SNYDER STRYPES TRUST
FINANCIAL REPORT
JUNE 30, 1998
(Unaudited)
<PAGE>
CONTENTS
FINANCIAL STATEMENTS:
Statement of net assets....................................................1
Schedule of investments....................................................2
Statement of operations....................................................3
Statement of changes in net assets.........................................4
Notes to financial statements............................................5-7
Financial highlights.......................................................8
<PAGE>
McGLADREY & PULLEN, LLP
Certified Public Accountants and Consultants
ACCOUNTANT'S REPORT
The accompanying statement of net assets, including the schedule of investments,
of Snyder Strypes Trust as of June 30, 1998, and the related statement of
operations for the six months then ended, the statements of changes in net
assets for the six months then ended and the period from September 24, 1997
(commencement of operations) to December 31, 1997, and the financial highlights
for the periods indicated were not audited by us and, accordingly, we do not
express an opinion on them.
McGladrey & Pullen, llp
New York, New York
October 27, 1998
<PAGE>
SNYDER STRYPES TRUST
STATEMENT OF NET ASSETS
June 30, 1998 (Unaudited)
- -------------------------------------------------------------------------------
ASSETS
Investments, at value (amortized cost $124,980,641)
(Notes 2, 4, and 8) $203,433,208
Cash 6,521
------------
Total Assets $203,439,729
============
Net Assets $203,439,729
============
COMPOSITION OF NET ASSETS
Structured Yield Product Exchangeable for Stock
("STRYPES"), no par value; 5,175,000 shares
issued and outstanding (Note 9) $124,126,784
Unrealized appreciation of investments 78,452,567
Undistributed net investment income 860,378
------------
Net Assets $203,439,729
============
Net Asset value per STRYPES $ 39.31
============
See Notes to Financial Statements.
<PAGE>
<TABLE>
SNYDER STRYPES TRUST
SCHEDULE OF INVESTMENTS
June 30, 1998 (Unaudited)
Par Maturity Market Amortized
Securities Description Value Date Value Cost
<S> <C> <C> <C> <C>
UNITED STATES GOVERNMENT
SECURITIES:
United States Treasury Strips $2,170,000 08/15/98 $2,156,307 $ 2,154,947
United States Treasury Strips 2,170,000 11/15/98 2,128,206 2,124,867
United States Treasury Strips 2,170,000 02/15/99 2,098,802 2,094,661
United States Treasury Strips 2,170,000 05/15/99 2,070,310 2,064,807
United States Treasury Strips 2,170,000 08/15/99 2,041,927 2,035,417
United States Treasury Strips 2,170,000 11/15/99 2,014,693 2,004,522
United States Treasury Strips 2,170,000 02/15/00 1,986,787 1,975,677
United States Treasury Strips 2,170,000 05/15/00 1,961,290 1,947,250
United States Treasury Strips 2,170,000 08/15/00 1,933,969 1,918,057
United States Treasury Strips 2,170,000 11/15/00 1,908,146 1,889,490
----------- ----------- -----------
$21,700,000 $20,300,437 20,209,695
=========== =========== ===========
FORWARD PURCHASE CONTRACT:
Snyder Communications, Inc. Common
Stock Forward Purchase Agreement 11/15/00 183,132,771 104,770,946
------------ ------------
Total $203,433,208 $124,980,641
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
SNYDER STRYPES TRUST
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1998 (Unaudited)
ACCRETION OF ORIGINAL ISSUE DISCOUNT $620,504
EXPENSES:
Administrative fees and expenses $ 18,115
Legal fees 13,390
Accounting fees 14,020
Mailing expense 7,089
Trustees fees (Note 5) 5,671
Other expenses 6,184
--------
Total fees and expenses 64,469
EXPENSE REIMBURSEMENT (Note 7) (64,469)
Total expenses - net -
--------
Net investment income 620,504
Net change in unrealized appreciation
of investments 31,216,752
----------
Net increase in net assets resulting
from operations $31,837,256
===========
See Notes to Financial Statements.
