<PAGE>
PRESIDENT'S LETTER
On a net asset value or NAV basis, the Fund underperformed the Lipper Closed End
High Yield Bond Fund Average (the Lipper Average) for both the fiscal year and
calendar year-to-date periods ending October 31, 2000. The Fund's total return
on a NAV basis was -11.64% and -14.52% for the fiscal year and calendar
year-to-date periods, respectively. The Lipper Average total returns for those
periods were -6.68% and -9.69%, respectively. The total return based on market
price for the Fund for the calendar year to date period ended October 31, 2000
was +2.65%, but on a fiscal year basis the return was -12.15%. This reflects
severe tax-loss selling that occurred in December 1999. We are suffering from
the same occurrence this year. There were three defaults in the Fund's portfolio
during the fiscal year (Tokheim Corp, Carmike Cinemas and Styling Technology)
totaling $7.75 million in losses to the Fund and there were a number of
"distressed sales." Given the current difficult economic and capital market
conditions, defaults and distressed sales may increase going forward. For the
quarter ending October 31, 2000 the Fund under performed the Lipper Average as a
result of pricing pressure and credit risk losses in the telecom/
media/internet, theatre, aerospace and industrial sectors. In August 2000, the
dividend was lowered back to 8 cents per share per month from the 8.25 cents per
share level to which it had been raised in April 1999. On December 1, 2000 the
dividend was lowered again to 7.5 cents per share partially due to higher
interest costs associated with the Fund's borrowings and to match the earnings
currently expected from the Fund's assets in 2001. The Fund's level of
borrowings is 31% of net assets as of October 31, which is close to the maximum
allowed.
For the fiscal year, the Fund remained over weighted in the telecom/media/
internet and information/technology sectors in relation to the Lipper Index.
Markets are rightly concerned generally about whether many of these companies
have adequate liquidity to support aggressive future investments given slower
economic growth and tighter access to capital. However, we are satisfied that
our positions have emphasized companies with large liquidity cushions and
world-scale/world-class assets. Also, demand for value-added telecom/media
services and technology products remains relatively strong and should continue
to grow faster than overall demand in the foreseeable future and at greater than
average profit levels. Our telecom investments have been focused on both "Next
Generation" (data/internet-centric as opposed to voice-centric) and European
broadband service providers which are areas that hold great promise. We expect
that markets will become more supportive of these investments in coming years.
The high yield-bond market has been under heavy downward pressure for much of
the year 2000. The pressure stems from widespread concern over whether the
economy will go into recession or just enter a slower growth mode in 2001 and
what that means for earnings and cash flow generation, credit availability, bond
default and recovery rates. This has led to a flight out of risk-assets (like
equities and high yield bonds) and into U.S. Treasuries in recent months. Given
the sea-change in the economic and financial environments in the past 6 months,
investors' concerns are certainly understandable. Investors are worried that
they don't know where the market "bottom" is at this point. We expect that over
the next several months that question will be answered. We believe that high
yield bonds are an excellent investment at a market "bottom" and that over time
bond prices should gravitate towards par which will provide investors with very
attractive returns.
The Officers and Trustees wish you a happy and prosperous New Year.
Sincerely,
[graphic]
G. Moffett Cochran December, 2000
President
<PAGE>
Fund Highlights (unaudited)
DLJ High Yield Bond Fund
Top Ten Holdings as of October 31, 2000
<TABLE>
<CAPTION>
% of % of
Security Description Net Assets Security Description Net Assets
------------------- --------- ------------------- ---------
<S> <C> <C> <C>
Kaiser Aluminum & Chemical Corp. Details, Inc.
12.75%, 02/01/03 2.37% 10.00%, 11/15/05 2.04%
ICN Pharmaceuticals, Inc. Packaging Corp of America
8.75%, 11/15/08 2.26% 9.63%, 04/01/09 1.98%
Regional Independent Media @Entertainment, Inc.
10.50%, 07/01/08 2.19% 14.50%, 02/01/09 1.97%
Triarc Consumer Beverage Fairchild Corp.
10.25%, 02/15/09 2.09% 10.75%, 04/15/09 1.95%
Rent-A-Center, Inc. Paxson Communications Corp. 1.93%
11.00%, 08/15/08 2.06%
</TABLE>
Portfolio and Fund Information October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
Current Yield(1): 15.52% Ticker Symbol: DHY
Distribution Rate(2): 15.88% Primary Exchange: NYSE
Average Rating: B
Average Years to Maturity*: 7.24 years
Average Duration*: 5.41 years
</TABLE>
* weighted average
Investment Results
<TABLE>
<CAPTION>
DLJ High Yield Bond Fund(3) Average Annual Total Return
--------------------------- ---------------------------
1 Year Since Inception*
------ ----------------
<S> <C> <C>
Market Price .................................................... -12.15% -8.72%
NAV(4) .......................................................... -11.64% -8.74%
Fund Index
----------
Lipper Closed-End High Yield Bond Fund Average(5) ............... -6.68% -6.72%
</TABLE>
* July 31, 1998 through October 31, 2000
---------------
(1) Current yield is based on October's dividend per share of $.0800
(annualized) divided by the October 31, 2000 market price ($6.1875).
(2) Distribution rate is based on dividends per share paid from net investment
income during the period November 1, 1999 through October 31, 2000 divided
by the October 31, 2000 market price.
(3) The performance data quoted represent past performance, which is no
indication of future performance. Investment return and principal value
will fluctuate so that an investor's shares, when sold, may be worth more
or less than their original cost. No adjustment has been made for any
income taxes payable by shareholders on dividends.
(4) The total return referenced reflects the change in the Fund's net asset
value over the period and assumes that dividends were reinvested. The
percentage is not an indication of the performance of a shareholder's
investment in the Fund which is based on market price.
(5) The Lipper Closed-End High Yield Bond Fund Average is an equally weighted
performance average of 34 funds in the Lipper Analytical grouping of
closed-end high yield bond funds, adjusted for capital gains and income
dividends.
<PAGE>
DLJ High Yield Bond Fund--Statement of Investments October 31, 2000
--------------------------------------------------------------------------------
BONDS - 136.68%
<TABLE>
<CAPTION>
Principal
Amount Value
------------- -------------
<S> <C> <C>
AEROSPACE--4.87%
Compass Aerospace Corp.
10.13%, 04/15/05 **,+++....................................... $ 3,275,000 $ 474,875
Fairchild Corp.
10.75%, 04/15/09 **........................................... 7,000,000 5,600,000
Hexcel Corp.
9.75%, 01/15/09 **............................................ 4,000,000 3,720,000
Transdigm, Inc.
