The
High Yield
Plus Fund,
Inc.
SEMI
ANNUAL
REPORT
September 30, 1998
<PAGE>
Letter To Shareholders October 16, 1998
Dear Shareholder:
The first half of the Fund's fiscal year proved to be a difficult one. While
the calendar year started off on a strong footing, a heavy load of new issuance
coupled with concerns about global economic weakness started to pressure the
high yield market by June. During the quarter ended September, the market
malaise turned into a rout; for instance, the difference in yield between high
yield issues and the ten-year U.S. Tresury bond widened with ferocious
rapidity, from 363 basis points at the start of the quarter to 604 basis points
at the end, according to data tracked by Lehman Brothers.
On November 16, 1998 The High Yield Plus Fund, Inc. announced the filing of a
registration statement with the Securities and Exchange Commission regarding a
transferable rights offering to holders of the Fund's common stock
The sharp dislocation occurred as a result of a crisis of confidence in the
financial markets, chiefly during the month of August. During August, Russia
defaulted on some of its ruble denominated debt. While this in itself should
not have created a global economic crisis, the issue of contagion, reduced
capital access, and the potential for widespread sympathetic currency
devaluations, all became very real concerns with broad, worldwide implications.
These concerns were translated into dramatically lower security prices,
particularly in instruments deemed to be risky or sensitive to capital access
needs. Non-U.S. entities were ravaged by the market's pullback: during the
month of August alone, emerging market debt issues as tracked by JP Morgan
returned -29%. (High yield index returns during the month ranged from
approximately -5% to -7%, depending on the composition of the index.)
Part of the drop in values occurred for psychological or technical reasons. As
broker/dealers feared facing an onslaught of customer selling, they tended to
drop their quoted bid prices to unreasonable levels. It should be noted that
open-end high yield mutual funds suffered a record outflow of $2.9 billion
during August, according to data compiled by the Investment Company Institute.
Liquidity effectively dried up. In addition, post August, we have all learned
of the bailout of the multi-billion dollar hedge fund, Long Term Capital
Management. While the hedge fund's woes do not directly impact the companies
we have invested in, many of the Wall Street firms that may have had trade
exposure to Long Term Capital were suddenly aware of the risk of losses or
major positions being liquidated. This too exacerbated the lack of liquidity
amongst the major broker/dealers. This market weakness extended to all credit
sensitive instruments, from investment grade corporate bonds and mortgages to
emerging market securities.
Despite the weakened worldwide economic outlook, we would note that the U.S.
economy remains surprisingly firm, albeit suspect. We expect that various
industries will continue to be plagued by global concerns (commodity price
pressures) or newer concerns such as the plight of the financial sector post
the now notorious Long Term Capital Management bailout. Despite the more
difficult operating environment and reduced capital availability, we believe
that attractive investment opportunities exist. Many of the Fund's companies
continue to show good financial health despite the market's volatility. With
respect to the Fund's positions in non-U.S. entities, we would note as well
that we expect present valuations to ultimately recover, and we believe many of
these entities offer excellent long-term potential. For point of reference, we
would highlight the debt securities of Korea Telecom. This company offers
interest coverage of over 11X (compared to a typical U.S. high yield company
with coverage of 2X), total revenues in excess of
1
<PAGE>
US$6 billion and a conservative balance sheet. Even after adjusting for
expectations of continued economic weakness in South Korea, this company should
be well positioned to weather the storm. Nevertheless, at the close of the
quarter, its securities yield approximately 14% as a result of the market
dislocation.
Fund Performance.
The Fund's total returns for periods ended September 30, 1998 are shown on the
following table. For comparison, we have also provided the returns of the
Lipper Closed-End Leveraged High Yield category, an average of 20 closed-end
high yield funds; we would note that the degree of leverage varies
substantially amongst the funds in the group. The Fund's poor performance
during this period of time reflects its exposure to non-U.S. companies. These
issues were particularly hurt by the chaotic August markets.
TOTAL RETURNS
For the Periods Ended September 30, 1998
<TABLE>
<CAPTION>
6 Months 12 Months 24 Months
<S> <C> <C> <C>
High Yield Plus Fund (NAV)1 -17.4% -11.4% 1.9%
Lipper CEHY -- Leveraged -9.3 -4.3 12.6
JP Morgan Emerging Mkts. Bond
Index Plus -25.9 -25.3 -5.7
</TABLE>
1Source: Prudential Investment Fund Management. The Fund's total return
represents the change in net asset value from the beginning of the period
noted through September 30, 1998 and assumes the reinvestment of dividends and
distributions. Past performance is no guarantee of future results.
The Fund's shares closed the period at $8.00 per share. This price reflected a
premium of 10.5% to the Fund's net asset value of $7.24 per share. Effective
September 1998, based on the Fund's historical and expected earnings rate, the
Board of Directors elected to raise the monthly dividend of the Fund from
$0.07 per share to $0.0725 per share. The new rate annualized ($0.87) equates
to a yield of 10.9% on the closing stock price.
As always, we appreciate your interest in the Fund.
Sincerely yours,
Catherine A. Smith
Portfolio Manager
Senior Vice President
Wellington Management Company, LLP
2
<PAGE>
Portfolio of Investments as of
September 30, 1998 (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--134.6%
CORPORATE BONDS--123.4%
- ------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--3.8%
Argo-Tech Corp., Sr. Sub. Notes B3 8.625% 10/01/07 $ 500 $ 472,500
K&F Industries, Inc., Sr. Sub. Notes, Ser. B B3 9.25 10/15/07 500 490,000
L-3 Communications Corp., Sr. Sub. Notes B2 8.50 5/15/08 750 761,250
Moog, Inc., Sr. Sub. Notes, Ser. B B1 10.00 5/01/06 1,340 1,366,800
------------
3,090,550
- ------------------------------------------------------------------------------------------------------------------------------
Automotive--4.6%
Accuride Corp., Sr. Sub. Notes B2 9.25 2/01/08 750 720,000
Federal-Mogul Corp.,
Sr. Notes Ba2 8.80 4/15/07 500 546,955
Sr. Notes Ba2 7.875 7/01/10 500 512,390
Johnstown America Industries, Inc., Sr. Sub. Notes B3 11.75 8/15/05 1,500 1,545,000
Key Plastics, Inc., Sr. Sub. Notes, Ser. B B3 10.25 3/15/07 500 482,500
------------
3,806,845
- ------------------------------------------------------------------------------------------------------------------------------
Basic Industries-Manufacturing--3.6%
Gaylord Container Corp., Sr. Notes B3 9.375 6/15/07 1,000 810,000
International Wire Group, Inc., Sr. Sub. Notes B3 11.75 6/01/05 500 512,500
Neenah Corp., Sr. Sub. Notes, Ser. B B3 11.125 5/01/07 750 759,375
UNICCO Service Co./UNICCO Fin. Corp., Sr. Sub. Notes, Ser.