<PAGE>
<TABLE>
SNYDER STRYPES TRUST
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1998 and the Period from September 24,
1997 (commencement of operations) to December 31, 1997 (Unaudited)
Six Months Period Ended
Ended June 30, 1998 December 31, 1997
------------------- -----------------
<S> <C> <C>
OPERATIONS
Net investment income $ 620,504 $ 368,976
Unrealized appreciation of investments 31,216,752 47,235,815
Net increase in net assets from operations 31,837,256 47,604,791
------------ ------------
DISTRIBUTIONS:
Net investment income (119,871) (9,231)
Return of capital (4,221,437) (1,220,866)
Net decrease in net assets from distributions (4,341,308) (1,230,097)
- ---------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM CAPITAL SHARES TRANSACTIONS (Note 9):
Gross proceeds from the sale of 5,174,997 STRYPES 133,579,610
Less:
Selling commissions (4,010,623)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from capital shares transactions 0 129,568,987
- ---------------------------------------------------------------------------------------------------------------------------------
Total increase in net assets for the period 27,495,948 175,943,681
Net assets, beginning of period 175,943,781 100
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period $203,439,729 $ 175,943,781
=================================================================================================================================
</TABLE>
See Notes to Financial Statements.
<PAGE>
SNYDER STRYPES TRUST
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Note 1. Organization
Snyder STRYPES Trust ("Trust") was established on August 5, 1997 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
Maturities of U.S. Treasury Strips totaled $4,340,000 and $1,229,000 for
the six months ended June 30,1998 and the period ended December 31, 1997,
respectively. There were no sales of such investments during the period.
Purchase of the U.S. Treasury Strips and the forward purchase contract
during the period ended December 31, 1997 totaled $24,789,215 and
$104,770,946, respectively.
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 June 30,
1998, the Trust had expensed $8,773 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, 1998, gross unrealized appreciation and depreciation of
investments, based on amortized cost for Federal income tax purposes,
aggregated $78,452,567 and $0, respectively. The amortized cost of
investment securities for Federal income tax purposes was $124,980,641 at
June 30, 1998.
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 June 30, 1998, 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 June 30, 1998,
$182,837 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 June 30, 1998 is as
follows:
<TABLE>
Exchange Cost of Contract Unrealized
Date Contract Value Appreciation
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Snyder Communications, Inc. Common
Stock Forward Purchase Agreement 11/15/00 $104,770,946 $183,132,771 $78,361,825
===================================================================================================================
</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 June 30,
1998, the Custodian held 5,175,000 shares with an aggregate value of
$227,700,000.
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 June 30, 1998,
there were 5,175,000 STRYPES issued and outstanding with an aggregate
cost, net of sales commission and return of capital, of $124,126,784.
<PAGE>
SNYDER 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>
September 24, 1997
Six Months (Commencement of
Ended Operations) to December
June 30, 1998 31, 1997
--------------------------- ---------------------------
<S> <C> <C>
Per Share Operating Performance for a STRYPES
outstanding throughout the period
Investment income $ 0.12 $ 0.07
Expenses 0.00 0.00
--------------------------- ---------------------------
Investment income - net 0.12 0.07
Distributions from income (0.02) 0.00
Return of capital (0.82) (0.24)
Unrealized gain on investments 6.03 9.13
--------------------------- ---------------------------
Net increase in net asset value 5.31 8.96
Beginning net asset value 34.00 25.04
--------------------------- ---------------------------
Ending net asset value $ 39.31 $ 34.00
=========================== ===========================
Ending market value $ 39.31 $ 34.00
=========================== ===========================
Total investment return based on market value 18.27% 32.75%
Ratios/Supplemental data
Ratio of expenses to average net assets
Before reimbursement (1) 0.07% 0.09%
After reimbursement (1) 0.00% 0.00%
Ratio of net investments income to average net assets
Before reimbursement (1) 0.59% 0.80%
After reimbursement (1) 0.66% 0.89%
Net assets, end of period (in thousands) $ 203,440 $ 175,944
</TABLE>
(1) Annualized
