diff --git a/Lib/compiler/transformer.py b/Lib/compiler/transformer.py
index d30cc1a8d4e..71a5d0ea3d1 100644
--- a/Lib/compiler/transformer.py
+++ b/Lib/compiler/transformer.py
@@ -536,12 +536,7 @@ class Transformer:
                    lineno=nodelist[0][2])
 
     def try_stmt(self, nodelist):
-        # 'try' ':' suite (except_clause ':' suite)+ ['else' ':' suite]
-        # | 'try' ':' suite 'finally' ':' suite
-        if nodelist[3][0] != symbol.except_clause:
-            return self.com_try_finally(nodelist)
-
-        return self.com_try_except(nodelist)
+        return self.com_try_except_finally(nodelist)
 
     def with_stmt(self, nodelist):
         return self.com_with(nodelist)
@@ -917,18 +912,21 @@ class Transformer:
             bases.append(self.com_node(node[i]))
         return bases
 
-    def com_try_finally(self, nodelist):
-        # try_fin_stmt: "try" ":" suite "finally" ":" suite
-        return TryFinally(self.com_node(nodelist[2]),
-                       self.com_node(nodelist[5]),
-                       lineno=nodelist[0][2])
+    def com_try_except_finally(self, nodelist):
+        # ('try' ':' suite
+        #  ((except_clause ':' suite)+ ['else' ':' suite] ['finally' ':' suite]
+        #   | 'finally' ':' suite))
 
-    def com_try_except(self, nodelist):
-        # try_except: 'try' ':' suite (except_clause ':' suite)* ['else' suite]
+        if nodelist[3][0] == token.NAME:
+            # first clause is a finally clause: only try-finally
+            return TryFinally(self.com_node(nodelist[2]),
+                              self.com_node(nodelist[5]),
+                              lineno=nodelist[0][2])
+        
         #tryexcept:  [TryNode, [except_clauses], elseNode)]
-        stmt = self.com_node(nodelist[2])
         clauses = []
         elseNode = None
+        finallyNode = None
         for i in range(3, len(nodelist), 3):
             node = nodelist[i]
             if node[0] == symbol.except_clause:
@@ -944,9 +942,16 @@ class Transformer:
                 clauses.append((expr1, expr2, self.com_node(nodelist[i+2])))
 
             if node[0] == token.NAME:
-                elseNode = self.com_node(nodelist[i+2])
-        return TryExcept(self.com_node(nodelist[2]), clauses, elseNode,
-                         lineno=nodelist[0][2])
+                if node[1] == 'else':
+                    elseNode = self.com_node(nodelist[i+2])
+                elif node[1] == 'finally':
+                    finallyNode = self.com_node(nodelist[i+2])
+        try_except = TryExcept(self.com_node(nodelist[2]), clauses, elseNode,
+                               lineno=nodelist[0][2])
+        if finallyNode:
+            return TryFinally(try_except, finallyNode, lineno=nodelist[0][2])
+        else:
+            return try_except
 
     def com_with(self, nodelist):
         # with_stmt: 'with' expr [with_var] ':' suite
diff --git a/Misc/NEWS b/Misc/NEWS
index b0f6641585b..746bbccfedf 100644
--- a/Misc/NEWS
+++ b/Misc/NEWS
@@ -4,8 +4,25 @@ Python News
 
 (editors: check NEWS.help for information about editing NEWS using ReST.)
 
+What's New in Python 2.5 beta 2?
+================================
+
+*Release date: XX-JUL-2006*
+
+Core and builtins
+-----------------
+
+
+Library
+-------
+
+- The compiler module now correctly compiles the new try-except-finally
+  statement (bug #1509132).
+
+
+
 What's New in Python 2.5 beta 1?
-=================================
+================================
 
 *Release date: 20-JUN-2006*