10.38%, 12/01/08 **........................................... 4,500,000 4,185,000
-------------
13,979,875
-------------
CHEMICALS--4.33%
Avecia Group plc
11.00%, 7/01/09 **............................................ 3,250,000 3,136,250
Huntsman ICI Chemicals LLC
0.00%, 12/31/09 **............................................ 11,230,000 3,369,000
Lyondell Chemical Co.
10.88%, 05/01/09 **........................................... 5,000,000 4,812,500
Sterling Chemicals, Inc.
11.75%, 08/15/06 **........................................... 2,000,000 1,110,000
-------------
12,427,750
-------------
CONSUMER NON-DURABLES--3.07%
Albecca, Inc.
10.75%, 08/15/08 **........................................... 3,000,000 2,685,000
Consoltex Group
11.00%, 10/01/03 **........................................... 4,000,000 2,860,000
Polaroid Corp.
11.50%, 02/15/06 **........................................... 4,000,000 3,140,000
Styling Technology Corp.
10.88%, 07/01/08 **,+......................................... 1,500,000 127,500
------------
8,812,500
------------
ENERGY--6.06%
Grey Wolf, Inc.
8.88%, 07/01/07 **............................................ 3,300,000 3,217,500
Mariner Energy, Inc.
10.50%, 08/01/06 **........................................... 4,000,000 3,860,000
R&B Falcon Corp.
9.50%, 12/15/08 **............................................ 5,000,000 5,362,500
Swift Energy Co.
10.25%, 08/01/09 **........................................... 2,000,000 2,020,000
Trico Marine Services, Inc.
8.50%, 08/01/05 **............................................ 3,000,000 2,910,000
-------------
17,370,000
-------------
FINANCIAL SERVICES--4.15%
AmeriCredit Corp.
9.88%, 04/15/06 **............................................ 4,500,000 4,421,250
Metris Companies, Inc.
10.13%, 07/15/06 **........................................... 4,750,000 4,512,500
Ocwen Financial Corp.
11.88%, 10/01/03 **........................................... 3,445,000 2,979,925
-------------
11,913,675
-------------
FOOD & TOBACCO--6.86%
Advantica Restaurant Group, Inc.
11.25%, 01/15/08 **........................................... 6,000,000 2,910,000
Fleming Companies, Inc.
10.63%, 07/31/07 **........................................... 6,420,000 4,847,100
Luigino's, Inc.
10.00%, 02/01/06 **........................................... 4,000,000 3,180,000
Triarc Consumer Beverage
10.25%, 02/15/09 **........................................... 5,325,000 5,990,625
Volume Services America, Inc.
11.25%, 03/01/09 **........................................... 3,000,000 2,760,000
-------------
19,687,725
-------------
FOREST PRODUCTS/
CONTAINERS--4.90%
American Tissue, Inc.
12.50%, 07/15/06 **........................................... $ 4,000,000 $ 3,820,000
Packaging Corp. of America
9.63%, 04/01/09 **............................................ 5,550,000 5,688,750
Riverwood International Corp.
10.88%, 04/01/08 **........................................... 5,000,000 4,537,500
-------------
14,046,250
-------------
GAMING/LEISURE--5.77%
Argosy Gaming Co.
10.75%, 06/01/09 **........................................... 4,000,000 4,200,000
Extended Stay America, Inc.
9.15%, 03/15/08 **............................................ 5,000,000 4,675,000
Hollywood Casino Corp.
11.25%, 05/01/07 **........................................... 5,350,000 5,523,875
Hollywood Casino Shreveport
13.00%, 08/01/06 **........................................... 2,000,000 2,150,000
-------------
16,548,875
-------------
HEALTHCARE--7.55%
Alaris Medical, Inc.
11.13%, 08/01/08 **, ***...................................... 10,000,000 1,250,000
ICN Pharmaceuticals, Inc.
8.75%, 11/15/08 *, **......................................... 6,500,000 6,483,750
Kinetic Concepts, Inc.
9.63%, 11/01/07 **............................................ 4,500,000 3,780,000
King Pharmaceutical, Inc.
10.75%, 02/15/09 **........................................... 5,000,000 5,300,000
Total Renal Care Holdings, Inc.
7.00%, 05/15/09 *, **......................................... 6,500,000 4,850,625
-------------
21,664,375
-------------
INFORMATION TECHNOLOGY--4.43%
Asat Finance LLC
12.50%, 11/01/06 *, **........................................ 3,250,000 3,298,750
Details, Inc.
10.00%, 11/15/05 **........................................... 6,000,000 5,842,500
SCG Holding & Semiconductor Co.
12.00%, 08/01/09 **........................................... 3,575,000 3,566,063
-------------
12,707,313
-------------
MANUFACTURING--8.00%
Actuant Corp.
13.00%, 05/01/09 **........................................... 2,750,000 2,708,750
BGF Industries, Inc.
10.25%, 01/15/09 **........................................... 4,000,000 3,760,000
Continental Global Group, Inc.
11.00%, 04/01/07 **........................................... 2,000,000 710,000
Filtronic plc
10.00%, 12/01/05 **........................................... 4,000,000 3,600,000
Gentek, Inc.
11.00%, 08/01/09 **........................................... 5,500,000 5,472,500
Grove Worldwide LLC
9.25%, 05/01/08 **............................................ 5,000,000 700,000
Jordan Industries, Inc.
10.38%, 08/01/07 **........................................... 4,500,000 4,207,500
Roller Bearing Company of America
9.63%, 06/15/07 **............................................ 2,000,000 1,790,000
-------------
22,948,750
-------------
</TABLE>
See notes to financial statements.
<PAGE>
DLJ High Yield Bond Fund--Statement of Investments October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
------------- -------------
<S> <C> <C>
MEDIA/ENTERTAINMENT--23.99%
@Entertainment, Inc.
14.50%, 02/01/09 **, ***...................................... $ 10,200,000 $ 5,661,000
AMC Entertainment, Inc.
9.50%, 03/15/09 **............................................ 6,000,000 2,850,000
Cablevision SA
13.75%, 04/30/07 **........................................... 5,000,000 3,962,500
Callahan Nordrhein-Westf
14.00%, 07/15/10 *,**......................................... 5,000,000 4,800,000
Charter Communications Holdings LLC
8.63%, 04/01/09 **............................................ 3,000,000 2,715,000
9.92%, 04/01/11 **, ***....................................... 6,500,000 3,794,375
Citadel Broadcasting Company
10.25%, 07/01/07 **........................................... 3,000,000 2,925,000
Echostar DBS Corp.
9.38%, 02/01/09 **............................................ 5,000,000 4,937,500
Globix Corp.