B B3 9.875 10/15/07 1,000 920,000
------------
3,001,875
- ------------------------------------------------------------------------------------------------------------------------------
Building & Related Industries--3.1%
Associated Materials, Inc., Sr. Sub Notes B2 9.25 3/01/08 500 475,000
Falcon Building Prod., Inc.,
Sr. Sub. Disc. Notes
Zero Coupon (until 6/15/02) B3 10.50 6/15/07 350 192,500
Sr. Sub. Notes B3 9.50 6/15/07 1,000 840,000
Nortek, Inc.,
Sr. Notes B1 8.875 8/01/08 750 725,625
Sr. Notes, Ser. B B1 9.25 3/15/07 350 351,750
------------
2,584,875
- ------------------------------------------------------------------------------------------------------------------------------
Cable--5.9%
Adelphia Communications Corp.,
Sr. Notes B2 8.375 2/01/08 365 370,475
Sr. Notes, Ser. B B2 9.875 3/01/07 500 540,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3
<PAGE>
<PAGE>
Portfolio of Investments as of
September 30, 1998 (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Cable (cont'd.)
Century Communications Corp., Sr. Disc. Notes Ba3 Zero 3/15/03 $ 225 $ 157,500
Classic Cable Inc. B3 9.875% 8/01/08 280 284,900
Classic Communications Inc., Sr. Disc. Notes
Zero Coupon (until 8/1/03) NR 13.25 8/01/09 890 498,400
Falcon Holding Group L.P.,
Sr. Deb., Ser. B B2 8.375 4/15/10 350 353,500
Sr. Disc. Deb., Ser. B
Zero Coupon (until 4/15/03) B2 9.285 4/15/10 500 337,500
Frontiervision Holdings L.P., Sr. Disc. Notes,
Zero Coupon (until 2/15/02) BPBP 11.875 9/15/07 1,000 817,500
Multicanal S.A.,
Sr. Notes Ba3 10.50 2/01/07 500 340,000
Sr. Notes NR 10.50 4/15/18 230 142,600
Rifkin Acquisition Partners L.L.L.P., Sr. Sub. Notes B3 11.125 1/15/06 500 540,000
Rogers Communications Inc., Sr. Notes B2 8.875 7/15/07 440 433,400
------------
4,815,775
- ------------------------------------------------------------------------------------------------------------------------------
Chemicals--3.8%
PCI Chemicals Canada Inc., Sr. Sec. Notes, Ser. B (Canada) B2 9.25 10/15/07 500D 400,000
Phillipp Brothers Chemicals Inc., Sr. Sub. Notes B3 9.875 6/01/08 680 646,000
Pioneer Americas Acquisition Corp., Sr. Sec. Notes, Ser. B B2 9.25 6/15/07 500 412,500
Sovereign Speciality Chemicals, Sr. Sub. Notes, Ser. B B3 9.50 8/01/07 1,000 965,000
Texas Petrochemicals Corp., Sr. Sub. Notes B3 11.125 7/01/06 750 690,000
------------
3,113,500
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Goods & Services--2.3%
Chattem Inc., Sr. Sub. Notes B2 8.875 4/01/08 500 485,000
Muzak L.P., Muzak Capital, Sr. Notes Ba3 10.00 10/01/03 500 505,000
Pierce Leahy Corp., Sr. Sub. Notes B3 9.125 7/15/07 500 510,000
Revlon Worldwide, Sr. Disc. Notes, Ser. B Ba2 Zero 3/15/01 500 383,750
------------
1,883,750
- ------------------------------------------------------------------------------------------------------------------------------
Containers--3.0%
BWay Corp., Sr. Sub. Notes, Ser. B B2 10.25 4/15/07 750 787,500
Silgan Holdings, Inc.,
Sr. Sub. Deb. B1 9.00 6/01/09 1,500 1,485,000
Sub. Deb., PIK NR 13.25 7/15/06 200 220,282
------------
2,492,782
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4
<PAGE>
<PAGE>
Portfolio of Investments as of
September 30, 1998 (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Energy & Related Goods & Services--10.0%
Abraxas Petroleum Corp., Sr. Notes, Ser. B B2 11.50% 11/01/04 $ 1,500 $ 1,215,000
Costilla Energy Inc., Sr. Notes B2 10.25 10/01/06 500 435,000
Cross Timbers Oil Co., Sr. Sub. Notes, Ser. B B2 9.25 4/01/07 750 690,000
Dailey International, Inc., Sr. Notes B2 9.50 2/15/08 500 300,000
Energy Corp. Amererica, Sr. Sub. Notes, Ser. A B2 9.50 5/15/07 750 693,750
Frontier Oil Corp., Sr. Notes NR 9.125 2/15/06 750 697,500
Kelley Oil And Gas Corp., Sr. Sub. Notes, Ser. B B3 10.375 10/15/06 355 301,750
P&L Coal Holdings Corp., Sr. Notes Ba3 8.875 5/15/08 500 508,750
Petroleos Mexicanos, Gtd. Sr. Notes (Mexico) Ba2 8.85 9/15/07 500D 400,000
Plains Resources, Inc., Sr. Sub. Notes B2 10.25 3/15/06 1,180 1,191,800
RAM Energy, Inc., Sr. Notes B3 11.50 2/15/08 1,750 1,452,500
Tatneft Finance, Gtd. Bonds (Russia) B2 9.00 10/29/02 1,000D 100,000
