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MANAGED INCOME SECURITIES PLUS FUND, INC.
SEMI-ANNUAL REPORT
JUNE 30, 1997
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MANAGED INCOME SECURITIES PLUS FUND, INC.
LETTER TO SHAREHOLDERS
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August 15, 1997
Dear Shareholders:
We are pleased to present the first semi-annual report of the Managed
Income Securities Plus Fund, Inc. (the "Fund"). Enclosed you will find unaudited
financial statements for the Fund, including a complete summary of portfolio
investments, for the period ended June 30, 1997.
The Fund commenced investment operations on February 5, 1997. The
initial net asset value ("NAV") of the Fund's common shares was $10,000.00 per
share. At June 30, 1997 the NAV of the Fund's common shares was $9,975.44,
representing a decline in total return, based on NAV, of 0.25% for the period
February 5, 1997 through June 30, 1997. Additional performance data can be found
in the "Financial Highlights" section of this report.
We appreciate your interest in the Fund, and would be pleased to
respond to any questions or comments. If you have any questions, please feel
free to call the Fund at 212-272-9027.
Sincerely,
[/S/ ELI WACHTEL]
Eli Wachtel
President
Managed Income Securities Plus Fund, Inc.
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MANAGED INCOME SECURITIES PLUS FUND, INC.
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997
(unaudited)
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PRINCIPAL MARKET
AMOUNT VALUE
DESCRIPTION (000's) (Note A)
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LONG-TERM INVESTMENTS - 37.12%
U.S. GOVERNMENT OBLIGATIONS - 37.12%
U.S. Treasury Notes, 7.25%, 08/15/04
(cost $192,844,182) ............................. $183,500 $191,223,514
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SHORT-TERM INVESTMENTS - 62.88%
COMMERCIAL PAPER - 34.94%
American Express Credit Corp., 5.58%, 07/31/97 ..... 25,000 25,000,000
Associates Corp. N.A.
5.62%, 07/01/97 ................................ 11,000 11,000,000
5.59%, 07/31/97 ................................ 15,000 15,000,000
Ford Motor Credit Corp., 5.59%, 07/31/97 ......... 26,000 26,000,000
General Electric Capital Corp., 5.58%, 07/31/97 .. 26,000 26,000,000
IBM Credit Corp., 5.53%, 07/31/97 ................ 26,000 26,000,000
Merrill Lynch & Co. Inc., 5.60%, 07/31/97 ......... 25,000 25,000,000
Prudential Funding Corp., 5.56%, 07/31/97 ........ 26,000 26,000,000
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Total Commercial Paper (cost $180,000,000) ....... 180,000,000
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U.S. GOVERNMENT AGENCY DISCOUNT NOTES - 26.90%
Federal Home Loan Mortgage Corporation
5.42%*, 07/03/97 ............................... 40,000 39,987,956
5.41%*, 10/01/97 ............................... 100,000 98,605,000
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Total U.S. Government Agency Discount Notes
(cost $138,605,400) ............................. 138,592,956
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SHARES
(000's)
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INVESTMENT COMPANIES - 1.04%
The Milestone Funds Treasury Obligations Portfolio,
Institutional Shares **
(cost - $5,353,628) ............................ 5,354 5,353,628
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Total Short-Term Investments
(cost - $323,959,028) .......................... 323,946,584
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Total Investments (cost - $516,803,210) - 100.00% .. $515,170,098
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* Effective yield on date of purchase.
** Money Market Fund
The accompanying notes are an integral part of the financial statements.
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MANAGED INCOME SECURITIES PLUS FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
(unaudited)
ASSETS
Investments, at value (cost $516,803,210) . $515,170,098
Cash....................................... 3,726
Interest receivable........................ 5,189,098
Deferred organization expenses (Note A).... 91,080
Prepaid Insurance.......................... 10,844
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Total assets................... 620,464,846
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LIABILITIES
Payable for investments purchased.......... 536,588
Advisory fee payable (Note B).............. 153,171
Organization expenses payable.............. 91,266
Notes payable (Note A)..................... 50,000
Accounting and administration fees payable 6,576
Accrued expenses........................... 46,028
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Total liabilities.............. 883,629
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NET ASSETS APPLICABLE TO OUTSTANDING
CAPITAL SHARES ............................... $519,581,217
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REPRESENTED BY:
Preferred shares (Note D).................. $200,000,000
Common shares:
Par value ($0.01, 32,036.8 shares issued
and outstanding, 97,000 shares
authorized)............................. 320
Paid-in capital (Note D)................ 320,588,680
Undistributed net investment income........ 965,222
Accumulated net realized loss from
investments............................. (339,893)
Net unrealized depreciation on
investments............................. (1,633,112)
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Net assets applicable to
outstanding capital shares.... $519,581,217
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Net assets applicable to
outstanding common shares..... $319,581,217
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NET ASSET VALUE PER COMMON SHARE:
($319,581,217 (DIVIDE) 32,036.8)................. $ 9,975.44
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The accompanying notes are an integral part of the financial statements.