12.50%, 02/01/10 **........................................... 5,000,000 2,775,000
Liberty Group Operating
9.38%, 02/01/08 ** 3,500,000 2,852,500
11.63%, 02/01/09 **, ***...................................... 3,000,000 1,890,000
Ono Finance plc
13.00%, 05/01/09 **........................................... 5,980,000 4,634,500
Pegasus Communications Corp.
9.63%, 10/15/05 **............................................ 4,000,000 3,920,000
9.75%, 12/01/06 **............................................ 2,000,000 1,960,000
RCN Corp.
11.13%, 10/15/07 **, ***...................................... 9,000,000 4,455,000
Regional Independent Media
10.50%, 07/01/08 **........................................... 6,000,000 6,270,000
United International Holdings, Inc.
10.75%, 02/15/08 **, ***...................................... 8,000,000 4,920,000
XM Satellite Radio, Inc.
14.00%, 03/15/10 **........................................... 5,000,000 3,475,000
-------------
68,797,375
-------------
METALS & MINERALS--6.08%
Algoma Steel, Inc.
12.38%, 07/15/05.............................................. 3,980,000 2,169,100
Great Lakes Carbon Corp.
10.25%, 05/15/08 **........................................... 5,000,000 3,850,000
Kaiser Aluminum & Chemical Corp.
12.75%, 02/01/03 **........................................... 9,000,000 6,795,000
LTV Corp.
11.75%, 11/15/09 **........................................... 6,000,000 2,430,000
Renco Steel Holdings
10.88%, 02/01/05 **........................................... 3,000,000 2,205,000
-------------
17,449,100
-------------
RETAIL--3.03%
Big 5 Corp.
10.88%, 11/15/07 **........................................... 4,000,000 3,600,000
J Crew Operating Corp.
10.38%, 10/15/07 **........................................... 3,500,000 3,062,500
MusicLand Group, Inc
9.88%, 03/15/08 **............................................ 2,500,000 2,012,500
------------
8,675,000
------------
SERVICE--5.25%
Allied Waste North America, Inc.
10.00%, 08/01/09 **........................................... $ 5,750,000 $ 4,945,000
Neff Corp.
10.25%, 06/01/08 **........................................... 3,000,000 1,365,000
Phoenix Color Corp.
10.38%, 02/01/09 **........................................... 3,450,000 2,829,000
Rent-A-Center, Inc.
11.00%, 08/15/08 **........................................... 6,000,000 5,910,000
-------------
15,049,000
-------------
TELECOMMUNICATIONS--29.74%
Adelphia Communications
10.88%, 10/01/10.............................................. 3,000,000 2,820,000
Covad Communications Group
12.00%, 02/15/10 **........................................... 4,500,000 2,092,500
Crown Castle International Corp.
10.38%, 05/15/11 **, ***...................................... 7,750,000 4,979,375
9.50%, 08/01/11 **............................................ 1,500,000 1,440,000
Dobson/Sygnet Communications Corp.
12.25%, 12/15/08 **........................................... 4,000,000 3,920,000
Dolphin Telecommunications plc
11.50%, 06/01/08 **, ***...................................... 2,250,000 438,750
14.00%, 05/15/09 **, ***...................................... 6,000,000 1,110,000
GT Group Telecom
13.25%, 02/01/10 **, ***...................................... 6,750,000 2,497,500
Impsat Corp.
12.38%, 06/15/08 **........................................... 5,000,000 3,412,500
Impsat Fiber Networks
13.75%, 02/15/05 **........................................... 1,000,000 820,000
Intermedia Communications, Inc.
12.25%, 03/01/09 **, ***...................................... 7,600,000 4,902,000
Leap Wireless International
14.50%, 04/15/10 **,***....................................... 1,000,000 285,000
12.50%, 04/15/10 **........................................... 4,000,000 2,940,000
Netia Holdings B.V.
10.25%, 11/01/07 **........................................... 2,000,000 1,490,000
Netia Holdings II B.V.
13.13%, 06/15/09 **........................................... 4,000,000 3,370,000
NTL, Inc.
12.38%, 10/01/08 **, ***...................................... 2,000,000 1,180,000
11.50%, 10/01/08 **........................................... 5,000,000 4,600,000
Primus Telecommunications Group, Inc.
11.25%, 01/15/09 **........................................... 5,000,000 2,475,000
12.75%, 10/15/09 **........................................... 1,000,000 495,000
PSINet, Inc.
10.00%, 02/15/05 **........................................... 2,000,000 965,000
11.50%, 11/01/08 **........................................... 4,000,000 1,990,000
PTC International Finance II SA
11.25%, 12/01/09 **........................................... 6,000,000 5,430,000
Spectrasite Holdings, Inc.
12.88%, 03/15/10 **, ***...................................... 2,500,000 1,225,000
Tele1 Europe B.V.
13.00%, 05/15/09 **........................................... 6,000,000 5,070,000
TeleCorp PCS, Inc.
11.63%, 04/15/09 **, ***...................................... 6,500,000 4,225,000
</TABLE>
See notes to financial statements.
<PAGE>
DLJ High Yield Bond Fund--Statement of Investments October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
------------- -------------
<S> <C> <C>
Triton PCS, Inc.
11.00%, 05/01/08 **, ***...................................... $ 5,500,000 $ 4,193,750
Versatel Telecom International N.V.
13.25%, 05/15/08 **........................................... 3,000,000 2,295,000
11.88%, 07/15/09 **........................................... 3,500,000 2,572,500
Viatel, Inc.
11.50%, 03/15/09 **........................................... 6,000,000 3,030,000
WinStar Communications, Inc.
14.75%, 04/15/10 *, **, ***................................... 2,983,000 939,645
12.75%, 04/15/10 *, **........................................ 6,018,000 4,272,780
Worldwide Fiber, Inc.
12.00%, 08/01/09 **........................................... 4,800,000 3,816,000
-------------
85,292,300
-------------
TRANSPORTATION/AUTOMOTIVE--8.60%
American Axle & Manufacturing
Holdings, Inc.
9.75%, 03/01/09 **............................................ 4,000,000 3,590,000
Amtran, Inc.
9.63%, 12/15/05 **............................................ 5,500,000 4,991,250
Great Lakes Dredge & Dock
11.25%, 08/15/08 **........................................... 4,500,000 4,522,500
JL French Automotive Casting
11.50%, 06/01/09 **........................................... 4,000,000 2,380,000
JPS Automotive Products Corp.
11.13%, 06/15/01**............................................ 3,000,000 3,045,000
North American Van Lines
13.38%, 12/01/09 *, **........................................ 2,500,000 2,237,500
Venture Holdings Trust
11.00%, 06/01/07 **........................................... 2,000,000 1,252,500
Worldwide Flight Service
12.25%, 08/15/07 **........................................... 4,000,000 2,660,000
--------------
24,678,750
--------------
Total Bonds
(Cost--$482,267,866) ........................................... 392,048,613
--------------
COMMERCIAL PAPER--0.34%
National Australia Funding, Inc.