Transportadora de Gas del Sur, S.A., Notes (Argentina) Ba3 10.25 4/25/01 250D 237,500
------------
8,223,550
- ------------------------------------------------------------------------------------------------------------------------------
Enertainment--0.9%
Loews Cineplex Entertainment Corp., Sr. Sub. Notes B3 8.875 8/01/08 750 740,625
- ------------------------------------------------------------------------------------------------------------------------------
Financial Services--9.4%
Bangkok Bank Public Co., Deb. (Thailand) NR 7.25 9/15/05 1,000D 480,000
Emergent Group Inc., Sr. Notes, Ser. B B3 10.75 9/15/04 895 411,700
First Nationwide Holdings, Inc., Sr. Notes Ba3 12.50 4/15/03 750 840,000
FirstFed Financial Corp., Notes B2 11.75 10/01/04 500 515,000
Guangdong Enterprises Hldgs., Ltd., (China)
Sr. Notes Baa3 8.875 5/22/07 250D 112,500
Sr. Notes Baa3 8.875 5/22/07 900D 405,000
Hawthorne Financial Corp., Sr. Notes NR 12.50 12/31/04 1,250 1,250,000
Olympic Financial, Ltd., Sr. Notes NR 11.50 3/15/07 1,500@ 1,083,000
Resource America, Inc., Sr. Notes B- 12.00 8/01/04 965 800,950
Thai Farmers Bank Ltd., Sub. Notes (Thailand) NR 8.25 8/21/16 1,500D 675,000
Western Financial Svgs. Bank, F.S.B., Sub. Cap. Deb. B1 8.875 8/01/07 1,500 1,200,000
------------
7,773,150
- ------------------------------------------------------------------------------------------------------------------------------
Food & Lodging--4.0%
Aurora Foods Inc.,
Sr. Sub. Notes, Ser. D B1 9.875 2/15/07 230 246,100
Sr. Sub. Notes, Ser. D B1 8.75 7/01/08 245 252,350
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5
<PAGE>
<PAGE>
Portfolio of Investments as of
September 30, 1998 (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Food & Lodging (cont'd.)
Del Monte Foods Co., Sr. Disc. Notes, Zero Coupon (until
12/15/02) B- 12.50% 12/15/07 $ 2,500 $ 1,425,000
John Q. Hammons Hotels, First Mtge. Bonds B1 8.875 2/15/04 1,500 1,357,500
------------
3,280,950
- ------------------------------------------------------------------------------------------------------------------------------
Gaming--2.1%
Fitzgeralds Gaming Corp., Sr. Sec. Notes B3 12.25 12/15/04 500 350,000
Hollywood Casino Corp., Sr. Sec. Notes B2 12.75 11/01/03 350 362,250
Lady Luck Gaming Corp., First Mtge. Notes B2 11.875 3/01/01 1,000 1,012,500
------------
1,724,750
- ------------------------------------------------------------------------------------------------------------------------------
General Industrial--2.1%
Cathay International Ltd., Sr. Notes Ba3 13.00 4/15/08 750 450,000
Wesco Distribution, Inc., Sr. Sub. Notes B2 9.125 6/01/08 1,350 1,299,375
------------
1,749,375
- ------------------------------------------------------------------------------------------------------------------------------
Grocery Stores--1.7%
Disco S.A., Notes NR 9.875 5/15/08 750 465,000
Homeland Stores, Inc., Sr. Notes NR 10.00 8/01/03 500 447,500
Pathmark Stores, Inc., Sub. Notes Caa 11.625 6/15/02 500 473,750
------------
1,386,250
- ------------------------------------------------------------------------------------------------------------------------------
Health Care--4.8%
Beverly Enterprises, Inc., Sr. Notes Ba3 9.00 2/15/06 70 70,175
Columbia/HCA Healthcare Corp., Notes Ba2 7.25 5/20/08 1,000 969,630
Mediq, Inc., Sr. Sub. Notes B3 11.00 6/01/08 930 874,200
Universal Hospital Svcs.,
Sr. Sub. Notes B3 10.25 3/01/08 1,750 1,575,000
Sr. Sub. Notes B2 8.375 4/01/08 500 450,000
------------
3,939,005
- ------------------------------------------------------------------------------------------------------------------------------
Home Builder & Real Estate--5.1%
Beazer Homes USA, Inc., Sr. Notes B1 8.875 4/01/08 750 697,500
Kaufman & Broad Home Corp., Sr. Sub. Notes Ba3 9.625 11/15/06 750 776,250
Presley Companies, Sr. Notes Caa 12.50 7/01/01 1,000 850,000
Ryland Group, Inc., Sr. Sub. Notes B+ 8.25 4/01/08 750 676,875
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6
<PAGE>
<PAGE>
Portfolio of Investments as of
September 30, 1998 (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Home Builder & Real Estate (cont'd.)