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MANAGED INCOME SECURITIES PLUS FUND, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD FEBRUARY 5, 1997* THROUGH JUNE 30, 1997
(unaudited)
INVESTMENT INCOME
Interest ......................... $11,921,624
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EXPENSES
Advisory fees (Note B) ........... 153,171
Accounting and administration
fees (Note B) .................. 32,000
Custodian fees and expenses
(Note B) ....................... 22,940
Legal and auditing fees .......... 19,234
Transfer agent fees and expenses . 12,000
Directors' fees and expenses ..... 10,928
Amortization of organizational
costs (Note A) ................. 7,920
Other ............................ 8,487
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Total expenses ............... 266,680
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Net investment income ............ 11,654,944
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NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss from
investments (339,893)
Net change in unrealized
depreciation (1,633,112)
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Net realized and unrealized
loss on investments (1,973,005)
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NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 9,681,939
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* Commencement of investment operations.
The accompanying notes are an integral part of the financial statements.
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MANAGED INCOME SECURITIES PLUS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FEBRUARY 5, 1997* THROUGH JUNE 30, 1997
(unaudited)
INCREASE IN NET ASSETS FROM
OPERATIONS
Net investment income ...................... $11,654,944
Net realized loss from investments ......... (339,893)
Net change in unrealized depreciation ...... (1,633,112)
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Net increase in net assets resulting
from operations ......................... 9,681,939
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DIVIDENDS TO PREFERRED SHAREHOLDERS FROM
Net investment income ...................... (10,689,722)
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SHARES OF BENEFICIAL INTEREST
Net proceeds from the sale of shares ....... 520,589,000
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Total increase in net assets ............... 519,581,217
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NET ASSETS
Beginning of period ........................ --
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End of period (including undistributed
net investment income of $965,222) ...... $519,581,217
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* Commencement of investment operations.
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MANAGED INCOME SECURITIES PLUS FUND, INC.
FINANCIAL HIGHLIGHTS
FOR THE PERIOD FEBRUARY 5, 1997* THROUGH JUNE 30, 1997
(unaudited)
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Contained below is per share operating performance data for a share of common
stock outstanding, total investment return, ratios to average net assets and
other supplemental data for the period indicated. This information has been
derived from information provided in the financial statements.
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PER SHARE OPERATING PERFORMANCE**
Net asset value, beginning of period.................. $10,000,00
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Net investment income................................. 369.02
Net realized and unrealized loss on
investments(1) .................................... (55.12)
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Net increase in net assets resulting from
operations ........................................ 313.90
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Dividends to preferred shareholders
from net investment income........................ (338.46)
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Net asset value, end of period........................ $ 9,975.44
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Total investment return(2)............................ (0.25)%
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RATIOS/SUPPLEMENTAL DATA
Net assets applicable to outstanding
capital shares at end of period
(000's omitted).......... $519,581
Ratio of expenses to average net assets(3)............. 0.13%
Ratio of net investment income to average
net assets(3) 5.71%
Portfolio turnover rate(4)............................. 9.17%
Value of preferred shares outstanding
(000's omitted) .................................... $200,000
Net asset coverage per share of preferred shares,
end of period...................................... $159,791
Liquidation value of preferred shares(5)............... $100,000
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* Commencement of investment operations.
** Calculated based on average shares outstanding.
(1)The amount shown for a common share outstanding is not in accord with
the change in the aggregate gains and losses in investments during the
period due to the timing of sales of Fund shares in connection with the
Fund's offerings and fluctuating net asset values.
(2)Total investment return is calculated assuming a purchase of common
shares at the net asset value on the first day and a sale of common
shares on the last day of the period. Total investment return includes
reinvestment of dividends and distributions, if any. Underwriting
discounts and commissions, if any, are not reflected in total investment
return. Total investment return is not annualized.
(3)Annualized.
(4)Not annualized.
(5)Excluding any accumulated but unpaid dividends.
The accompanying notes are an integral part of the financial statements.
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MANAGED INCOME SECURITIES PLUS FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (UNAUDITED)
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Managed Income Securities Plus Fund, Inc. (the "Fund"), is a non-diversified,
closed-end management investment company registered with the Securities and
Exchange Commission (the "Commission") under the Investment Company Act of 1940
(the "1940 Act"). The Fund was incorporated under the laws of the State of
Delaware on January 27, 1997.