6.58%, 11/01/00 ****.......................................... 960,000 960,000
--------------
Total Commercial Paper
(Cost--$960,000) ............................................... 960,000
--------------
REPURCHASE AGREEMENTS--27.27%
Bear Stearns & Co., 4.9687%, dated
10/31/00, due 11/01/00, proceeds
at maturity $1,401,120 (fully
collateralized by $4,600,000
U.S. Treasury Note 0.00%, due
05/15/20, value $1,430,324)................................... 1,401,120 1,401,120
Bear Stearns & Co., 6.7500%, dated
10/31/00, due 11/01/00, proceeds
at maturity $76,842,340 (fully
collateralized by $495,372,864
U.S. Government and Agency
Securities 0.00% to 10.25%, due
10/15/07 to 10/25/23, value
$77,996,578).................................................. $ 76,842,340 $ 76,842,340
--------------
Total Repurchase Agreements
(Cost--$78,243,460) 78,243,460
--------------
</TABLE>
<TABLE>
<CAPTION>
Shares
-------------
<S> <C> <C>
PREFERRED STOCKS--3.37%
INFORMATION
TECHNOLOGY--1.44%
Viasystems Group, Inc. ......................................... 229,737 4,135,268
--------------
MEDIA/ENTERTAINMENT--1.93%
Paxson Communications Corp. ** ................................. 5,548 5,533,641
--------------
Total Preferred Stocks
(Cost--$8,760,237) ............................................. 9,668,909
--------------
WARRANTS--0.87%
INFORMATION TECHNOLOGY--0.14%
Asat Finance LLC *,++
(expires 11/01/06)............................................ 5,000 402,500
--------------
MEDIA/ENTERTAINMENT--0.36%
Ono Finance plc ++
(expires 05/31/09)............................................ 5,980 432,055
XM Satellite Radio, Inc. ++
(expires 03/15/10)............................................ 5,000 600,000
--------------
1,032,055
--------------
TELECOMMUNICATIONS--0.37%
GT Group Telecom *,++
(expires 02/01/10)............................................ 6,750 340,875
Leap Wireless International *,++
(expires 04/15/10)............................................ 5,000 49,625
Versatel Telecom International
N.V.*,++(expires 05/15/08)..................................... 3,000 671,625
--------------
1,062,125
--------------
TRANSPORTATION/
AUTOMOTIVE--0.00%
Worldwide Flight Service *,++
(expires 08/15/07)............................................ 4,000 40
--------------
Total Warrants
(Cost--$879,286) ............................................... 2,496,720
--------------
TOTAL INVESTMENTS--168.53%
(Cost--$571,110,849).......................................... 483,417,702
Liabilities Net of Cash
and Other Assets--(68.53%).................................... (196,580,128)
--------------
NET ASSETS--100.00%.............................................. $ 286,837,574
==============
</TABLE>
NOTES:
* Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31,
2000, the value of these securities amounted to $31,315,215 or 10.92% of
net assets.
** Security has an effective maturity date less than the stated maturity date
due to a call feature.
*** Zero coupon until a specified date at which time the stated coupon rate
becomes effective until maturity.
**** Commercial paper is traded on a discount basis; the interest rate shown
reflects the discount rate paid at the time of purchase by the fund.
+ Non income producing - issuer filed for protection under the Federal
Bankruptcy Code.
++ Non income producing.
+++ Non income producing - interest payments in default.
See notes to financial statements.
<PAGE>
DLJ High Yield Bond Fund--Statement of Assets and Liabilities October 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities at value (cost $571,110,849) (including repurchase
agreements of $78,243,460) .................................................................... $483,417,702
Cash ............................................................................................ 391,309
Dividends and interest receivable ............................................................... 13,029,718
Other assets .................................................................................... 75,078
------------
Total assets ................................................................................. 496,913,807
------------
LIABILITIES:
Loan payable .................................................................................... 130,500,000
Collateral on securities loaned ................................................................. 78,243,460
Interest payable ................................................................................ 816,875
Payable to advisor .............................................................................. 367,048
Accrued expenses ................................................................................ 148,850
------------
Total liabilities ............................................................................ 210,076,233
------------
NET ASSETS:
Applicable to 46,537,215 shares outstanding ..................................................... $286,837,574
============
NET ASSETS CONSIST OF:
Capital paid-in ................................................................................. $456,660,782
Accumulated distributions in excess of net investment income .................................... (94,613)
Accumulated net realized loss on investments .................................................... (82,035,448)
Net unrealized depreciation on investments ...................................................... (87,693,147)
------------
$286,837,574
============
Net asset value per share ........................................................................ $6.16
=====
</TABLE>
See notes to financial statements.
<PAGE>
DLJ High Yield Bond Fund--Statement of Operations For the Year Ended October 31,
2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest ........................................................................................ $ 58,653,761
Dividends ....................................................................................... 1,184,248
------------
Total investment income ...................................................................... 59,838,009
------------
EXPENSES:
Investment advisory fees (Note 2) .............................................................. 4,970,091
Interest and leveraging fees (Note 5) ........................................................... 10,808,354
Fund accounting fees ............................................................................ 62,642
Administration fees ............................................................................. 49,643
Custodian fees .................................................................................. 48,260
Legal fees ...................................................................................... 82,578
Transfer agent fees ............................................................................. 43,250
Auditing fees ................................................................................... 56,872
Registration expenses ........................................................................... 21,097
Trustees fees (Note 2) .......................................................................... 29,915
Postage expense ................................................................................. 13,290
Printing fees ................................................................................... 34,021
Insurance expense ............................................................................... 6,644
Miscellaneous expenses .......................................................................... 13,289
------------
Total expenses ............................................................................... 16,239,946
------------
NET INVESTMENT INCOME ............................................................................ 43,598,063
------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments ................................................................ (36,685,309)
Net unrealized depreciation on investments ...................................................... (45,349,903)
------------
Net realized and unrealized loss on investments ................................................. (82,035,212)
------------
NET DECREASE IN NET ASSETS FROM OPERATIONS ....................................................... $(38,437,149)
============
</TABLE>
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
10/31/00 10/31/99
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income .............................................................. $ 43,598,063 $ 43,058,379
Net realized loss on investments ................................................... (36,685,309) (30,606,551)
Net unrealized appreciation (depreciation) on investments .......................... (45,349,903) 12,681,862
------------ ------------
Net increase (decrease) in net assets .............................................. (38,437,149) 25,133,690
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ......................................................... (44,687,290) (42,990,100)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Reinvestment of dividends .......................................................... 11,282,681 16,685,722
Offering costs charged to capital paid-in .......................................... 0 (106,056)
------------ ------------
Net increase in net assets from capital share transactions ......................... 11,282,681 16,579,666
------------ ------------
Total decrease in net assets ....................................................... (71,841,758) (1,276,744)
NET ASSETS:
Beginning of period ................................................................ 358,679,332 359,956,076
------------ ------------
End of period ...................................................................... $286,837,574 $358,679,332
============ ============
Accumulated undistributed/(distributions in excess of) net investment
income............................................................................ $ (94,613) $ 106,176
============ ============
</TABLE>
See notes to financial statements.
