------------ ------------ ------------ ------------
Less than 500........................... 4.90 % 5.152% 4.25 % 4.439% 3.90%
500 but less than 1,000................. 4.75 4.987 4.15 4.330 3.70
1,000 but less than 2,500............... 4.50 4.712 3.85 4.004 3.50
2,500 but less than 5,000............... 4.25 4.439 3.60 3.734 3.25
5,000 but less than 10,000.............. 3.50 3.627 3.35 3.466 3.00
10,000 but less than 25,000............. 3.00 3.093 3.00 3.093 2.75
25,000 but less than 50,000............. 2.50 2.564 2.50 2.564 2.50
50,000 or more.......................... 2.00 2.041 2.00 2.041 2.00
<CAPTION>
<S> <C>
PERCENT
OF NET
AMOUNT
NUMBER OF UNITS* INVESTED
- ---------------------------------------- ------------
Less than 500........................... 4.058%
500 but less than 1,000................. 3.842
1,000 but less than 2,500............... 3.627
2,500 but less than 5,000............... 3.359
5,000 but less than 10,000.............. 3.093
10,000 but less than 25,000............. 2.828
25,000 but less than 50,000............. 2.564
50,000 or more.......................... 2.041
</TABLE>
<TABLE>
<CAPTION>
SHORT INTERMEDIATE TRUSTS
SHORT TERM TRUSTS
----------------------------- -----------------------------
<S> <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. See "UNIT VALUE AND EVALUATION." The effect of this method of sales
charge calculation will be that different sales charge
9
<PAGE>
rates will be applied to the various Bonds in a Trust portfolio based upon the
maturities of such Bonds. As shown, the sales charge on Bonds in each maturity
range (and therefore the aggregate sales charge on the purchase) is reduced with
respect to purchases of at least $50,000 or 500 Units:
<TABLE>
<CAPTION>
AMOUNT OF PURCHASE*
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$50,000 $100,000 $250,000 $500,000
UNDER TO TO TO TO
YEARS TO MATURITY $50,000 $99,999 $249,999 $499,999 $999,999
- ---------------------------------------- ------------ ------------ ------------ ------------ ------------
Less than 1............................. 0 0 0 0 0
1 but less than 2....................... 1.523 % 1.446 % 1.369 % 1.317 % 1.215%
2 but less than 3....................... 2.041 1.937 1.833 1.729 1.626
3 but less than 4....................... 2.564 2.433 2.302 2.175 2.041
4 but less than 5....................... 3.093 2.961 2.828 2.617 2.459
5 but less than 7....................... 3.627 3.433 3.239 3.093 2.881
7 but less than 10...................... 4.167 3.951 3.734 3.520 3.239
10 but less than 13..................... 4.712 4.467 4.221 4.004 3.788
13 but less than 16..................... 5.263 4.988 4.712 4.439 4.167
16 or more.............................. 5.820 5.542 5.263 4.987 4.603
<CAPTION>
<S> <C> <C> <C>
$1,000,000 $2,500,000
TO TO $5,000,000
YEARS TO MATURITY $2,499,999 $4,999,999 OR MORE
- ---------------------------------------- ------------ ------------ ------------
Less than 1............................. 0 0 0
1 but less than 2....................... 1.061 % .900 % .750 %
2 but less than 3....................... 1.420 1.225 1.030
3 but less than 4....................... 1.781 1.546 1.310
4 but less than 5....................... 2.175 1.883 1.590
5 but less than 7....................... 2.460 2.165 1.870
7 but less than 10...................... 2.828 2.489 2.150
10 but less than 13..................... 3.253 2.842 2.430
13 but less than 16..................... 3.627 3.169 2.710
16 or more.............................. 4.004 3.500 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). 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.
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.
At all times while Units are being offered for sale, the Sponsor will
appraise or cause to be appraised daily the value of the underlying Bonds in
each Trust as of 4:00 p.m. eastern time on each day on which the New York Stock
Exchange (the "Exchange") is normally open and will adjust the Public Offering
Price of the Units commensurate with such appraisal. Such Public Offering Price
will be effective for all orders received by a dealer or the Sponsor at or prior
to 4:00 p.m. eastern time on each such day. Orders received after that time, or
on a day when the Exchange is closed for a scheduled holiday or weekend, will be
held until the next determination of price.
Accrued interest from the preceding Record Date to, but not including, the
settlement date of the transaction (three business days after purchase) will be
added to the Public Offering Price to determine the purchase price of Units. See
"WHAT IS ACCRUED INTEREST?".
The graduated sales charges set forth above will apply on all applicable
purchases of Nuveen investment company securities on any one day by the same
purchaser in the amounts stated, and for this purpose purchases of this Series
will be aggregated with concurrent purchases of any other Series or of shares of
any open-end management investment company of which the Sponsor is principal
underwriter and with respect to the purchase of which a sales charge is imposed.
Purchases by or for the account of an individual and his or her spouse and
children under 21 years of age ("immediate family members") will be aggregated
to determine the applicable sales charge. The graduated sales charges are also
applicable to a trustee or other fiduciary purchasing securities for a single
trust estate or single fiduciary account. Units may be purchased 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 "HOW
UNITS OF THE TRUSTS ARE DISTRIBUTED TO THE PUBLIC?") 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.
10
<PAGE>
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 between 1/2% to 2% more than the BID
prices of such Bonds. The difference between the bid side evaluation and the
offering side evaluation of the Bonds in each Trust on the business day prior to
the Date of Deposit is shown in the discussion of each Trust portfolio.
Whether or not Units are being offered for sale, the Sponsor will determine
the aggregate value of each Trust as of 4:00 p.m. eastern time: (i) on each June
30 or December 31 (or, if such date is not a business day, the last business day
prior thereto), (ii) on any day on which a Unit is tendered for redemption (or
the next succeeding business day if the date of tender is a non-business day)
and (iii) at such other times as may be necessary. For this purpose, a "business
day" shall be any day on which the Exchange is normally open. (See "UNIT VALUE
AND EVALUATION.")
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. UNITHOLDERS WHO WISH TO DISPOSE OF THEIR
UNITS SHOULD INQUIRE OF THE TRUSTEE OR THEIR BROKER AS TO THE CURRENT REDEMPTION
PRICE. (See "HOW UNITS MAY BE REDEEMED WITHOUT CHARGE?".) 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 (three business days after purchase) as the Trustee
can complete the mechanics of registration, normally within 48 hours after
registration instructions are received. Purchasers of Units to whom Certificates
are issued will be unable to exercise any right of redemption until they have
received their Certificates as tender of the Certificate, properly endorsed for
transfer. (See "HOW UNITS MAY BE REDEEMED WITHOUT CHARGE?".)
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. Accrued
interest does not include accrual of original issue discount on zero coupon
bonds, Stripped Obligations or other original issue discount bonds. Interest
accrues to the benefit of Unitholders commencing with the settlement date of
their purchase transaction.
In an effort to reduce the amount of accrued interest that investors would
have to pay in addition to the Public Offering Price, the Trustee has agreed to
advance to each 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, the amount
of accrued interest to be added to the Public Offering Price of Units will
include only accrued interest from the Date of Deposit to, but not including,
the date of settlement of the investor's purchase (three business days after
purchase), less any distributions from the related Interest Account. The Trustee
will recover its advancements (without interest or other cost to the 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 Part A of this Prospectus and
"WHEN ARE DISTRIBUTIONS MADE TO UNITHOLDERS?".) As Bonds mature, or are redeemed
or sold, the accrued interest applicable to such bonds is collected and
subsequently distributed to Unitholders. Unitholders who
11
<PAGE>
sell or redeem all or a portion of their Units will be paid their proportionate
share of the remaining accrued interest to, but not including, the third
business day following the date of sale or tender.
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 expected to be 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 of any premium over, or discount from, the par (maturity) value
inherent in the bond's purchase price. In the calculation of Estimated Long Term
Return, the average yield for 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. This weighted average yield is then
adjusted to reflect estimated expenses, is compounded, and is reduced by a
factor which represents the amortization of the sales charge over the expected
average life of the Trust. The Estimated Long Term Return calculation does not
take into account the effect of a first distribution which may be less than a
regular distribution or may be paid at some point after 30 days (or a second
distribution which may be less than a normal distribution for Unitholders who
choose quarterly or semi-annual plans of distribution), and it also does not
take into account the difference in timing of payments to Unitholders who choose
quarterly or semi-annual plans of distribution, each of which will reduce the
return.
Estimated Current Return is computed by dividing the Net Annual Interest
Income per Unit by the Public Offering Price. In contrast to Estimated Long Term
Return, Estimated Current Return does not reflect the amortization of premium or
accretion of discount, if any, on the Bonds in the Trust's portfolio. Net Annual
Interest Income per Unit is calculated by dividing the annual interest income to
the Trust, less estimated expenses, by the number of Units outstanding.
Net Annual Interest Income per Unit, used to calculate Estimated Current
Return, will vary with changes in fees and expenses of the Trustee and the
Evaluator and with the redemption, maturity, exchange or sale of Bonds. A
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 "OTHER INFORMATION."
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. 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.
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" appearing
in Part A of this Prospectus, "COMPOSITION OF TRUSTS" and "WHAT IS THE TAX
STATUS OF UNITHOLDERS?")
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 a
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 Trusts are
described more fully elsewhere in the Prospectus.
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 "WHY AND HOW ARE THE BONDS INSURED?".)
12
<PAGE>
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 Part A of this Prospectus.) The Sponsor also may
realize FURTHER PROFIT OR SUSTAIN FURTHER LOSS as a result of fluctuations in
the Public Offering Price of the Units. Cash, if any, made available to the
Sponsor prior to the settlement date for a purchase of Units, or prior to the
acquisition of all Portfolio securities by a Trust, may be available for use in
the Sponsor's business, and may be of benefit to the Sponsor.
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 Part
A of this Prospectus. 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. If the
interest on a Bond should be determined to be taxable, the Bond would generally
have to be sold at a substantial discount. In addition, investors could be
required to pay income tax on interest received prior to the date of which
interest is determined to be taxable.
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 tax-exempt 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. 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.
In the opinion of Chapman and Cutler, Counsel to the Sponsor, under existing
law:
(1) the Trusts are not associations taxable as corporations for Federal
income tax purposes. Tax-exempt interest received by each of the Trusts
on Bonds deposited therein will retain its status as tax-exempt
interest, for Federal income tax purposes, when received by the Trusts
and when distributed to the Unitholders, except that the alternative
minimum tax and environmental tax (the "Superfund Tax") applicable to
corporate Unitholders may, in certain circumstances, include in the
amount on which such taxes are calculated a portion of the interest
income received by the Trust. See "CERTAIN TAX MATTERS APPLICABLE TO
CORPORATE UNITHOLDERS", below;
(2) each Unitholder of a Trust is considered to be the owner of a pro rata
portion of such Trust under Subpart E, subchapter J of Chapter 1 of the
Internal Revenue Code of 1986 (the "Code") and will have a taxable event
when the Trust disposes of a Bond or when the Unitholder redeems or
sells Units. Unitholders must reduce the tax basis of their Units for
their share of accrued interest received by the Trust, if any, on Bonds
delivered after the date the Unitholders pay for their Units and,
consequently, such Unitholders may have an increase in taxable gain or
reduction in capital loss upon the disposition of such Units. Gain or
loss upon the sale or redemption of Units is measured by comparing the
proceeds of such sale or redemption with the adjusted basis of the
Units. If the Trustee disposes of Bonds (whether by sale, payment at
maturity, redemption or otherwise), gain or loss is recognized to the
Unitholder. The amount of any such gain or loss is measured by comparing
the Unitholder's pro rata share of the total proceeds from such
disposition with the Unitholder's basis for his or her fractional
interest in the asset disposed of. In the case of a Unitholder who
purchases Units, such basis (before adjustment for earned original issue
discount and amortized bond premium, if any) is determined by
apportioning the cost of the Units among each of the Trust assets
ratably according to value as of the date of acquisition of the Units.
The tax cost reduction requirements of said Code relating to
amortization of bond premium may, under some circumstances, result in
the Unitholder realizing a taxable gain when his or her Units are sold
or redeemed for an amount equal to their original cost; and
(3) any amounts paid on defaulted Bonds held by the Trustee under policies
of insurance issued with respect to such Bonds will be excludable from
Federal gross income if, and to the same extent as, such interest would
13
<PAGE>
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 Part A of this Prospectus.
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 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.
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.
CERTAIN TAX MATTERS APPLICABLE TO CORPORATE UNITHOLDERS. In the case of
certain corporations, the alternative minimum tax and the Superfund Tax depend
upon the corporation's alternative minimum taxable income ("AMTI"), which is the
corporation's taxable income with certain adjustments. One of the adjustment
items used in computing AMTI and the Superfund Tax of a corporation (other than
an S corporation, Regulated Investment Company, Real Estate Investment Trust, or
REMIC) is an amount equal to 75% of the excess of such corporation's "adjusted
current earnings" over an amount equal to its AMTI (before such adjustment item
and the alternative tax net operation loss deduction). Although tax-exempt
interest received by each of the Trusts on Bonds deposited therein will not be
included in the gross income of corporations for Federal income tax purposes,
"adjusted current earnings" includes all tax-exempt interest, including interest
on all Bonds in the Trust and tax-exempt original issue discount.
Corporate Unitholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them resulting under the Federal
tax law, including the corporate alternative minimum tax, the Superfund Tax and
the branch profits tax imposed by Section 884 of the Code.
EXCEPT AS NOTED ABOVE AND IN PART A OF THIS PROSPECTUS, 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.
WHAT ARE NORMAL TRUST OPERATING EXPENSES?
No annual advisory fee is charged to the Trusts by the Sponsor. The Sponsor
does, however, receive a fee as set forth in "Essential Information" in Part A
of this Prospectus for regularly evaluating the Bonds and for maintaining
surveillance over the portfolio. (See "UNIT VALUE AND EVALUATION.")
The Trustee receives for ordinary recurring services an annual fee for each
plan of distribution for each Trust as set forth in "Essential Information"
appearing in Part A of this Prospectus. 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 of Shelter" 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.
14
<PAGE>
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.
All or a portion of the expenses incurred in establishing the Trusts,
including costs of preparing the registration statement, the trust indenture and
other closing documents, registering Units with the Securities and Exchange
Commission and states, the initial audit of each Trust portfolio, legal fees,
the initial fees and expenses of the Trustee and any other non-material
out-of-pocket expenses, will be paid by the Trusts and amortized over the first
five years of such Trusts. The following are additional expenses of the Trusts
and, when paid by or are owed to the Trustee, are secured by a lien on the
assets of the Trust or Trusts to which such expenses are allocable: (1) the
expenses and costs of any action undertaken by the Trustee to protect the Trusts
and the rights and interests of the Unitholders; (2) all taxes and other
governmental charges upon the Bonds or any part of the Trusts (no such taxes or
charges are being levied or made or, to the knowledge of the Sponsor,
contemplated); (3) amounts payable to the Trustee as fees for ordinary recurring
services and for extraordinary non-recurring services rendered pursuant to the
Indenture, all disbursements and expenses including counsel fees (including fees
of bond counsel which the Trustee may retain) sustained or incurred by the
Trustee in connection therewith; and (4) any losses or liabilities accruing to
the Trustee without negligence, bad faith or willful misconduct on its part. The
Trustee is empowered to sell Bonds in order to pay these amounts if funds are
not otherwise available in the applicable Interest and Principal Accounts.
The Indenture requires each Trust to be audited on an annual basis at the
expense of the Trust by independent public accountants selected by the Sponsor.
The Trustee shall not be required, however, to cause such an audit to be
performed if its cost to a Trust shall exceed $.05 per Unit on an annual basis.
Unitholders of a Trust covered by an audit may obtain a copy of the audited
financial statements upon request.
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. See Part A of this
Prospectus for details of distributions per Unit of each Trust under the various
plans based upon estimated Net Annual Interest Income at the Date of Deposit.
The amount of the regular distributions will generally change when Bonds are
redeemed, mature or are sold or when fees and expenses increase or decrease. For
the purpose of minimizing fluctuations in the distributions from the Interest
Account of a 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 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
15
<PAGE>
Trustee not later than the semi-annual Record Date to be effective as of the
semi-annual distribution following the subsequent semi-annual Record Date.
Unitholders are requested to make any such changes within 45 days prior to the
applicable Record Date. Certificates should only be sent by registered or
certified mail to minimize the possibility of their being lost or stolen. (See
"OWNERSHIP AND TRANSFER OF UNITS.")
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. In addition, 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.
Funds which are available for future distributions, redemptions and payment of
expenses are held in accounts which are non-interest bearing to Unitholders and
are available for use by the Trustee pursuant to normal banking procedures.
ACCUMULATION PLAN
The Sponsor is also the principal underwriter of the Accumulation Funds
described in the following table. Each of these funds is an open-end,
diversified management investment company into which Unitholders may choose to
reinvest Trust distributions automatically, without any sales charge.
(Reinvestment generally 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. For a
more detailed description, Unitholders of each Accumulation Fund should read
carefully the prospectus of the Accumulation Fund in which they are interested.
For additional information concerning the Accumulation Plan see the Information
Supplement of this Prospectus.
<TABLE>
<CAPTION>
ACCUMULATION FUND GENERAL FUND DESCRIPTION
- -------------------------------------------------------------- --------------------------------------------------------------
<S> <C>
Nuveen Municipal Bond Fund Tax-exempt income by investing in long-term municipal
securities.
Nuveen Tax-Free Reserves, Inc. and Nuveen Tax-Free Money
Market Fund, Inc.:
Nuveen Massachusetts Tax-Free Money Market Fund Nuveen New Tax-exempt and in certain cases double and triple tax- exempt
York Tax-Free Money Market Fund "money market" funds with checkwriting privileges.
Nuveen California Tax-Free Fund:
Nuveen California Tax-Free Value Fund Double tax-exempt income by investing in long-term investment
grade California tax-exempt securities.
Nuveen California Insured Tax-Free Value Fund Double tax-exempt income by investing in insured California
tax-exempt securities.
Nuveen California Tax-Free Money Market Fund California tax-exempt "money market" fund with checkwriting
privileges.
Nuveen Tax-Free Bond Fund, Inc. and the Nuveen Multistate
Tax-Free Trust:
Nuveen Massachusetts Tax-Free Value Fund, Nuveen New York Double and in certain cases triple tax-exempt income by
Tax-Free Value Fund, Nuveen Ohio Tax-Free Value Fund, Nuveen investing in tax-exempt securities in the state for which the
New Jersey Tax-Free Value Fund, Nuveen Arizona Tax-Free Value portfolio is named.
Fund, Nuveen Florida Tax-Free Value Fund, Nuveen Maryland
Tax-Free Value Fund, Nuveen Michigan Tax-Free Value Fund,
Nuveen Pennsylvania Tax-Free Value Fund and Nuveen Virginia
Tax-Free Value Fund
Nuveen Insured Tax-Free Bond Fund, Inc.:
Nuveen Insured Municipal Bond Fund, Nuveen Massachusetts Tax-exempt and in certain cases double and triple tax- exempt
Insured Tax-Free Value Fund and the Nuveen New York Insured funds investing in insured tax-exempt securities in the state
Tax-Free Value Fund. for which the portfolio is named.
</TABLE>
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
16
<PAGE>
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.
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, if any, and the amount of
other receipts (received since the preceding distribution) being distributed,
expressed in each case as a dollar amount representing the pro rata share of
each Unit of a Trust outstanding and a year to date summary of all distributions
paid on said Units. Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each person who at any time during
the calendar year was a registered Unitholder of a Trust a statement with
respect to such Trust (i) as to the Interest Account: interest received
(including amounts representing interest received upon any disposition of
Bonds), and, except for any State Trust, the percentage of such interest by
states in which the issuers of the Bonds are located, deductions for fees and
expenses of such Trust, redemption of Units and the balance remaining after such
distributions and deductions, expressed in each case both as a total dollar
amount and as a dollar amount representing the pro rata share of each Unit
outstanding on the last business day of such calendar year; (ii) as to the
Principal Account: the dates of disposition of any Bonds and the net proceeds
received therefrom (excluding any portion representing accrued interest), the
amount paid for purchase of Replacement Bonds, the amount paid upon redemption
of Units, deductions for payment of applicable taxes and fees and expenses of
the Trustee, and the balance remaining after such distributions and deductions
expressed both as a total dollar amount and as a dollar amount representing the
pro rata share of each Unit outstanding on the last business day of such
calendar year; (iii) a list of the Bonds held and the number of Units
outstanding on the last business day of such calendar year; (iv) the Unit Value
based upon the last computation thereof made during such calendar year; and (v)
amounts actually distributed during such calendar year from the Interest Account
and from the Principal Account, separately stated, expressed both as total
dollar amounts and as dollar amounts representing the pro rata share of each
Unit outstanding. Each annual statement will reflect pertinent information in
respect of all plans of distribution so that Unitholders may be informed
regarding the results of other plans of distribution.
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.
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 of the United States of
America, and Units of State Trusts only in the state for which the Trust is
named and selected other states.
17
<PAGE>
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. To facilitate the
handling of transactions, sales of Units shall be limited to transactions
involving a minimum of either $5,000 or 50 Units, whichever is less. The Sponsor
reserves the right to reject, in whole or in part, any order for the purchase of
Units.
The Sponsor plans to allow a discount to brokers and dealers in connection
with the primary distribution of Units and also in secondary market
transactions. The primary market discounts are as follows:
<TABLE>
<CAPTION>
DISCOUNT PER UNIT
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NATIONAL LONG INTER- SHORT INTER-
AND STATE MEDIATE INTERMEDIATE MEDIATE SHORT TERM
NUMBER OF UNITS* TRUSTS TRUSTS TRUSTS TRUSTS TRUSTS
- ------------------------------ ---------- ------------- ------------- ------------- -----------
Less than 500................. $3.20 $2.90 $2.70 $2.00 $1.50
500 but less than 1,000....... 3.20 2.90 2.70 2.00 1.50
1,000 but less than 2,500..... 3.20 2.70 2.50 1.80 1.30
2,500 but less than 5,000..... 3.20 2.45 2.25 1.55 1.05
5,000 but less than 10,000.... 2.50 2.45 2.25 1.55 1.05
10,000 but less than 25,000... 2.00 2.00 2.00 1.30 .80
25,000 but less than 50,000... 1.75 1.75 1.75 1.30 .60
50,000 or more................ 1.75 1.50 1.50 1.00 .60
</TABLE>
*Breakpoint sales charges and related dealer concessions are computed both on a
dollar basis and on the basis of the number of Units purchased, using the
equivalent of 500 Units to $50,000, 2,500 Units to $250,000 etc. and will be
applied on that basis which is more favorable to the purchaser.
