SEMI ANNUAL REPORT September 30, 1995
The High Yield Plus Fund, Inc.
(LOGO)
<PAGE>
Letter to Shareholders
November 6, 1995
Dear Shareholder:
During the first six months of the Fund's fiscal year, the high yield market
was fairly robust. In particular, the performance of the market benefited both
from the drop in interest rates and the ensuing strong demand for high yield
issues during the first three months of the year. The second quarter was more
subdued as rates stabilized and investors appeared to step back to assess
valuations in light of the threat of a heavy new issue calendar. While plenty
of new offerings did come to fruition during the month of September, the market
has remained somewhat muted with virtually all attention being directed towards
new issuance.
Our focus has been on uncovering companies that should weather the economic
slowdown without impinging on the strength of their balance sheets. To that
end, we have intentionally been scouring the secondary market (as well as the
new issue market) for potential opportunities. During the first half of the
year, we also reduced some of the Fund's exposure to cyclical industries such
as steel, where we believe market dynamics have turned. In the paper sector,
we have shifted our exposure to those grades of paper that typically perform
better later in the business cycle. Again, our general investment theme is to
maintain or increase our exposure in those issues (cyclical or not) that are
striving to reduce debt with free cash flow, as we believe this is a prudent
goal at this point in the economic cycle.
The Fund's total return was as follows for the periods ended September 30,
1995. We have also provided the returns of the Lipper Closed-End Leveraged
High Yield category, an average of 19 closed-end high yield funds; we would
note that the degree of leverage varies substantially amongst the funds in the
group.
Investment Objective
The Fund seeks high current income by invest-ing in a portfolio of high yield
debt securities. Capital appreciation is a secondary objective.
-1-
<PAGE>
TOTAL RETURNS
As of September 30, 1995
<TABLE>
<CAPTION>
3 Months 6 Months 12 Months
<S> <C> <C> <C>
High Yield Plus Fund (at NAV)* 3.9% 11.4% 15.4%
Lipper Closed-End Leveraged
High Yield Average** 3.5% 9.6% 15.2%
</TABLE>
*The Fund's total return represents the change in net asset value from the
beginning of the period noted through September 30, 1995 and assumes the
reinvestment of dividends and distributions. Shares of the Fund are traded on
the NYSE. Past performance is no guarantee of future results.
**An average of 19 closed-end leveraged bond funds tracked by Lipper
Analytical Services, Inc.
Stock Listing
The High Yield Plus Fund, Inc.'s common stock is traded on the New York
Stock Exchange under the symbol "HYP" and is frequently listed as
"HighYld-PlsFd" in the financial sections of newspapers. It is also listed in
a closed-end fund table every Monday in The Wall Street Journal.
As of September 30, 1995, the Fund's total invested assets of $108 million
represented 117% of the Fund's net assets of $92 million. Total borrowings
were $16 million, a decrease of $3 million from March 31, 1995. We have
intentionally scaled back the Fund's leverage during this period of market
strength. We may increase the degree of leverage in the future if market
valuations become more compelling.
The Fund's largest holdings include K & F Industries (the leading US supplier
of aircraft braking systems), Fort Howard Corporation (leading US manufacturer
of commercial tissue products), Sweetheart Cup (major cup and food container
supplier), Container Corporation of America (linerboard and newsprint producer)
and Magma Copper (copper mining and smelting); in aggregate, these holdings
represent 12% of invested assets. The yield to maturity, average years to
maturity and duration of the portfolio were 10.7%, 8.4 years and 5.1 years,
respectively, as of September 30, 1995. This compares to 11.3%, 8.5 years and
5.5 years, respectively, as of March 31, 1995. Average ratings have remained
steady at B1/B+.
Thank you for your interest in the Fund, and we look forward to continuing
the Fund's investment program.
Sincerely,
Catherine A. Smith
Portfolio Manager
Senior Vice President
Wellington Management Company
-2-
<PAGE>
<PAGE>
- - ----------------------------------------------------------
THE HIGH YIELD PLUS FUND, INC.