<PAGE>
DLJ High Yield Bond Fund--Statement of Cash Flows For the Year Ended October 31,
2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Cash flows from operating activities:
Interest and dividends received ................................................... $ 51,413,291
Operating expenses paid ........................................................... (5,658,211)
-------------
Net cash provided by operating activities........................................... $ 45,755,080
Cash flows from investing activities:
Purchases of short-term securities, net ........................................... (76,863,460)
Purchases of long-term securities ................................................. (150,553,057)
Proceeds from sales of long-term securities ....................................... 187,049,603
-------------
Net cash used for investing activities.............................................. (40,366,914)
Cash flows from financing activities:
Interest paid on notes payable .................................................... (10,840,302)
Cash dividends paid ............................................................... (33,404,609)
Proceeds from borrowings .......................................................... 16,800,000
Repayments of borrowings .......................................................... (55,800,000)
Collateral received from securities lending, net .................................. 78,243,460
-------------
Net cash used for financing activities.............................................. (5,001,451)
------------
Net increase in cash................................................................ 386,715
Cash -- beginning of year........................................................... 4,594
------------
Cash -- end of year................................................................. $ 391,309
============
RECONCILIATION OF NET INCREASE IN NET ASSETS FROM OPERATIONS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net decrease in net assets resulting from operations................................ $(38,437,149)
Adjustments to reconcile net increase in net assets from operations to net cash
provided by operating activities:
Interest expense and leveraging fees .............................................. $ 10,808,354
Decrease in dividends and interest receivable ..................................... 1,074,832
Decrease in accrued expenses ...................................................... (121,269)
Decrease in other assets .......................................................... 26,667
Decrease in advisory fees payable ................................................. (105,350)
Net realized loss on investments .................................................. 36,685,309
Net unrealized depreciation on investments ........................................ 45,349,903
Net amortization of discount on investments ....................................... (9,526,217)
-------------
Total adjustments............................................................... 84,192,229
------------
Net cash provided by operating activities........................................... $ 45,755,080
============
</TABLE>
See notes to financial statements.
Notes to Financial Statements--October 31, 2000
--------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
DLJ High Yield Bond Fund is a business trust under the laws of the State of
Delaware organized on April 30, 1998. The Fund is registered with the Securities
and Exchange Commission under the Investment Company Act of 1940, as amended
(the "1940 Act"), as a non-diversified, closed-end management investment
company. The Fund's shares trade on the New York Stock Exchange under the ticker
symbol DHY. Prior to the commencement of operations on July 28, 1998, the Fund
had no operations other than those relating to organizational matters and the
sale of 10,000 shares of beneficial interest on July 2, 1998 to DLJ Investment
Management Corp. ("DLJIM") for $100,000. The Fund's primary objective is to seek
high current income. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its financial
statements.
Portfolio valuation: Fixed-income securities (other than short-term
obligations, but including listed issues) are valued based on prices obtained by
one or more independent pricing services approved by the Board of Trustees.
Securities (other than fixed-income securities) for which the principal
market is one or more securities exchanges are valued at the last reported sale
price (or if there has been no current sale, at the closing bid price) on the
primary exchange on which such securities are traded. If a securities exchange
is not the principal market for a security, such security will, if market
quotations are readily available, be valued at the closing bid price in the
over-the-counter market (or the last sale price in the case of securities
reported on the NASDAQ national market system for which any sales occurred
during the day). Portfolio securities for which there are no such valuations are
valued at fair value as determined in good faith by or at the direction of the
Board of Trustees. Short-term obligations with maturities of less than 60 days
are valued at amortized cost, which approximates market value.
<PAGE>
DLJ High Yield Bond Fund--Notes to Financial Statements October 31, 2000
(continued)
--------------------------------------------------------------------------------
Securities transactions and investment income: Securities transactions are
recorded as of the trade date. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Dividend income is
recorded on the ex-dividend date. Interest income, including, where applicable,
accretion of discount on investments is recorded on the accrual basis.
Dividends and distributions to shareholders: The Fund declares and pays
dividends on a monthly basis. Each dividend is recorded on the ex dividend date.
Capital gains, if any, net of capital losses, are distributed annually. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investment securities held by the Fund, timing
differences and differing characterization of distributions made by the Fund.
Federal income taxes: It is the Fund's policy to comply with the requirements
of the Internal Revenue Service applicable to regulated investment companies and
to distribute substantially all of its taxable income to its shareholders.
Accordingly, no provisions for federal income or excise taxes have been made in
the accompanying financial statements. At October 31, 2000, as a result of
permanent book to tax differences, the Fund reclassed $888,438 from accumulated
undistributed net investment income to accumulated net realized loss on
investments. Net Assets were not effected by this reclassification.
Cash flow information: Cash, as used in the Statement of Cash Flows, is the
amount reported in the Statement of Assets and Liabilities. The Fund invests in
securities and distributes dividends from net investment income and net realized
gains, if any, (which are either paid in cash or reinvested at the discretion of
shareholders). These activities are reported in the Statement of Changes in Net
Assets. Information on cash payments is presented in the State- ment of Cash
Flows. Accounting practices that do not affect reporting activ- ities on a cash
basis include unrealized gain or loss on investment securities and accretion
income recognized on investment securities.
