NEXTEL STRYPES TRUST
Financial Statements (Unaudited)
June 30, 1997 and for the Period
March 10, 1997 (commencement of operations) to June 30, 1997
(With Accompanying Accountants' Compilation Report Thereon)
<PAGE>
Page
Accountants' Compilation Report . . . . . . . . . . . . . . 1
Financial Statements:
Statement of Assets and Liabilities . . . . . . . . . . 2
Schedule of Investments . . . . . . . . . . . . . . . . 3
Statement of Operations . . . . . . . . . . . . . . . . 4
Statement of Changes in Net Assets . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . 6-9
<PAGE>
Independent Accountants' Compilation Report
Independent Accountants' Compilation Report
Trustees
Nextel STRYPES Trust:
We have compiled the accompanying statement of assets and liabilities and
schedule of investments of the Nextel STRYPES Trust as of June 30, 1997, and
the related statement of operations and statement of changes in net assets
for the period March 10, 1997 (commencement of operations) to June 30, 1997
in accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
and supplementary schedules, information that is the representation of
management. We have not audited or reviewed the accompanying financial
statements and supplementary information and, accordingly, do not express an
opinion or any other form of assurance on those financial statements and
supplementary information.
September 9, 1997
<PAGE>
NEXTEL STRYPES TRUST
Statement of Assets and liabilities (Unaudited)
June 30, 1997
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<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value(amortized cost $96,383,406)(notes 2,4, and 8) $137,973,093
Cash 10,101
-----------
Total Assets 137,983,194
Liabilities - accounts payable and accrued expenses -
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Net Assets $137,983,194
-----------
-----------
Composition of Net Assets
Structured Yield Product Exchangeable for Stock, no par value;
7,175,731 shares issued and outstanding (note 9) $96,147,381
Unrealized appreciation of investments 41,589,687
Undistributed net investment income 246,126
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Net Assets $137,983,194
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Net Asset value per STRYPES $19.23
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------------
</TABLE>
See accompanying accountants' compilation report and notes to financial
statements.
<PAGE>
NEXTEL STRYPES TRUST
Statement of Investments (Unaudited)
June 30, 1997
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<TABLE>
<CAPTION>
Par Maturity Market Amortized
Securities Description Value Date Value Cost
UNITED STATES GOVERNMENT
SECURITIES:
<S> <C> <C> <C> <C>
United States Treasury Strips $1,820,000 8/15/97 $1,808,206 $1,797,376
United States Treasury Strips 1,820,000 11/15/97 1,782,890 1,772,215
United States Treasury Strips 1,820,000 2/15/98 1,757,465 1,746,450
United States Treasury Strips 1,820,000 5/15/98 1,732,403 1,721,438
United States Treasury Strips 1,820,000 8/15/98 1,706,123 1,694,654
United States Treasury Strips 1,820,000 11/15/98 1,680,078 1,670,969
United States Treasury Strips 1,820,000 2/15/99 1,653,233 1,642,915
United States Treasury Strips 1,820,000 5/15/99 1,627,371 1,617,361
United States Treasury Strips 1,820,000 8/15/99 1,602,565 1,592,882
United States Treasury Strips 1,820,000 11/15/99 1,576,393 1,567,075
United States Treasury Strips 1,820,000 2/15/00 1,550,331 1,541,750
United States Treasury Strips 1,820,000 5/15/00 1,527,017 1,519,514
--------- --------- ---------
$21,840,000 $20,004,075 $19,884,599
----------- ----------- -----------
----------- ----------- -----------
Forward purchase contract:
NEXTEL STRYPES Trust 5/15/00 117,969,018 76,498,807
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Purchase Agreement
Total $137,973,093 $96,383,406
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</TABLE>
See accompanying accountants' compilation report and notes to financial
statements.
<PAGE>
NEXTEL STRYPES TRUST
Statement of Operations (Unaudited)
For the period from March 10, 1997 (commencement of operations) to
June 30, 1997
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Accretion of Original Issue Discount $259,407
Expenses:
Administrative fees and expenses $14,485
Legal fees 1,789
Accounting fees 6,842
Trustees fees 3,789
Other expenses 6,316
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Total fees and expenses 33,221
Expense reimbursement (note 7) (33,221)
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Total expenses - Net -
-------
Net investment income 259,407
--------
Net unrealized appreciation of investments 41,589,687
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Net increase in net assets resulting from operations $41,849,094
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------------
See accompanying accountants' compilation report and notes to financial
statements.
<PAGE>
NEXTEL STRYPES TRUST
Statement of Changes in Net Assets (Unaudited)
For the period from March 10, 1997 (commencement of operations)
to June 30, 1997
<TABLE>
<CAPTION>
<S> <C>
Operations
Net investment income $ 259,407
Net unrealized appreciation of investments 41,585,687
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Net increase in net assets from operations 41,849,094
Distributions:
Net investment income 13,281
Return of capital 1,302,030
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Net decrease in net assets from distributions 1,315,311
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Increase in net assets from capital shares transactions:
Gross proceeds from the sale of 100,460,218
structured yield product exchangeable (3,010,807)
for stock shares
Less selling commissions
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Net increase in net assets from capital
shares transactions 97,449,411
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Total increase in net assets for the period 137,983,194
Net assets, beginning of period --
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Net assets, end of period $ 137,983,194
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See accompanying accountants' compilation report and notes to financial
statements.
