MANAGED INTERMEDIATE GOVERNMENT FUND
- --------------------------------------------------------------------------------
MID-YEAR REPORT
JUNE 30, 1996
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Board of Directors
<S> <C>
DAVID S. LEE(1) Chairman of the Board; Managing Director, Scudder, Stevens
& Clark, Inc.
EDGAR R. FIEDLER(1) (2) (3) Vice President and Economic Counsellor, The Conference Board;
formerly Assistant Secretary of the Treasury for Economic Policy
PETER B. FREEMAN(2) (3) Corporate Director and Trustee
ROBERT W. LEAR(2) (3) Executive-in-Residence and Visiting Professor, Columbia
University Graduate School of Business; Director or Trustee,
Various Organizations
DANIEL PIERCE(1) President; Chairman of the Board, Scudder, Stevens & Clark, Inc.
(1)Member of Executive Committee
(2)Member of Nominating Committee
(3)Member of Audit Committee
- ---------------------------------------------------------------------------------------------------------
Officers
DAVID S. LEE Chairman of the Board
DANIEL PIERCE President
K. SUE COTE Vice President
JERARD K. HARTMAN Vice President
KATHRYN L. QUIRK Vice President
THOMAS W. JOSEPH Vice President and Assistant Secretary
THOMAS F. McDONOUGH Vice President and Assistant Secretary
PAMELA A. McGRATH Vice President and Treasurer
IRENE McC. PELLICONI Secretary
</TABLE>
2
<PAGE>
Dear Shareholder:
We are pleased to provide you with the mid-year report for Managed
Intermediate Government Fund. As of June 30, the Fund's 30-day net annualized
yield was a competitive 4.96%, and its total return for the six months, assuming
the reinvestment of dividends, was 1.36%. As the average return for the 121
intermediate U.S. government funds tracked by Lipper Analytical Services was
- -1.49% for the same period, your Fund fared particularly well. The Fund's mix of
conservative investments helped it pursue its dual objectives of providing
investors with a reasonably high level of current income and a relatively stable
share price compared with long-term bonds.
The first six months of 1996 encompassed an uncertain environment for bond
investors, as long-term interest rates rose sharply during first three months of
the period before stabilizing somewhat in the spring. The Federal Reserve's
recent decision to hold short-term interest rates at current levels appears to
reflect a consensus that slower economic growth and low inflation should hold
sway in the near future.
While the Fund's share price and income will vary in response to changes in
interest rates and other economic factors, we believe that the current
environment should allow the Fund to continue to provide solid total returns,
blending a reasonable level of current income and price stability. If you have
any questions about your Fund, please call toll free (800) 854-8525 from any
continental state. Thank you for choosing Managed Intermediate Government Fund
to help meet your investment needs.
/s/David S. Lee
David S. Lee
Chairman
3
<PAGE>
Portfolio Management Discussion
Recognizing that conservative bond investors count on dependable income and
a fair degree of price stability, we focused on three types of investments
during the period: U.S. Government agency pass-throughs, U.S. Treasury
obligations, and repurchase agreements. This combination of investments,
compatible with the conservative nature of the Fund, helped to provide a
competitive return during the period of generally rising interest rates, as is
evident in its outperformance versus its peers.
At the close of the period, close to 30% of the portfolio was invested in
U.S. Government agency pass-throughs. We utilize these mortgage-backed
securities to add yield to the portfolio, targeting opportunities in older pools
in the moderate premium 15-year sector. These "seasoned" pools offer greater
prepayment protection, as the underlying borrowers have not refinanced despite
several opportunities to do so in prior years. Moreover, prepayment risk has
subsided in the wake of the recent interest rate increases, helping to keep
supply far below 1993's record peaks.
Shorter-maturity U.S. Treasury obligations and repurchase agreements
afforded the Fund the price stability its shareholders have come to expect. U.S.