The Sponsor currently intends to maintain a secondary market for Units of
each Trust. See "MARKET FOR UNITS." 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 "HOW IS THE PUBLIC OFFERING PRICE DETERMINED?",
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 "HOW IS THE PUBLIC OFFERING PRICE DETERMINED?").
Certain commercial banks are making Units of the Trusts available to their
customers on an agency basis. A portion of the sales charge paid by these
customers is retained by or remitted to the banks in the amounts shown in the
above table. The Glass-Steagall Act prohibits banks from underwriting Trust
Units; the Act does, however, permit certain agency transactions and banking
regulators have not indicated that these particular agency transactions
18
<PAGE>
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.
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.
For Trusts allowing optional plans of distribution, Certificates for Units
will bear an appropriate notation on their face indicating which plan of
distribution has been selected. When a change is made, the existing Certificates
must be surrendered to the Trustee and new Certificates issued to reflect the
currently effective plan of distribution. There will be no charge for this
service. Holders of book entry Units can change their plan of distribution by
making a written request to the Trustee, which will issue a new Book Entry
Position Confirmation to reflect such change.
Units are transferable by making a written request to the Trustee and, in
the case of Units evidenced by Certificate(s), by presenting and surrendering
such Certificate(s) to the Trustee, at its address listed on the back cover of
this Part B of the Prospectus, properly endorsed or accompanied by a written
instrument or instruments of transfer. The Certificate(s) should be sent
registered or certified mail for the protection of the Unitholder. Each
Unitholder must sign such written request, and such Certificate(s) or transfer
instrument, exactly as his name appears on (a) the face of the Certificate(s)
representing the Units to be transferred, or (b) the Book Entry Position
Confirmation(s) relating to the Units to be transferred. Such signature(s) must
be guaranteed by a guarantor acceptable to the Trustee. In certain instances the
Trustee may require additional documents such as, but not limited to, trust
instruments, certificates of death, appointments as executor or administrator or
certificates of corporate authority. Mutilated Certificates must be surrendered
to the Trustee in order for a replacement Certificate to be issued. Although at
the date hereof no charge is made and none is contemplated, a Unitholder may be
required to pay $2.00 to the Trustee for each Certificate reissued or transfer
of Units requested and to pay any governmental charge which may be imposed in
connection therewith.
REPLACEMENT OF LOST, STOLEN OR DESTROYED CERTIFICATES.
To obtain a new Certificate replacing one that has been lost, stolen, or
destroyed, the Unitholder must furnish the Trustee with sufficient
indemnification and pay such expenses as the Trustee may incur. This
indemnification must be in the form of an Open Penalty Bond of Indemnification.
The premium for such an indemnity bond may vary, but currently amounts to 1% of
the market value of the Units represented by the Certificate. In the case
however, of a 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.
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 address listed on the back cover of this Part B of the Prospectus
(redemptions of 1,000 Units or more will require a signature guarantee), (2) in
the case of Units evidenced by a Certificate, by also tendering such Certificate
to the Trustee, duly endorsed or accompanied by proper instruments of transfer
with signatures guaranteed as explained above, or provide satisfactory indemnity
required in connection with lost, stolen or destroyed Certificates and (3)
payment of applicable governmental charges, if any. Certificates should be sent
only by registered or certified mail to minimize the possibility of their being
lost or stolen. (See "OWNERSHIP AND TRANSFER OF UNITS".) No redemption fee will
be charged. A Unitholder may authorize the Trustee to honor telephone
instructions for the redemption of Units held in book entry form. Units
represented by Certificates may not be redeemed by telephone. The proceeds of
Units redeemed by telephone will be sent by check either to the Unitholder at
the address specified on his account or to a financial institution specified by
the Unitholder for credit to the account of the Unitholder. A Unitholder wishing
to use this method of redemption must complete a Telephone Redemption
Authorization Form and furnish the Form to the Trustee. Telephone Redemption
Authorization Forms can be obtained from a Unitholder's registered
representative or by calling the Trustee. Once the completed Form is on file,
the Trustee will honor telephone redemption requests by any person. The time a
telephone redemption request is received
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determines the "date of tender" as discussed below. The redemption proceeds will
be mailed within three business days following the telephone redemption request.
Only Units held in the name of individuals may be redeemed by telephone;
accounts registered in broker name, or accounts of corporations or fiduciaries
(including among others, trustees, guardians, executors and administrators) may
not use the telephone redemption privilege.
On the third business day following the date of tender, the Unitholder will
be entitled to receive in cash for each Unit tendered an amount equal to the
Unit Value of such 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 third 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.
Unitholders should check with the Trustee or their broker to determine the
Redemption Price before tendering Units.
The "date of tender" is deemed to be the date on which the request for
redemption of Units is received in proper form by the Trustee, except that as
regards a redemption request received after 4:00 p.m. eastern time or 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 "HOW BONDS MAY BE REMOVED FROM THE TRUSTS.") 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 1/2% to 2% of
principal amount. In the case of actively traded Bonds, the difference may be as
little as 1/4 to 1/2 of 1%, and in the case of inactively traded Bonds such
difference usually will not exceed 3%.
The right of redemption may be suspended and payment postponed for any
period during which the Securities and Exchange Commission determines that
trading in the municipal bond market is restricted or an emergency exists, as a
result of which disposal or evaluation of the Bonds is not reasonably
practicable, or for such other periods as the Securities and Exchange Commission
may by order permit.
Under regulations issued by the Internal Revenue Service, the Trustee will
be required to withhold a specified percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's tax
identification number in the manner required by such regulations. Any amount so
withheld is transmitted to the Internal Revenue Service and may be recovered by
the Unitholder only when filing his or her tax return. Under normal
circumstances the Trustee obtains the Unitholder's tax identification number
from the selling broker at the time the Certificate or Book Entry Return
Confirmation is issued, and this number is printed on the Certificate or Book
Entry Return Confirmation and on distribution statements. If a Unitholder's tax
identification number does not appear as described above, or if it is incorrect,
the Unitholder should contact the Trustee before redeeming Units to determine
what action, if any, is required to avoid this "back-up withholding."
HOW UNITS MAY BE PURCHASED BY THE SPONSOR
The Trustee will notify the Sponsor of any tender of Units for redemption. If
the Sponsor's bid in the secondary market at that time equals or exceeds the
Redemption Price it may purchase such Units by notifying the Trustee before the
close of business on the second succeeding business day and by making payment
therefor to the Unitholder not later than the day on which payment would
otherwise have been made by the Trustee. (See "HOW UNITS MAY BE REDEEMED WITHOUT
CHARGE.") 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.
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 Part A of this Prospectus and "RISK FACTORS" for a discussion of
call provisions of portfolio Bonds.
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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. 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 "COMPOSITION OF TRUSTS" regarding the limited right of
substitution of Replacement Bonds for Failed Bonds, and except for refunding
securities that may be exchanged for Bonds under certain conditions specified in
the Indenture, the Indenture does not permit either the Sponsor or the Trustee
to acquire or deposit bonds either in addition to, or in substitution for, any
of the Bonds initially deposited in a Trust.
INFORMATION ABOUT THE TRUSTEE
The Trustee and its address are stated on the back cover of this Part B of the
Prospectus. The Trustee is subject to supervision and examination by the Federal
Deposit Insurance Corporation, the Board of Governors of the Federal Reserve
System and either the Comptroller of the Currency or state banking authorities.
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.
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 16 mutual funds and 60 closed-end
funds. 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 Sponsor may
advertise and create specific investment programs and systems. For example, such
activities may include presenting information on how to use an investment in the
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.
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 "COMPOSITION OF TRUSTS" regarding the limited right of
substitution of Replacement Bonds and except for the substitution of refunding
bonds under certain circumstances. The Trustee shall advise the Unitholders of
any amendment promptly after execution thereof.
TERMINATION OF INDENTURE
Each Trust may be liquidated at any time by written consent of 100% of the
Unitholders or by the Trustee when the value of such Trust, as shown by any
evaluation, is less than 20% of the original principal amount of such Trust and
will be liquidated by the Trustee in the event that Units not yet sold
aggregating more than 60% of the Units originally created are tendered for
redemption by the Sponsor thereby reducing the net worth of such Trust to less
than 40% of the principal amount of the Bonds originally deposited in the
portfolio. (See "Essential Information" appearing in Part A of this Prospectus.)
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
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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
appearing in Part A of this Prospectus. Carter, Ledyard & Milburn, 2 Wall
Street, New York, New York 10005, has acted as counsel for the Trustee with
respect to the Series, and, in the absence of a New York Trust from the Series,
as special New York tax counsel for the Series.
AUDITORS
The "Statement of Condition" and "Schedule of Investments" at Date of
Deposit included in Part A of this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report in
Part A of this Prospectus, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
SUPPLEMENTAL INFORMATION
Upon written or telephonic request to the Trustee, investors will receive at
no cost to the investor supplemental information about this Trust, which has
been filed with the Securities and Exchange Commission and is intended to
supplement information contained in Part A and Part B of this Prospectus. The
supplemental information includes more detailed information concerning certain
of the Bonds included in the Trusts contained in the applicable Series and more
specific risk information concerning the individual state Trusts. This
supplement also includes additional general information about the Sponsor and
the Trusts.
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NUVEEN Tax-Exempt Unit Trusts
PROSPECTUS -- PART B
SEPTEMBER 1, 1995
<TABLE>
<C> <S> <C>
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 The Chase Manhattan Bank, N.A.
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 supplemental information
or 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.
<PAGE>
NUVEEN TAX-EXEMPT UNIT TRUSTS
---------------------------------------------
INFORMATION SUPPLEMENT
NUVEEN SERIES 827
This Information Supplement provides additional
information concerning the structure, operations and
risks of a Nuveen Tax-Exempt Unit Trust not found in the
prospectuses for the Trusts. This Information Supplement
is not a prospectus and does not include all of the
information that a prospective investor should consider
before investing in a Trust. This Information Supplement
should be read in conjunction with the prospectus for
the Trust in which an investor is considering investing
("Prospectus"). Copies of the Prospectus can be obtained
by calling or writing the Trustee at the telephone
number and address indicated in Part B of the
Prospectus. This Information Supplement has been created
to supplement information contained in the Prospectus.
This Information Supplement is dated September 28,
1995. Capitalized terms have been defined in the
Prospectus.
TABLE OF CONTENTS
--------------------------------------------------
<TABLE>
<S> <C>
GENERAL RISK DISCLOSURE..................................................... 2
Health Facility Obligations............................................... 2
Housing Obligations....................................................... 2
Single Family Mortgage Revenue Bonds...................................... 2
Federally Enhanced Obligations............................................ 3
Industrial Revenue Obligations............................................ 3
Electric Utility Obligations.............................................. 3
Transportation Facility Revenue Bonds..................................... 4
Water and/or Sewerage Obligations......................................... 4
University and College Revenue Obligations................................ 4
Bridge Authority and Tollroad Obligations................................. 4
Dedicated-Tax Supported Bonds............................................. 4
Municipal Lease Bonds..................................................... 5
Original Issue Discount Bonds and Stripped Obligations.................... 5
WHY AND HOW ARE THE BONDS INSURED?.......................................... 6
ACCUMULATION PLAN........................................................... 8
INFORMATION ABOUT THE SPONSOR............................................... 10
DESCRIPTION OF RATINGS...................................................... 11
Appendix A -- National Disclosure........................................... A-1
Appendix B -- California Disclosure......................................... B-1
Appendix C -- Florida Disclosure............................................ C-1
Appendix D -- Georgia Disclosure............................................ D-1
Appendix E -- Pennsylvania Disclosure....................................... E-1
</TABLE>
<PAGE>
GENERAL RISK DISCLOSURE
An investment in Units of any Trust should be made with an understanding of
the risks that such an investment may entail. These include the ability of the
issuer, or, if applicable, an insurer, to make payments of interest and
principal when due, the effects of changes in interest rates generally, early
call provisions and the potential for changes in the tax status of the Bonds. As
set forth in the portfolio summaries in Part A of this Prospectus, the Trusts
may contain or be concentrated in one or more of the types of bonds discussed
below. The following paragraphs discuss certain circumstances which may
adversely affect the ability of issuers of Bonds held in the portfolio of a
Trust to make payment of principal and interest thereon or which may adversely
affect the ratings of such Bonds; with respect to Insured Trusts, however,
because of the insurance obtained by the Sponsor or by the issuers of the Bonds,
such changes should not adversely affect an Insured Trust's receipt of principal
and interest, the Standard & Poor's 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 "Risk 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 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
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<PAGE>
redemption price of such issues may be more or less than the offering price of
such bonds. Additionally, unusually high rates of default on the underlying
mortgage loans may reduce revenues available for the payment of principal of or
interest on such mortgage revenue bonds. Single family mortgage revenue bonds
issued after December 31, 1980 were issued under Section 103A of the Internal
Revenue Code of 1954, as amended, or Section 143 of the Internal Revenue Code of
1986, which Sections contain certain requirements relating to the use of the
proceeds of such bonds in order for the interest on such bonds to retain its
tax-exempt status. In each case, the issuer of the bonds has covenanted to
comply with applicable requirements and bond counsel to such issuer has issued
an opinion that the interest on the bonds is exempt from Federal income tax
under existing laws and regulations. There can be no assurance that such
continuing requirements will be satisfied; the failure to meet such requirements
could cause interest on the Bonds to be subject to Federal income taxation,
possibly from the date of issuance of the Bonds.
FEDERALLY ENHANCED OBLIGATIONS. Some of the mortgages which secure the
various health care or housing projects which underlie the previously discussed
Health Facility, Housing, and Single Family Mortgage Revenue Obligations (the
"Obligations") in a Trust may be insured by the Federal Housing Administration
("FHA"). Under FHA regulations, the maximum insurable mortgage amount cannot
exceed 90% of the FHA's estimated value of the project. The FHA mortgage
insurance does not constitute a guarantee of timely payment of the principal of
and interest on the Obligations. Payment of mortgage insurance benefits may be
(1) less than the principal amount of Obligations outstanding or (2) delayed if
disputes arise as to the amount of the payment or if certain notices are not
given to the FHA within the prescribed time periods. In addition, some of the
previously discussed Obligations may be secured by mortgage-backed certificates
guaranteed by the Government National Mortgage Association ("GNMA"), a wholly
owned corporate instrumentality of the United States, and/or the Federal
National Mortgage Association ("Fannie Mae") a federally chartered and
stockholder-owed corporation. GNMA and Fannie Mae guarantee timely payment of
principal and interest on the mortgage-backed certificates, even where the
underlying mortgage payments are not made. While such mortgage-backed
certificates are often pledged to secure payment of principal and interest on
the Obligations, timely payment of interest and principal on the Obligations is
not insured or guaranteed by the United States, GNMA, Fannie Mae or any other
governmental agency or instrumentality. The GNMA mortgage-backed certificates
constitute a general obligation of the United States backed by its full faith
and credit. The obligations of Fannie Mae, including its obligations under the
Fannie Mae mortgage-backed securities, are obligations solely of Fannie Mae and
are not backed by, or entitled to, the full faith and credit of the United
States.
INDUSTRIAL REVENUE OBLIGATIONS. Certain of the Bonds in a Trust may be
industrial revenue bonds ("IRBs"), including pollution control revenue bonds,
which are tax-exempt securities issued by states, municipalities, public
authorities or similar entities to finance the cost of acquiring, constructing
or improving various industrial projects. These projects are usually operated by
corporate entities. Issuers are obligated only to pay amounts due on the IRBs to
the extent that funds are available from the unexpended proceeds of the IRBs or
receipts or revenues of the issuer under an arrangement between the issuer and
the corporate operator of a project. The arrangement may be in the form of a
lease, installment sale agreement, conditional sale agreement or loan agreement,
but in each case the payments to the issuer are designed to be sufficient to
meet the payments of amounts due on the IRBs. Regardless of the structure,
payment of IRBs is solely dependent upon the creditworthiness of the corporate
operator of the project and, if applicable, corporate guarantor. Corporate
operators or guarantors may be affected by many factors which may have an
adverse impact on the credit quality of the particular company or industry.
These include cyclicality of revenues and earnings, regulatory and environmental
restrictions, litigation resulting from accidents or environmentally-caused
illnesses, extensive competition and financial deterioration resulting from a
corporate restructuring pursuant to a leveraged buy-out, takeover or otherwise.
Such a restructuring may result in the operator of a project becoming highly
leveraged which may have an impact on such operator's creditworthiness which in
turn would have an adverse impact on the rating and/or market value of such
Bonds. Further, the possibility of such a restructuring may have an adverse
impact on the market for and consequently the value of such Bonds, even though
no actual takeover or other action is ever contemplated or effected. The IRBs in
a Trust may be subject to special or extraordinary redemption provisions which
may provide for redemption at par or, in the case of original issue discount
bonds, accreted value. The Sponsor cannot predict the causes or likelihood of
the redemption of IRBs in a Trust prior to the stated maturity of such Bonds.
ELECTRIC UTILITY OBLIGATIONS. Some of the Bonds in a Trust may be
obligations of issuers whose revenues are primarily derived from the sale of
electric energy. The problems faced by such issuers include the difficulty in
obtaining approval for timely and adequate rate increases from the applicable
public utility commissions, the difficulty of financing large construction
programs, increased competition, reductions in estimates of future demand for
electricity in certain areas of the country, the limitations on operations and
increased costs and delays
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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 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
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underlying property for unpaid taxes. A third type of dedicated-tax supported
Bond may be secured by a tax levied upon the manufacture, sale or consumption of
commodities or upon the license to pursue certain occupations or upon corporate
privileges within a taxing jurisdiction. As to any of these types of Bonds, the
ability of the designated revenues to satisfy the interest and principal
payments on such bonds may be affected by changes in the local economy, the
financial success of the enterprise responsible for the payment of the taxes,
the value of any property on which taxes may be assessed and the ability to
collect such taxes in a timely fashion. Each of these factors will have a
different affect on each distinct type of dedicated-tax supported bonds.
MUNICIPAL LEASE BONDS. Some of the Bonds in a Trust may be obligations that
are secured by lease payments of a governmental entity. Such payments are
normally subject to annual budget appropriations of the leasing governmental
entity. A governmental entity that enters into such a lease agreement cannot
obligate future governments to appropriate for and make lease payments but
covenants to take such action as is necessary to include any lease payments due
in its budgets and to make the appropriations therefor. A governmental entity's
failure to appropriate for and to make payments under its lease obligation could
result in insufficient funds available for payment of the obligations secured
thereby.
ORIGINAL ISSUE DISCOUNT BONDS AND STRIPPED OBLIGATIONS. Certain of the
Bonds in a Trust may be original issue discount bonds. These Bonds were issued
with nominal interest rates less than the rates then offered by comparable
securities and as a consequence were originally sold at a discount from their
face, or par, values. This original issue discount, the difference between the
initial purchase price and face value, is deemed under current law to accrue on
a daily basis and the accrued portion is treated as tax-exempt interest income
for federal income tax purposes. On sale or redemption, gain, if any, realized
in excess of the earned portion of original issue discount will be taxable as
capital gain. See "What is the Tax Status of Unitholders". The current value of
an original issue discount bond reflects the present value of its face amount at
maturity. In a stable interest rate environment, the market value of an original
issue discount bond would tend to increase more slowly in early years and in
greater increments as the bond approached maturity.
Certain of the original issue discount bonds in a Trust may be zero coupon
bonds. Zero coupon bonds do not provide for the payment of any current interest;
the buyer receives only the right to receive a final payment of the face amount
of the bond at its maturity. The effect of owning a zero coupon bond is that a
fixed yield is earned not only on the original investment but also, in effect,
on all discount earned during the life of the obligation. This implicit
reinvestment of earnings at the same rate eliminates the risk of being unable to
reinvest the income on such obligation at a rate as high as the implicit yield,
but at the same time also eliminates the holder's ability to reinvest at higher
rates in the future. For this reason, zero coupon bonds are subject to
substantially greater price fluctuations during periods of changing market
interest rates than are securities of comparable quality that pay interest
currently.
Original issue discount bonds, including zero coupon bonds, may be subject
to redemption at prices based on the issue price plus the amount of original
issue discount accreted to redemption (the "accreted value") plus, if
applicable, some premium. Pursuant to such call provisions an original issue
discount bond may be called prior to its maturity date at a price less than its
face value. See the "Schedules of Investments" for more information about the
call provisions of portfolio Bonds.
Certain of the Bonds in a Trust may be Stripped Obligations, which represent
evidences of ownership with respect to either the principal amount of or a
payment of interest on a tax-exempt obligation. An obligation is "stripped" by
depositing it with a custodian, which then effects a separation in ownership
between the bond and any interest payment which has not yet become payable, and
issues evidences of ownership with respect to such constituent parts. A Stripped
Obligation therefore has economic characteristics similar to zero coupon bonds,
as described above.
Each Stripped Obligation has been purchased at a discount from the amount
payable at maturity. With respect to each Unitholder, the Internal Revenue Code
treats as "original issue discount" that portion of the discount which produces
a yield to maturity (as of the date of purchase of the Unitholder's Units) equal
to the lower of the coupon rate of interest on the underlying obligation or the
yield to maturity on the basis of the purchase price of the Unitholder's Units
which is allocable to each Stripped Obligation. Original issue discount which
accrues with respect to a Stripped Obligation will be exempt from Federal income
taxation to the same extent as interest on the underlying obligations. (See
"WHAT IS THE TAX STATUS OF UNITHOLDERS?" in Part B of this Prospectus.)
Unitholders should consult their own tax advisers with respect to the state
and local tax consequences of owning original issue discount bonds or Stripped
Obligations. Under applicable provisions governing determination of state and
local taxes, interest on original issue discount bonds or Stripped Obligations
may be deemed to be received in the year of accrual even though there is no
corresponding cash payment.