Standard Pacific Corp., Sr. Notes Ba2 8.50% 6/15/07 $ 750 $ 727,500
U.S. Home Corp., Sr. Sub. Notes B1 8.88 8/15/07 500 495,000
------------
4,223,125
- ------------------------------------------------------------------------------------------------------------------------------
Industrials--2.3%
Clark Refining & Marketing, Inc., Sr. Notes Ba3 8.625 8/15/08 915 841,800
Westpoint Stevens, Inc., Sr. Notes BPBP 7.875 6/15/08 1,000 1,017,500
------------
1,859,300
- ------------------------------------------------------------------------------------------------------------------------------
Media & Communications--8.5%
Echostar DBS Corp., Sr. Sec. Notes B-PoundPound 12.50 7/01/02 750 791,250
Fox/Liberty Networks L.L.C.,
Sr. Disc. Notes, Zero Coupon (until 8/15/02) B1 9.75 8/15/07 1,500 982,500
Sr. Notes B1 8.875 8/15/07 15 14,700
Globo Comunicacoes e Participacoes S.A., Notes, (Brazil) NR 10.50 12/20/06 1,750D 875,000
Granite Broadcasting Corp.,
Sr. Sub. Notes B3 8.875 5/15/08 340 317,900
Innova S de R.L., Sr. Notes (Mexico) B2 12.875 4/01/07 1,500D 825,000
Jacor Communications, Inc., Sr. Sub. Notes B2 9.75 12/15/06 250 270,625
Primedia, Inc., Sr. Notes Ba3 7.625 4/01/08 405 388,800
Sullivan Graphics, Inc., Sr. Sub. Notes Caa 12.75 8/01/05 1,000 1,015,000
Sun Media Corp., Sr. Sub. Notes B2 9.50 5/15/07 500 512,500
Tevecap S.A., Sr. Notes (Brazil) B2 12.625 11/26/04 800D 336,000
TV Azteca S.A. de CV, Gtd., Sr. Notes (Brazil) Ba3 10.50 2/15/07 1,000D 680,000
------------
7,009,275
- ------------------------------------------------------------------------------------------------------------------------------
Metals--5.9%
Ameristeel Corp., Sr. Notes Ba3 8.75 4/15/08 285 265,050
Bayou Steel Corp., First Mtge. Notes B1 9.50 5/15/08 1,000 862,500
Companhia Vale do Rio Doce, Notes (Brazil) NR 10.00 4/02/04 750D 585,000
CSN Iron S.A., Gtd. Notes (Brazil) B2 9.125 6/01/07 1,250 D 706,250
Iron Medium Term Note Inc., Delaware, Sr. Sub. Notes B3 8.75 9/30/09 350 346,500
Pohang Iron & Steel Co. Ltd.,
Sr. Notes Ba1 7.125 7/15/04 1,000 756,690
Sr. Notes Ba1 7.375 5/15/05 500 371,520
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7
<PAGE>
<PAGE>
Portfolio of Investments as of
September 30, 1998 (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Metals (cont'd.)
Weirton Steel Corp., Sr. Notes B2 11.375% 7/01/04 $ 1,000 $ 930,000
------------
4,823,510
- ------------------------------------------------------------------------------------------------------------------------------
Paper & Packaging--10.4%
American Pad & Paper Company, Delaware, Sr. Sub. Notes,
Ser. B CCC+BPBP 13.00 11/15/05 1,385 761,750
APP Int'l. Finance Co.,
Sec. Notes (Indonesia) B2 3.50 4/30/03 870D 330,600
Sec. Notes (Indonesia) B2 11.75 10/01/05 750D 465,000
Aracruz Celulose S. A. (Brazil),
Notes B2 10.375 1/31/02 1,035D 859,050
Notes B2 10.375 1/31/02 715D 593,450
Sr. Sub. Notes B2 10.25 10/01/06 375D 326,250
Bahia Sul Celulose S.A. (Brazil) NR 10.625 7/10/04 500D 325,000
Buckeye Technologies, Inc., Sr. Sub. Notes Ba3 8.00 10/15/10 465 444,075
Container Corp. of America,
Sr. Notes B1 9.75 4/01/03 1,000 1,010,000
Sr. Notes, Ser. B B2 10.75 5/01/02 1,000 1,025,000
Doman Industries Ltd., Sr. Notes (Canada) B1 8.75 3/15/04 750D 525,000
Klabin Fabricadora de Papel e Celulose S.A., Gtd. Notes
(Brazil) NR 11.00 8/12/04 1,000D 820,000
Pindo Deli Finance Mauritius Ltd., Gtd Sr. Notes
(Indonesia) NR 10.75 10/01/07 1,750D 735,000
Repap New Brunswick, Inc., Sr. Sec. Notes (Canada) Caa 10.625 4/15/05 500D 300,000
------------
8,520,175
- ------------------------------------------------------------------------------------------------------------------------------
Technology--5.6%
Advanced Micro Devices, Inc., Sr. Sec. Notes Ba3 11.00 8/01/03 500 505,000
Concentric Network Corp., Sr. Notes NR 12.75 12/15/07 255@ 235,875
DecisionOne Holdings Corp.,
Sr. Disc. Deb., Zero Coupon (until 8/1/02) NR 11.50 8/01/08 1,000@ 375,000
Sr. Sub. Notes, B3 9.75 8/01/07 500 325,000
Fisher Scientific International, Inc., Sr. Sub. Notes B3 9.00 2/01/08 750 720,000
Samsung Electronics America, Inc., Gtd. Notes Ba1 9.75 5/01/03 1,750 1,277,500
Telecommunications Tech Company L.L.C., Sr. Sub. Note B3 9.75 5/15/08 795 715,500
Verio Inc., Sr. Notes B3 10.375 4/01/05 500 490,000
------------
4,643,875
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 8
<PAGE>
<PAGE>
Portfolio of Investments as of
September 30, 1998 (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Telecommunications--19.0%
Advanced Radio Telecom Corp., Sr. Notes CaaBPBP 14.00% 2/15/07 $ 325 $ 286,000
American Mobile Satellite, Inc., Sr. Notes NR 12.25 4/01/08 750@ 431,250
BTI Telecom Corp., Sr. Notes B3 10.50 9/15/07 1,750 1,470,000
Century Communications Corp., Sr. Disc. Notes Ba3 11.25 1/15/08 1,750 831,250
Clearnet Communications, Inc., Sr. Disc. Notes,
Zero Coupon (until 12/15/00)(Canada) B3 14.75 12/15/05 750D 630,000
E Spire Communications Insurance, Sr. Disc. Notes
Zero Coupon (until 4/1/01) NR 12.75 4/01/06 500 375,000
GST Network Funding, Inc., Sr. Disc. Notes, Zero Coupon
(until 5/1/03) NR 13.25 5/01/08 1,765 838,375
GST Telecommunications, Inc., Sr. Sub. Notes, Zero Coupon
(until 11/15/02) NR 12.75 11/15/07 500 475,000
Hyperion Telecommunications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 4/15/01) B3 13.00 4/15/03 265 184,175
Sr. Sec. Notes, Ser. B B3 12.25 9/01/04 715 700,700
ICO Global Commerce, Sr. Notes CCC+PoundPound 15.00 8/01/05 410 319,800
Intermedia Communications, Inc.,
Sr. Notes B2 8.60 6/01/08 1,000 990,000
Sr. Notes, Ser. B B2 8.875 11/01/07 350 351,750
Iridium LLC/Cap. Corp.,
Gtd. Sr. Notes, Ser. D B3 10.875 7/15/05 300 238,500
Sr. Notes NR 11.25 7/15/05 1,000 805,000
ITC Deltacom, Inc., Sr. Notes B2 8.875 3/01/08 350 353,500
IXC Communications, Inc., Sr. Sub. Notes B3 9.00 4/15/08 750 745,312
Korea Telecom,
Notes Ba1 7.50 6/01/06 500D 342,895
Notes Ba1 7.625 4/15/07 1,000D 691,990
McLeod USA Inc., Sr. Notes B2 9.25 7/15/07 250 256,250
MGC Communications Inc., Sr. Sec. Notes, Ser. B Caa 13.00 10/01/04 500 385,000
MobileMedia Communications, Inc., Sr. Sub. Notes C 9.375 11/01/07 1,000** 170,000
Philippine Long Dist. Tel. Co., Notes (The Philippines) Ba2 7.85 3/06/07 750D 559,238
PsiNet Inc., Sr. Notes B3 10.00 2/15/05 500 502,500
SK Telecom Ltd., Notes Ba1 7.75 4/29/04 1,000 755,180
Time Warner Telecom L.L.C., Sr. Notes B2 9.75 7/15/08 500 505,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 9
<PAGE>
<PAGE>
Portfolio of Investments as of
September 30, 1998 (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Telecommunications (cont'd.)
