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What is a defined portfolio?
A defined portfolio, like a mutual fund, is a professionally selected portfolio
of securities that offers the advantages of affordability and diversification
to individual investors. A defined portfolio is defined, which means that from
the time of purchase you know exactly which securities you own. Once the
portfolio is assembled and issued, in most cases, no new issues are added
during its life. The portfolio will remain the same until the securities
mature, are called or are sold.
What if I don't want to liquidate my holdings at the end of the portfolio's investment
horizon?
Investors with initial investments of
$25,000 or more may request an in-kind distribution of the underlying securities
and continue holding them with the original cost basis. This gives you greater
tax control, allowing you to manage when you sell your holdings and realize
capital gains or losses.
What happens if a company in the portfolio is merged or acquired by another company?
If the acquisition or merger is in exchange for stock,
you will receive your proportionate share of stock in the new entity. For cash
transactions you will receive your share of the cash, or it will be reinvested
if you have chosen dividend reinvestment.
What if an individual portfolio holding is losing value?
A holding
may be eliminated for credit reasons under extreme circumstances, although that
rarely happens. Typically all holdings remain in the portfolio regardless of
market value. This is similar to an index, which does not remove holdings based
on price movement. It is important to remember that the purpose of a defined
portfolio is to participate in the overall market sector or strategy, not to
target individual companies.
Why did I receive a return of principal?
When a security is
called, sold or matures from the defined portfolio, principal is returned to the
investor. Because of the structure of defined portfolios, principal returns
cannot be reinvested back into the portfolio. Defined portfolios issue a fixed
number of units and the portfolios are not actively managed. New issues cannot
be purchased to replace those that are removed.
What is a bond call?
One of the most common reasons that you might
receive a principal return is that a bond in your defined portfolio is called.
This occurs when the issuer of the bond chooses to retire, or pay off, the bond
before its stated maturity date. Bonds are generally issued with a specified
interest rate and maturity date. In addition, most bonds are issued with call
dates, that is, a provision that allows the issuer to redeem a bond after a set
period of time, usually eight to ten years after issuance but before its
scheduled maturity date.
Why is a bond called?
When interest rates decline between the time
they were issued and the date of the call, the issuer may decide to call the
original bonds and issue new bonds as a way of refinancing obligations at a
lower cost. This process is similar to when a homeowner refinances a mortgage
when loan rates drop. For the bond issuer, the benefits of calling a bond may
include lower periodic payments and less overall cost to pay off the debt.
What are other reasons for principal returns?
You may receive a
principal return if bonds are sold from your defined portfolios. Bonds are sold
from the trust when Nuveen's Research Department determines that the credit
characteristics of an issuer or a specific issue have significantly changed and
no longer meet our quality criteria. You will also receive a principal return
when your defined portfolio is terminated. A trust is terminated when all the
bonds held by the trust have matured or been called or sold by the trustee.
When are dividends paid?
For most Nuveen Municipal, Corporate, or U.S. Treasury Trusts, you can choose to
receive your income distributions in one of three periods:
monthly - payable on the 15th of each month.
quarterly - payable February, May, August and November on the 15th of
the month (see the prospectus for details).
semi-annually - payable May and November on the 15th of the month (see
the prospectus for details).
The income from most Nuveen Equity Trusts is distributed semi-annually,
once in June and again in December. Principal distributions are generally not
made, except at termination of the trust.
Can I change my distribution option?
For Nuveen Municipal,
Corporate or U.S. Treasury Trusts, you can change the distribution period on
your trust by providing Nuveen with written instructions during certain times of
year. If we receive your request between March 15 and May 1, the effective date
of the change will be May 2. If we receive your request between September 15 and
November 1, the effective date of your distribution change will be November 2.
Include your unsigned certificate sent registered mail, return receipt
requested, if applicable
How can I hold my defined portfolios?
You can hold your units in two ways:
Nuveen recommends that unitholders who hold their certificates for their
defined portfolios discuss the benefits of book entry ownership with their
financial advisors.
Book Entry
If you prefer to avoid the risk of incurring the
expenses involved in replacing a lost or stolen certificate, Nuveen can maintain
your units in "book entry" form. Records of your holdings will be maintained by
the Trustee. When your units are issued, or whenever you change the number of
units that you hold in book entry, you receive a Book Entry Position
Confirmation, just as you would a certificate. However, the Trustee can replace
misplaced confirmations free of charge.
In addition, book entry allows unitholders the convenience and flexibility of
Telephone Redemption Privileges.
Certificate
If you have elected to hold your units in certificate
form, your Nuveen certificate will be mailed to you within four to six weeks of
your purchase. If you do not receive your certificate within six weeks of your
purchase, call Investor line: 1-800-225-8530. Certificates are negotiable
financial instruments and should be kept in a safe place like a safe deposit
box. When sending them in the mail, we recommend that you use registered mail,
return receipt requested.
What happens if my certificate is lost or stolen?
If your certificate is lost, stolen or destroyed, notify Nuveen in writing,
including the following information:
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Your exact registration name and Taxpayer ID number
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The full description of the trust(s) you own, including name, number and
distribution option
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The number of units you own
A "stop transfer" will be placed on all affected certificates and an
affidavit forwarded to you. Complete the affidavit and return it to the
following address:
The Bank of New York
Unit Investment Trust -- Nuveen Defined
Portfolios
111 Sanders Creek Parkway
East Syracuse, NY 13057
Once the affidavit is received a new certificate will be issued to you.
The cost to replace lost certificates is 1.5% of the current net asset value of
the units replaced. In the case of a certificate that was lost in the mail, it
must be reported within one year to avoid the 1.5% surcharge.
If you find your certificate after it has been reported lost or stolen, but
before it has been replaced, write Nuveen to release the "stop transfer" on your
certificate. If your certificate has already been replaced you will be required
to return the original certificate to Nuveen for cancellation. If your
certificate is found within one year of replacement, one half of your
replacement costs will be refunded.
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