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WHY AND HOW ARE THE BONDS INSURED?
INSURANCE ON BONDS
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 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 June 30, 1995 the Insurer had admitted assets of $3.6 billion
(unaudited), total liabilities of $2.4 billion (unaudited), and total capital
and surplus of $1.2 billion (unaudited) 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
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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>
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.
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
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outstanding and the insurer remains in business. Insurance relates only to the
particular Bond and not to the Units offered hereby or to their market value.
Insured Bonds have received a rating of "Aaa" by Moody's Investors Service, Inc.
and/or "AAA" by Standard & Poor's Corporation in recognition of such insurance.
If a Bond in a Traditional Trust is insured, the Schedule of Investments in
Part A of this Prospectus will identify the insurer. Such insurance will be
provided by Financial Guaranty Insurance Company ("FGIC"), AMBAC Indemnity
Corporation ("AMBAC"), Bond Investors Guaranty Insurance Company, now known as
MBIA Corp. of Illinois ("BIG"), Capital Guaranty Insurance Company ("CGIC"),
Financial Security Assurance, Inc. ("FSA"), Municipal Bond Insurance Association
(the "Association"), 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.
ACCUMULATION PLAN
The Sponsor, John Nuveen & Co. Incorporated, is also the principal underwriter
of the Nuveen Municipal Bond Fund, Inc. (the "Bond Fund"), Nuveen Tax-Free
Reserves, Inc. ("Tax-Free Reserves"), Nuveen California Tax-Free Fund, Inc. (the
"California Fund"), Nuveen Tax-Free Bond Fund, Inc. ("Tax-Free Bond Fund"),
Nuveen Insured Tax-Free Bond Fund, Inc. (the "Insured Bond Fund") and Nuveen
Tax-Free Money Market Fund, Inc. (the "Money Market Fund") and the Nuveen
Multistate Tax-Free Trust (the "Multistate Trust"). Each of these funds
(together, the "Accumulation Funds") is an open-end, diversified management
investment company into which Unitholders may choose to reinvest Trust
distributions automatically, without any sales charge. (Reinvestment in the
California Fund is available only to Unitholders who are California residents.
Reinvestment in the State Portfolios of the Tax-Free Bond Fund, the Insured Bond
Fund, the Money Market Fund and the Multistate Trust is available only to
Unitholders who are residents of the states for which such portfolios are
named.) Unitholders may reinvest both interest and principal distributions or
principal distributions only. Each Accumulation Fund has investment objectives
which differ in certain respects from those of the Trusts and may invest in
securities which would not be eligible for deposit in the Trusts. The investment
adviser to each Accumulation Fund is Nuveen Advisory Corp., a wholly-owned
subsidiary of the Sponsor. The following is a general description of the
investment objectives and policies of each Accumulation Fund. For a more
detailed description, Unitholders should read the prospectus of the Accumulation
Fund in which they are interested.
THE BOND FUND
The Bond Fund has the objective of providing, through investment in a
professionally managed portfolio of long-term municipal bonds, as high a level
of current interest income exempt from Federal income tax as is consistent with
preservation of capital. The Bond Fund may include in its portfolio tax-exempt
bonds rated Baa or BBB or better by Moody's or Standard & Poor's, unrated bonds
which, in the opinion of the investment adviser, have credit characteristics
equivalent to bonds rated Baa or BBB or better, and certain temporary
investments, including securities the interest income from which may be subject
to Federal income tax.
TAX-FREE RESERVES
Tax-Free Reserves is a "money market" fund that includes in its portfolio
only obligations maturing within one year from the date of acquisition,
maintains an average maturity of all investments of 120 days or less, values its
portfolio at amortized cost and seeks to maintain a net asset value of $1.00 per
share. It provides checkwriting and expedited wire redemption privileges for its
shareholders. Tax-Free Reserves has the objective of providing, through
investment in a professionally managed portfolio of high quality short-term
municipal obligations, as high a level of current interest income exempt from
Federal income tax as is consistent with preservation of capital and the
maintenance of liquidity. Tax- Free Reserves may include in its portfolio
municipal obligations rated Aaa, Aa, MIG-1, VMIG-1 or Prime-1 by Moody's or AAA,
AA, SP-1 or A-1 by Standard & Poor's, unrated municipal 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.
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<PAGE>
THE CALIFORNIA FUND
The California Fund has the objective of providing, through investment in
professionally managed portfolios of California municipal obligations, as high a
level of current interest income exempt from both Federal and California income
taxes as is consistent with the investment policies of each of the portfolios of
the California Fund and with preservation of capital. Each portfolio of the
California Fund may include temporary investments that may be subject to tax.
California Unitholders may reinvest in one of three portfolios of the California
Fund: The Nuveen California Tax-Free Value Fund, the Nuveen California Insured
Tax-Free Value Fund and the Nuveen California Tax-Free Money Market Fund.
The Nuveen California Tax-Free Value Fund invests primarily in long-term
investment grade California tax-exempt bonds (I.E., bonds rated in the four
highest categories by Moody's or Standard & Poor's or, if unrated, that have
equivalent credit characteristics). The Nuveen California Insured Tax-Free Value
Fund invests primarily in the same type of investments as the Special Bond
Portfolio, each of which is covered by insurance guaranteeing the timely payment
of principal and interest or is backed by a deposit of U.S. Government
securities.
The Nuveen California Tax-Free Money Market Fund invests primarily in
high-quality short term California tax- exempt money market instruments (I.E.,
obligations rated in the two highest categories by Moody's or Standard & Poor's
or, if unrated, that have equivalent credit characteristics). This portfolio
will include only obligations maturing within one year from the date of
acquisition, will maintain an average maturity of all investments of 120 days or
less, will value its portfolio at amortized cost and will seek to maintain a net
asset value of $1.00 per share. The Nuveen California Tax-Free Money Market Fund
provides for an expedited wire redemption privilege.
THE TAX-FREE BOND FUND
The Tax-Free Bond Fund consists of the Nuveen Massachusetts Tax-Free Value
Fund, the Nuveen New York Tax-Free Value Fund, the Nuveen Ohio Tax-Free Value
Fund, and the Nuveen New Jersey Tax-Free Value Fund, which are each available
for reinvestment to Unitholders who are residents of the state for which such
portfolio is named. The Tax-Free Bond Fund has the objective of providing,
through investment in a professionally managed portfolio of municipal bonds, as
high a level of current interest income exempt both from Federal income tax and
from the income tax imposed by each portfolio's designated state as is
consistent with preservation of capital. The Tax-Free Bond Fund may include in
each of its portfolios tax-exempt bonds rated Baa or BBB or better; unrated
bonds which, in the opinion of the investment adviser, have credit
characteristics equivalent to bonds rated Baa or BBB or better; and certain
temporary investments, including securities the interest income from which may
be subject to Federal and state income tax.
THE INSURED BOND FUND
The Insured Bond Fund consists of the Nuveen Insured Municipal Bond Fund,
the Nuveen Massachusetts Insured Tax-Free Value Fund and the Nuveen New York
Insured Tax-Free Value Fund, which are each available for reinvestment to
Unitholders. (The Massachusetts and New York Portfolios are available only to
those Unitholders who are residents of the state for which the portfolio is
named.) The Insured Bond Fund has the objective of providing, through investment
in professionally managed portfolios of municipal bonds, as high a level of
current interest income exempt from both Federal income tax and, in the case of
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,
9
<PAGE>
have credit characteristics equivalent to obligations rated as above; and
temporary investments that may be subject to Federal and state income tax.
THE MULTISTATE TRUST
The Multistate Trust consists of the Nuveen Arizona Tax-Free Value Fund, the
Nuveen Florida Tax-Free Value Fund, the Nuveen Maryland Tax-Free Value Fund, the
Nuveen Michigan Tax-Free Value Fund, the Nuveen New Jersey Tax-Free Value Fund,
the Nuveen Pennsylvania Tax-Free Value Fund and the Nuveen Virginia Tax Free
Value Fund, which are each available for reinvestment to Unitholders who are
residents of the state for which such portfolio is named. The Multistate Trust
has the objective of providing, through investment in a professionally managed
portfolio of municipal bonds, as high a level of current interest income exempt
from both regular Federal income tax and the applicable state personal income
tax as is consistent with preservation of capital. The Multistate Trust may
include in each of its portfolios tax-exempt bonds rated "Baa" or "BBB" or
better, unrated bonds which, in the opinion of the investment advisor, have
credit characteristics equivalent to bonds rated "baa" or "BBB" or better,
limited to no more than 20% of the Multistate Trust's assets, and certain
temporary investments that may be subject to Federal and state income tax.
Each person who purchases Units of a Trust may become a participant in the
Accumulation Plan and elect to have his or her distributions on Units of the
Trust invested directly in shares of one of the Accumulation Funds. Reinvesting
Unitholders may select any interest distribution plan. Thereafter, each
distribution of interest income or principal on the participant's Units
(principal only in the case of a Unitholder who has chosen to reinvest only
principal distributions) will, on the applicable distribution date, or the next
day on which the New York Stock Exchange is normally open ("business day") if
the distribution date is not a business day, automatically be received by
Shareholder Services, Inc., transfer agent for each of the Accumulation Funds,
on behalf of such participant and applied on that date to purchase shares (or
fractions thereof) of the Accumulation Fund chosen at net asset value as
computed as of 4:00 p.m. eastern time on each such date. All distributions will
be 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.
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
10
<PAGE>
Municipal Fund, Nuveen Michigan Premium Income Municipal Fund, Inc., Nuveen New
Jersey Premium Income Municipal Fund, Inc., Nuveen Insured New York Premium
Income Municipal Fund, Inc., Nuveen Ohio Premium Income Municipal Fund, Inc.,
Nuveen Pennsylvania Premium Income Municipal Fund, Nuveen Texas Premium Income
Municipal Fund, Nuveen Premium Income Municipal Fund 4, Inc., Nuveen
Pennsylvania Premium Income Municipal Fund 2, Nuveen Insured Florida Premium
Income Municipal Fund 2, Nuveen Maryland Premium Income Municipal Fund, Nuveen
Virginia Premium Income Municipal Fund, Nuveen Massachusetts Premium Income
Municipal Fund, Nuveen Insured California Premium Income Municipal Fund 2, Inc.,
Nuveen Insured New York Premium Income Municipal Fund 2, Nuveen New Jersey
Premium Income Municipal Fund 2, Nuveen Washington Premium Income Municipal
Fund, Nuveen Michigan Premium Income Municipal Fund 2, Nuveen 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.
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;
- ----------
*As published by the rating companies.
11
<PAGE>
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.
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 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
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<PAGE>
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 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.
13
<PAGE>
APPENDIX A
NATIONAL DISCLOSURE
NATIONALLY DIVERSIFIED TRUST TAXABLE ESTIMATED CURRENT RETURN TABLE
(NATIONAL INSURED TRUST)
The following tables show the approximate taxable estimated current returns
for individuals that are equivalent to tax-exempt estimated current returns
under published 1994 marginal Federal tax rates. The tables incorporate
increased tax rates for higher-income tax payers that were included in the
Revenue Reconciliation Act of 1993. The tables illustrate what you would have to
earn on taxable investments to equal the tax-exempt estimated current return for
your income tax bracket. A taxpayer's marginal tax rate is affected by both his
taxable income and his adjusted gross income. Locate your adjusted gross income
and your taxable income (which is your adjusted gross income reduced by any
deductions and exemptions), then locate your tax bracket based on joint or
single tax filing. Read across to the equivalent taxable estimated current
return you would need to match the tax-free income.
MARGINAL FEDERAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED
TAXABLE GROSS TAX-EXEMPT ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL --------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25% 6.50%
------------- ------------- ----------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 38.0 $ 0-111.8 15.0 % 5.59 5.88 6.18 6.47 6.76 7.06 7.35 7.65
38.0- 91.9 0-111.8 28.0 6.60 6.94 7.29 7.64 7.99 8.33 8.68 9.03
111.8-167.7 29.0 6.69 7.04 7.39 7.75 8.10 8.45 8.80 9.15
91.9-140.0 0-111.8 31.0 6.88 7.25 7.61 7.97 8.33 8.70 9.06 9.42
111.8-167.7 32.0 6.99 7.35 7.72 8.09 8.46 8.82 9.19 9.56
167.7-290.2 34.5 7.25 7.63 8.02 8.40 8.78 9.16 9.54 9.92
140.0-250.0 111.8-167.7 37.0 7.54 7.94 8.33 8.73 9.13 9.52 9.92 10.32
167.7-290.2 40.0 7.92 8.33 8.75 9.17 9.58 10.00 10.42 10.83
Over 290.2 37.0 2 7.54 7.94 8.33 8.73 9.13 9.52 9.92 10.32
Over 250.0 167.7-290.2 44.0 8.48 8.93 9.38 9.82 10.27 10.71 11.16 11.61
Over 290.2 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- 22.8 $ 0-111.8 15.0 % 5.59 5.88 6.18 6.47 6.76 7.06 7.35 7.65
22.8- 55.1 0-111.8 28.0 6.60 6.94 7.29 7.64 7.99 8.33 8.68 9.03
55.1-115.0 0-111.8 31.0 6.88 7.25 7.61 7.97 8.33 8.70 9.06 9.42
111.8-234.3 32.5 7.04 7.41 7.78 8.15 8.52 8.89 9.26 9.63
115.0-250.0 111.8-234.3 38.0 7.66 8.06 8.47 8.87 9.27 9.68 10.08 10.48
Over 234.3 37.0 2 7.54 7.94 8.33 8.73 9.13 9.52 9.92 10.32
Over 250.0 Over 234.3 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-1
<PAGE>
APPENDIX B
CALIFORNIA DISCLOSURE
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.
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.
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
B-1
<PAGE>
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, 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
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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.
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.
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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 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.
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
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<PAGE>
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 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.
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<PAGE>
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 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
Traditional 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.
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<PAGE>
CALIFORNIA TAXABLE ESTIMATED CURRENT RETURN TABLE
The following tables show the approximate taxable estimated current returns
for individuals that are equivalent to tax-exempt estimated current returns
under combined Federal and state taxes, using published 1994 marginal Federal
tax rates and marginal state tax rates currently available and scheduled to be
in effect. The tables incorporate increased tax rates for higher-income
taxpayers that were included in the Revenue Reconciliation Act of 1993. For
cases in which more than one state bracket falls within a Federal bracket, the
highest state bracket is combined with the Federal bracket. The combined state
and Federal tax brackets shown reflect the fact that state tax payments are
currently deductible for Federal tax purposes. The tables illustrate what you
would have to earn on taxable investments to equal the tax-exempt estimated
current return for your income tax bracket. A taxpayer's marginal tax rate is
affected by both his taxable income and his adjusted gross income. Locate your
adjusted gross and your taxable income (which is your adjusted gross income
reduced by any deductions and exemptions), then locate your tax bracket based on
joint or single tax filing. Read across to the equivalent taxable estimated
current return you would need to match the tax-free income.
COMBINED MARGINAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED
TAXABLE GROSS STATE* AND TAX-EXEMPT ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL --------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.50% 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 9.65 10.09 10.53 10.96
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>
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<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>
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<PAGE>
APPENDIX C
FLORIDA DISCLOSURE
ECONOMIC FACTORS--FLORIDA
POPULATION. In 1980, Florida was the seventh most populous state in the
U.S. The State has grown dramatically since then and as of April 1, 1993, ranks
fourth with an estimated population of 13.6 million. Florida's attraction, as
both a growth and retirement state, has kept net migration fairly steady with an
average of 292,988 new residents a year from 1983 through 1993. The U.S. average
population increase since 1982 is about 1% annually, while Florida's average
annual rate of increase is about 2.5%. Florida continues to be the fastest
growing of the ten largest states. This strong population growth is one reason
the State's economy is performing better than the nation as a whole. In addition
to attracting senior citizens to Florida as a place for retirement, the State is
also recognized as attracting a significant number of working age individuals.
Since 1983, the prime working age population (18-44) has grown at an average
annual rate of 2.6%. The share of Florida's total working age population (18-59)
to total State population is approximately 54%. This share is not expected to
change appreciably into the twenty-first century.
INCOME. The State's personal income has been growing strongly the last
several years and has generally outperformed both the U.S. as a whole and the
southeast in particular, according to the U.S. Department of Commerce and the
Florida Consensus Economic Estimating Conference. This is because Florida's
population has been growing at a very strong pace and, since the early 1970's,
the State's economy has diversified so as to provide a broader economic base. As
a result, Florida's real per capita personal income has tracked closely with the
national average and has tracked above the southeast. From 1984 through 1993,
the State's real per capita income rose at an average of 5.4% per year, while
the national real per capita income increased at an average of 5.5% per year.
Because Florida has a proportionately greater retirement age population,
property income (dividends, interest, and rent) and transfer payments (Social
Security and pension benefits, among other sources of income) are relatively
more important sources of income. For example, Florida's total wages and
salaries and other labor income in 1993 was 62% of total personal income, while
a similar figure for the nation was 72%. Transfer payments are typically less
sensitive to the business cycle than employment income and, therefore, act as
stabilizing forces in weak economic periods.
The State's per capita personal income in 1993 of $20,857 was slightly above
the national average of $20,817 and significantly ahead of that for the
southeast United States, which was $18,753. Real personal income in the State is
estimated to increase 4.5% in 1994-95 and 4.2% in 1995-96. By the end of
1995-96, real personal income per capita in the State is projected to average
4.5% higher than its 1993-94 level.
EMPLOYMENT. Since 1980, the State's job creation rate is almost twice the
rate for the nation as a whole, and its growth rate in new non-agricultural jobs
is the fastest of the 11 most populous states, second only to California in the
absolute number of new jobs created. Contributing to the State's rapid rate of
growth in employment and income is international trade. Since 1980, the State's
unemployment rate has generally been below that of the U.S. In recent years,
however, as the State's economic growth has slowed from its previous highs, the
State's unemployment rate has tracked above the national average. The average
rate in Florida since 1980 has been 6.5% while the national average is 7.1%.
According to the U.S. Department of Commerce, the Florida Department of Labor
and Employment Security, and the Florida Consensus Economic Estimating
Conference (together, the "Organization"), the State's unemployment rate was
8.2% during 1992. As of January 1994, the Organization estimates that the
unemployment rate will be 6.1% for 1994-95 and 6.1% in 1995-96.
The rate of job creation in Florida's manufacturing sector has exceeded that
of the U.S. From the beginning of 1980 through 1993, the State added over 50,000
new manufacturing jobs, an 11.7% increase. During the same period, national
manufacturing employment declined ten out of the fourteen years, for a loss of
2,977,000 jobs.
Total non-farm employment in Florida is expected to increase 3.6% in 1994-95
and rise 3.3% in 1995-96. Trade and services, the two largest sources of
employment in the State, account for more than half of the total non-farm
employment. Employment in the service sectors should experience an increase of
5.4% in 1994-95 while growing 4.7% in 1995-96. Trade is expected to expand 3.1%
in 1995 and 3.2% in 1996. The service sector is now the State's largest
employment category.
CONSTRUCTION. The State's economy has in the past been highly dependent on
the construction industry and construction related manufacturing. This
dependency has declined in recent years and continues to do so as a result of
continued diversification of the State's economy. For example, in 1980, total
contract construction employment as a share of total non-farm employment was
just over 7.0%, and in 1993 the share had edged
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downward to 5%. This trend is expected to continue as the State's economy
continues to diversify. Florida, nevertheless, has a dynamic construction
industry, with single and multi-family housing starts accounting for 8.5% of
total U.S. housing starts in 1993 while the State's population is 5.3% of the
U.S. total population. Florida's housing starts since 1980 have represented an
average of 11.0% of the U.S.'s total annual starts, and since 1980, total
housing starts have averaged 156,450 a year.
A driving force behind the State's construction industry has been the
State's rapid rate of population growth. Although the State currently is the
fourth most populous state, its annual population growth is now projected to
decline as the number of people moving into the State is expected to hover near
the mid 250,000 range annually throughout the 1990's. This population trend
should provide fuel for business and home builders to keep construction activity
lively in Florida for some time to come. However, other factors do influence the
level of construction in the State. For example, federal tax reform in 1986 and
other changes to the federal income tax code have eliminated tax deductions for
owners of more than two residential real estate properties and have lengthened
depreciation schedules on investment and commercial properties. Economic growth
and existing supplies of homes also contribute to the level of construction
activity in the State.
Single and multi-family housing starts in 1994-95 are projected to reach a
combined level of 118,000, increasing to 124,100 next year. Lingering
recessionary effects on consumers and tight credit are some of the reasons for
relatively slow core construction activity, as well as lingering effects from
the 1986 tax reform legislation discussed above. Total construction expenditures
are forecasted to increase 6.6% this year and increase 7.5% next year.
The State has continuously been dependent on the highly cyclical
construction and construction related manufacturing industries. While that
dependency has decreased, the State is still somewhat at the mercy of the
construction and construction related manufacturing industries. The construction
industry is driven to a great extent by the State's rapid growth in population.
There can be no assurance that population growth will continue throughout the
1990's in which case there could be an adverse impact on the State's economy
through the loss of construction and construction related manufacturing jobs.
Also, recent increases in interest rates could significantly adversely impact
the financing of new construction within the State, thereby adversely impacting
unemployment and other economic factors within the State. In addition, available
commercial office space has tended to remain high over the past few years. So
long as this glut of commercial rental space continues, construction of this
type of space will likely continue to remain slow.
TOURISM. Tourism is one of the State's most important industries.
Approximately 41.1 million tourists visited the State in 1993, as reported by
the Florida Department of Commerce. In terms of business activities and State
tax revenues, tourists in Florida in 1993 represented an estimated 4.5 million
additional residents. Visitors to the State tend to arrive equally by air and
car. The State's tourism industry over the years has become more sophisticated,
attracting visitors year-round and, to a degree, reducing its seasonality.
Tourist arrivals are expected to increase by 5.0% this year, and 3.4% next year.
Tourist arrivals to Florida by air are expected to increase by 9.2% this year
and 2.9% next year, while arrivals by car are expected to rise 0.7% in 1994-95
and 4.0% in 1995-96. By the end of the State's current fiscal year, 42.1 million
domestic and international tourists are expected to have visited the State. In
1995-96 tourist arrivals should approximate 43.6 million.