Treasury obligations are backed by the U.S. government, and provide the the
highest degree of credit safety available. At the period's close, these
securities made up 59% of the Fund's portfolio. Repurchase agreements made up
the remaining 11% of the portfolio at the close of the period. In view of the
current bond market uncertainty, these stable, very short term securities also
give the Fund the ability to deploy assets quickly as the direction of the bond
market becomes more clear.
We believe Managed Intermediate Government Fund is well-positioned to take
advantage of the current investment environment, and will continue to scrutinize
the economic data to help shape investment strategy for the remainder of the
year. Thank you for your continued interest in Managed Intermediate Government
Fund.
/s/David H. Glen /s/Mark Boyadjian
David H. Glen Mark Boyadjian
Lead Portfolio Manager Portfolio Manager
4
<PAGE>
MANAGED INTERMEDIATE GOVERNMENT FUND
PERFORMANCE UPDATE as of June 30, 1996
- -----------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
- -----------------------------------------------------------------
MANAGED INTERMEDIATE GOVERNMENT FUND
- ----------------------------------------
Total Return
Period Growth --------------
Ended of Average
6/30/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,501 5.01% 5.01%
Life of
Fund* $11,180 11.80% 3.40%
LEHMAN BROTHERS 1-3 YEAR
GOVERNMENT INDEX
- --------------------------------------
Total Return
Period Growth --------------
Ended of Average
6/30/96 $10,000 Cumulative Annual
- -------- ------- ---------- ------
1 Year $10,547 5.47% 5.47%
Life of
Fund* $11,657 16.57% 4.84%
*The Fund commenced operations on March 1, 1993.
Index comparisons begin March 31, 1993.
A chart in the form of a line graph appears here,
illustrating the Growth of a $10,000 Investment.
The data points from the graph are as follows:
YEARLY PERIODS ENDED JUNE 30
Managed Intermediate Government Fund
Year Amount
- ----------------------
3/31/93 $10,000
6/93 $10,202
12/93 $10,392
6/94 $10,043
12/94 $10,068
6/95 $10,601
12/95 $10,983
6/96 $11,132
Lehman Brothers 1-3 Year Government Index
Year Amount
- ----------------------
3/31/93 $10,000
6/93 $10,111
12/93 $10,315
6/94 $10,265
12/94 $10,368
6/95 $11,052
12/95 $11,492
6/96 $11,657
The unmanaged Lehman Brothers 1-3 Year Government Index is composed of agency
and treasury securities with maturities of 1-3 years. Both the Fund and Index
assume reinvestment of dividends. Index returns do not reflect fees or expenses.
- -----------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
- -----------------------------------------------------------------
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
YEARLY PERIODS ENDED JUNE 30
<TABLE>
<S> <C> <C> <C> <C>
1993* 1994 1995 1996
-------------------------------
NET ASSET VALUE... $10.06 $9.40 $9.42 $9.42
INCOME DIVIDENDS.. .19 .51 .49 .46
FUND TOTAL
RETURN (%)........ 2.48 -1.56 5.55 5.01
INDEX TOTAL
RETURN (%)........ 1.11 1.52 7.67 5.47
</TABLE>
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results.
Investment return and principal value will fluctuate, so an investor's
shares, when redeemed, may be worth more or less than when purchased. If
the Manager had not maintained the Fund's expenses, the average annual
total return for the one year, five year and life of Fund periods would have
been lower.