Winstar Communications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 10/15/00) NR 14.00% 10/15/05 $ 1,750 $ 1,137,500
Sr. Sub. Notes NR 11.00 3/15/08 500 350,000
------------
15,681,165
- ------------------------------------------------------------------------------------------------------------------------------
Transportation--1.5%
MRS Logisticasa S.A., Notes (Brazil) NR 10.625 8/15/05 500D 240,000
Valujet, Inc., Sr. Notes B3 10.25 4/15/01 1,250 1,000,000
------------
1,240,000
------------
Total corporate bonds (cost $119,483,711) 101,608,032
- ------------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONSD--5.4%
Republic of Argentina, Bonds Ba3 11.00 10/09/06 1,750 1,662,500
Republic of Brazil, Bonds, Ser. C B1 4.50 4/15/14 1,471 923,132
Republic of Korea, Bonds BB+BPBP 8.875 4/15/08 1,500 1,312,170
Republic of Venezuela, Bonds NR 9.25 9/15/27 500 261,500
Republic of Venezuela, Global Bonds B2 9.25 9/15/27 500 287,500
------------
Total foreign government obligations (cost $5,275,155) 4,446,802
- ------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS*--0.3% Shares
----------
Fitzgeralds Gaming Corp. -- -- -- 10,000 220,000
Sinking Fund Holding Group -- -- -- 4,070 8,140
------------
Total common stocks (cost $320,000) 228,140
- ------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--5.4%
Concentric Network Corp. NR 13.75 -- 690 603,750
Fairfield Mfg., Inc., Exchangeable, PIK NR 11.25 -- 1,000 960,000
Granite Broadcasting Corp., Cumulative Exchangeable, PIK NR 12.75 -- 372 376,036
IXC Communications, Inc.,
Jr. Pfd. Exchangeable Ser. CCC+PoundPound 12.50 -- 10,002 346,183
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 10
<PAGE>
<PAGE>
Portfolio of Investments as of
September 30, 1998 (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS (cont'd.)
Lady Luck Gaming Corp., Ser. A NR 11.50% -- 7,000 $ 238,000
Sinking Fund Holdings Group, Inc., Exchangeable PIK NR 13.75 -- 110 792,000
Superior Nat'l. Cap. Tr. NR 12.25 -- 1,135 1,112,300
------------
Total preferred stocks (cost $4,882,179) 4,428,269
- ------------------------------------------------------------------------------------------------------------------------------
WARRANTS*--0.1% Warrants
----------
American Mobile Satellite Corp. NR -- 4/1/08 280 1,319
Benedek Communications Corp. NR -- 7/1/07 5,500 11,000
Concentric Network Corp. NR -- 1/1/09 255 22,950
MGC Communications, Inc. NR -- 10/1/20 500 24,000
------------
Total warrants (cost $17,500) 59,269
------------
Total long-term investments (cost $129,978,545) 110,770,512
- ------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT--1.1%
- ------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreement--1.1% Principal
Amount
(000)
----------
Paribas Corp., dated 9/30/98, due in the amount of $904,139
(cost $904,000; collateralized by $821,000 U.S. Treasury
Notes 6.50%, 8/15/05, approximate value including
accrued interest $930,296) NR 5.54 10/01/98 $ 904 904,000
------------
Total Investments--135.7%
(cost $130,882,545; Note 3) 111,674,512
Other assets in excess of liabilities--(35.7)% (29,363,304)
------------
Net Assets--100% $ 82,311,208
------------
------------
</TABLE>
- ---------------
* --Non-income-producing security.
** --Represents issuer in default on interest payments; non-income-
producing security.
BPBP--S&P Equivalent to Moody's Rating.
D --US$ Denominated Foreign Bonds.
@ --Consists of more than 1 class of securities traded together as a
unit; generally bonds with attached stock or warrants.
NR --Not rated by Moody's or Standard & Poor's.
PIK --Payment in Kind.
L.L.C.--Limited Liability Corporation.
L.L.L.P. --Limited Liability Limited Partnership.