REVENUES AND EXPENSES. Estimated fiscal year 1994-95 General Revenue plus
Working Capital and Budget Stabilization funds available to the State total
$14,624.4 million, a 5.7% increase over 1993-94. This reflects a transfer of
$159.0 million in non-recurring revenue due to Hurricane Andrew, to a hurricane
relief trust fund. Of the total General Revenue plus Working Capital and Budget
Stabilization funds available to the State, $13,858.4 million of that is
Estimated Revenues (excluding the Hurricane Andrew impact), which represents an
increase of 7.9% over the previous year's Estimated Revenues. With effective
General Revenues plus Working Capital Fund and Budget Stabilization
appropriations at $14,311.1 million, unencumbered reserves at the end of 1994-95
are estimated at $313.3 million. Estimated fiscal year 1995-96 General Revenue
plus Working Capital and Budget Stabilization funds available total $15,145.9
million, a 3.6% increase over 1994-95. The $14,647.2 million in Estimated
Revenues represents an increase of 5.7% over the previous year's Estimated
Revenues.
In fiscal year 1993-94, approximately 66% of the State's total direct
revenue to its three operating funds was derived from State taxes and fees, with
Federal grants and other special revenue accounting for the balance. State sales
and use tax, corporate income tax, intangible personal property tax and beverage
tax amounted to 66%, 8%, 4% and 4%, respectively, of total General Revenue Funds
available during fiscal 1993-94. In that same year, expenditures for education,
health and welfare, and public safety amounted to approximately 49%, 32%, and
12%, respectively, of total expenditures from the General Revenue Fund.
The State's sales and use tax (6%) currently accounts for the State's single
largest source of tax receipts. Sightly less than 10% of the State's sales and
use tax is designated for local governments and is distributed to the
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respective counties in which collected for use by the counties, and the
municipalities therein. In addition to this distribution, local governments may
assess (by referendum) a 0.5% or a 1.0% discretionary sales surtax within their
county. Proceeds from this local option sales tax are earmarked for funding
local infrastructure programs and acquiring land for public recreation or
conservation or protection of natural resources as provided under applicable
Florida law. Certain charter counties have other additional taxing powers, and
non-consolidated counties with a population in excess of 800,000 may levy a
local option sales tax to fund indigent health care. It alone cannot exceed 0.5%
and when combined with the infrastructure surtax cannot exceed 1.0%. For the
fiscal year ended June 30, 1994, sales and use tax receipts (exclusive of the
tax on gasoline and special fuels) totalled $10,012.5 million, an increase of
6.9% over fiscal year 1992-93.
The second largest source of State tax receipts is the tax on motor fuels.
However, these revenues are almost entirely dedicated trust funds for specific
purposes and are not included in the State's General Revenue Fund.
The State imposes an alcoholic beverage wholesale tax (excise tax) on beer,
wine, and liquor. This tax is one of the State's major tax sources, with
revenues totalling $439.8 million in fiscal year ending June 30, 1994. Alcoholic
beverage tax receipts decreased about 1.0% from the previous year's total. The
revenues collected from this tax are deposited into the State's General Revenue
Fund.
The State imposes a corporate income tax. All receipts of the corporate
income tax are credited to the General Revenue Fund. For the fiscal year ended
June 30, 1994, receipts from this source were $1,047.4 million, an increase of
23.7% from fiscal year 1992-93.
The State imposes a documentary stamp tax on deeds and other documents
relating to realty, corporate shares, bonds, certificates of indebtedness,
promissory notes, wage assignments, and retail charge accounts. The documentary
stamp tax collections totalled $775.0 million during fiscal year 1993-94, a
21.3% increase from the previous fiscal year. Beginning in fiscal year 1992-93,
71.29% of these taxes is to be deposited to the General Revenue Fund.
The State imposes a gross receipts tax on electric, natural gas, and
telecommunications services. All gross receipts utilities tax collections are
credited to the State's Public Education Capital Outlay and Debt Service Trust
Fund. In fiscal year 1993-94, this amounted to $459.4 million.
The State imposes an intangible personal property tax on stocks, bonds,
including bonds secured by liens in Florida real property, notes, governmental
leaseholds, and certain other intangibles not secured by a lien on Florida real
property. The annual rate of tax is 2 mils. The State also imposes a
non-recurring 2 mil tax on mortgages and other obligations secured by liens on
Florida real property. In fiscal year 1993-94, total intangible personal
property tax collections were $836.0 million, a 6.7% increase over the prior
year. Of the tax proceeds, 66.5% is distributed to the General Revenue Fund.
The State's severance tax taxes oil, gas and sulphur production, as well as
the severance of phosphate rock and other solid minerals. Total collections from
severance taxes total $54.8 million during fiscal year 1993-94, down 15.0% from
the previous year. Currently 60% of this amount is transferred to the General
Revenue Fund.
The State began its own lottery in 1988. State law requires that lottery
revenues be distributed 50.0% to the public in prizes, 38.0% for use in
enhancing education, and the balance, 12.0%, for costs of administering the
lottery. Fiscal year 1993-94 lottery ticket sales totalled $2.15 billion,
providing education with approximately $816.2 million.
DEBT-BALANCED BUDGET REQUIREMENT. At the end of fiscal 1993, approximately
$5.61 billion in principal amount of debt secured by the full faith and credit
of the State was outstanding. In addition, since July 1, 1993, the State issued
about $1.36 billion in principal amount of full faith and credit bonds.
The State Constitution and statutes mandate that the State budget, as a
whole, and each separate fund within the State budget, be kept in balance from
currently available revenues each fiscal year. If the Governor or Comptroller
believe a deficit will occur in any State fund, by statute, he must certify his
opinion to the Administrative Commission, which then is authorized to reduce all
State agency budgets and releases by a sufficient amount to prevent a deficit in
any fund. Additionally, the State Constitution prohibits issuance of State
obligations to fund State operations.
LITIGATION. Currently under litigation are several issues relating to State
actions or State taxes that put at risk substantial amounts of General Revenue
Fund monies. Accordingly, there is no assurance that any of such matters,
individually or in the aggregate, will not have a material adverse affect on the
State's financial position.
Florida law provides preferential tax treatment to insurers who maintain a
home office in the State. Certain insurers challenged the constitutionality of
this tax preference and sought a refund of taxes paid. Recently, the
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Florida Supreme Court ruled in favor of the State. This case and others, along
with pending refund claims, total about $150 million.
Previously the State imposed a $295 fee on the issuance of certificates of
title for motor vehicles previously titled outside the State. Plaintiffs sued
the State alleging that this fee violated the Commerce Clause of the U.S.
Constitution. The Circuit Court in which the case was filed granted summary
judgment for the plaintiffs, enjoined further collection of the impact fee and
ordered refunds to all those who have paid the fee since the collection of the
fee went into effect. In the State's appeal of the lower Court's decision, the
Florida Supreme Court ruled that this fee was unconstitutional under the
Commerce Clause. Thus, the Supreme Court approved the lower court's order
enjoining further collection of the fee and requiring refund of the previously
collected fees. The refund exposure of the State has been estimated to be in
excess of $100 million.
The State maintains a bond rating of Aa, AA, and AA from Moody's, Standard &
Poor's, and Fitch, respectively, on the majority of its general obligation
bonds, although the rating of a particular series of revenue bonds relates
primarily to the project, facility, or other revenue source from which such
series derives funds for repayment. While these ratings and some of the
information presented above indicate that the State is in satisfactory economic
health, there can be no assurance that there will not be a decline in economic
conditions or that particular Bonds purchased by the Trust will not be adversely
affected by any such changes.
The sources for the information presented above include official statements
and financial statements of the State of Florida. While the Sponsor has not
independently verified this information, it has no reason to believe that the
information is not correct in all material respects.
FLORIDA 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 published 1995 marginal Federal tax rates. The tables incorporate
increased tax rates for higher-income taxpayers 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 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.
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<PAGE>
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- 38.0 $ 0-111.8 15.0 % 5.29 5.59 5.88 6.18 6.47 6.76 7.06 7.35
38.0- 91.9 0-111.8 28.0 6.25 6.60 6.94 7.29 7.64 7.99 8.33 8.68
111.8-167.7 29.0 6.34 6.69 7.04 7.39 7.75 8.10 8.45 8.80
91.9-140.0 0-111.8 31.0 6.52 6.88 7.25 7.61 7.97 8.33 8.70 9.06
111.8-167.7 32.0 6.62 6.99 7.35 7.72 8.09 8.46 8.82 9.19
167.7-290.2 34.5 6.87 7.25 7.63 8.02 8.40 8.78 9.16 9.54
140.0-250.0 111.8-167.7 37.0 7.14 7.54 7.94 8.33 8.73 9.13 9.52 9.92
167.7-290.2 40.0 7.50 7.92 8.33 8.75 9.17 9.58 10.00 10.42
Over 290.2 37.0 2 7.14 7.54 7.94 8.33 8.73 9.13 9.52 9.92
Over 250.0 167.7-290.2 44.0 8.04 8.48 8.93 9.38 9.82 10.27 10.71 11.16
Over 290.2 41.0 3 7.63 8.05 8.47 8.90 9.32 9.75 10.17 10.59
</TABLE>
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- 22.8 $ 0-111.8 15.0 % 5.29 5.59 5.88 6.18 6.47 6.76 7.06 7.35
22.8- 55.1 0-111.8 28.0 6.25 6.60 6.94 7.29 7.64 7.99 8.33 8.68
55.1-115.0 0-111.8 31.0 6.52 6.88 7.25 7.61 7.97 8.33 8.70 9.06
111.8-234.3 32.5 6.67 7.04 7.41 7.78 8.15 8.52 8.89 9.26
115.0-250.0 111.8-234.3 38.0 7.26 7.66 8.06 8.47 8.87 9.27 9.68 10.08
Over 234.3 37.0 2 7.14 7.54 7.94 8.33 8.73 9.13 9.52 9.92
Over 250.0 Over 234.3 41.0 3 7.63 8.05 8.47 8.90 9.32 9.75 10.17 10.59
<FN>
- ------------------
1 The table reflects the effect of the limitations on itemized deductions and the deduction for personal exemptions. They
were designed to phase out certain benefits of these deductions for higher income taxpayers. These limitations, in effect, raise
the current maximum marginal Federal tax rate to approximately 44.0 percent for taxpayers filing a joint return and entitled to
four personal exemptions and to approximately 41.0 percent for taxpayers filing a single return entitled to only one personal
exemption. These limitations are subject to certain maximums, which depend on the number of exemptions claimed and the total
amount of the taxpayer's itemized deductions. For example, the limitation on itemized deductions will not cause a taxpayer to
lose more than 80% of his allowable itemized deductions, with certain exceptions.
2 Federal tax rate reverts to 36.0% after the 80% cap on the limitation on itemized deductions has been met.
3 Federal tax rate reverts to 39.6% after the 80% cap on the limitation on itemized deductions has been met.
</TABLE>
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<PAGE>
APPENDIX D
GEORGIA DISCLOSURE
ECONOMIC FACTORS--GEORGIA
The following brief summary regarding the economy of Georgia is based upon
information drawn from publicly available sources and is included for purposes
of providing information about general economic conditions that may or may not
affect issuers of the Georgia obligations. The Sponsor has not independently
verified any of the information contained in such publicly available documents.
CONSTITUTIONAL CONSIDERATIONS. The Georgia Constitution permits the
issuance by the State of general obligation debt and of certain guaranteed
revenue debt. The State may incur guaranteed revenue debt by guaranteeing the
payment of certain revenue obligations issued by an instrumentality of the
State. The Georgia Constitution prohibits the incurring of any general
obligation debt or guaranteed revenue debt if the highest aggregate annual debt
service requirement for the then current year or any subsequent fiscal year for
outstanding general obligation debt and guaranteed revenue debt, including the
proposed debt, exceed 10 percent of the total revenue receipts, less refunds, of
the State treasury in the fiscal year immediately preceding the year in which
any such debt is to be incurred.
The Georgia Constitution also permits the State to incur public debt to
supply a temporary deficit in the State treasury in any fiscal year created by a
delay in collecting the taxes of that year. Such debt must not exceed, in the
aggregate, 5% of the total revenue receipts, less refunds, of the State treasury
in the fiscal year immediately preceding the year in which such debt is
incurred. The debt incurred must be repaid on or before the last day of the
fiscal year in which it is to be incurred out of the taxes levied for that
fiscal year. No such debt may be incurred in any fiscal year if there is then
outstanding unpaid debt from any previous fiscal year which was incurred to
supply a temporary deficit in the State treasury. No such short-term debt has
been incurred under this provision since the inception of the constitutional
authority referred to in this paragraph.
Virtually all of the issues of long-term debt obligations issued by or on
behalf of the State of Georgia and counties, municipalities and other political
subdivisions and public authorities thereof are required by law to be validated
and confirmed in a judicial proceeding prior to issuance. The legal effect of an
approved validation in Georgia is to render incontestable the validity of the
pertinent bond issue and the security therefor.
THE STATE AND ITS ECONOMY. The State operates on a fiscal year beginning
July 1 and ending June 30. Thus, the 1994 fiscal year ended June 30, 1994. The
state's recovery from the recent economic recession has been steady and is
better than regional trends, albeit half the rate of earlier recoveries. While
this recovery does not meet the explosive patterns set in past cycles, recent
state data reveal that Georgia ranks among the top five states in the nation in
employment and total population growth. The 1992 annual average unemployment
rate for Georgia was 6.9% as compared to the 1992 national annual average
unemployment rate of 7.4%. The 1993 annual average unemployment rate for Georgia
was 5.7% as compared to the 1993 national annual average unemployment rate of
6.7%. Throughout 1994, the monthly unemployment rate for Georgia (not seasonally
adjusted) has remained below the national average monthly unemployment rate (not
seasonally adjusted). In December 1994, Georgia's unemployment rate was 4.6% as
compared to the national average unemployment rate of 5.1% (not seasonally
adjusted).
Stronger economic trends and conservative revenue forecasting resulted in
the continuation of improved financial results for the fiscal year ended June
30, 1994. The state's general fund closed fiscal 1994 with a total fund balance
position of $480.6 million, of which $249.5 million was in the revenue shortfall
reserve fund (3% of revenues), marking the second consecutive year of buildup in
that reserve. The midyear adjustment reserve was fully funded at $89.1 million.
The state's fiscal 1995 adopted budget called for an increase in state
spending to $9.8 billion, up 6.5% from the prior period. Economic growth is
estimated to be in the 6%-8% range for the second straight year. The budget
report forecasted general fund revenues to grow to $9.4 billion, an increase of
$490.0 million, or 5.5% above actual fiscal 1994 levels. Sales and income taxes
account for the majority of that increase, despite a $100 million cut in
personal income taxes. Additional revenues provided by lottery proceeds ($240
million) and indigent-care trust fund monies support the remaining spending.
Revenues for the first three months of the current year are running nearly 8.4%
above fiscal 1994 levels. Most of the increase is attributable to the growth in
personal and corporate income and sales taxes. As a result, the state
anticipates that fiscal 1995 will once again produce positive financial results.
The debt burden is low at only $593 per capita, or 3.3% of personal income,
and 5% of expenditures.
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<PAGE>
In July, 1994, widespread flooding in central and southern Georgia caused
extensive damage and destruction of farmland, private residences, businesses and
local and state government facilities. As of July 12, 1994, Governor Zell Miller
refused to estimate the dollar value of the damage but other sources estimate
that damage could exceed $300 million. Thirty-one counties have been declared
federal disaster areas. Moody's Investors Service, Inc. and Standard and Poor's
Corporation are observing the situation in Georgia, but neither rating agency
has expressed any immediate credit concerns.
BOND RATINGS. Currently, Moody's Investors Service, Inc. rates Georgia
general obligation bonds Aaa and Standard & Poor's Corporation rates such bonds
AA+.
LEGAL PROCEEDINGS. Georgia is involved in certain legal proceedings that,
if decided against the State, may require the State to make significant future
expenditures or may substantially impair revenues.
Three suits have been filed against the State of Georgia seeking refunds of
liquor taxes under O.C.G.A. Section 48-2-35, in light of BACCHUS IMPORTS, LTD.
V. DIAS, 468 U.S. 263 (1984) under Georgia's pre-BACCHUS statute. In JAMES
B.BEAM DISTILLING CO. V. STATE, 501 U.S. 529 (decided June 20, 1991) the Supreme
Court indicated that BACCHUS was retroactive, but only within the bounds of
State statutes of limitations and procedural bars, and left State courts to
determine any remedy in light of reliance interests, equitable considerations,
and other defenses. Georgia's statute of limitations in O.C.G.A. Section 48-2-35
has run on all pre-BACCHUS claims for refund except five pending claims seeking
31.7 million dollars in tax plus interest. On remand, the Fulton County Superior
Court has ruled that procedural bars and other defenses bar any recovery by
taxpayers on Beam's claims for refund. The Georgia Supreme Court has affirmed,
and Beam's petition to the United States Supreme Court for a rehearing was
denied on February 21, 1995.
In BOARD OF PUBLIC EDUCATION FOR SAVANNAH/CHATHAM COUNTY V. STATE OF
GEORGIA, the local school board claimed that the State should finance the major
portion of the costs of its desegregation program. The Savannah Board originally
requested restitution in the amount of $30 million, but the Federal District
Court set forth a formula which would require a State payment in the amount of
approximately $6 million. Subsequently the parties agreed to a settlement, the
terms of which have not been finalized. The proposed settlement calls for the
State to pay approximately $10 million to the school board. A similar complaint
has been filed by DeKalb County and there are approximately five other school
districts which potentially might attempt to file similar claims. In the DeKalb
County case alone, the plaintiffs appear to be seeking approximately $67.5
million of restitution. The DeKalb case has recently been tried and is awaiting
final argument and decision.
On December 6, 1994 the Supreme Court ruled in REICH V. COLLINS, that
Georgia had employed a "bait-and-switch" scheme to tax federal pension income in
the State and then to deny retirees' requests for a tax refund. The Court left
it up to the Georgia Supreme Court to provide retirees with "meaningful
backward-looking relief." Governor Zell Miller tentatively agreed that the State
would pay such retirees $108 million. The State potentially owes another $100
million to those federal retirees who did not apply for a refund by the State's
April 1992 deadline. The Chairman of the Georgia State Senate Appropriations
Committee said that the Georgia budget could absorb the impact of the $108
million settlement.
The foregoing information does not purport to be a complete or exhaustive
description of all conditions to which the issuers of Bonds in the Georgia
Traditional Trust are subject. Many factors including national economic, social
and environmental policies and conditions, which are not within the control of
the issuers of Bonds could affect or could have an adverse impact on the
financial condition of the State and various agencies and political subdivisions
located in the State. Since Georgia Bonds in the Georgia Traditional Trust
(other than general obligation bonds issued by the State) are payable from
revenue derived from a specific source or authority, the impact of a pronounced
decline in the national economy or difficulties in significant industries within
the State could result in a decrease in the amount of revenues realized from
such source or by such authority and thus adversely affect the ability of the
respective issuers of the Georgia Bonds in the Georgia Traditional Trust to pay
the debt service requirements on the Georgia Bonds. Similarly, such adverse
economic developments could result in a decrease in tax revenues realized by the
State and thus could adversely affect the ability of the State to pay the debt
service requirements of any Georgia general obligation bonds in the Georgia
Traditional Trust.
GEORGIA TAXABLE ESTIMATED CURRENT RETURN TABLE
The following tables show the approximate taxable estimated current returns
for individuals that are equivalent to tax-exempt estimated current returns
under combined Federal and state taxes, using published 1994 marginal Federal
tax rates and marginal state tax rates currently available and scheduled to be
in effect. The tables incorporate increased tax rates for higher-income
taxpayers that were included in the Revenue Reconciliation Act of 1993. For
cases in which more than one state bracket falls within a Federal bracket, the
highest state bracket is
D-2
<PAGE>
combined with the Federal bracket. The combined state and Federal tax brackets
shown reflect the fact that state tax payments are currently deductible for
Federal tax purposes. The tables illustrate what you would have to earn on
taxable investments to equal the tax-exempt estimated current return for your
income tax bracket. A taxpayer's marginal tax rate is affected by both his
taxable income and his adjusted gross income. Locate your adjusted gross and
your taxable income (which is your adjusted gross income reduced by any
deductions and exemptions), then locate your tax bracket based on joint or
single tax filing. Read across to the equivalent taxable estimated current
return you would need to match the tax-free income.
COMBINED MARGINAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED
TAXABLE GROSS STATE AND TAX-EXEMPT ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL --------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25% 6.50%
------------- ------------- ----------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 38.0 $ 0-111.8 20.0 % 5.94 6.25 6.56 6.88 7.19 7.50 7.81 8.13
38.0- 91.9 0-111.8 32.5 7.04 7.41 7.78 8.15 8.52 8.89 9.26 9.63
111.8-167.7 33.0 7.09 7.46 7.84 8.21 8.58 8.96 9.33 9.70
91.9-140.0 0-111.8 35.0 7.31 7.69 8.08 8.46 8.85 9.23 9.62 10.00
111.8-167.7 36.0 7.42 7.81 8.20 8.59 8.98 9.38 9.77 10.16
167.7-290.2 38.5 7.72 8.13 8.54 8.94 9.35 9.76 10.16 10.57
140.0-250.0 111.8-167.7 41.0 8.05 8.47 8.90 9.32 9.75 10.17 10.59 11.02
167.7-290.2 43.5 8.41 8.85 9.29 9.73 10.18 10.62 11.06 11.50
Over 290.2 41.0 2 8.05 8.47 8.90 9.32 9.75 10.17 10.59 11.02
Over 250.0 167.7-290.2 47.5 9.05 9.52 10.00 10.48 10.95 11.43 11.90 12.38
Over 290.2 44.5 3 8.56 9.01 9.46 9.91 10.36 10.81 11.26 11.71
</TABLE>
COMBINED MARGINAL TAX RATES FOR SINGLE TAXPAYERS WITH ONE PERSONAL EXEMPTION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED
TAXABLE GROSS STATE AND TAX-EXEMPT ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL --------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25% 6.50%
------------- ------------- ----------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 22.8 $ 0-111.8 20.0 5.94 6.25 6.56 6.88 7.19 7.50 7.81 8.13
22.8- 55.1 0-111.8 32.5 7.04 7.41 7.78 8.15 8.52 8.89 9.26 9.63
55.1-115.0 0-111.8 35.0 7.31 7.69 8.08 8.46 8.85 9.23 9.62 10.00
111.8-234.3 36.5 7.48 7.87 8.27 8.66 9.06 9.45 9.84 10.24
115.0-250.0 111.8-234.3 41.5 8.12 8.55 8.97 9.40 9.83 10.26 10.68 11.11
Over 234.3 41.0 2 8.05 8.47 8.90 9.32 9.75 10.17 10.59 11.02
Over 250.0 Over 234.3 44.5 3 8.56 9.01 9.46 9.91 10.36 10.81 11.26 11.71
<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>
D-3
<PAGE>
APPENDIX E
PENNSYLVANIA DISCLOSURE
ECONOMIC FACTORS--PENNSYLVANIA
RISK FACTORS--Prospective investors should consider the financial
difficulties and pressures which the Commonwealth of Pennsylvania and certain of
its municipal subdivisions have undergone. Both the Commonwealth and the City of
Philadelphia have historically experienced significant revenue shortfalls. There
can be no assurance that the Commonwealth will not experience further declines
in economic conditions or that portions of the municipal obligations purchased
by the Fund will not be affected by such declines. Without intending to be
complete, the following briefly summarizes some of these difficulties and the
current financial situation, as well as some of the complex factors affecting
the financial situation in the Commonwealth. It is derived from sources that are
generally available to investors and is based in part on information obtained
from various agencies in the Commonwealth. No independent verification has been
made of the following information.
