MANAGED SECURITIES PLUS FUND, INC.
SEMI-ANNUAL REPORT
JUNE 30, 1999
(UNAUDITED)
<PAGE>
MANAGED SECURITIES PLUS FUND, INC.
LETTER TO SHAREHOLDERS
August 12, 1999
Dear Shareholders:
We are pleased to present the semi-annual report for the Managed
Securities Plus Fund, Inc. (the "Fund") (formerly Managed Income Securities Plus
Fund, Inc.). Enclosed you will find the unaudited financial statements for the
Fund for the six months ended June 30, 1999, including the portfolio of
investments as of June 30, 1999.
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, 1999, the NAV of the Fund's common shares was $6,590.94,
representing a decrease in total return, based on NAV, of (8.59)%, for the
period February 5, 1997 through June 30, 1999 and (14.31)% for the six months
ended June 30, 1999, assuming reinvestment of dividends and distributions.
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 Securities Plus Fund, Inc.
1
<PAGE>
MANAGED SECURITIES PLUS FUND, INC.
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
=======================================================================================
PRINCIPAL MARKET
AMOUNT VALUE
DESCRIPTION (000'S) (NOTE A)
=======================================================================================
SHORT-TERM INVESTMENTS - 100.00%
COMMERCIAL PAPER - 91.24%
<S> <C> <C>
Alpine Securitization Corp., 4.99%*, 07/15/99..................$50,000 $ 49,902,972
Barton Capital Corp., 5.02%*, 07/23/99......................... 50,000 49,846,611
Broadway Capital Corp., 5.00%*, 07/09/99....................... 20,000 19,977,778
Delaware Funding Group, 4.99%*, 07/15/99....................... 20,000 19,961,189
General Electric Capital Corp., 4.93%*, 07/14/99............... 20,000 19,964,395
General Motors Acceptance Corp., 5.00%*, 07/23/99.............. 50,000 49,847,222
Greenwich Funding Corp., 4.99%*, 07/15/99...................... 50,000 49,902,972
Park Avenue Receivables Corp., 5.00%*, 07/14/99................ 20,000 19,963,889
Prudential Funding Corp., 4.93%*, 07/14/99..................... 11,000 10,980,417
Prudential Funding Corp., 4.93%*, 07/14/99..................... 5,000 4,991,099
Prudential Funding Corp., 4.93%*, 07/20/99..................... 5,000 4,986,990
Sheffield Receivables Corp., 5.00%*, 07/20/99.................. 20,000 19,947,222
Triple A-1 Funding Corp., 5.00%*, 07/20/99..................... 20,000 19,947,222
Twin Towers Inc., 5.00%*, 07/20/99............................. 20,000 19,961,111
Windmill Funding Corp., 5.03%*, 07/23/99....................... 15,000 14,953,892
-------------
Total Commercial Paper (cost - $375,134,981)............. 375,134,981
-------------
SHARES
---------
INVESTMENT COMPANIES - 8.76%
Dreyfus Cash Management Plus, Inc.**........................15,000,000 15,000,000
Federated Investors, Trust for Short-Term U.S. Government
Securities**........................................... 2,877 2,877
The Milestone Funds Treasury Obligations Portfolio,
Institutional Shares**..................................21,015,438 21,015,438
------------
Total Investment Companies (cost - $36,018,315)....... 36,018,315
------------
Total Investments (cost - $411,153,296) - 100.00%........... $411,153,296
============
<FN>
- ----------------
* Effective yield on date of purchase.