ORGANIZATIONAL MATTERS - Prior to commencing investment operations on February
5, 1997, the Fund did not have any transactions other than those relating to
organizational matters. Costs of approximately $99,000 incurred by the Fund in
connection with the organization, registration with the Commission and initial
offering of its shares, have been deferred and are being amortized using the
straight-line method over the period of benefit not exceeding sixty months,
beginning with the commencement of investment operations of the Fund. In the
event that the Fund is liquidated prior to the end of the sixty month period,
The Bear Stearns Companies Inc. ("Bear Stearns") shall bear the unamortized
deferred organization expenses.
MANAGEMENT ESTIMATES - The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
certain estimates and assumptions that may affect the reported amounts and
disclosures in the financial statements. Actual results could differ from those
estimates.
PORTFOLIO VALUATION - Investments are stated at value in the accompanying
financial statements. Investments (including short-term investments) are valued
by one or more independent pricing services (the "Service") approved by the
Fund's Board of Directors. Securities valued by the Service for which quoted bid
prices in the judgment of the Service are readily available and are
representative of the bid side of the market, are valued at the mean between the
quoted bid prices (as obtained by the Service from dealers in such securities)
and asked prices (as calculated by the Service based upon its evaluation of the
market for such securities). Securities which mature in 60 days or less are
valued at amortized cost, which approximates market value, unless this method
does not represent fair value. Expenses and fees, including the investment
advisory and administration fees, are accrued daily and taken into account for
the purpose of determining the net asset value of the Fund's shares. The net
asset value of the Fund is calculated at the end of each month and at any other
times determined by the Board of Directors.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME - Investment transactions are
recorded on the trade date (the date on which the order to buy or sell is
executed). Realized gains and losses from securities, if any, are calculated on
the identified cost basis. Interest income is recorded on an accrual basis.
Discounts are treated as adjustments to interest income and identified costs of
investments over the lives of respective investments.
U.S. FEDERAL TAX STATUS - The Fund intends to distribute substantially all of
its taxable income and to comply with the other requirements of the Internal
Revenue Code of 1986, as amended, applicable to regulated investment companies.
Accordingly, no provision for U.S. federal income taxes is required. In
addition, by distributing during each calendar year substantially all of its
ordinary income and capital gains, if any, the Fund intends not to be subject to
a U.S. federal excise tax.
DIVIDENDS AND DISTRIBUTIONS - The Fund distributes at least annually to
shareholders of the common shares, substantially all of its net investment
income and net realized short-term capital gains, if any
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after the required distributions on the preferred shares are met. The Fund
determines annually whether to distribute any net realized long-term capital
gains in excess of net realized short-term capital losses to shareholders of the
common shares, if any. An additional distribution may be made to the extent
necessary to avoid the payment of a 4% U.S. federal excise tax. Dividends and
distributions to common and preferred shareholders are recorded by the Fund on
the respective shares' ex-dividend date.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for U.S.
federal income tax purposes due to U.S. generally accepted accounting
principles/tax differences in the character of income and expense recognition.
Dividends on the outstanding preferred shares of the Fund are cumulative from
their respective settlement dates, and payable quarterly in arrears on March 30,
June 30, September 30, and December 30 of each year (or the next succeeding
business day), at a rate representing an annual dividend yield of 13.270% until
and including December 30, 2006, and thereafter at a rate representing an annual
dividend yield of 1.00%.
Other - The Fund has outstanding $50,000 aggregate principal amounts of Floating
Rate Notes (the "Notes") paying interest quarterly at a floating rate equal to
the three month LIBOR plus 2.50% per annum over the yield of the one-year
constant maturity Treasury Security. The Notes are redeemable at face value at
any time by the Fund and are due upon the earlier of December 30, 2017 and the
dissolution of the Fund.
NOTE B - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
During the period ended June 30, 1997, Bear Stearns Funds Management Inc.
("BSFM" or the "Adviser"), a wholly-owned subsidiary of Bear Stearns, serves as
the investment adviser pursuant to an Investment Advisory Agreement with the
Fund. Under the terms of the Investment Advisory Agreement, the Fund has agreed
to pay the Adviser a monthly fee equal to an annual rate of 0.075% of the Fund's
average monthly net assets.
Under the terms of an Administrative Services Agreement with the Fund, PFPC Inc.
("PFPC") provides certain fund accounting and administrative services to the
Fund. For providing these services, the Fund has agreed to pay PFPC an annual
fee of $80,000, plus out of pocket expenses, payable monthly.
PFPC also serves as the Fund's transfer agent, dividend disbursing agent and the
registrar for the Common Stock, Preferred Stock and Notes.
Custodial Trust Company ("CTC"), a wholly-owned subsidiary of Bear Stearns and
an affiliate of the Adviser, serves as custodian to the Fund. For providing
these services, the Fund has agreed to pay CTC a monthly fee equal to an annual
rate of 0.01% of the Fund's average net assets, subject to a minimum annual fee
of $6,000, plus transaction charges.