STATE ECONOMY--Pennsylvania has been historically identified as a heavy
industry state although that reputation has changed recently as the industrial
composition of the Commonwealth diversified when the coal, steel and railroad
industries began to decline. The major new sources of growth in the Commonwealth
are in the service sector, including trade, medical and the health services,
education and financial institutions. The Commonwealth's agricultural industries
are also an important component of its economic structure, accounting for more
than $3.6 billion in crop and livestock products annually while agribusiness and
food related industries support $39 billion in economic activity annually.
Employment within the Commonwealth increased steadily from 1984 to 1990.
From 1991 to 1994, employment in the Commonwealth declined 1.2 percent. The
growth in employment experienced in the Commonwealth during such periods is
comparable to the growth in employment in the Middle Atlantic region of the
United States. Non-manufacturing employment in the Commonwealth has increased
steadily since 1980 to its 1994 level of 82.0 percent of total Commonwealth
employment. Manufacturing, which contributed 18.0 percent of 1994 non-
agricultural employment, has fallen behind both the services sector and the
trade sector as the largest single source of employment within the Commonwealth.
In 1994, the services sector accounted for 29.9 percent of all non-agricultural
employment in the Commonwealth while the trade sector accounted for 22.9
percent.
The Commonwealth recently experienced a slowdown in its economy. Moreover,
economic strengths and weaknesses vary in different parts of the Commonwealth.
In general, heavy industry and manufacturing have been facing increasing
competition from foreign producers. During 1994, the annual average unemployment
rate in the Commonwealth was 6.2 percent compared to 6.1 percent for the United
States. For June 1995 the unadjusted unemployment rate was 6.0 percent in the
Commonwealth and 5.8 percent in the United States, while the seasonally adjusted
unemployment rate for the Commonwealth was 6.2 percent and for the United States
was 5.6 percent.
STATE BUDGET--The Commonwealth operates under an annual budget that is
formulated and submitted for legislative approval by the Governor each February.
The Pennsylvania Constitution requires that the Governor's budget proposal
consist of three parts: (i) a balanced operating budget setting forth proposed
expenditures and estimated revenues from all sources and, if estimated revenues
and available surplus are less than proposed expenditures, recommending specific
additional sources of revenue sufficient to pay the deficiency; (ii) a capital
budget setting forth proposed expenditures to be financed from the proceeds of
obligations of the Commonwealth or its agencies or from operating funds; and
(iii) a financial plan for not less than the succeeding five fiscal years, that
includes for each year projected operating expenditures and estimated revenues
and projected expenditures for capital projects. The General Assembly may add,
change or delete any items in the budget prepared by the Governor, but the
Governor retains veto power over the individual appropriations passed by the
legislature. The Commonwealth's fiscal year begins on July 1 and ends on June
30.
All funds received by the Commonwealth are subject to appropriation in
specific amounts by the General Assembly or by executive authorization by the
Governor. Total appropriations enacted by the General Assembly may not exceed
the ensuing year's estimated revenues, plus (less) the unappropriated fund
balance (deficit) of the preceding year, except for constitutionally authorized
debt service payments. Appropriations from the principal operating funds of the
Commonwealth (the General Fund, the Motor License Fund and the State Lottery
Fund) are generally made for one fiscal year and are returned to the
unappropriated surplus of the fund if not spent or encumbered by the end of the
fiscal year. The Constitution specifies that a surplus of operating funds at the
end of a fiscal year must be appropriated for the ensuing year.
Pennsylvania uses the "fund" method of accounting for receipts and
disbursements. For purposes of government accounting, a "fund" is an independent
fiscal and accounting entity with a self-balancing set of accounts,
E-1
<PAGE>
recording cash and/or other resources together with all related liabilities and
equities that are segregated for the purpose of carrying on specific activities
or attaining certain objectives in accordance with the fund's special
regulations, restrictions or limitations. In the Commonwealth, over 150 funds
have been established by legislative enactment or in certain cases by
administrative action for the purpose of recording the receipts and disbursement
of moneys received by the Commonwealth. Annual budgets are adopted each fiscal
year for the principal operating funds of the Commonwealth and several other
special revenue funds. Expenditures and encumbrances against these funds may
only be made pursuant to appropriation measures enacted by the General Assembly
and approved by the Governor. The General Fund, the Commonwealth's largest fund,
receives all tax revenues, non-tax revenues and federal grants and entitlements
that are not specified by law to be deposited elsewhere. The majority of the
Commonwealth's operating and administrative expenses are payable from the
General Fund. Debt service on all bond indebtedness of the Commonwealth, except
that issued for highway purposes or for the benefit of other special revenue
funds, is payable from the General Fund.
Financial information for the principal operating funds of the Commonwealth
are maintained on a budgetary basis of accounting, which is used for the purpose
of ensuring compliance with the enacted operating budget. The Commonwealth also
prepares annual financial statements in accordance with generally accepted
accounting principles ("GAAP"). Budgetary basis financial reports are based on a
modified cash basis of accounting as opposed to a modified accrual basis of
accounting prescribed by GAAP. Financial information is adjusted at fiscal
year-end to reflect appropriate accruals for financial reporting in conformity
with GAAP.
RECENT FINANCIAL RESULTS--From fiscal 1984, when the Commonwealth first
prepared its financial statements on a GAAP basis, through fiscal 1989, the
Commonwealth reported a positive unreserved-undesignated fund balance for its
governmental fund types at each fiscal year end. Slowing economic growth during
1990, leading to a national economic recession beginning in fiscal 1991, reduced
revenue growth and increased expenditures and contributed to negative
unreserved-undesignated fund balances at the end of the 1990 and 1991 fiscal
years. The negative unreserved-undesignated fund balance was due largely to
operating deficits in the General Fund and the State Lottery Fund during those
fiscal years. Actions taken during fiscal 1992 to bring the General Fund back
into balance, including tax increases and expenditure restraints, resulted in a
$1.1 billion reduction to the unreserved-undesignated fund deficit for combined
governmental fund types at June 30, 1993, as a result of a $420.4 million
increase in the balance. These gains were produced by continued efforts to
control expenditure growth. The Combined Balance Sheet as of June 30, 1993,
showed total fund balance and other credits for the total governmental fund
types of $1,959.9 million, a $732.1 million increase from the balance at June
30, 1992. During fiscal 1993, total assets increased by $1,296.7 million to
$7,096.4 million, while liabilities increased $564.6 million to $5,136.5
million.
FISCAL 1991 FINANCIAL RESULTS--The Commonwealth experienced a $453.6 million
General Fund deficit as of the end of its 1991 fiscal year. The deficit
reflected higher than budgeted expenditures, below-estimate economic activity
and growth rates of economic indicators and total tax revenue shortfalls below
those assumed in the enacted budget.
Rising demands on state programs caused by the economic recession,
particularly for medical assistance and cash assistance programs, and the
increased costs of special education programs and correction facilities and
programs, contributed to increased expenditures in fiscal 1991, while tax
revenues for the 1991 fiscal year were severely affected by the economic
recession. Total corporation tax receipts and sales and use tax receipts during
fiscal 1991 were, respectively, 7.3 percent and 0.9 percent below amounts
collected during fiscal 1990. Personal income tax receipts also were affected by
the recession but not to the extent of the other major General Fund taxes,
increasing only 2.0 percent over fiscal 1990 collections.
A number of actions were taken throughout the fiscal year by the
Commonwealth to mitigate the effects of the recession on budget revenues and
expenditures. The Commonwealth initiated a number of cost-saving measures,
including the firing of 2,000 state employees, deferral of paychecks and
reduction of funds to state universities, which resulted in approximately $871
million cost savings.
FISCAL 1992 FINANCIAL RESULTS--Actions taken during fiscal 1992 to bring the
General Fund budget back into balance, including tax increases and expenditure
restraints resulted in a $1.1 billion reduction for the unreserved-undesignated
fund deficit for combined governmental fund types and a return to a positive
fund balance. Total General Fund revenues for fiscal 1992 were $14,516.8
million, which is approximately 22 percent higher than fiscal 1991 revenues of
$11,877.3 million due in large part to tax increases. The increased revenues
funded substantial increases in education, social services and corrections
programs. As a result of the tax increases and certain appropriation lapses,
fiscal 1992 ended with an $8.8 million surplus after having started the year
with an unappropriated General Fund balance deficit of $453.6 million.
E-2
<PAGE>
FISCAL 1993 FINANCIAL RESULTS--Fiscal 1993 closed with revenues higher than
anticipated and expenditures approximately as projected, resulting in an ending
unappropriated balance surplus of $242.3 million. A deduction in the personal
income tax rate in July 1992 and the one-time receipt of revenues from
retroactive corporate tax increases in fiscal 1992 were responsible, in part,
for the low growth in fiscal 1993.
FISCAL 1994 FINANCIAL RESULTS--Commonwealth revenues during the 1994 fiscal
year totaled $15,210.7 million, $38.6 million above the fiscal year estimate,
and 3.9 percent over commonwealth revenues during the 1993 fiscal year. The
sales tax was an important contributor to the higher than estimated revenues.
The strength of collections from the sales tax offset the lower than budgeted
performance of the personal income tax that ended the 1994 fiscal year $74.4
million below estimate. The shortfall in the personal income tax was largely due
to shortfalls in income not subject to withholding such as interest, dividends
and other income. Expenditures, excluding pooled financing expenditures and net
of all fiscal 1994 appropriation lapses, totaled $14,934.4 million representing
a 7.2 percent increase over fiscal 1993 expenditures. Medical assistance and
prisons spending contributed to the rate of spending growth for the 1994 fiscal
year. The Commonwealth maintained an operating balance on a budgetary basis for
fiscal 1994 producing a fiscal year ending unappropriated surplus of $335.8
million.
FISCAL 1995 BUDGET--On June 16, 1994, the Governor signed a $15.7 billion
General Fund budget, an increase of over 3.9 percent from the Fiscal 1994
budget. A substantial amount of the increase was targeted for medical assistance
expenditures, reform of the state-funded public assistance program and education
subsidies to local school districts. The budget also included tax reductions
totaling an estimated $166.4 million benefiting principally low income families
and corporations. Fiscal 1995 was projected to end with a $3.2 million year-end
unappropriated surplus.
FISCAL 1996 BUDGET--On June 30, 1995, the Governor signed a $16.2 billion
general fund budget, an increase of approximately 2.8 percent from the fiscal
1995 budget. Areas receiving the largest budgetary increases are medical
assistance and basic education. In addition, the budget accelerated corporate
net income tax rate reductions, eliminated the inheritance tax paid by a
surviving spouse on jointly owned property, and made other business tax
reductions.
DEBT LIMITS AND OUTSTANDING DEBT--The Pennsylvania Constitution permits the
issuance of the following types of debt: (i) debt to suppress insurrection or
rehabilitate areas affected by disaster; (ii) electorate approved debt; (iii)
debt for capital projects subject to an aggregate outstanding debt limit of 1.75
times the annual average tax revenues of the preceding five fiscal years; and
(iv) tax anticipation notes payable in the fiscal year of issuance.
Under the Pennsylvania Fiscal Code, the Auditor General is required to
certify to the Governor and the General Assembly certain information regarding
the Commonwealth's indebtedness. According to the August 31, 1995 Auditor
General certificate, the average annual tax revenues deposited in all funds in
the five fiscal years ended June 30, 1995 was approximately $17.7 billion, and
therefore, the net debt limitation for the 1995 fiscal year is $30.9 billion.
Outstanding net debt totaled $3.9 billion at June 30, 1995, approximately equal
to the net debt at June 30, 1993. At August 31, 1995, the amount of debt
authorized by law to be issued, but not yet incurred, was $16.5 billion.
DEBT RATINGS--All outstanding general obligation bonds of the Commonwealth
are rated AA- by S&P and A1 by Moody's.
CITY OF PHILADELPHIA--The City of Philadelphia (the "City" or
"Philadelphia") is the largest city in the Commonwealth. Philadelphia
experienced a series of general fund deficits for fiscal years 1988 through 1992
which have culminated in the City's present serious financial difficulties. In
its 1992 Comprehensive Annual Financial Report, Philadelphia reported a
cumulative general fund deficit of $71.4 million for fiscal year 1992.
In June 1991, the Pennsylvania legislature established the Pennsylvania
Intergovernmental Cooperation Authority ("PICA"), a five-member board which
oversees the fiscal affairs of the City of Philadelphia. The legislation
empowers PICA to issue notes and bonds on behalf of Philadelphia, and also
authorizes Philadelphia to levy a one-percent sales tax the proceeds of which
would be used to pay off the bonds. In return for PICA's fiscal assistance,
Philadelphia is required, among other things, to establish a five-year financial
plans that include balanced annual budgets. Under the legislation, if
Philadelphia does not comply with such requirements, PICA may withhold bond
revenues and certain state funding.
At this time, the City is operating under a five-year fiscal plan approved
by PICA on April 6, 1992. Full implementation of the five-year plan was delayed
due to labor negotiations that were not completed until October 1992, three
months after the expiration of the old labor contracts. The terms of the new
labor contracts are estimated to cost approximately $144.4 million more than
what was budgeted in the original five-year plan. An
E-3
<PAGE>
amended five-year plan was approved by PICA in May 1993. The Mayor's latest
update of the five-year financial plan was approved by PICA on May 2, 1994.
As of November 17, 1994, PICA has issued $1,296.7 million of its Special Tax
Revenue Bonds. In accordance with the enabling legislation, PICA was guaranteed
a percentage of the wage tax revenue expected to be collected from Philadelphia
residents to permit repayment of the bonds.
In January 1993, Philadelphia anticipated a cumulative general fund budget
deficit of $57 million for the 1993 fiscal year. In response to the anticipated
deficit, the Mayor unveiled a financial plan eliminating the budget deficit for
the 1993 budget year through significant service cuts that included a plan to
privatize certain city provided services. Due to an upsurge in tax receipts,
cost-cutting and additional PICA borrowings, Philadelphia completed the 1993
fiscal year with a balanced general fund budget. The audit findings for fiscal
1993 show a cumulative general fund surplus of approximately $3 million for the
fiscal year ended June 30, 1993.
In January 1994, the Mayor proposed a $2.3 billion city general fund budget
that included no tax increases, no significant service cuts and a series of
modest health and welfare program increases. At that time, the Mayor also
unveiled a $2.2 billion program (the "Philadelphia Economic Stimulus Program")
designed to stimulate Philadelphia's economy and stop the loss of 1,000 jobs a
month. In its 1994 Comprehensive Annual Financial Report, Philadelphia reported
a cumulative general fund surplus of approximately $15.4 million for the fiscal
year ended June 30, 1994.
The Standard & Poor's Corporation rating on Philadelphia general obligation
bonds is "B-." Moody's rating is currently "Baa."
LITIGATION--The Commonwealth is a party to numerous lawsuits in which an
adverse final decision could materially affect the Commonwealth's governmental
operations and consequently its ability to pay debt service on its obligations.
The Commonwealth also faces tort claims made possible by the limited waiver of
sovereign immunity effected by Act 152, approved September 28, 1978, as amended.
PENNSYLVANIA TAXABLE ESTIMATED CURRENT RETURN TABLE
The following tables show the approximate taxable estimated current returns
for individuals that are equivalent to tax-exempt estimated current returns
under combined Federal and state taxes, using published 1994 marginal Federal
tax rates and marginal state tax rates currently available and scheduled to be
in effect. The tables incorporate increased tax rates for higher-income
taxpayers that were included in the Revenue Reconciliation Act of 1993. For
cases in which more than one state bracket falls within a Federal bracket, the
highest state bracket is combined with the Federal bracket. The combined state
and Federal tax brackets shown reflect the fact that state tax payments are
currently deductible for Federal tax purposes. The tables illustrate what you
would have to earn on taxable investments to equal the tax-exempt estimated
current return for your income tax bracket. A taxpayer's marginal tax rate is
affected by both his taxable income and his adjusted gross income. Locate your
adjusted gross and your taxable income (which is your adjusted gross income
reduced by any deductions and exemptions), then locate your tax bracket based on
joint or single tax filing. Read across to the equivalent taxable estimated
current return you would need to match the tax-free income.
E-4
<PAGE>
COMBINED MARGINAL TAX RATES FOR JOINT TAXPAYERS WITH FOUR PERSONAL EXEMPTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED
TAXABLE GROSS STATE* AND TAX-EXEMPT ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL --------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25% 6.50%
------------- ------------- ----------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 38.0 $ 0-111.8 17.5 % 5.76 6.06 6.36 6.67 6.97 7.27 7.58 7.88
38.0- 91.9 0-111.8 30.0 6.79 7.14 7.50 7.86 8.21 8.57 8.93 9.29
111.8-167.7 31.0 6.88 7.25 7.61 7.97 8.33 8.70 9.06 9.42
91.9-140.0 0-111.8 33.0 7.09 7.46 7.84 8.21 8.58 8.96 9.33 9.70
111.8-167.7 34.0 7.20 7.58 7.95 8.33 8.71 9.09 9.47 9.85
167.7-290.2 36.5 7.48 7.87 8.27 8.66 9.06 9.45 9.84 10.24
140.0-250.0 111.8-167.7 39.0 7.79 8.20 8.61 9.02 9.43 9.84 10.25 10.66
167.7-290.2 41.5 8.12 8.55 8.97 9.40 9.83 10.26 10.68 11.11
Over 290.2 39.0 2 7.79 8.20 8.61 9.02 9.43 9.84 10.25 10.66
Over 250.0 167.7-290.2 45.5 8.72 9.17 9.63 10.09 10.55 11.01 11.47 11.93
Over 290.2 42.5 3 8.26 8.70 9.13 9.57 10.00 10.43 10.87 11.30
</TABLE>
COMBINED MARGINAL TAX RATES FOR SINGLE TAXPAYERS WITH ONE PERSONAL EXEMPTION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FEDERAL
FEDERAL ADJUSTED COMBINED
TAXABLE GROSS STATE* AND TAX-EXEMPT ESTIMATED CURRENT RETURN
INCOME INCOME FEDERAL --------------------------------------------------------------
(1,000'S) (1,000'S) TAX RATE1 4.75% 5.00% 5.25% 5.50% 5.75% 6.00% 6.25% 6.50%
------------- ------------- ----------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0- 22.8 $ 0-111.8 17.5 5.76 6.06 6.36 6.67 6.97 7.27 7.58 7.88
22.8- 55.1 0-111.8 30.0 6.79 7.14 7.50 7.86 8.21 8.57 8.93 9.29
55.1-115.0 0-111.8 33.0 7.09 7.46 7.84 8.21 8.58 8.96 9.33 9.70
111.8-234.3 34.5 7.25 7.63 8.02 8.40 8.78 9.16 9.54 9.92
115.0-250.0 111.8-234.3 39.5 7.85 8.26 8.68 9.09 9.50 9.92 10.33 10.74
Over 234.3 39.0 2 7.79 8.20 8.61 9.02 9.43 9.84 10.25 10.66
Over 250.0 Over 234.3 42.5 3 8.26 8.70 9.13 9.57 10.00 10.43 10.87 11.30
<FN>
- ------------------
1 The table reflects the effect of the limitations on itemized deductions and the deduction for personal exemptions. They
were designed to phase out certain benefits of these deductions for higher income taxpayers. These limitations, in effect, raise
the current maximum marginal Federal tax rate to approximately 44.0 percent for taxpayers filing a joint return and entitled to
four personal exemptions and to approximately 41.0 percent for taxpayers filing a single return entitled to only one personal
exemption. These limitations are subject to certain maximums, which depend on the number of exemptions claimed and the total
amount of the taxpayer's itemized deductions. For example, the limitation on itemized deductions will not cause a taxpayer to
lose more than 80% of his allowable itemized deductions, with certain exceptions.
2 Federal tax rate reverts to 36.0% after the 80% cap on the limitation on itemized deductions has been met.
3 Federal tax rate reverts to 39.6% after the 80% cap on the limitation on itemized deductions has been met.
</TABLE>
E-5
<PAGE>
Statement of differences between electronic filing and printed document.
Pursuant to Rule 499(c) (7) under the Securities Act of 1933 and Rule
20-11 under the Investment Company Act of 1940, Registrant hereby identifies
those differences in the foregoing document between the electronic format in
which it is filed and the printed form in which it will be circulated:
(1) The printed and distributed prospectus may be paged differently
because the printed document may contain a different amount of information on
each page from that contained in the electronic transmission.
(2) On the cover page, in the index and on the last page of the printed
document, solid vertical bars will appear.
(3) In the printed document, footnote symbols may include a "dagger" or
multiple "dagger". The "dagger" symbol is represented as # in the electronic
document.
