SNYDER STRYPES TRUST
FINANCIAL REPORT
DECEMBER 31, 1997
CONTENTS
ACCOUNTANTS' 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......................................6-8
Financial highlights.................................................9
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
Snyder STRYPES Trust:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Snyder STRYPES Trust as of December 31, 1997,
the related statements of operations and changes in net assets, and the
financial highlights for the period September 24, 1997 (commencement of
operations) to December 31, 1997. These financial statements and the financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights 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 and the financial
highlights 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 securities owned at
December 31, 1997 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Snyder STRYPES
Trust as of December 31, 1997, the results of its operations, the changes in
its net assets, and the financial highlights for the period September 24, 1997
to December 31, 1997 in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
Princeton, New Jersey
June 23, 1998
7
SNYDER STRYPES TRUST
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Investments, at value (amortized cost $128,700,137) (Notes 2, 4, and 8) $175,935,952
Cash 7,829
Total Assets 175,943,781
Net Assets $175,943,781
COMPOSITION OF NET ASSETS
Structured Yield Product Exchangeable for Stock ("STRYPES"), no par value; $128,348,221
5,175,000 shares issued and outstanding (Note 9)
Unrealized appreciation of investments 47,235,815
Undistributed net investment income 359,745
Net Assets $175,943,781
Net Asset value per STRYPES $ 34.00
======== =====
</TABLE>
See Notes to Financial Statements.
SNYDER STRYPES TRUST
SCHEDULE OF INVESTMENTS
December 31, 1997
<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 $2,170,000 2/15/98 $2,155,266 $ 2,155,403
United States Treasury Strips 2,170,000 5/15/98 2,127,316 2,126,516
United States Treasury Strips 2,170,000 8/15/98 2,097,131 2,096,725
United States Treasury Strips 2,170,000 11/15/98 2,068,748 2,067,091
United States Treasury Strips 2,170,000 2/15/99 2,038,889 2,037,215
United States Treasury Strips 2,170,000 5/15/99 2,010,418 2,007,405
United States Treasury Strips 2,170,000 8/15/99 1,982,295 1,978,827
United States Treasury Strips 2,170,000 11/15/99 1,954,693 1,948,116
United States Treasury Strips 2,170,000 2/15/00 1,927,285 1,920,090
United States Treasury Strips 2,170,000 5/15/00 1,901,397 1,892,312
United States Treasury Strips 2,170,000 8/15/00 1,872,928 1,863,700
United States Treasury Strips 2,170,000 11/15/00 1,847,538 1,835,791
-- --------- -- --------- --- ---------
$26,040,000 $23,983,904 23,929,191
=========== =========== ==========
FORWARD PURCHASE CONTRACT:
Snyder Communications, Inc. Common
Stock Forward Purchase Agreement 11/15/00 151,952,048 104,770,946
----------- -----------
Total $175,935,952 $128,700,137
============ ============
</TABLE>
See Notes to Financial Statements.
SNYDER STRYPES TRUST
STATEMENT OF OPERATIONS
For the period from September 24, 1997 (commencement of operations)
to December 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
ACCRETION OF ORIGINAL ISSUE DISCOUNT $368,976
EXPENSES:
Administrative fees and expenses $ 9,909
Legal fees 7,324
Accounting fees 7,668
Mailing expense 3,877
Trustees fees 3,102
Other expenses 3,382
-------
Total fees and expenses 35,262
EXPENSE REIMBURSEMENT (Note 7) (35,262)
Total expenses - net -
----------
Net investment income 368,976
Net change in unrealized appreciation of investments 47,235,815
----------
Net increase in net assets resulting from operations $47,604,791
===========
</TABLE>
See Notes to Financial Statements.
SNYDER STRYPES TRUST
STATEMENT OF CHANGES IN NET ASSETS
For the period from September 24, 1997 (commencement of operations)
to December 31, 1997
<TABLE>
<CAPTION>
<S> <C>
OPERATIONS $ 368,976
Net investment income 47,235,815
Unrealized appreciation of investments
- --------------------------------------------------------------------------- ----------------------------------------
Net increase in net assets from operations 47,604,791
----------
DISTRIBUTIONS:
Net investment income (9,231)
Return of capital (1,220,866)
- --------------------------------------------------------------------------- ----------------------------------------
Net decrease in net assets from distributions (1,230,097)
- --------------------------------------------------------------------------- ----------------------------------------
INCREASE IN NET ASSETS FROM CAPITAL SHARES TRANSACTIONS: 133,579,610
Gross proceeds from the sale of 5,174,997 STRYPES
Less: (4,010,623)
Selling commissions
- --------------------------------------------------------------------------- ----------------------------------------
Net increase in net assets from capital shares 129,568,987
transactions
- --------------------------------------------------------------------------- ----------------------------------------
Total increase in net assets for the period 175,943,681
Net assets, beginning of period 100
- --------------------------------------------------------------------------- ----------------------------------------
Net assets, end of period $ 175,943,781
</TABLE>
See Notes to Financial Statements.
