NEXTEL STRYPES TRUST
FINANCIAL REPORT
JUNE 30, 1999
(UNAUDITED)
<PAGE>
CONTENTS
_______________________________________________________________________________
FINANCIAL STATEMENTS:
Statement of net assets 1
Schedule of investments 2
Statement of operations 3
Statements of changes in net assets 4
Notes to financial statements 5-7
Financial highlights 8
_______________________________________________________________________________
<PAGE>
NEXTEL STRYPES TRUST
STATEMENT OF NET ASSETS
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
_______________________________________________________________________________________________________
ASSETS
Investments, at value (amortized cost $83,560,129) (Notes 2, 4, and 8) $ 303,748,436
Cash 3,387
-------------------
TOTAL ASSETS $ 303,751,823
===================
LIABILITIES
Accounts payable 20
-------------------
NET ASSETS $ 303,751,803
===================
COMPOSITION OF NET ASSETS
Structured Yield Product Exchangeable for StockSM ("STRYPES"),
no par value; 7,175,731 shares issued and outstanding (Note 9) $ 82,639,705
Net unrealized appreciation of investments 220,188,307
Undistributed net investment income 923,791
-------------------
NET ASSETS $ 303,751,803
===================
NET ASSET VALUE PER STRYPES $ 42.33
===================
</TABLE>
See Notes to Financial Statements.
<PAGE>
NEXTEL STRYPES TRUST
SCHEDULE OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Par Maturity Market Amortized
Securities Description Value Date Value Cost
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES GOVERNMENT
SECURITIES:
United States Treasury Strips $ 1,820,000 08/15/99 $ 1,809,972 $ 1,806,237
United States Treasury Strips 1,820,000 11/15/99 1,787,658
1,778,674
United States Treasury Strips 1,820,000 02/15/00 1,764,636 1,751,201
United States Treasury Strips 1,820,000 05/15/00 1,741,194 1,725,210
------------ -----------------------------
$ 7,280,000 7,103,460 7,061,322
============
FORWARD PURCHASE CONTRACT:
Nextel Communications, Inc. Common
Stock Forward Purchase Agreement 05/15/00 296,644,976 76,498,807
-----------------------------
TOTAL $ 303,748,436 $ 83,560,129
=============================
</TABLE>
See Notes to Financial Statements.
<PAGE>
NEXTEL STRYPES TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
__________________________________________________________________________________________________________________
<S> <C> <C>
ACCRETION OF ORIGINAL ISSUE DISCOUNT $ 263,273
EXPENSES:
Administrative fees and expenses $ 21,415
Legal fees 2,645
Accounting fees 10,116
Trustees' fees (Note 5) 5,603
Other expenses 10,894
------------------
TOTAL FEES AND EXPENSES 50,673
EXPENSE REIMBURSEMENT (Note 7) (50,673)
------------------
TOTAL EXPENSES - NET
---
-----------------
NET INVESTMENT INCOME 263,273
NET INCREASE IN UNREALIZED APPRECIATION
INVESTMENT
OF INVESTMENTS 160,018,744
-----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 160,282,017
=================
</TABLE>
See Notes to Financial Statements.
<PAGE>
NEXTEL STRYPES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Year Ended
Ended December 31, 30,
June 30, 1999 1998
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net investment income $ 263,273 $ 818,246
Unrealized appreciation (depreciation) of investments 160,018,744 (16,849,768)
-----------------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM OPERATIONS 160,282,017 (16,031,522)
-----------------------------------------
DISTRIBUTIONS
DISTRIBUTIONS
Net investment income (421,694) (528,528)
Return of capital (3,219,989) (6,754,839)
-----------------------------------------
NET DECREASE IN NET ASSETS FROM DISTRIBUTIONS (3,641,683) (7,283,367)
-----------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS
FOR THE PERIOD 156,640,334 (23,314,889)
NET ASSETS, BEGINNING OF PERIOD 147,111,469 170,426,358
-----------------------------------------
NET ASSETS, END OF PERIOD $ 303,751,803 $ 147,111,469
=========================================
</TABLE>
See Notes to Financial Statements.
<PAGE>
NEXTEL STRYPES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- -------------------------------------------------------------------------------
NOTE 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"). In March 1997, the Trust sold
Structured Yield Product Exchangeable for StockSM ("STRYPES") to the public
pursuant to a Registration Statement on Form N-2 under the Securities Act of
1933 and the Act. The Trust used the proceeds to purchase a portfolio comprised
of stripped U.S. Treasury securities and a forward purchase contract for shares
of common stock of Nextel Communications, Inc. ("Nextel"), a Delaware
corporation, with certain existing shareholders of Nextel ("Contracting
Stockholders"). The shares are 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 to the Administrator the
administrative duties with respect to the Trust.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
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 using the
effective interest method. The forward purchase contract is valued at the
mean of the bid prices received by the Trust at the end of each period
from two independent broker-dealer firms unaffiliated with the Trust who
are in the business of making bids on financial instruments similar to the
contract 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 accrual 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.
<PAGE>
NOTE 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 November 15, 1997 which was $0.1833).
NOTE 4. PURCHASES AND SALES OF INVESTMENTS
Maturities of U.S. Treasury Strips for the periods ended June 30, 1999 and
December 31, 1998 totaled $3,640,000 and $7,280,000, respectively. There were no
sales of such investments during either period. Purchase of U.S. Treasury Strips
and the forward purchase contract during the period ended December 31, 1997
totaled $20,940,192 and $76,498,807, respectively.