(4) The printed and distributed prospectus will not contain the
preliminary prospectus legend included at the beginning of the first
prospectus page.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
A. BONDING ARRANGEMENTS OF DEPOSITOR:
The Depositor has obtained the following Stockbrokers Blanket Bonds
for its officers, directors and employees:
INSURER/POLICY NO. AMOUNT
United Pacific Insurance Co. $10,000,000
Reliance Insurance Company
B 74 92 20
Aetna Casualty and Surety $10,000,000
08 F10618BCA
St. Paul Insurance Co. $ 6,000,000
400 HC 1051
B. This amendment of Registration Statement comprises the following papers
and documents:
The facing sheet
The cross-reference sheet
The Prospectus
The signatures
Consents of Independent Public
Accountants and Counsel as indicated
Exhibits as listed on page S-5
C. Explanatory Note:
This Amendment No. 1 to the Registration Statement contains
multiple separate prospectuses. Each prospectus will relate to an
individual unit investment trust and will consist of a Part A, a
Part B and an Information Supplement. Each prospectus will be
identical with the exception of the respective Part A which will
contain the financial information specific to such underlying unit
investment trust.
D. Undertakings:
1. With the exception of the information included in the state
specific appendices to the Information Supplement, which will vary
depending upon the make-up of a Fund or updated to reflect current
events, any amendment to a Fund's Information Supplement will be
subject to the review of the staff of the Securities and Exchange
Commission prior to distribution; and
2. The Information Supplement to the Trust will not include third
party financial information.
<PAGE>
SIGNATURES
The Registrant, Nuveen Tax-Exempt Unit Trust, Series 827 hereby
identifies Series 401, 507, 512, 515, 517, 519, 723, 814 and 823 of the Nuveen
Tax-Exempt Unit Trust for purposes of the representations required by
Rule 487 and represents the following:
(1) that the portfolio securities deposited in the series as to the
securities of which this Registration Statement is being filed do not differ
materially in type or quality from those deposited in such previous series;
(2) that, except to the extent necessary to identify the specific
portfolio securities deposited in, and to provide essential financial
information for, the series with respect to the securities of which this
Registration Statement is being filed, this Registration Statement does not
contain disclosures that differ in any material respect from those contained
in the registration statements for such previous series as to which the
effective date was determined by the Commission or the staff; and
(3) that it has complied with Rule 460 under the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Nuveen Tax-Exempt Unit Trust, Series 827 has duly caused this
Amendment of Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized in the City of Chicago and State of
Illinois on 9/28/95.
NUVEEN TAX-EXEMPT UNIT TRUST, SERIES 827
(Registrant)
By JOHN NUVEEN & CO. INCORPORATED
(Depositor)
By: George P. Thermos
_________________________________
Vice President
Attest: Morrison C. Warren
__________________________________
Assistant Secretary
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
of Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
SIGNATURE TITLE* DATE
Richard J. Franke Chairman, Board of Directors )
Chief Executive Officer and )
Director )
)
Donald E. Sveen President, Chief Operating )
Officer and Director )
)
Anthony T. Dean Executive Vice President ) Larry Woods Martin
and Director ) Attorney-In-Fact**
)
Timothy T. Schwertfeger Executive Vice President )
and Director )
John P. Amboian Chief Financial Officer and )
Executive Vice President )
O. Walter Renfftlen Vice President and Controller )
(Principal Accounting Officer))
)
)9/28/95
___________________
*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 Schwertfeger with the Amendment to the
Registration Statement on Form S-6 of Nuveen Tax-Exempt Unit Trust,
Series 671 (File No. 33-49175). The Power of Attorney for Messr. Amboian
was filed with the Amendment to the Registration statement on Form S-6 of
Nuveen Tax-Exempt Unit Trust, Series 823 (File No. 33-62325).
<PAGE>
827
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The consent of Arthur Anderson LLP to the use of its name in the Prospectus
included in the Registration Statement is filed by this amendment as Exhibit
4.4 to the Registratin Statement.
CONSENT OF CHAPMAN AND CUTLER
The consent of Chapman and Cutler to the use of its name in the Prospectus
included in the Registration Statement is contained in its opinions filed by
this amendment as Exhibits 3.1 and 3.2 to the Registration Statement.
CONSENT OF STATE COUNSEL
The consents of special counsel to the Fund for state tax matters to the
use of their names in the Prospectus included in the Registration Statement
are contained in their opinions filed by this amendment as Exhibit 3.3 to the
Registration Statement.
CONSENT OF STANDARD & POOR'S,
A DIVISION OF THE MCGRAW-HILL COMPANIES
The consent of Standard & Poor's, a Division of The McGraw-Hill
Companies, to the use of its name in the Prospectus included in the Registration
Statement is filed by this amendment as Exhibit 4.1 to the Registration
Statement.
CONSENT OF KENNY S&P EVALUATION SERVICES
The consent of Kenny S&P Evaluation Services to the use of its name in the
Prospectus included in the Registration Statement is filed by this amendment
as Exhibit 4.2 to the Registration Statement.
CONSENT OF CARTER, LEDYARD & MILBURN
The consent of Carter, Ledyard & Milburn to the use of its name in the
Prospectus included in the Registration Statement is filed by this amendment
as Exhibit 4.3 to the Registration Statement.
<PAGE>
LIST OF EXHIBITS
1.1 (a) Copy of Standard Terms and Conditions of Trust between John Nuveen &
Co. Incorporated, Depositor, and The Chase Manhattan Bank (National
Association), Trustee (as Exibit 1.1 (a) to the Sponsor's Registration
Statement on Form S-6 relating to Series 823 of the Fund (file No.
33-62325) and incorporated herein by reference).
1.1 (b) Trust Indenture and Agreement.
2.1 Copy of Certificate of Ownership (Included in Exhibit 1.1(a) on
pages 2 to 8, inclusive, and incorporated herein by reference).
3.1 Opinion of counsel as to legality of securities being registered.
3.2 Opinion of counsel as to Federal income tax status of securities
being registered.
3.3 Opinions of special state counsel to the Fund for state tax matters
as to income tax status to residents of the respective states of the
units of the respective trusts and consents to the use of their names
in the Prospectus.
4.1 Consent of Standard & Poor's, a Division of The McGraw-Hill Companies.
4.2 Consent of Kenny S&P Evaluation Services.
4.3 Consent of Carter, Ledyard & Milburn.
4.4 Consent of Arthur Anderson LLP
6.1 List of Directors and Officers of Depositor and other related
information (incorporated by reference to Form S-6 [File No.
33-62325] filed on September 7, 1995 on behalf of Nuveen Tax-Exempt
Unit Trust, Series 823).
<PAGE>
Exhibit 1.1(b)
Nuveen Tax-Exempt Unit Trust Series 827
Trust Indenture and Agreement
Dated 9/28/95
This Trust Indenture and Agreement by and between John Nuveen & Co.
Incorporated, as Depositor and The Chase Manhattan Bank (National Association),
as Trustee, sets forth certain provisions in full and incorporates other
provisions by reference to the document entitled "Standard Terms and Conditions
of Trust for Nuveen Tax-Exempt Unit Trust Series 823 and subsequent Series,
effective September 7, 1995" (herein called the "Standard Terms and Conditions
of Trust"), and such provisions as are set forth in full and such provisions as
are incorporated by reference constitute a single instrument. All references
herein to Articles and Sections are to Articles and Sections of the Standard
Terms and Conditions of Trust.
Witnesseth That:
In consideration of the premises and of the mutual agreements herein contained,
the Depositor and the Trustee, agree as follows:
Part I
Standard Terms and Conditions of Trust
Subject to the Provisions of Part II hereof, all the provisions contained in the
Standard Terms and Conditions of Trust are herein incorporated by reference in
their entirety and shall be deemed to be a part of this instrument as fully and
to the same extent as though said provisions had been set forth in full in this
instrument.
Part II
Special Terms and Conditions of Trust
The following special terms and conditions are hereby agreed to:
(a) The Bonds defined in Section 1.01(1) listed in Schedule A hereto have
been deposited in trust under this Trust Indenture and Agreement.
(b) The fractional undivided interest in and ownership of the Trust Fund
represented by each Unit for a Trust on the Initial Date of Deposit is the
amount set forth under the captions "Essential Information _ Fractional
Undivided Interest in the Trust per Unit" in the Prospectus.
(c) The number of Units created of a Trust are as set forth under the
caption "Essential Information - Number of Units" in the Prospectus for each
Trust.
In Witness Whereof, John Nuveen & Co. Incorporated, has caused this Trust
Indenture and Agreement for Nuveen Tax-Exempt Unit Trust Series 827 to be
executed by its President, one of its Vice Presidents or one of its Assistant
Vice Presidents and its corporate seal to be hereto affixed and attested by its
Secretary or its Assistant Secretary and The Chase Manhattan Bank (National
Association) has caused this Trust Indenture and Agreement to be executed by one
of its Vice Presidents or Second Vice Presidents and its corporate seal to be
hereto affixed and attested to by one of its Assistant Treasurers; all as of the
day, month and year first above written.
John Nuveen & Co. Incorporated,
Depositor
By Larry Woods Martin
Authorized Officer
(Seal)
Attest:
By Morrison C. Warren
Assistant Secretary
The Chase Manhattan Bank (National Association), Trustee
By Timothy Kelley
Second Vice President
(Seal)
Attest:
By Joseph Lyons
Assistant Treasurer
Schedule A to the Trust Indenture and Agreement Securities Initially
Deposited in Nuveen Tax-Exempt Unit Trust Series 827
(Note: Incorporated herein and made a part hereof is the "Schedule of
Investments" as set forth for each Trust in the Prospectus.)
<PAGE>
EXHIBIT 3.1
(ON CHAPMAN AND CUTLER LETTERHEAD)
9/28/95
John Nuveen & Co. Incorporated
333 W. Wacker Drive
Chicago, Illinois 60606
RE: Nuveen Tax-Exempt Unit Trust, Series 827
Gentlemen:
We have served as counsel for you, as depositor of Nuveen Tax-Exempt Unit
Trust, Series 827 (hereinafter referred to as the "Fund"), in connection
with the issuance under the Trust Indenture and Agreement dated the date
hereof between John Nuveen & Co. Incorporated, as Depositor, and The Chase
Manhattan Bank (National Association), as Trustee, of Units of fractional
undivided interest in the one or more Trusts of said Fund (hereinafter
referred to as the "Units").
In connection therewith, we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable us
to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Indenture and Agreement and
the establishment of book entry positions and the execution and issuance of
certificates evidencing the Units in the Trusts of the Fund have been duly
authorized; and
2. The book entry positions and certificates positions evidencing the
Units in the Trusts of the Fund when duly executed and delivered or duly
established by the Depositor and the Trustee in accordance with the
aforementioned Trust Indenture and Agreement, will constitute valid and
binding obligations of such Trusts and the Depositor in accordance with the
terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-62615) relating to the Units referred
to above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
<PAGE>
EXHIBIT 4.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of
our report and to all references to our Firm included in or made a
part of this Registration Statement.
ARTHUR ANDERSON LLP
Chicago, Illinois
9/28/95
<PAGE>
EXHIBIT 4.2
(On J. J. Kenny Co., Inc., Letterhead)
9/28/95
John Nuveen & Company
333 West Wacker Drive
Chicago, IL 60606-1286
RE: Nuveen Tax Exempt Unit Trust, Series 827
Gentlemen:
We have examined Registration Statement File No. 33-62615 for the
above-captioned trust. We hereby acknowledge that Kenny S+P Evaluation
Services, a division of J. J. Kenny Co., Inc. is currently acting as
the evaluator for the trust. We hereby consent to the use in the Registration
Statement of the reference to Kenny S+P Evaluation Services, a division of
J. J. Kenny Co., Inc. as evaluator.
In addition, we hereby confirm that the ratings indicated in the
Registration Statement for the respective bonds comprising the trust
portfolio are the ratings currently indicated in our KENNYBASE database.
You are hereby authorized to file a copy of this letter with
the Securities and Exchange Commission.
Sincerely,
Frank A. Ciccotto
<PAGE>
EXHIBIT 4.1
(ON STANDARD & POOR'S, A DIVISION OF THE MCGRAW-HILL COMPANIES LETTERHEAD)
9/28/95
John Nuveen & Co. Incorporated
333 W. Wacker Drive
Chicago, IL 60606
RE: Nuveen Tax-Exempt Unit Trust, Series 827
Gentlemen:
This is in response to your requests regarding the above-
captioned fund which consists of separate underlying unit investment trusts
(the "trusts"), SEC file # 33-62615.
We have reviewed the information presented to us and have assigned a 'AAA'
rating to the units of each insured trust and a 'AAA' rating to the securities
contained in each insured trust. The ratings are direct reflections of the
portfolio of each insured trust, which will be composed solely of securities
covered by bond insurance policies that insure against default in the payment
of principal and interest on the securities contained in each insured trust
for as long as they remain outstanding. We understand that the bonds
described in the prospectus are the same as those in the attached list.
Since such policies have been issued by MBIA which has been assigned a 'AAA'
claims paying ability rating by S&P, S&P has assigned a 'AAA' rating to
the units of each insured trust and a 'AAA' rating to the securities contained
in each insured trust.
You have permission to use the name of Standard & Poor's, a Division of The
McGraw-Hill Companies and the above-assigned rating in connection with your
dissemination of information relating to the insured trusts provided that it is
understood that the ratings are not "market" ratings nor recommendations to buy,
hold or sell the units of the insured trusts or the securities contained in the
insured trusts. Further, it should be understood the rating on the units of
each insured trust does not take into account the extent to which the trust's
expenses or portfolio asset sales for less than the trust's purchase price will
reduce payment to the unit holders of the interest and principal required to be
paid on the portfolio assets. S&P reserves the right to advise its own clients,
subscribers, and the public of the ratings. S&P relies on the sponsor and its
counsel, accountants, and other experts for the accuracy and completeness
of the information submitted in connection with the ratings. S&P does not
independently verify the truth or accuracy of any such information.
This letter evidences our consent to the use of the name of Standard &
Poor's, a Division of The McGraw-Hill Companies in connection with the rating
assigned to the units of each insured trust in the registration statement or
prospectus relating to the units and the trusts. However, this letter should
not be construed as a consent by us, within the meaning of Section 7 of the
Securities Act of 1933, to the use of the name of Standard & Poor's, a Division
of The McGraw-Hill Companies in connection with the ratings assigned to the
securities contained in the insured trusts. You are hereby authorized to file a
copy of this letter with the Securities and Exchange Commission.
Please be certain to send us three copies of your final prospectus as
soon as it becomes available. Should we not receive them within a reasonable
amount of time after the closing or should they not conform to the
certification received by us, we reserve the right to nullify the ratings.
Very truly yours,
STANDARD & POOR'S, A DIVISION OF THE MCGRAW-HILL COMPANIES
By Sanford Bragg
<PAGE>
EXHIBIT 3.2
(ON CHAPMAN AND CUTLER LETTERHEAD)
9/28/95
John Nuveen & Co. Incorporated
333 W. Wacker Drive
Chicago, Illinois 60606
RE: Nuveen Tax-Exempt Unit Trust, Series 827
Gentlemen:
We have served as counsel for you, as Depositor of Nuveen Tax-Exempt Unit
Trust, Series 827 (the "Fund") in connection with the issuance under the
Trust Indenture and Agreement, dated the date hereof between John Nuveen & Co.
Incorporated, as Depositor, and The Chase Manhattan Bank (National Association),
as Trustee, of Units of fractional undivided interest (the "Units"), as
evidenced by a book entry position or certificate, if requested by the purchaser
of Units, in the one or more Trusts of said Fund.
We have also served as counsel for you in connection with all previous
Series of the Nuveen Tax-Exempt Unit Trust and as such have previously
examined such pertinent records and documents and matters of law as we have
deemed necessary, including (but not limited to) the Trust Indenture and
Agreements with respect to those series. We have also examined such
pertinent records and documents and matters of law as we have deemed
necessary including (but not limited to) the Trust Indenture and Agreement
relating to Nuveen Tax-Exempt Unit Trust, Series 827.
We have concluded that the Trust Indenture and Agreement for the Fund and
its counterpart in each of the prior issues of Nuveen Tax-Exempt Unit Trust
are in all material respects substantially identical.
Based upon the foregoing, and upon such matters of law as we consider
to be applicable we are of the opinion that, under existing federal income
law:
(i) For Federal income tax purposes, each of the Trusts will not be
taxable as an association but will be governed by the provisions of
Subchapter J (relating to Trusts) of Chapter 1, Internal Revenue Code of
1986 (the "Code").
(ii) Each Unitholder will be considered as owning a pro rata
share of each asset of the respective Trust of the Fund in the proportion
that the number of Units of such Trust held by him bears to the total number
of outstanding Units of such Trust. Under Subpart E, Subchapter J of Chapter
1 of the Code, income of each Trust will be treated as income of each
Unitholder thereof in the proportion described and an item of Fund income
will have the same character in the hands of a Unitholder as it would have in
the hands of the Trustee. Accordingly, to the extent that the income of a
Trust consists of interest and original issue discount excludable from gross
income under Section 103 of the Code, such income will be excludable from
federal gross income of the Unitholder, except in the case of a Unitholder
who is a substantial user (or a person related to such user) of a facility
financed through issuance of any industrial development bonds or certain
private activity bonds held by the Trust. In the case of such Unitholder who
is a substantial user (and no other) interest received and original issue
discount with respect to his Units attributable to such industrial
development bonds or such private activity bonds is includable in his gross
income. In the case of certain corporations, interest on the Bonds is included
in computing the alternative minimum tax pursuant to Sections 56(f) and 56(g)
of the Code, the enviromental tax (the "Superfund Tax") imposed by Sections
59A of the Code, and the branch profits tax imposed by Section 884 of the Code
with repect to U.S. branches of foreign corporations.
(iii) Gain or loss will be recognized to a Unitholder upon
redemption or sale of his Units. Such gain or loss is measured by comparing
the proceeds of such redemption or sale with the adjusted basis of such Units.
Before adjustment, such basis would normally be cost if the Unitholder had
acquired his Units by purchase, plus his aliquot share of advances by the
Trustee to the Trust to pay interest on Bonds delivered after the Unitholder's
settlement date to the extent that such interest accrued on the Bonds during
the period from the Unitholder's settlement date to the date such Bonds are
delivered to the Trust, but only to the extent that such advances are to be
repaid to the Trustee out of interest received by the Fund with respect to
such Bonds. In addition, such basis will be increased by both the
Unitholder's aliquot share of the accrued original issued discount with
respect to each Bond held by the Trust with respect to which there was an
original issue discount and reduced by the annual amortization of bond
premium, if any, on Bonds held by the Trust.
<PAGE>
(iv) If the Trustee disposes of a Trust asset (whether by sale, payment on
maturity, redemption or otherwise), gain or loss is recognized to the
Unitholder and the amount thereof is measured by comparing the
Unitholder's aliquot share of the total proceeds from the transaction
with his basis for his fractional interest in the asset disposed of. Such
basis is ascertained by apportioning the tax basis for his Units among each
of the Trust assets (as of the date on which his Units were acquired) ratably
according to their values as of the valuation date nearest the date on which
he purchased such Units. A Unitholder's basis in his Units and of his
fractional interest in each Trust asset must be reduced by the amount of his
aliquot share of interest received by the Fund, if any, on Bonds delivered
after the Unitholder's settlement date to the extent that such
interest accrued on the Bonds during the period from the Unitholder's
settlement date to the date such Bonds are delivered to the Trust, must be
reduced by the annual amortization of bond premium, if any, on Bonds held by
the Trust and must be increased by the Unitholder's share of accrued
original issue discount with respect to each Bond which, at the time
the Bond was issued, had original issue discount.
(v) In the case of any Bond held by the Trust where the "stated
redemption price at maturity" exceeds the "issue price," such excess shall
be original issue discount. With respect to each Unitholder, upon the
purchase of his Units subsequent to the original issuance of Bonds held by the
Trust Section 1272(a)(7) of the Code provides for a reduction in the accrued
"daily portion" of such original issue discount upon the purchase of a Bond
subsequent to the Bond's original issue, under certain circumstances. In the
case of any Bond held by the Trust the interest on which is excludable from
gross income under Section 103 of the Code, any original issue discount which
accrues with respect thereto will be treated as interest which is excludable
from gross income under Section 103 of the Code.
(vi) In the case of any Bond which matures within one year of the date
issued, the accrual of tax-exempt original issue discount will generally be
computed daily on a ratable basis unless the Unitholder elects to accrue such
discount under a constant yield method, compounded daily.
(vii) In the case of any Bond which does not mature within one year
after the date issued, tax-exempt original issue discount will accrue
daily, computed generally under a constant yield method, compounded
semiannually (with straight line interpolation between compounding dates).
(viii) In the case of Trusts for which MBIA Insurance Corporation ("MBIA")
insurance with respect to each of the Bonds deposited therein has been obtained
by the Depositor or the issuer or underwriter of the Bonds, we have examined
the form of MBIA's policy or several policies of insurance (the "Policies")
which have been delivered to the Trustee. Assuming issuance of Policies in such
form, in our opinion, any amounts paid under said Policies representing maturing
interest on defaulted obligations held by the Trustee will be excludable from
Federal gross income if, and to the same extent as, such interest would have
been so excludable if paid by the respective issuer, 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
(ii) of this opinion is accordingly applicable to Policy proceeds representing
maturing interest.
<PAGE>
Because the Trusts do not include any "specified private activity bonds"
within the meaning of Section 57(a)(5) of the Code issued on or after August
8, 1986, none of the Trust Fund's interest income shall be treated as an item
of tax preference when computing the alternative minimum tax. In the case of
corporations, for taxable years beginning after December 31, 1986, the alter-
native minimum tax and the Superfund Tax depend upon the corporation's
alternative minimum taxable income ("AMTI"), which is the corporation's
taxable income with certain adjustments.