Portfolio of Investments
September 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
- - ----------------------------------------------------------
Principal
Moody's Amount Value
Rating (000) Description (Note 1)
<S> <C> <C> <C>
- - ----------------------------------------------------------
LONG-TERM INVESTMENTS--114.0%
Corporate Bonds--109.9%
Aerospace/Defense--6.1%
K & F Industries, Inc.,
Sr. Sec. Notes,
B1 $ 350 11.875%, 12/1/03....... $ 364,875
Sr. Sub. Deb.,
B2 2,500 13.75%, 8/1/01......... 2,593,750
Rohr, Inc., Sr. Notes,
Ba3 1,250 11.625%, 5/15/03....... 1,331,250
Wyman Gordon Co.,
Sr. Notes,
B1 1,350 10.75%, 3/15/03........ 1,377,000
------------
5,666,875
------------
Basic Industries-Manufacturing--21.4%
American Standard,
Inc.,
Sr. Deb.,
Ba3 250 11.375%, 5/15/04....... 275,000
Sr. Sub. Deb.,
Zero Coupon, (until
6/1/98),
B1 2,000 10.50%, 6/1/05......... 1,625,000
Bell & Howell Co.,
Deb., Ser. B,
B3 1,250 Zero Coupon, 3/1/05.... 768,750
Sr. Notes,
B1 500 9.25%, 7/15/00......... 502,500
Cabot Safety
Acquisition Corp.,
Sr. Sub. Notes,
B3 1,250 12.50%, 7/15/05........ 1,300,000
Calmar Inc.,
Sr. Sub. Notes,
B3 1,075 11.50%, 8/15/05........ 1,085,750
Day International Group
Inc.,
Sr. Sub. Notes,
B3 500 11.125%, 6/1/05........ 507,500
Dominion Textile USA,
Inc.,
Sr. Notes,
Ba3 500 8.875%, 11/1/03........ 500,000
Envirosource, Inc., Sr.
Notes,
B3 1,250 9.75%, 6/15/03......... 1,143,750
Essex Group, Inc., Sr.
Notes,
B1 $ 500 10.00%, 5/1/03......... $ 485,000
Exide Corp., Sr. Notes,
B1 350 10.75%, 12/15/02....... 372,750
B1 500 10.00%, 4/15/05........ 527,500
Fairfield
Manufacturing,
Sr. Sub. Notes,
Caa 950 11.375%, 7/1/01........ 902,500
Graphic Controls Corp.,
Sr. Sub. Notes,
B3 500 12.00%, 9/15/05........ 503,750
IDEX Corp.,
Sr. Sub. Notes,
Ba3 250 9.75%, 9/15/02......... 260,000
Interlake Corp.,
Sr. Notes,
B2 250 12.00%, 11/15/01....... 258,750
Sr. Sub. Deb.,
B3 900 12.125%, 3/1/02........ 882,000
Jordan Industries,
Inc.,
Sr. Notes,
B3 1,000 10.375%, 8/1/03........ 935,000
Lear Seating Corp.,
Sub. Notes,
B2 1,000 8.25%, 2/1/02.......... 972,500
Lear Siegler Seating
Corp.,
Sr. Sub. Notes,
B2 500 11.25%, 7/15/00........ 523,750
Lone Star Industries,
Inc.,
Sr. Notes,
NR 500 10.00%, 7/31/03........ 501,250
Overhead Door Corp.,
Sr. Notes,
B1 1,000 12.25%, 2/1/00......... 955,000
Penda Corp.,
Sr. Notes, Ser. B,
B2 750 10.75%, 3/1/04......... 637,500
Portola Packaging Inc.,
Sr. Notes,
B2 375 10.75%, 10/1/05........ 377,812
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------
Principal
Moody's Amount Value
Rating (000) Description (Note 1)
<S> <C> <C> <C>
- - ----------------------------------------------------------
Basic
Industries-Manufacturing--(cont'd.)
Silgan Holdings, Inc.,
Sr. Deb.,
B3 $ 785 Zero Coupon, until
(6/15/96),
13.25%, 12/15/02..... $ 733,975
Specialty Equipment
Cos. Inc.,
Sr. Sub. Notes,
B3 1,000 11.375%, 12/1/03....... 1,042,500
Thermadyne Holdings
Corp.,
Sr. Notes,
B3 750 10.25%, 5/1/02......... 750,000
Ucar Global Enterprises
Inc.,
Sr. Sub. Notes,
B+* 415 12.00%, 1/15/05........ 462,725
------------
19,792,512
------------
Cable--6.0%
Cablevision Industries
Corp.,
B1 850 9.25%, 4/1/08, Sr.