5
<PAGE>
MANAGED INTERMEDIATE GOVERNMENT FUND
<TABLE>
INVESTMENT PORTFOLIO (UNAUDITED)
JUNE 30, 1996
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
---------- -----------
<S> <C> <C>
REPURCHASE AGREEMENT -- 11.4%
Repurchase Agreement with Donaldson, Lufkin & Jenrette
dated 6/28/96 at 5.45% to be repurchased at $1,229,558 on
7/1/96, collateralized by a $935,000 U.S. Treasury Note,
11.75%, 2/15/10 (Cost $1,229,000) ....................................... $1,229,000 $ 1,229,000
-----------
U.S. GOVERNMENT AGENCY PASS-THROUGHS -- 29.5%
Federal Home Loan Mortgage Corporation*
5.27%, 7/10/96 ......................................................... 1,200,000 1,198,416
Student Loan Marketing Association*
5.52%, due 7/1/96 ....................................................... 2,000,000 2,000,000
-----------
TOTAL U.S. GOVERNMENT AGENCY PASS-THROUGHS (cost $3,198,419) ................ 3,198,416
-----------
U.S. TREASURY OBLIGATIONS -- 59.1%
U.S. Treasury Note, 4.375%, 8/15/96 ....................................... 1,000,000 998,910
U.S. Treasury Note, 4.75%, 2/15/97 ........................................ 1,000,000 994,060
U.S. Treasury Note, 6.125%, 5/15/98 ....................................... 1,000,000 1,000,000
U.S. Treasury Note, 4.75%, 9/30/98 ........................................ 1,000,000 970,160
U.S. Treasury Note, 5%, 1/31/99 ........................................... 2,000,000 1,940,940
U.S. Treasury Note, 6.125%, 7/31/00 ....................................... 500,000 494,455
-----------
TOTAL U.S. TREASURY OBLIGATIONS (cost $6,458,828) ........................... 6,398,525
-----------
TOTAL INVESTMENTS -- 100.0% (cost $10,886,247)** ............................ $10,825,941
===========
<FN>
* The investments in mortgage-backed securities are interests in separate pools of mortgages. All separate
investments in each of these issues which have similar coupon rates have been aggregated for presentation
purposes. Effective maturities of these investments may be shorter than stated maturities due to
prepayments.
** Cost for federal income tax purposes was $10,886,247. At June 30, 1996, net unrealized depreciation for
all securities based on tax cost was $60,306. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax cost of $23,517 and unrealized
depreciation for all securities in which there was an excess of tax cost over market value of $83,823.
</FN>
</TABLE>
See notes to financial statements.
6
<PAGE>
MANAGED INTERMEDIATE GOVERNMENT FUND
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1996
<CAPTION>
<S> <C> <C>
ASSETS
Investments, at market (identified cost $10,886,247) (note 2) ....... $10,825,941
Cash ................................................................ 1,533
Interest receivable ................................................. 109,276
Receivable due from advisor (note 5) ................................ 674
Deferred organizational expenses (note 2) ........................... 20,389
-----------
Total assets ................................................... 10,957,813
LIABILITIES
Dividend payable .................................................... $39,569
Accrued expenses (note 5) ........................................... 29,613
-------
Total liabilities .............................................. 69,182
-----------
Net assets, at market value ......................................... $10,888,631
===========
NET ASSETS
Net assets consist of:
Net unrealized depreciation on investments ........................ $ (60,306)
Accumulated net realized loss ..................................... (1,585,446)
Capital Stock ($.001 par value) ................................... 1,156
Additional paid-in capital ........................................ 12,533,227
-----------
Net assets, at market value ......................................... $10,888,631
===========
NET ASSET VALUE, offering and redemption price per share
($10,888,631[Division Sign]1,156,343 outstanding shares of
Capital Stock, $.001 par value, 100,000,000
shares authorized) ............................................. $9.42
=====
</TABLE>
See notes to financial statements.
7
<PAGE>
MANAGED INTERMEDIATE GOVERNMENT FUND
<TABLE>
STATEMENT OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1996
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME
Interest.......................................................... $ 325,362
EXPENSES:
Management fee (note 5) ........................................... $ 37,530
Directors' fees and expenses (note 5) ............................. 3,785
Shareholder services (note 5 and 6) ............................... 12,089
Custodian and accounting fees (note 5) ............................ 22,069
Professional services ............................................. 4,302
Reports to shareholders ........................................... 5,631
Amortization of organization expense (note 2) ..................... 6,101
Registration fees ................................................. 5,053
Miscellaneous fees ................................................ 3,689
---------
Total expenses before reductions .................................. 100,249
Expense reductions (Note 5) ....................................... (54,030)
---------
Expenses, net ..................................................... 46,219
---------
NET INVESTMENT INCOME ............................................. 279,143
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain from investments ................................ 55,910
Net unrealized depreciation on investments during the period ...... (190,550)
---------
Net loss on investments ........................................... (134,640)
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .............. $ 144,503
=========
</TABLE>
See notes to financial statements.