Pursuant to Section 56(c) of the Code, one of the adjustment
items used in computing AMTI and the Superfund Tax of a corporation
(other than an S Corporation, Regulated Investment Company, Real Estate
Investment Trust or REMIC) is an amount equal to 50% of the excess of such
corporation's "adjusted net book income" over an amount equal to its AMTI
(before such adjustment item and the alternative tax net operating
loss deduction). For taxable years beginning after 1989, such adjustment item
will be 75% of the excess of such corporation's "adjusted current earnings"
over an amount equal to its AMTI (before such adjustment item and the
alternative tax net operating net operating loss deduction) pursuant to
Section 56(g) of the Code. Both "adjusted net book income" and "adjusted
current earnings" include all tax-exempt interest, including interest on all
Bonds in the Trust, and tax-exempt original issue discount.
Effective for tax returns filed after December 31, 1987, all taxpayers
are required to disclose to the Internal Revenue Service the amount of
tax-exempt interest earned during the year.
Section 265 of the Code generally provides for a reduction
in each taxable year of 100% of the otherwise deductible interest on
indebtedness incurred or continued by financial institutions, to which either
Section 585 or Section 593 of the Code applies, to purchase or carry
obligations acquired after August 7, 1986, the interest on which is exempt
from federal income taxes for such taxable year. Under rules prescribed by
Section 265, the amount of interest otherwise deductible by such financial
institutions in any taxable year which is deemed to be attributable to
tax-exempt obligations acquired after August 7, 1986 will be the amount
that bears the same ratio to the interest deduction otherwise allowable
(determined without regard to Section 265) to the taxpayer for the taxable
year as the taxpayer's average adjusted basis (within the meaning of Section
1016) of tax-exempt obligations acquired after August 7, 1986, bears to
such average adjusted basis for all assets of the taxpayer, unless such
financial institution can otherwise establish under regulations to be
prescribed by the Secretary of the Treasury, the amount of interest on
indebtedness incurred or continued to purchase or carry such obligations.
<PAGE>
We also call attention to the fact that, under Section 265 of the
Code, interest on indebtedness incurred or continued to purchase or carry
Units by taxpayers other than certain financial institutions, as referred to
above, is not deductible for Federal income tax purposes. Under rules used by
the Internal Revenue Service for determining when borrowed funds are con-
sidered used for the purpose of purchasing or carrying particular assets, the
purchase of Units may be considered to have been made with borrowed funds even
though the borrowed funds are not directly traceable to the purchase of Units.
However, these rules generally do not apply to interest paid on indebtedness
incurred for expenditures of a personal nature such as a mortgage incurred to
purchase or improve a personal residence.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects tax-exempt
bonds to the market discount rules of the Code effective for bonds purchased
after April 30, 1993. In general, market discount is the amount (if any) by
which the stated redemption price at maturity exceeds an investor's purchase
price (except to the extent that such difference, if any, is attributable to
original issue discount not yet accrued) subject to a statutory de minimis rule.
Market discount can arise based on the price a Trust pays for Bonds or the price
a Unitholder pays for his or her Units. Under the Tax Act, accretion of market
discount is taxable as ordinary income; under prior law, the accretion had been
treated as capital gain. Market discount that accretes while a Trust holds a
Bond would be recognized as ordinary income by the Unitholders when principal
payments are received on the Bond, upon sale or at redemption (including early
redemption), or upon the sale or redemption of his or her Units, unless a
Unitholder elects to include market discount in taxable income as it accrues.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-62615) relating to the Units referred
to above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
<PAGE>
EXHIBIT 3.3
(ON ORRICK, HERRINGTON & SUTCLIFFE LETTERHEAD)
9/28/95
John Nuveen & Co. Incorporated
333 W. Wacker Drive
Chicago, Illinois 60606
The Chase Manhattan Bank, N.A.
770 Broadway
New York, NY 10003
Re: Nuveen Tax-Exempt Unit Trust, Series 827
California Insured Trust 255
Dear Sirs:
We have acted as special California counsel for John Nuveen & Co.
Incorporated, as Depositor of the above captioned trust(s) (each a "Trust"),
in connection with the issuance under the Trust Agreement dated 9/28/95,
among John Nuveen & Co. Incorporated, as Depositor, and The Chase Manhattan
Bank, N.A., as Trustee, of units of fractional undivided
interest in each Trust (the "Units") in exchange for certain bonds, as well as
"regular-way" and "when-issued" contracts for the purchase of bonds (such
bonds and contracts are hereinafter referred to collectively as the
Securities").
In connection therewith, we have examined such corporate records,
certificates and other documents and such questions of law as we have deemed
necessary or appropriate for the purpose of this opinion, and, on the basis
of such examination, and upon existing provisions of the Revenue and Taxation
Code of the State of California, with respect to each Trust, we are of the
opinion that:
1. The Trust is not an association taxable as a corporation
and the income of the Trust will be treated as the income of the unitholders
under the income tax laws of California.
2. Interest on the underlying Securities (which may include bonds
or other obligations issued by the governments of Puerto Rico, the Virgin
Islands, Guam, or the Northern Mariana Islands) which is exempt from tax
under California personal income tax and property tax laws when received by
the Trust will, under such laws, retain its status as tax-exempt interest when
distributed to unitholders. However, interest on the underlying securities
attributed to a unitholder which is a corporation subject to the California
franchise tax laws may be includable in such corporation's gross income for
purposes of determining its California franchise tax.
3. Under California income tax law, each unitholder in the Trust will
have a taxable event when the Trust disposes of a security (whether by sale,
exchange, redemption, or payment at maturity) or when the unitholder redeems
or sells Units. Because of the requirement that tax cost basis be reduced to
reflect amortization of bond premium, under some circumstances a
unitholder may realize taxable gain when units are sold or
redeemed for an amount equal to, or less than, their original cost.
The total tax cost of each Unit to a unitholder is allocated among each of
the bond issues held in the Trust (in accordance with the proportion of the
Trust comprised by each bond issue) in order to determine his per unit tax
cost for each bond issue; and the tax cost reduction requirements relating to
amortization of bond premium will apply separately to the per unit cost of
each bond issue. Unitholders' bases in their Units, and the bases for
their fractional interest in each Trust asset, may have to be adjusted for
their pro rata share of accrued interest received, if any, on securities
delivered after the unitholders' respective settlement dates.
4. Under the California personal property tax laws, bonds (including
the Securities) or any interest therein is exempt from such tax.
5. Proceeds paid under an insurance policy, if any, issued to the
Trustee of the Trust with respect to the Securities which represent maturing
interest on defaulted obligations held by the Trustee will be exempt from
California personal income tax if, and to the same extent as, such interest
would have been so exempt if paid by the issuer of the defaulted obligations.
<PAGE>
6. Under Section 17280(b)(2) of the California Revenue and
Taxation Code, interest on indebtedness incurred or continued to purchase
or carry Units of the Trust is not deductible for the purposes of the
California personal income tax. While there presently is no California
authority interpreting this provision, Section 17280(b)(2) directs the
California Francise Tax Board to prescribe regulations determining the
proper allocation and apportionment of interest costs for this purpose.
The Franchise Tax Board has not yet proposed or prescribed such regulations.
In interpreting the generally similar Federal provision, the Internal
Revenue Service has taken the position that such indebtedness need not be
directly traceable to the purchase or carrying of Units (although the Service
has not contended that a deduction for interest on indebtedness incurred
to purchase or improve a personal residence or to purchase goods or services
for personal consumption will be disallowed). In the absence of conflicting
regulations or other California authority, the California Franchise Tax
Board generally has interpreted California statutory tax provisions in accord
with Internal Revenue Service interpretations of similar Federal provisions.
Opinions relating to the validity of securities and the exemption of
interest thereon from State of California income tax are rendered by bond
counsel to the issuing authority at the time securities are issued and we
have relied solely upon such opinions, or, as to securities not yet
delivered, forms of such opinions contained in official statements
relating to such securities. Except in certain instances in which we acted
as bond counsel to issuers of securities, and as such made a review of pro-
ceedings relating to the issuance of certain securities at the time of their
issuance, we have not made any review of proceedings relating to the issuance
of securities or the bases of bond counsels' opinions.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-62615) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Very truly yours,
ORRICK, HERRINGTON & SUTCLIFFE
(BY KENNETH G. WHYBURN)
<PAGE>
EXHIBIT 3.3
(On Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A. LETTERHEAD)
9/28/95
Nuveen Tax-Exempt Unit Trust, Series 827
Florida Insured Trust 218
John Nuveen & Co. Incorporated
333 W. Wacker Drive
Chicago, Illinois 60606
Attn: James J. Wesolowski, Esquire
Vice President, General Counsel
and Secretary
Re:
Florida Insured Trust 218
Gentlemen:
We have acted as special Florida counsel to Nuveen Tax-Exempt Unit Trust,
Series 827 including the above-captioned trust (the "Fund") in connection with
the issuance by the Fund of units of fractional undivided interests in the Fund
(the "Units"). In that connection, you have requested our opinion as to the
application of Florida state and local taxes to the Trust (as hereinafter
defined) and to investors who purchase units in the Trust.
We have not been furnished with a copy of the Registration Statement or
the prospectus, which is a part of the Registration Statement, relating to the
issuance by the Fund of the Units. However, you have authorized us to assume
that the proposed offer and sale of the Units, including the units of the
Florida Trust, will be carried out in that same manner and upon the same terms
and conditions as those described in any prospectus for a previous Nuveen
Tax-Exempt Unit Trust that contained a Florida Insured Trust.
In addition, you have authorized us to assume and we have assumed that:
(a) The Fund has been organized under a Trust Indenture and Agreement
between John Nuveen & Co., Incorporated (the "Depositor") and The Chase
Manhattan Bank, N.A. (the "Trustee").
(b) The Fund will issue the Units in several State Trusts; one of which
is the Florida Insured Trust (the "Trust").
(c) The Units will be purchased by various investors who may be
individuals or corporations.
(d) Each Unit of the Trust represents a fractional undivided interest in
the principal and net income of the Trust in the ratio of ten Units for each
$1,000 principal amount of the obligations initially acquired by the Trust.
(e) Each Trust will be administered as a distinct entity with separate
certificates, investments, expenses, books, and records.
(f) The assets of the Trust will consist solely of interest-bearing
obligations issued by or on behalf of the State of Florida, its political
subdivisions, and authorities or by the Commonwealth of Puerto Rico, Guam
or the Virgin Islands.
(g) Distributions of interest received by the Trust will be made
semi-annually, unless the Unitholder elects otherwise.
(h) The interest on all Bonds in the Trust will be exempt from Federal
income tax.(N.1)
(i) The Bonds have been issued in strict compliance with all requirements
of Florida, Federal or territorial law.
(j) The Fund is a registered investment company under the Investment
Company Act of 1940, as amended.
In rendering our opinion, you have advised us that Messrs. Chapman and
Cutler have rendered the following opinions and have authorized us to rely
upon such opinions and we have relied upon such opinions that:
(a) The Trust will not be taxable as an association but will be governed
by the provisions of Subchapter J (relating to trusts) of Chapter 1 of the
Internal Revenue Code of 1986, as amended.
(b) Each Unitholder will be considered as owning a pro-rata share
of each asset of the Trust to which such Unit relates in the proportion
that the number of Units of the Trust held by him bears to the total number of
outstanding Units of the Trust and will be subject to Federal income tax on
the income therefrom under the provisions of Subpart E of Subchapter J of
Chapter 1 of the Internal Revenue Code of 1986, as amended.
(c) The Trust will not be subject to Federal income taxes.
<PAGE>
(d) For Federal income tax purposes, each item of Trust income will have
the same character in the hands of a Unitholder as it would have in the
hands of the Trustee. Accordingly, to the extent that the income of the Trust
consists of interest excludable from Federal gross income under Section 103 of
the Internal Revenue Code of 1986, as amended, such income will be excludable
from Federal gross income of the Unitholders.
(e) For Federal income tax purposes, each Unitholder will have a
taxable event when, upon redemption or sale of his Units, he receives
cash or other property. Gain or loss will be measured by comparing the
proceeds of such a redemption or sale with the Unitholder's adjusted
basis for the Unit. Before adjustment, generally this basis would be cost, if
the Unitholder had purchased his Units, plus his share of certain
advances by the Trustee to the Trust and certain accrued original issue
discount. For Federal income tax purposes, if the Trustee disposes of a Trust
asset (whether by sale, payment on maturity, retirement, or otherwise), gain
or loss will be recognized by each Unitholder, and such gain or loss is
computed by measuring the Unitholder's aliquot share of the total
proceeds from the transaction against his basis for his fractional interest in
the asset disposed of (such basis being determined by apportioning the basis
for his Units among all of the Trust's assets ratably according to their
values as of the valuation date nearest the date on which he purchased the
Units). A Unitholder's basis in his Units and the basis for his
fractional interest in each Trust asset must be reduced by the amount of his
aliquot share of interest received, if any, on Bonds delivered after the
Unitholder's settlement date to the extent that such interest accrued
on the Bonds during the period from the Unitholder's settlement date to
the date such Bonds are delivered to the Trust and must be reduced annually by
amortization of premiums, if any, on obligations held by the Trust.
For the purposes of this letter:
(a) "Florida Code" shall mean the Florida Income Tax Code, Chapter 220,
Florida Statutes, as amended. In the Florida Income Tax Code, Chapter 220,
Florida Statutes, the Florida Legistature has adopted, retroactively to
January 1, 1995, the Internal Revenue Code of 1986, as amended and in effect
on January 1, 1995, as the Internal Revenue Code under which a Corporate
Unitholder must compute its income for purposes of Florida corporate income
taxation.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended and in effect on January 1, 1995.
(c) "Non-Corporate Unitholder" shall mean a Unitholder
of the Florida Trust who is an individual not subject to the income
tax on corporations imposed by the Florida Code.
(d) "Corporate Unitholder" shall mean a Unitholder of the
Florida Trust that is a corporation subject to the income tax on
corporations imposed by the Florida Code.
(e) "Nonbusiness Income" is defined in the Florida Code and shall mean
rents and royalties from real or tangible personal property, capital gains,
interest, dividends, and patent and copyright royalties, to the extent that
they do not arise from transactions and activities in the regular course of a
Corporate Unitholder's trade or business. The term Nonbusiness Income
does not include income from tangible and intangible property if the
acquisition, management, and disposition of the property constitute integral
parts of a Corporate Unitholder's regular trade or business operations,
or any amounts which could be included in apportionable income without
violating the due process clause of the United States Constitution. For
purposes of this definition, "income" means gross receipts less all expenses
directly or indirectly attributable thereto.
(f) "Commercial domicile" shall mean the place that a corporation
maintains its principal place of business. The term "commercial domicile" is
not specifically defined in Florida law for Florida corporate income tax
purposes. However, the Florida Supreme Court has on at least two occasions
attributed meaning to this phrase, and recently enacted legislation amending
Florida's intangible personal property tax law defines this phrase. The
Court has implied that a corporation's commercial domicile is its principal
place of business, Department of Revenue v. Amrep Corp., 358 So.2d 1343, 1350
(Fla. 1978). The Court also stated in another case that a particular
corporation's domicile was in New York City where its head office and the
actual seat of its over-all business government was located and from where
its executive officers regularly exercised their complete authority and
controlled and directed all activities of the corporation, wherever carried
on. Gay v. Bessemer Properties, Inc., 32 So.2d 587, 591 (Fla. 1947). In
recently enacted legislation, a corporation is considered to acquire a
commercial domicile in Florida "when it maintains its chief or principal
office in [Florida] where executive or management functions are performed
or where the course of business operations is determined." Section 199.175
(1)(b), Florida Statutes (1989).
Based solely upon the assumptions you have permitted us to make and the
opinions of Messrs. Chapman and Cutler upon which you have authorized us to
rely, we are of the opinion that:
(a) For Florida state income tax purposes, the Trust will not be subject
to the income tax imposed by the Florida Code so long as the Trust has no
income subject to federal income taxation. In addition, political sub-
divisions of Florida do not impose any income taxes.
(b) Because Florida does not impose an income tax on individuals,
Non-Corporate Unitholders will not be subject to any Florida income tax
on income realized by the Trust. Each Corporate Unitholder will be
subject to Florida income taxation on its share of the income realized by the
Trust notwithstanding the tax exempt status of the interest received
from any bonds under Section 103(a) of the Code or any other federal law,
unless the interest income constitutes Nonbusiness Income. Nevertheless,
any Corporate Unitholder that has its commercial domicile in Florida will be
taxable under the Florida Code on its share of the Trust income which
constitutes Nonbusiness Income.
<PAGE>
(c) A Non-Corporate Unitholder will not be subject to Florida
income taxation with respect to gain realized when Bonds held in the Trust
are sold, redeemed, or paid at maturity. A Corporate Unitholder will
be subject to Florida income taxation with respect to gain realized on such a
sale, redemption, or payment at maturity of a Bond held by the Trust, except
to the extent that the gain realized therefrom constitutes Nonbusiness
Income. Nevertheless, to the extent that gains realized by a Corporate
Unitholder arising from a sale, redemption, or payment at maturity
constitute Nonbusiness Income, such gain will be taxable under the Florida
Code if the Corporate Unitholder's commercial domicile is in Florida.
(d) Any gain realized by a Non-Corporate Unitholder from the
redemption, sale, or other disposition of a Unit will not be subject to
Florida income tax. Any gain realized by a Corporate Unitholder from
the redemption, sale, or other disposition of a Unit will be subject to
Florida income tax except to the extent that the gain realized therefrom
constitutes Nonbusiness Income. Nevertheless, to the extent that gain
realized by a Corporate Unitholder arising from a sale, redemption, or
other disposition of a Unit consitutes Nonbusiness Income, such gain will be
taxable under the Florida Code if the Corporate Unitholder's commercial
domicile is in Florida.
(e) A Non-Corporate Unitholder will not be subject to Florida
income taxation with respect to amounts paid under the Municipal Bond
Investors Assurance Corporation insurance policies representing interest on
defaulted obligations held by the Trustee. A Corporate Unitholder
will be subject to Florida income taxation on its share of amounts paid under
the Municipal Bond Investors Assurance Corporation insurance policies
representing maturing interest on defaulted obligations held by the Trustee
except to the extent that such payments constitute Nonbusiness Income as de-
fined in the Florida Code. Nevertheless, any Corporate Unitholder that
has its commercial domicile in Florida will be taxable under the Florida Code
on its share of amounts paid under the Municipal Bond Investors Assurance
Corporation insurance policies representing maturing interest on defaulted
obligations held by the Trustee even if such payments constitute Nonbusiness
Income.
(f) A Non-Corporate Unitholder will not be subject to Florida
income taxation with respect to gain realized with respect to amounts paid
under the Municipal Bond Investors Assurance Corporation
insurance policies representing principal on defaulted
obligations held by the Trustee. A Corporate Unitholder will be
subject to Florida income taxation with respect to gain realized on its share
of amounts paid under the Municipal Bond Investors Assurance Corporation
insurance policies representing principal on defaulted obligations held by
the Trustee except to the extent that the gain realized constitutes
Nonbusiness Income. Nevertheless, gain realized, by
any Corporate Unitholder that has its commercial domicile in Florida,
on such payments representing principal on defaulted obligations held by the
Trustee, will be taxable under the Florida Code even if such payments
constitute Nonbusiness Income.
(g) Even if interest on indebtedness incurred or continued by a
Unitholder to purchase Units in the Trust is not deductible for Federal
income tax purposes, under Code section 265(a)(2) or any other law, it will
be deductible, in effect, by Corporate Unitholders for Florida income tax
purposes if interest earned on the Units is other than Nonbusiness Income.
Nevertheless, if interest earned on the Units is Nonbusiness Income, any
Corporate Unitholder that has its commercial domicile in Florida may reduce
the amount of interest included as Nonbusiness Income by the amount of
expenses directly or indirectly attributable thereto.
(h) Trust Units will be subject to Florida estate tax only if owned by
Florida residents and may be subjected to Florida estate tax if owned by other
decendents. However, the Florida estate tax is limited to the amount of the
credit allowable under the applicable Federal Revenue Act (currently Section
2011 (and in some cases Section 2102) of the Internal Revenue Code of 1986,
as amended) for death taxes actually paid to the several states.
(i) Neither the Bonds nor the Units will be subject to the Florida ad
valorem tax or Florida sales or use tax.
(j) Because Bonds issued by the State of Florida, its political
subdivisions or by the Commonwealth of Puerto Rico, Guam, or the Virgin
Islands, are exempt from Florida intangible personal property taxation under
Chapter 199, Florida Statutes, the Trust will not be subject to Florida
intangible personal property tax. In addition, the Unitholders will not be
subject to Florida intangible personal property tax on the Units.
(k) The sale, redemption, or other disposition by the Trust of Bonds
issued by the State of Florida, the Commonwealth of Puerto Rico, Guam, or the
Virgin Islands, will not subject either the Trust or the Unitholders to
Florida documentary stamp tax.
(l) The issuance and sale of the Units by the Trust will not
subject either the Trust or the Unitholders to Florida documentary
stamp tax.
(m) The transfer of Units by a Unitholder will not be
subject to Florida documentary stamp tax.
<PAGE>
This opinion is limited to the law in effect as of the date hereof and
we assume no responsibility for changes in the law that may become effective
subsequent to the date of this opinion. Furthermore, this letter is not to be
construed as a prediction of a favorable outcome with respect to any issue for
which no favorable prediction is made herein, or as a guaranty of any tax
result, or as offering an assurance or guaranty that a Florida state or local
taxing authority might not differ with our conclusions, or raise other
questions or issues upon audit, or that such action may not be judicially
sustained.
We have not examined any of the Bonds to be deposited in the Fund and held
by the Trust, and we express no opinion as to whether the interest on any such
Bonds would, in fact, be tax-exempt if directly received by a
Unitholder; nor have we made any review of the proceedings relating to
the issuance of the Bonds or the basis for the bond counsel opinions or the
opinions of Messrs. Chapman and Cutler referred to herein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-62615) and to the reference to our
firm in such Registration Statement and the Prospectus included
therein. In giving such consent, we do not thereby admit that we are within
the category of persons whose consent is required by Section 7 of the
Securities Act of 1933, as amended, and the rules and regulations thereunder.
_______________________
(N.1) Section 2.01 of the Indenture provides that if the Depositor fails to
deposit Bonds, through no fault of its own, the Depositor may, as provided in
Section 3.14 of said Indenture, purchase replacement bonds (referred to as
"New Bonds") that will also be tax exempt bonds issued by the same states or
their respective political subdivisions.