Deb.................. 903,125
Cablevision Systems
Corp.,
Sr. Sub. Deb.,
B3 250 9.875%, 2/15/13........ 261,250
Comcast Corp.,
Sr. Sub. Deb.,
B1 400 9.375%, 5/15/05........ 406,000
Continental
Cablevision, Inc.,
Sr. Deb.,
Ba2 500 9.00%, 9/1/08.......... 511,250
Sr. Sub. Deb.,
B1 550 11.00%, 6/1/07......... 607,750
Galaxy Telecom, L.P.,
Sr. Sub. Notes,
B3 1,000 12.375%, 10/1/05....... 997,500
Marcus Cable Operating
Co., L.P.,
Sr. Sub. Disc. Notes,
B3 500 Zero Coupon, (until
2/1/00),
13.50%, 8/1/04....... 340,000
Sr. Sub. Notes,
Caa 750 Zero Coupon, (until
6/15/00),
14.25%, 12/15/05..... 435,000
Videotron Ltd.,
Sr. Sub. Notes,
Ba3 1,000(D) 10.25%, 10/15/02
(Canada)............. 1,040,000
------------
5,501,875
------------
Chemicals--4.4%
Agriculture Minerals &
Chemicals, Inc., Sr.
Notes,
Ba3 $ 500 10.75%, 9/30/03........ $ 523,750
Arcadian Partners L.P.,
Sr. Notes,
B2 1,350 10.75%, 5/1/05......... 1,417,500
General Chemical Corp.,
Sr. Sub. Notes,
B2 500 9.25%, 8/15/03......... 487,500
Huntsman Corp.,
First Mtge. Notes,
B1 500 10.625%, 4/15/01....... 532,500
Rexene Corp.,
Sr. Notes,
B1 500 11.75%, 12/1/04........ 536,250
Sherritt, Inc., Deb.,
B1 450 10.50%, 3/31/14........ 455,625
Uniroyal Technology
Corp.,
Sr. Notes,
B2 100 11.75%, 6/1/03......... 92,000
------------
4,045,125
------------
Computers & Electrical
Equipment--0.8%
Digital Equipment
Corp., Deb.,
Ba1 750 7.75%, 4/1/23.......... 702,188
------------
Consumer Goods & Services--5.6%
American Safety Razor
Co.,
Sr. Notes, Ser. A,
B1 500 9.875%, 8/1/05......... 500,000
Fieldcrest Cannon,
Inc.,
Sr. Sub. Deb.,
B1 250 11.25%, 6/15/04........ 262,500
Gruma S.A de C.V.,
Notes, (Mexico)
NR 700(D) 9.75%, 3/9/98.......... 675,500
Kindercare Learning
Centers,
Inc., Sr. Notes,
Ba3 250 10.375%, 6/1/01........ 257,500
Sweetheart Cup, Inc.,
Sr. Sub. Notes,
B2 2,750 10.50%, 9/1/03......... 2,695,000
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------
Principal
Moody's Amount Value
Rating (000) Description (Note 1)
<S> <C> <C> <C>
- - ----------------------------------------------------------
Consumer Goods & Services--(cont'd.)
Westpoint Stevens,
Inc.,
Sr. Notes,
B1 $ 750 8.75%, 12/15/01........ $ 744,375
------------
5,134,875
------------
Energy & Related Goods &
Services--4.9%
Energy Ventures Inc.,
Sr. Notes,
NR 750 10.25%, 3/15/04........ 780,000
Global Marine, Inc.,
Sr. Sec. Notes,
B1 250 12.75%, 12/15/99....... 276,250
Plains Resources Inc.,
Sr. Sub. Notes,
B3 500 12.00%, 10/1/99........ 515,000
Santa Fe Energy
Resources, Inc., Sr.
Sub. Deb.,
B1 1,250 11.00%, 5/15/04........ 1,331,250
Seagull Energy Corp.,
Sr. Sub. Notes,
B2 500 8.625%, 8/1/05......... 475,000
Transportadora De Gas,
Medium-Term Notes,
NR 350(D) 7.75%, 12/23/98
(Argentina).......... 317,625
YPF Sociedad Anonima,
Unsec'd. Notes
(Argentina),
B1 1,000(D) 8.00%, 2/15/04......... 855,000
------------
4,550,125
------------
Financial Services--3.8%
Banco Rio de la Plata
S.A.,
Unsec'd. Notes
(Argentina),
B1 500(D) 8.75%, 12/15/03........ 380,000
Dime Bancorp, Inc.,
Sr. Notes,
Ba3 1,250 10.50%, 11/15/05....... 1,368,750
Firstfed Financial
Corp.