Use of estimates: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER RELATED PARTY
TRANSACTIONS
Effective January 1, 2000, DLJIM merged into DLJ Asset Management Group
("DLJAM"), a wholly-owned subsidiary of Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJSC"), a wholly-owned subsidiary of Donaldson Lufkin & Jenrette,
Inc. ("DLJ"). On November 3, 2000, DLJ was acquired (the "Acquisition") by
Credit Suisse Group ("Credit Suisse"). Credit Suisse combined the investment
advisory business of DLJAM with its existing US asset management business,
Credit Suisse Asset Management, LLC ("CSAM"). Pursuant to the Investment Company
Act of 1940, the Fund's advisory contract with DLJAM terminated upon the
consummation of the Acquisition. In anticipation of this termination, at a
meeting held on October 26, 2000, the Board of Trustees of the Fund approved an
interim investment advisory agreement (the "Interim Advisory Agreement") on
behalf of the Fund, pursuant to which CSAM is acting as investment advisor (the
"Advisor"). The Interim Advisory Agreement, like the previous advisory agreement
with DLJAM, provides for a fee at the annual rate of 1% of the average weekly
value of the Fund's total assets minus the sum of accrued liabilities (other
than aggregate indebtedness constituting leverage). The Interim Advisory
Agreement will terminate, upon the earlier of 150 days from November 3, 2000
which is April 2, 2001 or the date of approval by the shareholders of a new
investment advisory agreement. Under the Interim Advisory Agreement with the
Fund, the Advisor provides investment advisory services and order placement
facilities for the Fund and pays all compensation of Trustees of the Fund who
are affiliated persons of the Advisor.
The Fund has also entered into an Administration and Support Agreement with
PFPC Inc., to provide all administrative services to the Fund other than those
related to the investment decisions. For these administration services, the Fund
will pay PFPC Inc., a fee at the annual rate of $50,000 per year.
The Fund pays each Trustee not affiliated with CSAM $1,500 per regular
quarterly board meeting attended, $500 per special board meeting attended, $250
per audit committee meeting attended and an annual retainer fee of $500. In
addition, the Fund reimburses each Trustee for travel and out-of-pocket expenses
relating to their attendance at such meetings. The Fund also pays the actual
out-of-pocket expenses of the Trustees affiliated with CSAM relating to their
attendance at such meetings.
Effective April 10, 2000, Custodial Trust Co. (CTC) began service as the
Fund's custodian. PFPC Inc. serves as the Fund's shareholder servicing agent
(transfer agent).
<PAGE>
DLJ High Yield Bond Fund--Notes to Financial Statements October 31, 2000
(continued)
--------------------------------------------------------------------------------
3. INVESTMENTS
For federal income tax purposes, the cost of securities owned at October 31,
2000, was substantially the same as the cost of securities for financial
statement purposes. At October 31, 2000, the aggregate gross unrealized
appreciation amounted to $5,898,351, and the aggregate gross unrealized
depreciation amounted to $93,591,498, resulting in net unrealized depreciation
of $87,693,147.
Cost of purchases and proceeds from sales of investment securities, excluding
short-term investments, during the year ended October 31, 2000, amounted to
$150,553,057 and $187,049,603, respectively.
4. FUND SHARES
The Fund has one class of shares of beneficial interest, par value $0.001 per
share; 200,000,000 shares are authorized. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 2000 October 31, 1999
--------------- ---------------
<S> <C> <C>
Shares issued through reinvestment of dividends........ 1,584,108 1,907,819
========= =========
</TABLE>
5. NOTES PAYABLE
The Fund currently has a $200 million ("commitment amount") line of credit
provided by Citibank North America, Inc., under a Revolving Credit and Security
Agreement (the "Agreement") dated July 31, 1998, primarily to leverage its
investment portfolio. Under this Agreement the Fund may borrow up to the lesser
of $200 million or 331/3% of its gross assets. Interest is payable at the Bank's
Base Rate plus a commission of 0.05%. The Fund is charged a structuring fee of
$19,000 per quarter, a program fee of 0.20% of the average daily amount
leveraged, an administration fee of 0.02% of the average daily amount leveraged
and a liquidity fee of 0.13% of the maximum borrowing limit (currently $200
million). The Agreement requires, among other provisions, that the percentage
obtained by dividing total indebtedness for money borrowed by total assets of
the Fund shall not exceed 331/3%. The average daily amount of borrowings during
the year ended October 31, 2000 was $157,986,066, with a related weighted
average annualized interest rate of 6.84%.
6. CONCENTRATION OF RISK
The Fund invests in securities offering high current income which generally
will be in the lower rating categories of recognized ratings agencies (socalled
"junk bonds"). These securities generally involve more credit risk than
securities in the higher rating categories. In addition, the trading market for
high yield securities may be relatively less liquid than the market for
higher-rated securities. The Fund's use of leverage also increases exposure to
capital risk.
7. CAPITAL LOSS CARRYFORWARD
At October 31, 2000, the Fund had available for Federal tax purposes an
unused capital loss carryforward of $82,035,448, of which $13,855,150 expires in
2006, $30,606,551 expires in 2007, and $37,573,747 expires in 2008. Capital loss
carryforwards are available to offset future realized capital gains. To the
extent that these carryforwards are used to offset future capital gains, it is
probable that the amount which is offset will not be distributed to
shareholders.
8. LOANS OF PORTFOLIO SECURITIES
DLJ High Yield Bond Fund loaned securities during the year to certain
brokers, with the Fund's custodian acting as lending agent. Upon such loans, the
Fund receives collateral which is maintained by the custodian and earns income,
in the form of negotiated lender's fees, which is included in interest income.
On a daily basis, the Fund monitors the market value of securities loaned and
maintains collateral against the securities loaned in an amount not less than
the value of the securities loaned. The Fund may receive collateral in the form
of cash or other eligible securities. Risks may arise upon entering into
securities lending to the extent that the value of the collaterial is less than
the value of the securities loaned due to changes in the value of collateral or
the loaned securities.
The value of loaned securities and related collateral outstanding at
October 31, 2000, were as follows:
<TABLE>
<CAPTION>
Value of Value of
Fund Securities Loaned Collateral
---- ---------------- ----------
<S> <C> <C>
DLJ High Yield Bond Fund $73,249,875 $78,243,460
</TABLE>
The collateral for the DLJ High Yield Bond Fund consisted of cash which was
invested in repurchase agreements with Bear Stearns due November 1, 2000,
collateralized by Fannie Mae and Federal Home Loan Mortgage Corp. notes.
<PAGE>
DLJ High Yield Bond Fund--Financial Highlights
--------------------------------------------------------------------------------
The table below sets forth financial data for a share of beneficial interest
outstanding throughout the periods presented. This information has been derived
from the Fund's financial statements.