L.P. --Limited Partnership.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 11
<PAGE>
<PAGE>
Statement of Assets and Liabilities (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets September 30, 1998
<S> <C>
Investments, at value (cost $130,882,545).................................................................. $ 111,674,512
Cash....................................................................................................... 853
Interest and dividends receivable.......................................................................... 3,330,341
Receivable for investments sold............................................................................ 1,541,089
Other assets............................................................................................... 45,250
--------------
Total assets............................................................................................ 116,592,045
--------------
Liabilities
Loan payable (Note 4)...................................................................................... 32,000,000
Payable for investments purchased.......................................................................... 987,090
Dividends payable.......................................................................................... 825,190
Loan interest payable (Note 4)............................................................................. 285,652
Accrued expenses........................................................................................... 120,989
Advisory fee payable....................................................................................... 33,670
Deferred directors' fees................................................................................... 14,658
Administration fee payable................................................................................. 13,588
--------------
Total liabilities....................................................................................... 34,280,837
--------------
Net Assets................................................................................................. $ 82,311,208
--------------
--------------
Net assets were comprised of:
Common stock, at par.................................................................................... $ 113,674
Paid-in capital in excess of par........................................................................ 104,313,386
--------------
104,427,060
Undistributed net investment income..................................................................... 647,061
Accumulated net realized loss on investments............................................................ (3,554,880)
Net unrealized depreciation of investments.............................................................. (19,208,033)
--------------
Net assets, September 30, 1998.......................................................................... $ 82,311,208
--------------
--------------
Net asset value per share ($82,311,208 / 11,367,373 shares of common stock issued and outstanding)......... $7.24
--------------
--------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 12
<PAGE>
<PAGE>
THE HIGH YIELD PLUS FUND, INC.
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
September 30,
Net Investment Income 1998
<S> <C>
Income
Interest.............................. $ 6,516,843
Dividends............................. 125,448
------------------
6,642,291
------------------
Expenses
Investment advisory fee............... 247,864
Administration fee.................... 99,146
Custodian's fees and expenses......... 57,000
Legal fees and expenses............... 35,000
Reports to shareholders............... 22,000
Transfer agent's fees and expenses.... 19,000
Insurance expense..................... 15,000
Audit fee and expenses................ 13,500
Listing fee........................... 10,000
Directors' fees and expenses.......... 9,000
Miscellaneous......................... 938
------------------
Total operating expenses........... 528,448
Loan interest expense (Note 4)........ 980,065
------------------
Total expenses..................... 1,508,513
------------------
Net investment income.................... 5,133,779
------------------
Realized and Unrealized
Loss on Investments
Net realized loss on investment
transactions.......................... (411,673)
Net change in unrealized depreciation of
investments........................... (22,328,229)
------------------
Net loss on investments.................. (22,739,902)
------------------
Net Decrease in Net Assets
Resulting from Operations................ $(17,606,123)
------------------
------------------
</TABLE>
THE HIGH YIELD PLUS FUND, INC.
Statement of Cash Flows (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
September
30,
Increase (Decrease) in Cash 1998
<S> <C>
Cash flows provided from operating activities
Interest and dividends received (excluding
discount amortization of $670,630)........ $ 5,551,837
Operating expenses paid...................... (1,442,643)
Loan interest and commitment fee paid........ (1,020,045)
Maturities of short-term portfolio
investments, net.......................... (904,000)
Purchases of long-term portfolio
investments............................... (73,079,560)
Proceeds from disposition of long-term
portfolio investments..................... 70,972,193
Deferred expenses and other assets........... (9,520)
------------
Net cash provided from operating
activities................................ 68,262
------------
Cash used for financing activities
Net increase in notes payable................ 2,000,000
Cash dividends paid (excluding reinvestment
of dividends of $156,275)................. (4,767,348)
------------
Net cash used for financing activities....... (2,767,348)
------------
Net decrease in cash......................... (2,699,086)
Cash at beginning of period.................. 2,699,939
------------
Cash at end of period........................ $ 853
------------
------------
Reconciliation of Net Decrease in Net Assets
to Net Cash Provided from Operating Activities
Net decrease in net assets resulting from
operations................................... $(17,606,122)
------------
Increase in investments......................... (3,283,294)
Net realized loss on investment transactions.... 411,673
Net change in unrealized depreciation of
investments.................................. 22,328,228
Decrease in receivable for investments sold..... 3,903,685
Increase in interest and dividends receivable... (419,824)
Decrease in deferred expenses and other
assets....................................... 9,520
Decrease in payable for investments purchased... (5,497,749)
Increase in accrued expenses and other
liabilities.................................. 222,145
------------
Total adjustments............................ 17,674,384
------------
Net cash provided from operating
activities................................ $ 68,262
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13
<PAGE>
<PAGE>
THE HIGH YIELD PLUS FUND, INC.
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
September Year Ended
Increase (Decrease) 30, March 31,
in Net Assets 1998 1998
------------ ------------
<S> <C> <C>
Operations
Net investment income....... $ 5,133,779 $ 9,479,163
Net realized gain (loss) on
investment
transactions............. (411,673) 5,009,438
Net change in unrealized
appreciation/depreciation
of investments........... (22,328,228) 2,649,914
------------ ------------
Net increase (decrease) in
net assets resulting from
operations............... (17,606,122) 17,138,515
Dividends from net investment
income...................... (4,797,317) (9,479,163)
Distributions in excess of net
investment income........... -- (19,779)
Value of Fund shares issued to
shareholders in reinvestment
of dividends................ 156,275 876,479
------------ ------------
Total increase (decrease)...... (22,247,164) 8,516,052
Net Assets
Beginning of period............ 104,558,372 96,042,320
------------ ------------
End of period(a)............... $ 82,311,208 $104,558,372
------------ ------------
------------ ------------
- ---------------
(a) Includes undistributed net
investment income of....... $ 647,061 $ 310,599
------------ ------------
</TABLE>
THE HIGH YIELD PLUS FUND, INC. Notes to Financial Statements (Unaudited)
- ------------------------------------------------------------
The High Yield Plus Fund, Inc. (the 'Fund') was organized in Maryland on
February 3, 1988, as a diversified, closed-end management investment company.
The Fund had no transactions until April 4, 1988, when it sold 11,000 shares of
common stock for $102,300 to Wellington Management Company, LLP (the 'Investment
Adviser'). Investment operations commenced on April 22, 1988. The Fund's primary
objective is to provide a high level of current income to shareholders. The Fund
seeks to achieve this objective through investment in publicly or privately
offered high yield debt securities rated in the medium to lower categories by
recognized rating services or nonrated securities of comparable quality. As a
secondary investment objective, the Fund will seek capital appreciation, but
only when consistent with its primary objective. The ability of issuers of debt
securities held by the Fund to meet their obligations may be affected by
economic developments in a specific industry or region.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Securities Valuation: Portfolio securities that are actively traded in the
over-the-counter market, including listed securities for which the primary
market is believed to be over-the-counter, are valued at the closing bid price
or in the absence of such price, as determined in good faith by the Board of
Directors of the Fund. Any security for which the primary market is on an
exchange is valued at the last sales price on such exchange on the day of
valuation or, if there was no sale on such day, the closing bid price.