</TABLE>
<PAGE>
NEXTEL STRYPES TRUST
Notes to Financial Statements
June 30, 1997
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(1) Organization
Nextel STRYPES Trust ("Trust") was established on October 25, 1995 and
is registered as a non-diversified, closed-end management investment
company under the Investment Company Act of 1940 (the "Act"), as
amended. In March 1997 the Trust sold Structured Yield Product
Exchangeable for Stock ("STRYPES") to the public pursuant to a
registration statement on Form N-2 under the Securities Exchange Act of
1933, and the Act. The Trust used the proceeds to purchase a portfolio
comprised of stripped U.S. Treasury securities and to pay the purchase
price for a forward purchase contract for shares of common stock of
Nextel Communications, Inc. ("Nextel"), a Delaware corporation, with two
existing stockholders of Nextel (the "Contracting Stockholders"). The
stock is deliverable pursuant to the contract on May 15, 2000 and the
Trust will thereafter terminate.
Pursuant to the Administration Agreement between the Trust and The Bank
of New York (the "Administrator"), the Trustees have delegated the
administrative duties with respect to the Trust to the Administrator.
(2) Summary of Significant Accounting Policies
Basis of Presentation
______________________
The following is a summary of the significant accounting policies
followed by the Trust, which are in conformity with generally accepted
accounting principles:
Valuation of Investments - The U.S. Treasury Strips are valued at the
mean of the bid and ask price at the close of the period. Amortized
cost is calculated on a basis which approximates the effective interest
method. The forward purchase contracts are valued at the mean of the
bid prices received by the Trust at the end of each period from three
independent broker-dealer firms unaffiliated with the Trust who are in
the business of making bids on financial instruments similar to the
contracts and with terms comparable thereto.
Investment Transactions - Securities transactions are accounted for as
of the date the securities are purchased and sold (trade date).
Interest income is recorded as earned and consists of accretion of
discount. Unrealized gains and losses are accounted for on the specific
identification method.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amount of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
(3) Distributions
STRYPES holders are entitled to receive distributions from the maturity
of U.S. Treasury Strips of $1.015 per annum or $0.25375 per quarter
(except for the first distribution on May 15, 1997 which was $0.1833),
payable quarterly commencing May 15, 1997.
(4) Purchases and Sales of Investments
Purchases and maturities of U.S. Treasury Strips for the period ended
June 30, 1997 totaled $20,940,192 and $1,315,000, respectively. There
were no sales of such investments during the period. Purchase of the
forward purchase contract during the period totaled $76,498,807.
<PAGE>
(5) Trustees Fees
Each of the three Trustees were paid a one-time, upfront fee of $10,800
for their services during the life of the Trust. In addition, the
Managing Trustee will be paid a one-time, upfront fee of $3,600 for
serving in such capacity. The total Trustees fees which were paid as of
June 30, 1997 of $36,000 will be expensed over the life of the Trust.
As of June 30, 1997, the Trust had expensed $3,789 of such fees.
(6) Income Taxes
The Trust is not an association taxable as a corporation for Federal
income tax purposes; accordingly, no provision is required for such
taxes.
At June 30, 1997, net unrealized appreciation of portfolio investments
was $41,589,687. The amortized cost of investment securities for
Federal income tax purposes was $96,383,406 at June 30, 1997.
(7) Expenses
The estimated expenses to be incurred in connection with the offering of
the STRYPES and its ongoing operations are $687,117. Of this amount,
$361,517 represents offering expenses ($351,517) and organizational
expenses ($10,000) incurred in the creation of the Trust. The offering
and organizational expenses are being paid by the Contracting
Stockholders. At June 30, 1997, the Contracting Stockholders had paid
$291,358 relating to such expenses. The remaining amount of $325,600
represents a prepayment of estimated administrative and other operating
expenses of the Trust. Such amount was paid to the Administrator by the
sponsor of the Trust. Expenses incurred in excess of this amount will
be paid by the sponsor or, if not, by the Trust.
Cash received by the Administrator from the sponsor of $325,600 for the
payment of administrative and related operating expenses of the Trust
has not been included in the Trust's financial statements since the
amount does not represent Trust property. At June 30, 1997, $105,694
had been paid by the Administrator for current and prepaid
administrative and related operating expenses. All administrative and
related operating expenses incurred by the Trust are reflected in the
Trust's financial statements net of amounts reimbursed.
(8) Forward Purchase Contracts
On March 10, 1997, the Trust entered into a forward purchase contract
with two principal shareholders of Nextel Communications, Inc. (the
"Sellers") and paid to the Sellers $76,498,807 in connection therewith.
Pursuant to such contracts, the Sellers are obligated to deliver to the
Trust a specified number of shares of Nextel Stock on May 15, 2000 (the
"Exchange Date"). See the Trust's original prospectus dated March 4,
1997 for the formula upon which such exchange will be determined.
Details of the forward purchase contract held by the Trust at June 30,
1997 are as follows:
<PAGE>
Exchange Cost of Contract Unrealized
date contract value appreciation
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Nextel STRYPES Trust Purchase 5/15/00 $76,498,807 117,969,018 41,470,211
Agreement
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(8) Continued
The Sellers' obligations under the forward purchase contracts are
collateralized by shares of Nextel Stock which are being held in the
custody of the Trust's Custodian, The Bank of New York. At June 30,
1997, the Custodian held 7,175,731 shares with an aggregate value of
$135,886,818.
(9) Capital Share Transactions
On February 26, 1997 two STRYPES were sold to two of the underwriters of
the STRYPES for $100,000 ($50,000 per STRYPES). As a result of a stock
split effected immediately prior to the public offering of the STRYPES,
these two STRYPES were converted into 7,144 STRYPES. During the
offering period, the Trust sold 7,168,587 STRYPES to the public and
received net proceeds of $97,349,411 ($100,360,218 net of sales
commission of $3,010,807). As of June 30, 1997, there were 7,175,731
STRYPES issued and outstanding with an aggregate cost, net of sales
commission, and return of capital, of $96,147,381.