<TABLE>
<CAPTION>
Year Ended Year Ended Period Ended
10/31/00 10/31/99 10/31/98*
-------- -------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period ............................. $ 7.98 $ 8.36 $ 10.00
-------- -------- --------
Income from Investment Operations:
Net investment income ........................................... 0.96++ 0.98 0.24
Net realized and unrealized (loss) on investments ............... (1.80) (0.38) (1.62)
-------- -------- --------
Total from investment operations............................... (0.84) 0.60 (1.38)
-------- -------- --------
Less Distributions:
From net investment income ...................................... (0.98) (0.98) (0.24)
-------- -------- --------
Offering costs charged to paid-in capital ........................ -- 0.00+ (0.02)
-------- -------- --------
Net asset value, end of period ................................... $6.16 $ 7.98 $ 8.36
======== ======== ========
Market value, end of period ...................................... $ 6.19 $ 8.06 $ 9.56
======== ======== ========
Total return (market value)*** ................................... (12.15)% (5.71)% (1.74)%
Ratios/Supplemental Data:
Net assets, end of period (000) ................................. $286,838 $358,679 $359,956
Average debt per share .......................................... $ 3.47 $ 3.18 $ 1.02
Ratio of operating expenses to average net assets ............... 1.61% 1.53% 1.16%**
Ratio of interest and leveraging expenses to average net assets . 3.20% 2.09% 0.65%**
Ratio of net investment income to average net assets ............ 12.90% 11.24% 10.48%**
Portfolio turnover .............................................. 31.29% 60.23% 15.26%
</TABLE>
* The DLJ High Yield Bond Fund commenced operations on July 28, 1998.
** Annualized
*** Total return (market value) is based on the change in market price of a
share during the period and assumes reinvestment of dividends and
distributions at actual prices pursuant to the Fund's Dividend Reinvestment
Plan. Total return for periods of less than one year are not annualized.
Total return based on market value, which can be significantly greater or
lesser than the net asset value, may result in substantially different
returns.
+ Amount rounds to less than $0.01.
++ Based on average shares outstanding.
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
--------------------------------------------------------------------------------
Shareholders and Board of Trustees
DLJ High Yield Bond Fund
We have audited the accompanying statement of assets and liabilities of DLJ High
Yield Bond Fund, including the statement of investments, as of October 31, 2000,
and the related statements of operations and cash flows for the year then ended,
the statement of changes in net assets for each of the two years in the period
then ended, and financial highlights for each of the periods indicated therein.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of October 31, 2000 by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of DLJ
High Yield Bond Fund at October 31, 2000, the results of its operations and its
cash flows for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the indicated periods, in conformity with accounting principles generally
accepted in the United States.
[graphic]
New York, New York
December 20, 2000
<PAGE>
DLJ High Yield Bond Fund--Additional Information October 31, 2000 (unaudited)
--------------------------------------------------------------------------------
Dividend Reinvestment Plan
Referenced below are policies related to the Fund's Automatic Dividend
Reinvestment Plan (the "Plan"). These policies apply to shareholders whose
shares are registered directly with the Fund in their own name. Shareholders
whose shares are purchased through a broker-dealer or nominee should contact
such broker-dealer or nominee regarding questions related to the reinvestment of
the Fund's dividends.
Pursuant to the Fund's Plan, unless a shareholder otherwise elects, all
dividends and capital gain distributions will be automatically reinvested by
PFPC Inc. as agent for Shareholders in administering the Plan (the "Plan
Agent"), in additional shares of the Fund. Shareholders who elect not to
participate in the Plan will receive all dividends and other distributions in
cash paid by check mailed directly to the shareholder of record (or, if the
shares are held in street or other nominee name, then to such nominee) by PFPC
Inc. as the Dividend Disbursing Agent. Such participants may elect not to
participate in the Plan and to receive all dividends and capital gain
distributions in cash by sending written instructions to PFPC Inc. as the
Dividend Disbursing Agent, at the address set forth below. Participation in the
Plan is completely voluntary and may be terminated or resumed at any time
without penalty by written notice if received by the Plan Agent not less than
ten days prior to any dividend record date; otherwise such termination will be
effective with respect to any subsequently declared dividend or other
distribution.
Whenever the Fund declares an income dividend or a capital gain distribution
(collectively referred to as "dividends") payable either in shares or in cash,
non-participants in the Plan will receive cash and participants in the Plan will
receive the equivalent in shares. The shares will be acquired by the Plan Agent
for the participants' accounts, depending upon the circumstances de- scribed
below, either (i) through receipt of additional unissued but author- ized shares
from the Fund ("newly issued shares") or (ii) by purchase of outstanding shares
on the open market ("open-market purchases") on the NYSE or elsewhere. If on the
record date for the dividend, the net asset value per share is equal to or less
than the market price per share plus estimated brokerage commissions (such
condition being referred to herein as "market premium"), the Plan Agent will
invest the dividend amount in newly issued shares on behalf of the participants.
The number of newly issued shares to be credited to each participant's account
will be determined by dividing the dollar amount of the dividend by the net
asset value per share on the date the shares are issued. If on the dividend
record date the net asset value per share is greater than the market value (such
condition being referred to herein as "market-discount"), the Plan Agent will
invest the dividend amount in shares acquired on behalf of the participants in
open-market purchases.
In the event of a market discount on the dividend record date, the Plan Agent
will have until the last business day before the next date on which the shares
trade on an "ex-dividend" basis or in no event more than 30 days after the
dividend record date (the "last purchase date") to invest the dividend amount in
shares acquired in open-market purchases. It is contemplated that the Fund will
pay monthly income dividends. Therefore, the period during which open-market
purchases can be made will exist only from the record date of the dividend
through the date before the next "ex-dividend" date. If, before the Plan Agent
has completed its open-market purchases, the market price of a share exceeds the
net asset value per share, the average per share purchase price paid by the Plan
Agent may exceed the net asset value of the shares, re- sulting in the
acquisition of fewer shares than if the dividend had been paid in newly issued
shares on the dividend record date. Because of the foregoing difficulty with
respect to open market purchases, the Plan provides that if the Plan Agent in
unable to invest the full dividend amount in open market purchases during the
purchase period or if the market discount shifts to a market premium during the
purchase period, the Plan Agent may cease making open-market purchases and may
invest the uninvested portion of the dividend amount in newly issued shares at
the net asset value per share at the close of business on the last purchase
date.
The Plan Agent maintains all shareholders' accounts in the Plan and furnishes
written confirmation of all transactions in the accounts, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Plan Agent on behalf of the Plan participant,
and each shareholder proxy will include those shares purchased or received
pursuant to the Plan. The Plan Agent will forward all proxy solicitation
materials to participants and vote proxies for shares held pursuant to the Plan
in accordance with the instructions of the participants.
<PAGE>
DLJ High Yield Bond Fund--Additional Information October 31, 2000 (unaudited)
(continued)
--------------------------------------------------------------------------------
In the case of shareholders such as banks, brokers or nominees that hold
shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of shares certified from time to time by the
record shareholder and held for the account of beneficial owners who participate
in the Plan.
There will be no brokerage charges with respect to shares issued directly by
the Fund as a result of dividends or capital gains distributions payable either
in shares or in cash. However, each participant will pay a pro rata share of
brokerage commissions incurred with respect to the Plan Agent's open-market
purchases in connection with the reinvestment of dividends.