Very truly yours,
CARLTON FIELDS WARD EMMANUEL SMITH & CUTLER, P.A.
By: David P. Burke
<PAGE>
EXHIBIT 3.3
(ON CHAPMAN & CUTLER LETTERHEAD)
9/28/95
Nuveen Tax-Exempt Unit Trust,
Series 827
c/o John Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606
Chase Manhattan Bank, N.A.
as Trustee for Nuveen Tax-Exempt Unit
Trust, Series 827
770 Broadway
New York, New York 10003
Re:
Georgia Insured Trust 47
Gentlemen:
We have acted as counsel to Nuveen Tax-Exempt Unit Trust, Series
827, with respect to certain matters preliminary to the issuance and sale
of units of interest therein (the "Units") pursuant to a Trust Indenture and
Agreement, dated as of the date hereof (the "Indenture"), between John
Nuveen & Co. Incorporated, as depositor (the "Depositor"), and The Chase
Manhattan Bank N.A., as trustee (the "Trustee"). The Units represent fractional
undivided interests in the principal of and net income on obligations deposited
in one of several separate trusts including the above-captioned trust
(the "Trust"), will be evidenced by a certificate (the "Certificate") and will
be sold to various investors (the "Unitholders"). Each separate trust will be
administered as a distinct entity with separate certificates, investments,
expenses, books and records.
The assets of the Trust will consist of interest-bearing obligations
issued by or on behalf of the State of Georgia (the "State") or counties,
municipalities, authorities or political subdivisions thereof (the "Georgia
Bonds") or by the Commonwealth of Puerto Rico or its political subdivisions
(the "Puerto Rico Bonds") (collectively, the "Bonds"). Distributions of
interest on the Bonds received by the Trust will be made semi-annually unless
a Unitholder elects to receive them monthly or quarterly.
Although we express no opinion with respect therto, in rendering the
opinion expressed herein, we have assumed that the Bonds were validly issued
by the State of Georgia or its instrumentalities or municipalities and the
Commonwealth of Puerto Rico, or its instrumentalities or municipalities, as
the case may be.
PAGE END
<PAGE>
Based on the foregoing, and review and consideration of existing
State laws, it is our opinion, and we herewith advise you, as follows:
1. For purposes of income taxation by the State of Georgia or any
of its counties or municipalities:
(a) The Trust is not an association taxable as a corporation and
each Unitholder of the Trust will be treated as the owner of a pro-rata
portion of the Trust, and the income of the Trust will therefore be treated
as the income of the Unitholder;
(b) Interest on the Georgia Bonds and the Puerto Rico Bonds
which is excludable from gross income for federal income tax purposes
when received by the Trust will be exempt from Georgia income taxation
and therefore will not be includible in the income of the Unitholder
for income tax purposes when distributed by the Trust and received by
the Unitholder;
(c) Each Unitholder of the Trust will recognize gain or
loss for income tax purposes if the Trustee disposes of a bond
(whether by sale, exchange, payment on maturity, retirement or other-
wise) or if the Unitholder redeems or sells Units of the Trust
to the extent that such transaction results in a recognized gain or
loss for federal income tax purposes;
(d) Due to the amortization of bond premium and the basis adjust-
ments required by the Internal Revenue Code, a Unitholder, under some
circumstances, may realize taxable gain when his or her Units are sold or
redeemed prior to the maturity of Bonds held by the Trust for an amount
equal to such Units' original cost;
(e) In the case of Georgia Bonds issued before March 11, 1987
with original issue discount the amount of gain or loss recognized for
income tax purposes upon such sale or redemption of Bonds or
Units may differ from the amount recognized for federal income tax purposes
because original issue discount on such Bonds will accrue on ratable basis
under Georgia law;
(f) Interest on indebtedness incurred by a Unitholder to
purchase or carry Units of the Trust and Trustee fees and related expenses
incurred by the Trust which are not deductible for federal income tax
purposes are also not deductible under Georgia law;
2. Units of the Trust are not subject to sales or use taxation by
the State of Georgia or any political subdivision thereof;
3. Georgia Bonds and Bonds issued by the Government of Puerto Rico are
not subject to intangible personal property taxation by the State of
Georgia or any political subdivision thereof and although there is currently
no published administrative interpretation or opinion of the Attorney General
of Georgia dealing with the status of bonds issued by a political subdivision
of Puerto Rico, we have in the past, been advised orally by representatives
of the Georgia Department of Revenue that such bonds would also be considered
exempt from such tax;
4. No opinion is expressed regarding whether Units of the Trust
are subject to intangilble personal property taxation by the State of
Georgia, however, according to discussions with the Georgia Department of
Revenue, it is the Department's view that Units of the Trust would be
subject to such tax;
5. Georgia Bonds and Puerto Rico Bonds are not subject to sales or
use taxation by the State of Georgia or any political subdivision thereof;
6. In the case of Trusts for which an insurance policy or policies with
respect to the payment of principal and interest on the Georgia Bonds and
Puerto Rico Bonds has been obtained by the Depositor, any proceeds paid under
such policy or policies issued to the Trust, if any, with respect to the Bonds
in the Trust which represent maturing interest on defaulted obligations held
by the Trustee will be exempt from State income taxes if, and to the same ex-
tent as, such interest would have been so exempt if paid by the issurer of the
defaulted obligations 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 1(b) of this opinion
is accordingly applicable to policy proceeds representing maturing interest.
We have not examined any of the Bonds to be deposited and held in
the Trust or the proceedings for the issuance thereof or the opinions of bond
counsel with respect thereto, and therefore express no opinion as to the
exemption from State income taxes of interest on the Bonds if received
directly by a Unitholder.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (No. 33-62615) filed pursuant to the Securities Act of
1933, as amended (the "Act"), with respect to the registration of the sale of
the Units by Nuveen Tax-Exempt Unit Trust, Series 827, and to the
references to our firm in such Registration Statement and the preliminary
prospectus included therein. In giving such consent, we do not thereby admit
that we are persons whose consent is required by Section 7 of the Act, or the
rules and regulations thereunder.
Very truly yours,
Chapman & Cutler
<PAGE>
EXHIBIT 3.3
(On Dechert Price & Rhoads Letterhead)
9/28/95
John Nuveen & Co. Incorporated
333 W. Wacker Drive
Chicago, Illinois 60606
RE: Nuveen Tax-Exempt Unit Trust, Series 827
Pennsylvania Insured Trust 203
Gentlemen:
You have requested our opinion as to the Pennsylvania tax aspects of the
above-captioned Trust(s) (the "Pennsylvania Trust(s)") which is (are) a part
of the Nuveen Tax-Exempt Unit Trust Series 827 ("Fund"). The Fund is
organized under the Trust Indenture and Agreement, of even date, between John
Nuveen & Co. Incorporated, as Depositor, and The Chase Manhattan Bank, N.A.,
as Trustee. The Fund will contain several trusts, including the
Pennsylvania Trust(s), which will issue Units of fractional undivided
interests. The Units will be purchased by various investors ("Unit Holder").
Each Unit of the Pennsylvania Trust(s) represents a fractional undivided
interest in the principal and net income of such Trust(s) in the ratio of ten
Units for each $1,000 of value of the obligations initially acquired by such
Trust(s). Each Pennsylvania Trust will be administered as a distinct entity
with separate certificates, investments, expenses, books and records.
The proceeds of the sale of the Units will be invested primarily in
interest-bearing obligations issued by or on behalf of the Commonwealth of
Pennsylvania, its agencies and instrumentalities, or political subdivisions
thereof, including any county, city, borough, town, township, school disrict,
municipality, and local housing or parking authority in the Commonwealth of
Pennsylvania or issued by Puerto Rico, the Virgin Islands, Guam or the
Northern Mariana Islands ("Bonds"). Distributions of the interest received by
the Trust will be made semi-annually unless the Unit Holder elects otherwise.
In the opinion of bond counsel to each issuer, the interest on all bonds in
the Trust is exempt fromn federal income tax under existing law.
You have advised us that for federal income tax purposes each Pennsylvania
Trust will not be taxable as an association but will be governed by the
provisions of Subchapter J (relating to Trusts) of Chapter 1 of the Internal
Revenue Code of 1986. Each Unit Holder will be considered the owner of a pro
rata portion of the Unit Holder's respective Pennsylvania Trust and will be
subject to tax on the income therefrom under the provisions of Subpart E of
Subchapter J of Chapter 1 of the Internal Revenue Code of 1986. A Pennsylvania
Trust itself will not be subject to federal income taxes. For federal income
tax purposes, each item of trust income will have the same character in the
hands of a Unit Holder as it would have in the hands of the Trustee.
Accordingly, to the extent that the income of a Pennsylvania Trust consists of
interest excludable from gross income under Section 103 of the Internal
Revenue Code of 1986, such income will be excludable from federal gross income
of the Unit Holder.
Based upon the above facts, it is our opinion that for Pennsylvania state
and local tax purposes, a Pennsylvania Trust will be recognized as a trust not
taxable as a corporation. It will, therefore, not be subject to the
Pennsylvania Capital Stock/Franchise Tax or the Pennsylvania Corporate Net
Income Tax. Since all of the income of a Trust is either itself income exempt
from Pennsylvania Personal Income Tax, as described below, or is required by
the terms of the Trust to be distributed to the holders of Units, a Trust
should not be subject to Pennsylvania Personal Income Tax. The Philadelphia
School District Investment Income Tax described below, is not imposed on
trusts.
Various personal property taxes are in effect in Pennsylvania, however,
each of them exempts, inter alia, Bonds, cash, checking and savings accounts
in and certificates of deposit issued by commercial banks, savings
institutions or trust companies and United States Treasury obligations. In
general, these taxes apply to a specified list of items of intangible
personal property including, inter alia, mortgages and other evidences of
indebtedness and shares of stock issued by business corporations not doing
business in Pennsylvania. The taxes referred to above include the County
Personal Property Tax imposed on residents of Pennsylvania by the Act of
June 17, 1913, P.L. 507, as amended, the additional personal property taxes
imposed on Pittsburgh residents by the School District of Pittsburgh under
the Act of June 20, 1947, P.L. 733, as amended, and by the City of Pittsburgh
by Ordinance No. 599 of December 28, 1967, under the Act of December 31, 1965,
P.L. 1257, and any additional personal property taxes that the School District
of Philadelphia may reimpose on Philadelphia residents under the authority
contained in the Act of May 23, 1949, P.L. 1676, as amended. Units evidencing
fractional undivided interests in a Pennsylvania Trust will not be subject to
any of these personal property taxes to the extent of that proportion of a
Pennsylvania Trust represented by Bonds and other exempt assets. Only that
proportion of the Units represented by taxable assets will be subject to the
personal property taxes. Pennsylvania Trust Units may be taxable under the
Pennsylvania inheritance and estate taxes.
The interest and gain from obligations issued by the Commonwealth of
Pennsylvania or by its political subdivisions or by any public authority of
either are exempt from tax under the Act of August 31, 1971, P.L. 395,
Act No. 94. However, that Act was repealed by the Act of December 3, 1993,
P.L. 473, Act No. 68 ("Act 68 of 1993") with respect to obligations issued
on or after February 1, 1994. Pursuant to Act 68 of 1993, profits, gains or
income derived from the sale, exchange or other disposition of exempt
government obligations issued after February 1, 1994 will be subject to
state or local taxation although interest and "income" derived from the
exempt obligations will continue to be exempt from all state and local
taxation. Therefore, the proportion of income representing interest from
Bonds distributable to Unit Holders is not taxable under the Pennsylvania
Personal Income Tax imposed by Article III of the Pennsylvania "Tax Reform
Code of 1971", as amended by the Act of August 31, 1971, P.L. 362, Act No. 93,
or under the Corporate Net Income Tax imposed on corporations by Article IV of
the Tax Reform Code. Similarly, such interest will not be taxable under the
Philadelphia School District Investment Income Tax imposed on
<PAGE>
Philadelphia resident individuals under the authority of the Act of August 9,
1963, P.L. 640, as implemented by Section 19-1804 of the Philadelphia Code,
as amended, and resolutions of the Board of Education of the School District
of Philadelphia made pursuant to the ordinances, and such interest will not be
subject to any of the taxes on net income from business activities in
Philadelphia under Philadelphia Code Sections 19-1500 and 19-2600, imposing
a Net Profits Tax and a Business Privilege Tax respectively. The City and
School District of Pittsburgh do not impose any taxes on unearned income.
Under the Pennsylvania Personal Income Tax Law, personal income tax is
imposed upon the following specified classes of income: (1) compensation for
services, (2) net profits from the operation of a business, profession, or
other activity, (3) net gains or income from the disposition of property, (4)
net gains or income in the form of rents and royalties, (5) dividends, (6)
interest from obligations not otherwise exempt, (7) gambling and lottery
winnings, (8) net gains or income from estates or trusts which fall under any
of the preceding classifications. Although there is no published authority
on the question, it is our opinion that any insurance proceeds paid in lieu of
interest on defaulted tax-exempt obligations will be exempt from Pennsylvania
Personal Income Tax either as payment in lieu of tax-exempt interest or as
payments of insurance proceeds which are not included in any of the classes
of income specified as taxable under the Pennsylvania Personal Income Tax
Law. Since Pennsylvania Corporate Net Income Tax is imposed upon the
corporation's net income for federal income tax purposes, because such
insurance proceeds will be excluded from the federal income tax base, such
proceeds will not be subject to the Pennsylvania Corporate Net Income Tax.
Finally, since proceeds from insurance policies are expressly excluded from
the Philadelphia School District Investment Income Tax, insurance proceeds
paid to replace defaulted payments under any Bonds held by the Pennsylvania
Trust(s) will not be subject to this tax.
Under Act 68 of 1993, a Unit Holder's share of gain upon disposition of a
Bond issued on or after February 1, 1994 by the Pennsylvania Trust, whether
by sale, exchange, redemption or payment at maturity, will be taxable
under the Pennsylvania Personal Income Tax. Gains on the disposition of Bonds
issued before February 1, 1994 will continue to be exempt. See 72 P.S. Section
7303(a)(3) and 61 Pa. Code Section. 121.9(b)(3). While there is no published
authority with respect to the treatment of such gains for purposes of the
Philadelphia School District Investment Income Tax, it is our opinion that
gains upon dispositions of Bonds issued before February 1, 1994 are exempt from
this tax under Act of August 31, 1971, P.L. 395, Act No. 94, and, if the
question were litigated, the Pennsylvania courts should so hold. Gains on the
disposition of Bonds issued on or after February 1, 1994 will be taxable.
In any event, the Philadelphia School District Investment Income Tax has no
application to any gain on the disposition of property held for more than
six months.
In C.C. Collings & Co., Inc. v. Commonwealth of Pennsylvania, 514 A.2d 1373
(1986), and two related cases, the Supreme Court of Pennsylvania held that
gains or losses from the sale of obligations of the Commonwealth of
Pennsylvania, its political subdivisions, instrumentalities and agencies are
not subject to the Corporate Net Income Tax. Profits, gains or income
derived from the sale, exchange or other disposition of those exempt
obligations issued on or after February 1, 1994, however, will be subject
to tax pursuant to Act 68 of 1993.
There is no published authority under any of the Pennsylvania state and
local income taxes described above with respect to gain from the redemption
or sale of a Unit. To the extent that such gain represents the
Unit Holder's share of any unrealized gain on the Bonds issued before
February 1, 1994 and held by the Trust, it is our opinion that such gain is
exempt from the above-described Pennsylvania state and local income taxes and,
if the question were litigated, the Pennsylvania courts should so hold. To the
extent that such gain is attributable to unrealized gain on Bonds issued on
or after February 1, 1994, such gain will be taxable under such taxes. In any
event, the Philadelphia School District Investment Income Tax has no
application to any gain on the disposition of property held for more than six
months.
Interest on obligations of Puerto Rico, the Virgin Islands, Guam, or the
Northern Mariana Islands is, under federal law, exempt from taxation by states
and municipalities. Federal law does not expressly exclude from taxation gain
realized upon the disposition of such obligations. Therefore, a disposition
of such obligations by a Pennsylvania Trust could be a taxable event to a
Holder under each of the Pennsylvania state and local income taxes discussed
in the preceding paragraphs. See Willcuts v. Bunn, 282 U.S. 216 (1931); U.S.
v. Stewart, 311 U.S. 60 (1940). Similarly, to the extent that gain on the
redemption or sale of a Unit represents unrealized gain on such obligations
held by a Pennsylvania Trust, such gain could be taxable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (No. 33-62615) relating to the Units referred to
above, and to the reference to our firm as special Pennsylvania tax counsel in
said Registration Statement and in the related Prospectus.
Very truly yours,
DECHERT PRICE & RHOADS
<PAGE>
EXHIBIT 4.3
(ON CARTER LEDYARD & MILBURN LETTERHEAD)
9/28/95
Nuveen Tax-Exempt Unit Trust, Series 827
c/o John Nuveen & Co. Incorporated,
as Depositor of Nuveen Tax-Exempt Unit
Trust, Series 827
333 W. Wacker Drive
Chicago, Illinois 60606
RE: Nuveen Tax-Exempt Unit Trust, Series 827
Dear Sirs:
We hereby consent to the reference to our firm under the caption "What is
the Tax Status of Unitholders?" in the Registration Statement and
related Prospectus of Nuveen Tax-Exempt Unit Trust, Series 827 for the
registration of units of fractional undivided interest in the Fund in the
aggregate principal amount as set forth in the Closing Memorandum dated
today's date.
Very truly yours,
CARTER, LEDYARD & MILBURN
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the National
Insured Trust 305 which is incorporated in the Prospectus dated September 28,
1995 and is qualified in its entirety by reference to such prospectus.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> Aug-31-1996
<PERIOD-END> Aug-31-1996
<INVESTMENTS-AT-COST> 9,477,106
<INVESTMENTS-AT-VALUE> 9,516,844
<RECEIVABLES> 161,780
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9,694,824
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 161,780
<TOTAL-LIABILITIES> 161,780
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 100,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 9,516,844
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 95.17
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
California Insured Trust 255 which is incorporated in the Prospectus dated
September 28, 1995 and is qualified in its entirety by reference to such
prospectus.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> Aug-31-1996
<PERIOD-END> Aug-31-1996
<INVESTMENTS-AT-COST> 3,304,831
<INVESTMENTS-AT-VALUE> 3,314,863
<RECEIVABLES> 43,572
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,363,735
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 43,572
<TOTAL-LIABILITIES> 43,572
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 35,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,314,863
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 94.71
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Florida
Insured Trust 218 which is incorporated in the Prospectus dated September 28,
1995 and is qualified in its entirety by reference to such prospectus.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> Aug-31-1996
<PERIOD-END> Aug-31-1996
<INVESTMENTS-AT-COST> 3,296,957
<INVESTMENTS-AT-VALUE> 3,293,115
<RECEIVABLES> 69,832
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,368,047
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 69,832
<TOTAL-LIABILITIES> 69,832
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 35,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,293,115
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 94.09
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the Georgia
Insured Trust 47 which is incorporated in the Prospectus dated September 28,
1995 and is qualified in its entirety by reference to such prospectus.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> Aug-31-1996
<PERIOD-END> Aug-31-1996
<INVESTMENTS-AT-COST> 3,260,990
<INVESTMENTS-AT-VALUE> 3,259,670
<RECEIVABLES> 52,114
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,316,084
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 52,114
<TOTAL-LIABILITIES> 52,114
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 35,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,259,670
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 93.13
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Pennsylvania Insured Trust 203 which is incorporated in the Prospectus dated
September 28, 1995 and is qualified in its entirety by reference to such
prospectus.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> Aug-31-1996
<PERIOD-END> Aug-31-1996
<INVESTMENTS-AT-COST> 3,287,282
<INVESTMENTS-AT-VALUE> 3,289,710
<RECEIVABLES> 46,820
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,341,730
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 46,820
<TOTAL-LIABILITIES> 46,820
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 35,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3,289,710
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 93.99
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
MEMORANDUM
Nuveen Tax-Exempt Unit Trust, Series 827
File No. 33-62615
The Prospectus and the Indenture filed with Amendment No. 1 of the
Registration Statement on Form S-6 have been revised to reflect information
regarding the execution of the Indenture and the deposit of bonds on 9/28/95,
and to set forth certain statistical data based thereon. In addition, there
are a number of other changes from the Prospectus as originally filed to which
reference is made, including the increase in the size of the Fund, a
corresponding increase in the number of Units and a change in the individual
trusts constituting the Fund. All references to the Units, prices and related
statistical data will apply to each trust of the Fund and the Units thereof
individually.
Except for such updating, an effort has been made to set forth below each
of the changes and also to reflect the same by marking the Prospectus
transmitted with the Amendment. Also, differences between the Final
Prospectus relating to the previous series of the Nuveen Tax-Exempt Unit
Trust and the subject Prospectus have been indicated.
FORM S-6
FACING SHEET. The file number is now shown.
THE PROSPECTUS
PART A-PAGE 2. The "Estimated Long-Term Return" and "Estimated
Current Return" to Unitholders under each Trust under each of the distribution
plans are stated.
PART A-PAGES 1 - 2. Essential information for each of the Trusts,
including applicable footnotes, has been completed for this Series.
PART A-PAGES 1 - 2. The date of the Indenture has been inserted in Section
1 along with the size and number of Units of each of the Trusts.
PART A-PAGES 1 - 6 et seq. The following information for each Trust appears
on the pages relating to such trust:
The estimated daily accrual of interest under the plans of
distribution for each of the Trusts
Data regarding the composition of the portfolio of each
Trust
Disclosure regarding the states' economic and legislative
matters relevant to investors of state trusts
Concentrations of issues by purpose in each Trust
The approximate percentage of the bonds in the
portfolio of each Trust acquired in distributions where
the Sponsor was either the sole underwriter or manager
or member of the underwriting syndicate
The percentage of "when issued" bonds in the portfolio
of each Trust
The schedule of investments for each Trust, including
the notes thereto
Descriptions of the opinions of the special tax
counsel for state trusts
The Record Dates and Distribution Dates for
interest distributions for each Trust
The statements of condition for each Trust
and the accountant's report with regard thereto.
The amount of the Trustee's Fee
CHAPMAN AND CUTLER
Chicago, Illinois
9/28/95