8
<PAGE>
MANAGED INTERMEDIATE GOVERNMENT FUND
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS
ENDED YEAR
JUNE 30, ENDED
1996 DECEMBER 31,
(UNAUDITED) 1995
----------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income .............................................. $ 279,143 $ 651,596
Net realized gain on investments ................................... 55,910 141,607
Net unrealized appreciation (depreciation) on investments
during the period ................................................ (190,550) 338,273
----------- ------------
Net increase in net assets resulting from operations ............... 144,503 1,131,476
----------- ------------
Dividends to shareholders from net investment income
($.23 and $.48 per share, respectively) .......................... (279,143) (651,596)
----------- ------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares ....................................... 748,960 2,192,383
Net asset value of shares issued in reinvestment of dividends ...... 85,157 538,309
----------- ------------
834,117 2,730,692
Cost of shares redeemed ............................................ (1,694,078) (13,506,103)
----------- ------------
Decrease in net assets from Capital Stock transactions ............. (859,961) (10,775,411)
----------- ------------
Total decrease in net assets ....................................... (994,601) (10,295,531)
NET ASSETS:
Beginning of period ................................................ 11,883,232 22,178,763
----------- ------------
End of period ...................................................... $10,888,631 $ 11,883,232
=========== ============
INCREASE (DECREASE) IN FUND SHARES:
Shares sold ........................................................ 78,815 232,670
Shares issued to shareholders in reinvestment of dividends ......... 8,985 57,445
----------- ------------
87,800 290,115
Shares redeemed .................................................... (179,094) (1,458,944)
----------- ------------
Net decrease in Fund shares ........................................ (91,294) (1,168,829)
SHARES OUTSTANDING:
Beginning of period ................................................ 1,247,637 2,416,466
----------- ------------
End of period ...................................................... 1,156,343 1,247,637
=========== ============
</TABLE>
See notes to financial statements.
9
<PAGE>
MANAGED INTERMEDIATE GOVERNMENT FUND
FINANCIAL HIGHLIGHTS
<TABLE>
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD AND OTHER PERFORMANCE
INFORMATION DERIVED FROM THE FINANCIAL STATEMENTS.
<CAPTION>
FOR THE PERIOD
SIX MONTHS MARCH 1, 1993
ENDED (COMMENCEMENT
JUNE 30, YEARS ENDED DECEMBER 31, OF OPERATIONS)
1996 ------------------------ TO DECEMBER 31,
(UNAUDITED) 1995 1994 1993
----------- ------------------------ ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..................... $ 9.52 $ 9.18 $ 9.98 $ 10.00
------ ------ ------- -------
Income from Investment Operations:
Net investment income (a) ................................ .23 .48 .49 .45
Net realized and unrealized gain (loss) on
investments ............................................ (.10) .34 (.80) (.02)
------ ------ ------- -------
Total from investment operations ......................... .13 .82 (.31) .43
------ ------ ------- -------
Less dividends from net investment income ................ (.23) (.48) (.49) (.45)
------ ------ ------- -------
Net asset value, end of period ........................... $ 9.42 $ 9.52 $ 9.18 $ 9.98
====== ====== ======= =======
TOTAL RETURN (%)(d) ...................................... 1.36(b) 9.08 (3.12) 4.37(b)
====== ====== ======= =======
RATIOS AND SUPPLEMENTARY DATA
Net assets, end of period ($ millions) ................... 11 12 22 15
Ratio of operating expenses, to average daily
net assets (%)(a) ...................................... .80(c) .80 1.01 .51(c)
Ratio of net investment income, to average daily
net assets (%) ......................................... 4.86(c) 5.08 5.19 5.35(c)
Portfolio turnover rate (%) .............................. 53.98(c) 96.54 336.62 132.98(c)
<FN>
(a) Reflects a per share amount of expenses
reimbursed by the Manager of ....................... $ -- $ -- $ -- $ .03
Reflects a per share amount of management fee
and other fees not imposed ......................... $ .04 $ .07 $ .03 $ .07
Operating expense ratio including expenses
reimbursed, management fee and other
expenses not imposed (%) ........................... 1.74(c) 1.59 1.34 1.69(c)
(b) Not annualized
(c) Annualized
(d) Total returns are higher due to maintenance of the Fund's expenses.