NOTE C - INVESTMENTS IN SECURITIES
For U.S. federal income tax purposes, the cost of securities owned at June 30,
1997 was $516,803,210. Accordingly, the net unrealized depreciation of
investments of $1,633,112 was composed entirely of gross depreciation
representing an excess of cost over the value of the Fund's investments.
For the period ended June 30, 1997, purchases and sales of securities, other
than short-term investments, were $210,871,837 and $17,281,470, respectively.
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NOTE D - CAPITAL SHARE TRANSACTIONS
The Fund is authorized to issue up to 97,000 shares of $0.01 par value common
stock. The Fund currently has 32,036.8 shares of common stock outstanding, all
of which are beneficially owned by Bear Stearns. The common stock has not been
and will not be registered under the Securities Act of 1933, as amended, and as
a consequence the common stock may be offered or transferred only in a private
transaction.
During the period ended June 30, 1997, the Fund had no transactions in its
common shares, other the sale of 32,036.8 shares to Bear Stearns for
$320,589,000.
The Fund is authorized to issue up to 3,000 shares of $0.01 par value preferred
stock. The Fund currently has 2,000 shares of preferred stock outstanding. The
preferred stock has not been and will not be registered under the Securities Act
of 1933, as amended, and as a consequence the preferred stock may be offered or
transferred only in a private transaction.
During the period ended June 30, 1997, the Fund had no transactions in its
preferred shares, other than the sale of 2,000 shares for $200,000,000.
No dividends shall be declared or paid or set apart for payment on any series of
capital stock of the Fund ranking , as to dividends, on a parity with or junior
to the preferred stock for any period, unless full cumulative dividends have
been or contemporaneously are declared and paid, or declared and a sum
sufficient for the payment thereof is set apart for such payments, on the
preferred stock for all past dividend periods and the then-current dividend
period. Additionally, under the 1940 Act, the Fund may not declare dividends or
make other distributions on common shares or purchase any such shares if, at the
time of the declaration, distribution or purchase, asset coverage with respect
to the outstanding preferred stock is less than 200%.
In the event of any voluntary or involuntary liquidation, dissolution or winding
up of the Fund, the holders of the preferred stock at the time outstanding will
be entitled to receive out of the assets of the Fund available for distribution
to stockholders, before any distribution of assets is made to holders of common
stock or any other class of stock ranking junior to the preferred stock upon
liquidation, liquidating distributions equal to $100,000 per share.
The holders of preferred shares have voting rights equal to the holders of
common shares (one vote per share) and will vote together with holders of common
shares as a single class. However, holders of preferred shares are also entitled
to elect two of the Fund's directors. In addition, the 1940 Act requires that
along with approval by shareholders that might otherwise be required, the
approval of the holders of a majority of any outstanding preferred shares,
voting separately as a class would be required to (a) adopt any plan of
reorganization that would adversely affect the preferred shares, and (b) take
any action requiring a vote of security holders pursuant to Section 13(a) of the
1940 Act, including, among other things, changes in the Fund's subclassification
as a closed-end investment company or changes in their fundamental investment
restrictions.
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BEAR
STEARNS
[LOGO OMITTED]
The
Bear Stearns
Funds
245 PARK AVENUE
NEW YORK, NY 10167
1.212.272.9027
MANAGED INCOME SECURITIES PLUS FUND, INC.
William J. Montgoris Chairman of the Board
Eli Wachtel President and Director
Peter M. Bren Director
John R. McKernan, Jr. Director
M.B. Oglesby, Jr. Director
Frank J. Maresca Vice President and Treasurer
Ellen T. Arthur Secretary
Vincent L. Pereira Vice President, Assistant Treasurer and
Assistant Secretary
Investment Adviser
Bear Stearns Funds
Management Inc.
245 Park Avenue
New York, NY 10167
SUB-ADMINISTRATOR,
ACCOUNTING AND
CUSTODIAN TRANSFER AGENT
Custodial Trust Company PFPC Inc.
101 Carnegie Center 400 Bellevue Parkway
Princeton, NJ 08540 Wilmington, DE 19809
LEGAL COUNSEL INDEPENDENT AUDITORS
Skadden, Arps, Slate, Meagher & Flom Deloitte & Touche LLP
919 Third Avenue Two World Financial Center
New York, NY 10022 New York, NY 10281
This report is submitted for the general information of shareholders of the
Fund. The financial information included herein is taken from the records of the
Fund without audit by the Fund's independent auditors who do not express an
opinion thereon. It is not authorized for distribution to prospective investors
in the Fund unless it is preceded or accompanied by a current offering circular
which includes details regarding the Fund's objectives, policies, and other
information. Total investment return is based on historical results and is not
intended to indicate future performance. The investment return and principal
value of an investment in the Fund will fluctuate, so that an investor's shares,
when redeemed, may be worth more or less than the original cost.