The automatic reinvestment of dividends will not relieve participants of any
Federal, state or local income tax that may be payable (or required to be
withheld) on such dividends.
Shareholders participating in the Plan may receive benefits not available to
shareholders not participating in the Plan. If the market price (plus
commissions) of the shares is above their net asset value, participants in the
Plan will receive shares of the Fund at less than they could otherwise purchase
them and will have shares with a cash value greater than the value of any cash
distribution they would have received on their shares. If the market price plus
commissions is below the net asset value, participants will receive
distributions in shares with a net asset value greater than the value of any
cash distribution they would have received on their shares. However, there may
be insufficient shares available in the market to make distributions in shares
at prices below the net asset value. Also, since the Fund does not redeem
shares, the price on resale may be more or less than the net asset value.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan. There
is no direct service charge to participants in the Plan; however, the Fund
reserves the right to amend the Plan to include a service charge payable by the
participants.
All correspondence concerning the Plan should be directed to the Plan Agent
at P.O. Box 8030, Boston, MA 02266-8030, 1-800-331-1710.
Managed Dividend Policy
The Fund's dividend policy is to distribute substantially all of its net
investment income to its shareholders on a monthly basis. However, in order to
provide shareholders with a more consistent yield to the current trading price
of shares of Common Stock of the Fund, the Fund may at times pay out less than
the entire amount of net investment income earned in any particular month and
may at times in any month pay out such accumulated but undistributed income in
addition to net investment income earned in that month. As a result, the
dividends paid by the Fund for any particular month may be more or less than the
amount of net investment income earned by the Fund during such month. The Fund's
current accumulated but undistributed net investment income, if any, is
disclosed in the Statement of Assets and Liabilities, which comprises part of
the Financial Information included in this report.
Leverage--Benefits and Risks
The use of leverage by the Fund creates an opportunity for increased net
income and capital appreciation for the Fund, but, at the same time, creates
special risks, and there can be no assurance that a leveraging strategy will be
successful during any period in which it is employed. The Fund intends to
utilize leverage to provide the Shareholders with a potentially higher return.
Leverage creates risks for Shareholders including the likelihood of greater
volatility of net asset value and market price of the Fund's shares and the risk
that fluctuations in interest rates on borrowings and short-term debt may affect
the return to Shareholders. To the extent the income or capital appreciation
derived from securities purchased with funds received from leverage exceeds the
cost of leverage, the Fund's return will be greater than if leverage had not
been used. Conversely, if the income or capital appreciation from the securities
<PAGE>
DLJ High Yield Bond Fund--Additional Information October 31, 2000 (unaudited)
(continued)
--------------------------------------------------------------------------------
purchased with such funds is not sufficient to cover the cost of leverage,
the return to the Fund will be less than if leverage had not been used, and
therefore the amount available for distribution to Shareholders as dividends and
other distributions will be reduced. In the latter case, the Advisor in its best
judgment nevertheless may determine to maintain the Fund's leveraged position if
it deems such action to be appropriate under the circumstances. During periods
in which the Fund is utilizing leverage, the Management Fee will be higher than
if the Fund did not utilize a leveraged capital structure because the fee is
calculated as a percentage of the Managed Assets including those purchased with
leverage. Certain types of borrowings by the Fund may result in the Fund's being
subject to covenants in credit agreements, including those relating to asset
coverage and portfolio composition requirements. The Fund's lenders may
establish guidelines for borrowing which may impose asset coverage or portfolio
composition requirements that are more stringent than those imposed by the
Investment Company Act. It is not anticipated that these covenants or guidelines
will impede the Advisor in managing the Fund's portfolio in accordance with the
Fund's investment objectives and policies.
Supplemental Information
Since the initial filing of the Fund's registration statement with the
Securities and Exchange Commission, on December 15, 2000, Richard Lindquist, a
managing director of CSAM, was assigned as the person primarily responsible for
the day-to-day management of the Fund's portfolio. In addition, since the filing
there have been (i) no material changes in the Fund's investment objectives or
policies, (ii) no changes in the Fund's charter or by-laws that would delay or
prevent a change of control of the Fund, and (iii) no material changes in the
principal risk factors associated with investment in the Fund.
Proxy Voting Results
A special meeting of DLJ High Yield Bond Fund's shareholders was held on
July 17, 2000 for the purpose of considering and acting upon the matters set
forth in the Proxy Statement and summarized below. A quorum was represented at
the meeting and the voting results are set forth below:
A. Election of Trustees of the Fund for each Class (I and II):
<TABLE>
<CAPTION>
For Against
---------- -------
<S> <C> <C>
Stig Host (Class II) 43,724,073 265,145
Wilmot H. Kidd, III (Class I) 43,724,073 265,145
Peter F. Krogh (Class I) 43,719,501 269,717
John J. Sheehan (Class I) 43,721,041 268,177
</TABLE>
B. Selection of Ernst & Young LLP as independent auditors of the Fund for the
fiscal year ending October 31, 2000:
<TABLE>
<CAPTION>
For Against Abstain
--------------------- ------- -------
<S> <C> <C>
43,701,148 111,275 176,795
</TABLE>
<PAGE>
DLJ HIGH YIELD BOND FUND
TRUSTEES
G. MOFFET COCHRAN ROBERT E. FISCHER
STIG HOST MARTIN JAFFE
WILMOT H. KIDD, III PETER F. KROGH
JOHN J. SHEEHAN
OFFICERS
G. MOFFETT COCHRAN, Chairman and President
MARTIN JAFFE, Vice President, Secretary and Treasurer
BRIAN A. KAMMERER, Vice President
INVESTMENT ADVISER
CREDIT SUISSE ASSET MANAGEMENT, LLC
277 Park Avenue, New York, NY 10172
CUSTODIAN
CUSTODIAL TRUST COMPANY
101 Carnegie Center, Princeton, NJ 08540
TRANSFER AGENT
PFPC, INC.
P.O. Box 61787 (211 South Gulph Road)
King of Prussia, PA 19406
DISTRIBUTOR
CREDIT SUISSE ASSET MANAGEMENT
SECURITIES INC.
277 Park Avenue, New York, NY 10172
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue, New York NY 10019
LEGAL COUNSEL
SULLIVAN & CROMWELL
125 Broad Street, New York NY 10004
CREDIT SUISSE ASSET MANAGEMENT, LLC
277 PARK AVENUE, NEW YORK, NEW YORK 10172
(888) 649-5711
DLJ HIGH YIELD
BOND FUND
ANNUAL REPORT
-------------
October 31, 2000
[graphic]