** Money Market Fund.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
MANAGED SECURITIES PLUS FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments, at value (cost $411,153,296)(Notes A,C).............$411,153,296
Interest receivable.............................................. 128,037
Prepaid Insurance ............................................... 12,021
------------
Total assets .................................................... 411,293,354
------------
LIABILITIES
Notes payable (Note A)........................................... 50,000
Advisory fee payable (Note B).................................... 32,194
Accounting and administration fees payable (Note B).............. 13,048
Accrued expenses................................................. 45,464
------------
Total liabilities................................................ 140,706
------------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL SHARES.................$411,152,648
============
NET ASSETS CONSIST OF:
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 (Notes A,D)...................................... 320,599,680
Distribution in excess of net investment income (Note A).........(110,741,871)
Accumulated net realized gain on investments and
foreign currency related transactions ........................... 1,294,519
------------
Net assets applicable to outstanding capital shares .............$411,152,648
============
Net assets applicable to outstanding common shares...............$211,152,648
============
NET ASSET VALUE PER COMMON SHARE:
($211,152,648 / 32,036.8)......................................$ 6,590.94
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
MANAGED SECURITIES PLUS FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(unaudited)
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Interest (Note A)..............................................$ 13,240,181
------------
EXPENSES
Advisory fees (Note B).......................................... 195,918
Accounting and administration fees (Note B)..................... 39,672
Legal and auditing fees......................................... 36,426
Custodian fees and expenses (Note B)............................ 30,167
Amortization of organizational costs (Note A)................... 21,117
Transfer agent fees and expenses................................ 14,876
Directors' fees and expenses.................................... 11,191
Interest and other (Note A)........................ 5,076
------------
Total expenses.................................................. 354,443
------------
Net investment income........................................... 12,885,738
------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND FOREIGN
CURRENCY RELATED TRANSACTIONS
Net realized gain/(loss) from:
Investments.................................................... (2,018,403)
Net change in unrealized appreciation in value of
investments and translation of other assets and liabilities
denominated in foreign currencies ............................. (6,842,744)
------------
Net realized and unrealized gain on investments and foreign
currency related transactions.................................. (8,861,147)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................$ 4,024,591
============
</TABLE>
4
The accompanying notes are an integral part of the financial statements.
<PAGE>
MANAGED SECURITIES PLUS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE YEAR
ENDED ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
----------- ----
INCREASE/(DECREASE) IN NET ASSETS FROM
OPERATIONS
<S> <C> <C>
Net investment income.......................................... $12,885,738 $29,107,927
Net realized gain/(loss) on investments and foreign
currency related transactions............................. (2,018,403) 9,019,519
Net change in unrealized appreciation in value of
investments and translation of other assets
and liabilities denominated in foreign currencies ........ (6,842,744) 1,097,175
----------- -----------
Net increase in net assets resulting from operations........... 4,024,591 39,224,621
----------- -----------
Dividends to preferred shareholders:
Net investment income.......................................... (13,270,000) (26,540,000)
Dividends and distributions to common shareholders:
Net investment income.......................................... -- (2,344,262)
In excess of net investment income.............................(110,527,019) --
Net realized gain from investments............................. -- (5,734,238)
----------- -----------
Total dividends and distributions to shareholders..............(123,797,019) (34,618,500)
----------- -----------
Total increase/(decrease) in net assets........................(119,772,428) 4,606,121
----------- -----------
NET ASSETS
Beginning of period............................................ 530,925,076 526,318,955
----------- -----------
End of period (including undistributed net
investment income of $180,410 for the year
ended December 31, 1998)....................................$411,152,648 $ 530,925,076
============ =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
MANAGED SECURITIES PLUS FUND, INC.
FINANCIAL HIGHLIGHTS
================================================================================
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 each period indicated. This information has been
derived from information provided in the financial statements.