Securities for which no trades have taken place that day and unlisted securities
for which market quotations are readily available are valued at the latest bid
price.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost.
Cash Flow Information: The Fund invests in securities and pays dividends from
net investment income and distributions from net realized gains which are paid
in cash or are reinvested at the discretion of shareholders. These activities
are reported in the Statement of Changes in Net Assets and additional
information on cash receipts and cash payments is
- --------------------------------------------------------------------------------
14
<PAGE>
<PAGE>
Notes to Financial Statements (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
presented in the Statement of Cash Flows. Accounting practices that do not
affect reporting activities on a cash basis include carrying investments at
value and amortizing discounts on debt obligations. Cash, as used in the
Statement of Cash Flows, is the amount reported as 'Cash' in the Statement of
Assets and Liabilities.
Securities Transactions and Net Investment Income: Security transactions are
recorded on the trade date. Realized gains and losses from securities
transactions are calculated on the identified cost basis. Interest income, which
is comprised of three elements; stated coupon rate, original issue discount and
market discount, is recorded on an accrual basis. Dividend income is recorded on
the ex-dividend date. Expenses are recorded on the accrual basis which may
require the use of certain estimates by management.
Taxes: It is the Fund's policy to continue to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to shareholders. Therefore, no federal
income tax provision is required.
Dividends and Distributions: The Fund expects to declare and pay dividends of
net investment income monthly and make distributions at least annually of any
net capital gains. Dividends and distributions are recorded on the ex-dividend
date.
Income distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has agreements with the Investment Adviser and with Prudential
Investments Fund Management LLC (the 'Administrator'). The Investment Adviser
makes investment decisions on behalf of the Fund; the Administrator provides
occupancy and certain clerical and accounting services to the Fund. The Fund
bears all other costs and expenses.
The investment advisory agreement provides for the Investment Adviser to receive
a fee, computed weekly and payable monthly at an annual rate of .50% of the
Fund's average weekly net assets. The administration agreement provides for the
Administrator to receive a fee, computed weekly and payable monthly at an annual
rate of .20% of the Fund's average weekly net assets.
Note 3. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the six months ended September 30, 1998, were $68,725,884 and $67,041,302,
respectively.
During the six months ended September 30, 1998, the Fund entered into $533,688
of securities transactions on a principal basis with Prudential Securities
Incorporated, an affiliate of the Administrator.
The federal income tax basis of the Fund's investments, as of September 30,
1998, was $130,882,544 and, accordingly, net unrealized depreciation for federal
income tax purposes was $19,364,231 (gross unrealized appreciation--$751,829;
gross unrealized depreciation--($20,116,060)).
For federal income tax purposes, the Fund has a capital loss carryforward as of
March 31, 1998 of approximately $3,143,000 of which $1,337,000 expires in 2003
and $1,806,000 expires in 2004. Accordingly, no capital gains distributions are
expected to be paid to shareholders until net gains have been realized in excess
of such carryforward.
- ------------------------------------------------------------
Note 4. Borrowings
The Fund has a credit agreement with an unaffiliated lender. The maximum
commitment under this agreement is $35,000,000. Interest on any such borrowings
is based on market rates and is payable at maturity. The average daily balance
outstanding during the six months ended September 30, 1998 was $32,000,000 at a
weighted average interest rate of 6.37%. The maximum face amount of borrowings
outstanding at any month-end during the six months ended September 30, 1998 was
$32,000,000. The current borrowings of $32,000,000 (at a weighted average
interest rate of 6.23%) mature throughout the period from October 8, 1998 to
March 29, 1999.
The Fund has paid commitment fees at an annual rate of .09 of 1% on any unused
portion of the credit facility. Commitment fees are included in 'Loan Interest'
as reported on the Statement of Assets and Liabilities and on the Statement of
Operations.
- ------------------------------------------------------------
Note 5. Capital
There are 100 million shares of $.01 par value common stock authorized. During
the six months ended September 30, 1998 and the fiscal year ended March 31,
1998, the Fund issued 18,829 and 98,012 shares in connection with reinvestment
of dividends, respectively.
- --------------------------------------------------------------------------------
See Notes to Financial Statements 15
<PAGE>
<PAGE>
Notes to Financial Statements (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
Note 6. Dividends
On August 7, 1998 the Board of Directors of the Fund declared dividends of
$0.0725 per share payable on October 9, November 13 and December 11 to
shareholders of record on September 30, October 30 and November 30,
respectively.
- --------------------------------------------------------------------------------
16
<PAGE>
<PAGE>
Financial Highlights (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended March 31,
September 30, --------------------------------------------------------
1998 1998 1997 1996 1995 1994
------------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 9.21 $ 8.54 $ 8.44 $ 7.85 $ 8.38 $ 8.48
------------- -------- ------- ------- ------- -------
Income from investment operations
Net investment income......................... .45 .84 .82 .84 .87 .90
Net realized and unrealized gain (loss) on
investments................................ (2.00) .67 .12 .59 (.54) (.15)
------------- -------- ------- ------- ------- -------
Total from investment operations........... (1.55) 1.51 .94 1.43 .33 .75
------------- -------- ------- ------- -------
Less dividends and distributions
Dividends from net investment income.......... (.42) (.84) (.82) (.84) (.86) (.85)
Distributions in excess of net investment
income..................................... -- -- (.02) -- -- --
------------- -------- ------- ------- ------- -------
Total dividends............................ (.42) (.84) (.84) (.84) (.86) (.85)
------------- -------- ------- ------- ------- -------
Net asset value, end of period(a)............. $ 7.24 $ 9.21 $ 8.54 $ 8.44 $ 7.85 $ 8.38
------------- -------- ------- ------- ------- -------
------------- -------- ------- ------- ------- -------
Market price per share, end of period(a)...... $ 8.00 $ 9.125 $ 9.00 $ 8.75 $ 8.00 $ 8.375
------------- -------- ------- ------- ------- -------
------------- -------- ------- ------- ------- -------
TOTAL INVESTMENT RETURN(b):................... (7.81)% 11.25% 13.38% 20.80% 6.33% 3.90%
------------- -------- ------- ------- ------- -------
------------- -------- ------- ------- ------- -------
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted)....... $ 82,311 $104,558 $96,042 $94,091 $86,704 $91,698
Average net assets (000 omitted).............. $ 106,099 $100,766 $95,946 $92,855 $87,734 $96,962
Ratio to average net assets:
Expenses, before loan interest, commitment
fees and nonrecurring expenses.......... .99%(c) 1.07% 1.08% 1.01% 1.11% 1.12%
Total expenses............................. 2.84%(c) 2.44% 2.32% 2.29% 2.71% 2.01%
Net investment income...................... 9.65%(c) 9.41% 9.63% 10.18% 10.90% 10.15%
Portfolio turnover rate....................... 54% 112% 60% 60% 47% 100%
Total debt outstanding at end of period (000
omitted)................................... $ 32,000 $ 30,000 $18,000 $17,000 $19,000 $28,000
Asset coverage per $1,000 of debt
outstanding................................ $ 3,744 $ 4,485 $ 6,336 $ 6,535 $ 5,563 $ 4,275
</TABLE>
- ---------------
(a) NAV and market value are published in The Wall Street Journal each Monday.