</FN>
</TABLE>
10
<PAGE>
MANAGED INTERMEDIATE GOVERNMENT FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION
Managed Intermediate Government Fund (the "Fund") is a portfolio of
Scudder Fund, Inc. (the "Company") which is an open-end diversified management
investment company.
2. SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies followed by the Fund are:
(a) Security Valuation--The value of securities is determined as of the
close of regular trading on the New York Stock Exchange. Securities are valued
utilizing primarily the latest bid prices or, if bid prices are not available,
on the basis of valuations based on a matrix system, both as furnished by a
reputable independent pricing service. Debt securities maturing in 60 days or
less are valued at amortized cost. All other securities and other assets for
which current market quotes are not readily available are valued at fair value
as determined in good faith by the Company's Board of Directors and in
accordance with procedures adopted by the Board of Directors.
(b) Federal Income Taxes--The Fund's policy is to qualify as a regulated
investment company under subchapter M of the Internal Revenue Code and to
distribute all taxable income, including any realized net capital gains, to
shareholders. Therefore, no Federal income tax provision is required. As of
December 31, 1995, the Fund had a net tax basis capital loss carryforward of
approximately $1,644,795, which may be applied against any realized net taxable
capital gains of each succeeding year until fully utilized or until December 31,
2002, whichever comes first.
(c) Allocation of Expenses--Expenses not directly chargeable to the Fund
are allocated primarily on the basis of relative net assets of the Company.
(d) Dividends--Dividends from net investment income are declared each
business day to shareholders of record on the previous business day for payment
on the first business day of the following month. During any particular year,
net realized gains from investment transactions in excess of available capital
loss carryforwards would be taxable to the Fund if not distributed. Therefore,
the Fund intends to distribute these amounts to shareholders. An additional
distribution may be made to the extent necessary to avoid the payment of a four
percent federal excise tax. The Fund uses the specific identification method for
determining realized gains or losses on investments for both financial and
federal income tax reporting purposes.
(e) Organization Costs--Costs incurred by the Fund in connection with
its organization and initial registration of shares have been deferred and are
being amortized on a straight-line basis over a five-year period.
(f) Other--Investment transactions are recorded on trade dates. Interest
income is recorded on the accrual basis and is adjusted for gains and losses on
paydowns on mortgage-backed securities. Distributions to shareholders are
recorded on the ex-dividend dates.
3. REPURCHASE AGREEMENTS
It is the Company's policy to obtain possession, through its custodian,
of the securities underlying each repurchase agreement to which it is a party,
either through physical delivery or book entry transfer in the Federal Reserve
System or Participants Trust Company. Payment by the Company in respect of a
repurchase agreement is authorized only when proper delivery of the underlying
securities is made to the Company's custodian. The Company's investment manager
values such underlying securities each business day using quotations obtained
from a reputable, independent source. If the Company's investment manager
determines that the value of such underlying securities (including accrued
interest thereon) does not at least equal the value of each repurchase agreement
(including accrued interest thereon) to which such securities are subject, it
will ask for additional securities to be delivered to the Company's custodian.
In connection with each repurchase agreement transaction, if the seller defaults
and the value of the collateral declines or if the seller enters an insolvency
proceeding, realization of the collateral by the Company may be delayed or
limited.
11
<PAGE>
4. PURCHASES AND SALES OF SECURITIES
During the six months ended June 30, 1996, purchases and sales of
securities, which were U.S. Government and U.S. Government agency securities,
(excluding short-term investments) aggregated $2,525,781 and $7,732,457,
respectively.
5. MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Company retains Scudder, Stevens & Clark, Inc. ("Scudder") as
investment manager for the Fund, pursuant to an investment advisory agreement
between Scudder and the Company on behalf of the Fund, for a management fee
payable each month, based upon the average daily value of the Fund's net assets,
at an annual rate of 0.65%. Scudder has agreed not to impose all or a portion of
its management fee until October 31, 1996, and during such period to maintain
the annualized expenses of the Fund at not more than 0.80% of average daily net
assets. For the six months ended June 30, 1996, Scudder did not impose any of
its fee amounting to $37,530. During the six months ended June 30, 1996, the
reimbursement was $675.
Under certain state regulations, if the total expenses of the Fund,
exclusive of taxes, interest, and extraordinary expenses exceed certain
limitations, the Company's investment adviser is required to reimburse the Fund
for such excess up to the amount of the management fee.
Scudder Service Corporation ("SSC"), a subsidiary of Scudder is the
Company's shareholder service, transfer and dividend disbursing agent. For the
six months ended June 30, 1996, the amount charged to the Fund by SSC aggregated
$11,611, of which $1,833 is unpaid.
Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of Scudder,
is responsible for determining the daily net asset value per share and
maintaining the portfolio and general accounting records for the Fund. For the
six months ended June 30, 1996, the amount charged to the Fund by SFAC
aggregated $2,925, of which $1,142 is unpaid. For the six months ended June 30,
1996, SFAC did not impose fees amounting to $15,825.
The Company has a compensation arrangement under which payment of
Directors' fees may be deferred. Interest is accrued (based on the rate of
return earned on the 90 day Treasury Bill as determined at the beginning of each
calendar quarter) on the deferred balances and is included in "Directors' fees
and expenses." The accumulated balance of deferred directors' fees and interest
thereon relating to the Fund aggregated $7,729, which is included in accrued
expenses of the Fund.
6. SHAREHOLDER SERVICES
The Fund has special arrangements with certain banks, institutions and
other persons under which they receive compensation from the Fund and Scudder
for performing shareholder servicing functions for their customers who own
shares in the Fund from time to time. For the six months ended June 30, 1996,
payments by the Fund pursuant to these arrangements aggregated $555, of which
$100 is unpaid.
7. SHAREHOLDER SERVICE, ADMINISTRATION AND DISTRIBUTION PLAN
The Company has a Shareholder Service, Administration and Distribution
Plan adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940
under which participating organizations which enter into agreements with the
Company and Scudder may receive a fee of up to 0.25% on an annual basis from
each of the Company and Scudder. Such fee is calculated on the average daily net
assets of the Company for which such participating organizations are
responsible. No payments have been made by the Company for shareholder service,
administration and distribution assistance under this plan other than those
indicated in Note 6 above.
8. CAPITAL STOCK
At June 30, 1996, one holder of record of the Fund held approximately
75% of the outstanding shares.
12
<PAGE>
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13
<PAGE>
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14
<PAGE>
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15
<PAGE>
Managed Intermediate Government Fund
345 Park Avenue, New York, New York 10154
(800) 854-8525
Investment Manager
Scudder, Stevens & Clark, Inc.
345 Park Avenue
New York, New York 10154
Distributor
Scudder Investor Services, Inc.
Two International Place
Boston, Massachusetts 02110
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Fund Accounting Agent
Scudder Fund Accounting Corporation
Two International Place
Boston, Massachusetts 02110
Transfer Agent and
Dividend Disbursing Agent
Scudder Service Corporation
P.O. Box 9242
Boston, Massachusetts 02106
Legal Counsel
Sullivan & Cromwell
New York, New York
--------------------------------------------
This report is for the information of the shareholders. Its use in connection
with any offering of the Company's shares is authorized only in case of a
concurrent or prior delivery of the Company's current prospectus.
MANAGED INTERMEDIATE
GOVERNMENT FUND
MID-YEAR REPORT
JUNE 30, 1996