================================================================================
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE YEAR FOR THE PERIOD
ENDED ENDED FEBRUARY 5, 1997*
JUNE 30, 1999 DECEMBER 31, THROUGH
(UNAUDITED) 1998 DECEMBER 31, 1997
------------- ------------- ------------------
PER SHARE OPERATING PERFORMANCE**
<S> <C> <C> <C>
Net asset value, beginning of period ..................$10,329.52 $10,185.75 $10,000.00
---------- ---------- ----------
Net investment income ................................. 402.22 908.58 836.13
Net realized and unrealized gain on investments and
foreign currency related transactions ................. (276.59) 315.78 187.38(1)
---------- ---------- ----------
Net increase in net assets resulting from operations .. 125.63 1,224.36 1,023.51
---------- ---------- ----------
Dividends to preferred shareholders:
Net investment income ................................. (414.21) (828.42) (746.19)
Dividends and distributions to common shareholders:
Net investment income ................................. -- (73.17) (90.08)
In excess of net investment income .................... (3,450.00) -- --
Net realized gain from investments .................... -- (179.00) (1.49)
---------- ---------- ----------
Total dividends and distributions to shareholders ..... (3,864.21) (1,080.59) (837.76)
---------- ---------- ----------
Net asset value, end of period ........................$ 6,590.94 $10,329.52 $10,185.75
========== ========== ==========
Total investment return(2)............................. (14.31)% 3.79% 2.78%
========== ========== ==========
RATIOS/SUPPLEMENTAL DATA
Net assets applicable to outstanding capital shares
at end of period (000's omitted) ......................$ 411,153 $ 530,925 $ 526,319
Ratio of expenses to average net assets ............... 0.14%(3) 0.13% 0.14%(3)
Ratio of net investment income to average net assets .. 4.93%(3) 5.47% 5.47%(3)
Portfolio turnover rate ............................... 28.41% 66.76% 25.79%
Value of preferred shares outstanding (000's omitted) .$ 200,000 $ 200,000 $ 200,000
Net asset coverage per share of preferred shares,
end of period .........................................$ 205,582 $ 265,463 $ 263,159
Liquidation value per share of preferred shares(4)
(Note D) ..............................................$ 100,000 $ 100,000 $ 100,000
<FN>
- --------------------
* Commencement of investment operations.
** Calculated based on average shares outstanding.
(1) The amount shown for a common share outstanding is not in accordance 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 each 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) Excluding accumulated but unpaid dividends, if any.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
MANAGED SECURITIES PLUS FUND, INC.
NOTES TO FINANCIAL STATEMENTS - (UNAUDITED)
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Managed Securities Plus Fund, Inc. (the "Fund"), formerly known as Managed
Income Securities Plus Fund, Inc., 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, as amended (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 $33,191 incurred by the Fund in connection with
the organization, registration with the Commission and initial offering of its
shares, were deferred and was amortized using the straight-line method over the
expected period of benefit not exceeding sixty months, beginning with the
commencement of investment operations of the Fund. At January 1, 1999 (start of
the Fund's new fiscal year) all unamortized organizational costs, were charged
to expense at that date in accordance with the American Institute of Certified
Public Accountants' Statement of Position 98-5 - Reporting on the Costs of
Start-up Activities.
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 fair 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 for which quoted bid prices in the
judgment of the Service are representative and readily available, 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 accreted over the lives of the related investments into interest
income with adjustments to the cost of such investments.
7
<PAGE>
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.
FOREIGN CURRENCY TRANSLATIONS - The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(I) market value of investment securities, assets and liabilities at the
current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at
the relevant rates of exchange prevailing on the respective dates of
such transactions.
The Fund reports certain foreign currency related transactions as components of
realized gains for financial reporting purposes, whereas such components are
treated as ordinary income for U.S. federal income tax purposes.
Net realized foreign exchange gains represent foreign exchange gains and losses
from transactions in foreign currencies and forward foreign currency contracts,
exchange gains or losses realized between the trade date and settlement date on
security transactions, and the difference between the amounts of interest and
dividends recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received.
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, 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, if any, to shareholders of the common
shares. 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.
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 13.27% 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 London Interbank Offered Rate ("LIBOR") plus 2.50% per annum.
The Notes are redeemable at face value at any time by the Fund and are due upon
the earlier of December 30, 2017 or the dissolution of the Fund.
The Fund reclassified $11,000 (originally charged to Paid-in Capital at the
Fund's inception in anticipation of incurring various expenses in connection
with the Fund's common and preferred share offerings) to Paid-in Capital.
8
<PAGE>
NOTE B - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
At June 30, 1999, Bear Stearns Asset Management Inc. ("BSAM" or the "Adviser"),
a wholly-owned subsidiary of The Bear Stearns Companies Inc. ("Bear Stearns"),
served as the Fund's investment adviser pursuant to an Investment Advisory
Agreement whereby 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 among the Fund, Bear
Stearns and PFPC Inc. ("PFPC"), 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, if
any, payable monthly.