SNYDER STRYPES TRUST
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization
Snyder STRYPES Trust ("Trust") was established on August 5, 1996 and is
registered as a non-diversified, closed-end management investment company under
the Investment Company Act of 1940 (the "Act"). In September 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 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 Snyder Communications, Inc. ("Snyder") with certain existing
shareholders of Snyder ("Contracting Stockholders"). The shares are deliverable
pursuant to the contract on November 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 on a basis which approximates
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.
Note 3. Distributions
STRYPES holders are entitled to receive distributions from the maturity of U.S.
Treasury Strips of $1.6778 per annum or $0.41945 per quarter (except for the
first distribution on November 15, 1997 which was $0.2377).
Note 4. Purchases and Sales of Investments
Purchases and maturities of U.S. Treasury Strips for the period ended December
31, 1997 totaled $24,789,215 and $1,229,000, respectively. There were no sales
of such investments during the period. Purchase of the forward purchase
contract during the period totaled $104,770,946.
Note 5. Trustees Fees
Each of the three Trustees was paid a one-time, upfront fee of $10,800 for
their 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 are being expensed
over the life of the Trust. As of December 31, 1997, the Trust had expensed
$3,102 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 December 31, 1997, net unrealized appreciation of investments aggregated
$47,235,815, consisting of gross unrealized appreciation of $47,235,952 and
gross unrealized depreciation of $137. The amortized cost of investment
securities for Federal income tax purposes was $128,700,137 at December 31,
1997.
Note 7. Expenses
The estimated expenses to be incurred in connection with the offering of the
STRYPES and its ongoing operations are $818,061. Of this amount, $395,000
represents offering expenses ($385,000) and organizational expenses ($10,000)
incurred by the Trust. At December 31, 1997, the Administrator had paid
$186,725 relating to such expenses. The remaining amount of $423,061 represents
estimated administrative and other operating expenses. 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
$423,061 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 December 31, 1997, $132,629 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.
Note 8. Forward Purchase Contracts
On September 18, 1997, the Trust entered into a forward purchase contract with
certain existing shareholders of Snyder (the "Contracting Stockholders") and
paid to the Contracting Stockholders $104,770,946 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 November
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 0.8333% and
1.00 shares of common stock. See the Trust's original prospectus dated
September 18, 1997 for the formula upon which such exchange will be determined.
The forward purchase contract held by the Trust at December 31, 1997 is as
follows:
<TABLE>
<CAPTION>
Exchange Cost of Contract Unrealized
Date Contract Value Appreciation
- --------------------------------------------- ----------------- ------------------ ------------------ ------------------
Snyder Communications, Inc. Common
<S> <C> <C> <C> <C>
Stock Forward Purchase Agreement 11/15/00 $104,770,946 $151,952,048 $47,181,102
============================================= ================= ================== ================== ==================
</TABLE>
The Sellers' obligations under the forward purchase contract are collateralized
by shares of Snyder common stock which are being held in the custody of the
Trust's Custodian, The Bank of New York. At December 31, 1997, the Custodian
held 5,175,000 shares with an aggregate value of $188,887,500.
Note 9. Capital Share Transactions
On September 12, 1997 one STRYPES was sold to one of the underwriters of the
STRYPES for $100. As a result of a stock split effected immediately prior to
the public offering of the STRYPES, this STRYPES was converted into three
STRYPES. During the offering period, the Trust sold 5,174,997 STRYPES to the
public and received net proceeds of $129,568,987 ($133,579,610 less sales
commission of $4,010,623). As of December 31, 1997, there were 5,175,000
STRYPES issued and outstanding with an aggregate cost, net of sales commission,
and return of capital, of $128,348,221.
SNYDER STRYPES TRUST
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
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>
September 24, 1997
(Commencement of
Operations) to
December 31, 1997
---------------------
Per Share Operating Performance (for a STRYPE outstanding throughout
the period)
<S> <C>
Investment income $ 0.07
Expenses 0.00
---------------------
Investment income - net 0.07
Distribution from income 0.00
Return of capital (0.24)
Unrealized gain on investments 9.13
---------------------
Net increase in net asset value 8.96
Beginning net asset value 25.04
---------------------
Ending net asset value $ 34.00
=====================
Ending market value $ 34.00
=====================
Total investment return based on market value 32.75%
Ratios/Supplemental data
Ratio of expenses to average net assets
Before reimbursement (1) 0.09%
After reimbursement (1) 0.00%
Ratio of net investments income to average net assets
Before reimbursement (1) 0.80%
After reimbursement (1) 0.89%
Net assets, end of period (in thousands) $ 175,944
</TABLE>
(1) Annualized