NOTE 5. TRUSTEES FEES
Each of the three Trustees were paid a one-time, upfront fee of $10,800 for the
services during the life of the Trust. In addition, the Managing Trustee was
paid an additional one-time, upfront fee of $3,600 for serving in such capacity.
The total fees paid to the Trustees of $36,000 is being expensed over the life
of the Trust. As of June 30, 1999, the Trust had expensed $26,095 of such fees.
NOTE 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.
As of June 30, 1999, gross unrealized appreciation and depreciation of
investments, based on amortized cost for Federal income tax purposes, aggregated
$220,188,307 and $0, respectively. The amortized cost of investment securities
for Federal income tax purposes was $83,560,129 at June 30, 1999.
NOTE 7. EXPENSES
The estimated expenses to be incurred by the Trust in connection with the
offering of the STRYPES and its ongoing operations is $687,117. Of this amount,
$361,517 represents offering expenses ($351,517) and organizational expenses
($10,000) incurred by the Trust. All of these expenses are being paid from cash
received by the Administrator from the Contracting Stockholders. At June 30,
1999, the Administrator 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 Contracting Stockholders. Expenses incurred in excess of
this amount will be paid by the Contracting Stockholders.
Cash received by the Administrator from the Contracting Stockholders 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, 1999, $237,390 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.
<PAGE>
NOTE 8. FORWARD PURCHASE CONTRACT
On March 10, 1997, the Trust entered into a forward purchase contract with
certain existing stockholders of Nextel (the "Contracting Stockholders") and
paid to the Contracting Stockholders $76,498,807 in connection therewith.
Pursuant to such contract, the Contracting Stockholders are obligated to deliver
to the Trust a specified number of shares of common stock on May 15, 2000 (the
"Exchange Date") so as to permit the holders of the STRYPES to exchange on the
Exchange Date each of their STRYPES for between 0.8403 and 1.00 shares of common
stock. See the Trust's original prospectus dated March 4, 1997 for the formula
upon which such exchange will be determined.
The forward purchase contract held by the Trust at June 30, 1999 is as follows:
<TABLE>
<CAPTION>
Exchange Cost of Contract Unrealized
Date Contract Value Appreciation
------------ ---------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Nextel Communications, Inc.
Common Stock Forward
Purchase Agreement 05/15/00 $ 76,498,807 $ 296,644,976 $ 220,146,169
================ ================ ====================
</TABLE>
The Contracting Stockholders' obligations under the forward purchase contract
are collateralized by shares of Nextel common stock which are being held in the
custody of the Trust's custodian, The Bank of New York. At June 30, 1999, the
custodian held 7,175,731 shares with an aggregate value of $360,131,999.
NOTE 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, 1999, there
were 7,175,731 STRYPES issued and outstanding with an aggregate cost, net of
sales commissions, and return of capital, of $82,639,705.
<PAGE>
NEXTEL STRYPES TRUST
FINANCIAL HIGHLIGHTS
(UNAUDITED)
- -------------------------------------------------------------------------------
The Trust's financial highlights are presented below. The per share operating
performance data is designed to allow investors to trace the operating
performance, on a per share basis, from the Trust's beginning net asset value to
the ending net asset value so that they can understand what effect the
individual items have on their investment assuming it was held throughout the
period. Generally, the per share amounts are derived by converting the actual
dollar amounts incurred for each item as disclosed in the financial statements
to their equivalent per share amounts.
The total return based on market value measures the Trust's performance assuming
investors purchased shares at market value as of the beginning of the period,
reinvested dividends and other distributions at market value, and then sold
their shares at the market value per share on the last day of the period. The
total return computations do not reflect any sales charges investors may incur
in purchasing or selling shares of the Trust. The total return for period of
less than one year is not annualized.
<TABLE>
<CAPTION>
March 10,1997
Six Months (Commencement
Ended Year Ended of Operations)to
June 30, December, 31 December 31
1999 1998 1998
-----------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE FOR A
STRYPE OUTSTANDING
THROUGHOUT THE PERIOD
Investment income $ 0.04 $ 0.11 $ 0.13
Expenses 0.00 0.00 0.00
-----------------------------------------------------
Investment income - net 0.04 0.11 0.13
Distributions from income (0.06) (0.07) (0.02)
Return of capital (0.45) (0.94) (0.67)
Unrealized gain (loss) on investments 22.30 (2.35) 10.73
-----------------------------------------------------
Net increase (decrease) in net asset value 21.83 (3.25) 10.17
Beginning net asset value 20.50 23.75 13.58
-----------------------------------------------------
Ending net asset value $ 42.33 $ 20.50 $ 23.75
=====================================================
Ending market value $ 42.00 $ 20.50 $ 23.75
=====================================================
TOTAL INVESTMENT RETURN BASED ON MARKET 108.40% (9.71)% 75.57%
VALUE
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets:
Before reimbursement (1) .05% .06% .08%
After reimbursement (1) .00% .00% .00%
Ratio of net investments income to average
net assets:
Before reimbursement (1) .19% .45% .75%
After reimbursement (1) .24% .51% .83%
Net assets, end of period (in thousands) $ 303,752 $ 147,111 $ 170,426
</TABLE>
(1) Annualized