PFPC also serves as the Fund's transfer agent, dividend disbursing agent and the
registrar for the common shares, preferred shares 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 monthly 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,
1999 was $411,153,296. There was no unrealized appreciation or depreciation on
such investments at June 30, 1999.
For the six months ended June 30, 1999, purchases and sales of securities, other
than short-term investments, were $30,571,797 and $285,722,710, respectively.
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 shares have not been
and will not be registered under the Securities Act of 1933, as amended, and as
a consequence the common shares may be offered or transferred only in a private
transaction.
During the year ended December 31, 1998 and the six months ended June 30, 1999,
the Fund had no transactions in its common shares.
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.
During the six months ended June 30, 1999, Bear Stearns acquired all of the
Fund's preferred stock outstanding in private transactions. The preferred shares
have not been and will not be registered under the Securities Act of 1933, as
amended, and as a consequence, the preferred shares may be offered or
transferred only in a private transaction. As of April 9, 1999, the Fund's
preferred stock is no longer rated by Moody's Investor Service.
During the year ended December 31, 1998 and the six months ended June 30, 1999
the Fund had no transactions in its preferred shares.
9
<PAGE>
No dividends shall be declared, paid or set apart for payment on any series of
capital shares of the Fund ranking, as to dividends, on a parity with or junior
to the preferred shares for any period, unless full cumulative dividends have
been or contemporaneously are being declared and paid, or declared and a sum
sufficient for the payment thereof is set apart for such payments, on the
preferred shares 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 shares 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 shares at the time outstanding will be entitled to receive out of
the assets of the Fund available for distribution to shareholders, before any
distribution of assets is made to holders of common shares or any other class of
shares ranking junior to the preferred shares upon liquidation, liquidating
distributions equal to $100,000 per share.
The preferred shares are not redeemable, except upon the occurrence of a Tax
Event (as defined under "Description of Preferred Stock - Rights Upon
Liquidation" caption in the Fund's Offering Memorandum). In the event that a Tax
Event has occurred, the Fund may, at its option, redeem in whole, but not in
part, the preferred shares at a redemption price equal to the Tax Event
Redemption Price. The Tax Redemption Price will be (i) the sum of the present
values of all future dividend payments due on the preferred shares (rounded to
the nearest whole cent per share), discounted on a quarterly basis at the
"Redemption Discount Rate" (as defined in the Fund's Offering Memorandum) to the
dividend payment date immediately preceding the redemption date, plus (ii) any
accrued but unpaid dividends up to and including the redemption date.
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 its
fundamental investment restrictions.
10
<PAGE>
BEAR
STEARNS
MANAGED SECURITIES PLUS FUND, INC.
245 Park Avenue
New York, NY 10167
1.212.272.9027
DIRECTORS AND CORPORATE OFFICERS
Samuel L. Molinaro, Jr, 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
Stephen A. Bornstein Secretary
Vincent L. Pereira Vice President, Assistant Treasurer and
Assistant Secretary
INVESTMENT ADVISER
Bear Stearns Asset
Management Inc.
575 Lexington Avenue
New York, NY 10022
CUSTODIAN CO-ADMINISTRATOR, ACCOUNTING AND
Custodial Trust Company TRANSFER AGENT
101 Carnegie Center PFPC Inc.
Princeton, NJ 08540 400 Bellevue Parkway
Wilmington, DE 19809
LEGAL COUNSEL INDEPENDENT AUDITORS
Skadden, Arps, Slate, Meagher Deloitte & Touche LLP
& Flom LLP Two World Financial Center
919 Third Avenue New York, NY 10281
New York, NY 10022
This report, including the financial statements herein, is submitted for the
general information of shareholders of the Fund. It is not a prospectus,
circular or representation intended for use in the purchase or sale of shares of
the Fund or of any securities mentioned in this report. The financial
information included herein is taken from the Fund's records without audit by
the Fund's independent auditors who do not express an opinion thereon. Total
investment return is based on historical results and is not intended to indicate
future performance. The total 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.
