On July 8, Montgomery Street Income Securities Fund (NYSE:MTS) held its 2010 annual stockholders meeting and the shareholders approved the new investment advisory agreement with Pimco. They also revised the Fund’s investment policies which has allowed the fund managers to restructure the bond portfolio.
A few weeks ago, the fund declared a dividend of $0.22 a share payable on July 30. The increased dividend (up from $0.16 a share) reflects the restructuring of the portfolio. It is anticipated that all distributions paid in 2010 will be ordinary income and not return of capital which will help to maintain the net asset value of the fund.
MTS is currently trading at a 6.3% discount to net asset value which is a little lower than the 8% discount it had several months ago in my last blog post on MTS.
On March 22, I wrote a blog article which pointed out that all of the closed-end funds with “PIMCO” in their name were trading at a premium above net asset value. If anything, the premiums are even larger now. It will be interesting to see if MTS will also sell at a premium over NAV once more investors realize that it is managed by Pimco.
Full Disclosure: Long MTS.