(b) Total investment return is calculated assuming a purchase of common stock at
the current market value on the first day and a sale at the current market
value on the last day of each period reported. Dividends and distributions
are assumed for purposes of this calculation to be reinvested at prices
obtained under the dividend reinvestment plan. This calculation does not
reflect brokerage commissions. Total returns for periods less than one year
are not annualized.
(c) Annualized.
Contained above is selected data for a share of common stock outstanding, total
investment return, ratios to average net assets and other supplemental data for
the period indicated. This information has been determined based upon
information provided in the financial statements and market price data for the
Fund's shares.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 17
<PAGE>
<PAGE>
Supplemental Proxy Information (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
The annual meeting of shareholders of The High Yield Plus Fund, Inc. was held on
August 27, 1998 at the offices of Prudential Investments Fund Management LLC,
751 Broad Street, Newark, New Jersey. The meeting was held for the following
purposes:
(1) To elect the following director to serve as follows:
Director Class Term Expiring
--------------------- ------ -------- ---------
Eugene C. Dorsey I 3 years 2001
Directors whose term of office continued beyond this meeting are
Douglas H. McCorkindale and Thomas T. Mooney.
(2) To ratify the selection of PricewaterhouseCoopers LLP as independent
public accountants for the year ending March 31, 1999.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Director/Auditor Votes for Votes against Votes withheld Abstentions
------------------- ---------- -------------- --------------- -----------
(1) Eugene C. Dorsey 9,535,054 -- 146,875 --
(2) PricewaterhouseCoopers LLP 9,578,622 28,736 -- 74,571
</TABLE>
- --------------------------------------------------------------------------------
18
<PAGE>
Other Information (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
Dividend Reinvestment Plan. Shareholders may elect to have all distributions of
dividends and capital gains automatically reinvested in Fund shares (Shares)
pursuant to the Fund's Dividend Reinvestment Plan (the Plan). Shareholders who
do not participate in the Plan will receive all distributions in cash paid by
check in United States dollars mailed directly to the shareholders of record (or
if the shares are held in street or other nominee name, then to the nominee) by
the custodian, as dividend disbursing agent. Shareholders who wish to
participate in the Plan should contact the Fund at (800) 451-6788.
State Street Bank and Trust Co. (the Plan Agent) serves as agent for the
shareholders in administering the Plan. After the Fund declares a dividend or
capital gains distribution, if (1) the market price is lower than net asset
value, the participants in the Plan will receive the equivalent in Shares valued
at the market price determined as of the time of purchase (generally, following
the payment date of the dividend or distribution); or if (2) the market price of
Shares on the payment date of the dividend or distribution is equal to or
exceeds their net asset value, participants will be issued Shares at the higher
of net asset value or 95% of the market price. If net asset value exceeds the
market price of Shares on the valuation date or the Fund declares a dividend or
other distribution payable only in cash, the Plan Agent will, as agent for the
participants, receive the cash payment and use it to buy Shares in the open
market. If, before the Plan Agent has completed its purchases, the market price
exceeds the net asset value per share, the average per share purchase price paid
by the Plan Agent may exceed the net asset value per share, resulting in the
acquisition of fewer shares than if the dividend or distribution had been paid
in shares issued by the Fund. The Fund will not issue Shares under the Plan
below net asset value.
There is no charge to participants for reinvesting dividends or capital gain
distributions, except for certain brokerage commissions, as described below. The
Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Fund. There will be no brokerage commissions
charged with respect to shares issued directly by the Fund. 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 and distributions. The automatic reinvestment of
dividends and distributions will not relieve participants of any federal income
tax that may be payable on such dividends or distributions.
The Fund reserves the right to amend or terminate the Plan upon 90 days' written
notice to shareholders of the Fund.
Participants in the Plan may withdraw from the Plan upon written notice to the
Plan Agent and will receive certificates for whole Shares and cash for
fractional Shares.
All correspondence concerning the Plan should be directed to the Plan Agent,
State Street Bank & Trust Company, P.O. Box 8200, Boston, MA 02266-8200.
- --------------------------------------------------------------------------------
19
<PAGE>
Directors
Eugene C. Dorsey
Douglas H. McCorkindale
Thomas T. Mooney
Investment Adviser
Wellington Management Company, LLP
75 State Street
Boston, MA 02109
Administrator
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian and Transfer Agent
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Independent Accountants
PricewaterhouseCoopers LLC
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase, from time to time, shares of
its common stock at market prices.
The accompanying financial statements as of September 30, 1998, were not
audited and, accordingly, no opinion is expressed on them.
The views expressed in this report and the information about the Fund's
portfolio holdings are for the period covered by this report and are subject
to change thereafter.
This report is for stockholder information. This is not a prospectus intended
for use in the purchase or sale of Fund shares.
The High Yield Plus Fund, Inc.
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
For information call toll-free (800) 451-6788
429906100