Delaware,
Unsec'd. Notes,
B2 500 11.75%, 10/1/04........ 500,000
I C H Corp.,
Sr. Sub. Notes,
C 300 11.25%, 12/1/96........ 201,000
Imperial Credit
Industries, Inc.,
Sr. Notes,
B1 $ 1,250 9.75%, 1/15/04......... $ 1,100,000
------------
3,549,750
------------
Food & Lodging--3.9%
ARA Services, Inc.,
Sr. Notes,
Ba1 500 10.625%, 8/1/00........ 552,500
John Q. Hammons Hotels,
First Mtge. Notes,
B1 250 8.875%, 2/15/04........ 236,250
La Quinta Motor Inns,
Inc.,
Sr. Sub. Notes,
Ba3 1,000 9.25%, 5/15/03......... 1,047,500
Purina Mills Inc.,
Sr. Sub. Notes,
B2 1,250 10.25%, 9/1/03......... 1,281,250
Red Roof Inns, Inc.,
Sr. Notes,
B3 500 9.625%, 12/15/03....... 486,250
------------
3,603,750
------------
Gaming--0.9%
GB Property Funding
Corp.,
First Mtge. Notes,
B2 1,000 10.875%, 1/15/04....... 842,500
------------
Grocery Stores--4.5%
Big V Supermarkets,
Sr. Sub. Notes, Ser.
B,
B3 1,750 11.00%, 2/15/04........ 1,426,250
Brunos Inc.,
Sr. Notes,
B3 500 10.50%, 8/1/05......... 485,000
Dominick's Finer Foods,
Inc.,
Sr. Sub. Notes,
B3 650 10.875%, 5/1/05........ 659,750
Eagle Food Centers
Inc.,
Sr. Notes,
B1 1,000 8.625%, 4/15/00........ 540,000
Kash N Karry Food
Stores Inc.,
Sr. Notes, PIK,
B3 801 11.50%, 2/1/03......... 788,788
Star Markets Co., Inc.,
Sr. Sub. Notes,
B3 250 13.00%, 11/1/04........ 243,750
------------
4,143,538
------------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------
Principal
Moody's Amount Value
Rating (000) Description (Note 1)
<S> <C> <C> <C>
- - ----------------------------------------------------------
Health Care--2.9%
OrNda Healthcorp,
Sr. Sub. Notes,
B2 $ 1,500 11.375%, 8/15/04....... $ 1,668,750
Tenet Healthcare Corp.,
Sr. Notes,
Ba2 325 9.625%, 9/1/02......... 343,688
Sr. Sub. Notes,
Ba3 600 10.125%, 3/1/05........ 634,500
------------
2,646,938
------------
Home Building & Real Estate--3.6%
Beazer Homes USA Inc.,
Sr. Notes,
B1 500 9.00%, 3/1/04.......... 455,000
Continental Homes
Holdings,
Sr. Notes,
B1 1,000 12.00%, 8/1/99......... 1,040,000
Del Webb Corp.,
Sr. Notes,
Ba3 500 10.875%, 3/31/00....... 512,500
Sr. Sub. Deb.,
B2 750 9.00%, 2/15/06......... 695,625
Toll Corp., Sr. Sub.
Notes,
Ba3 600 10.50%, 3/15/02........ 621,000
------------
3,324,125
------------
Media & Communications--10.6%
Granite Broadcasting
Corp.,
Sr. Sub. Deb.,
B3 500 12.75%, 9/1/02......... 556,250
Sr. Sub. Notes,
B3 1,000 10.375%, 5/15/05....... 1,020,000
Heritage Media Services
Corp.,
Sr. Sec'd. Notes,
Ba3 1,000 11.00%, 6/15/02........ 1,070,000
Infinity Broadcasting
Corp.,
Sr. Sub. Notes,
Ba3 250 10.375%, 3/15/02....... 267,500
Paging Network, Inc.,
Sr. Sub. Notes,
B2 500 11.75%, 5/15/02........ 550,000
B2 375 10.125%, 8/1/07........ 390,937
SFX Broadcasting, Inc.,
Sr. Sub. Notes,
B2 $ 325 11.375%, 10/1/00....... $ 338,813
Telefonica de Argentina
S.A.,
Unsec'd. Notes,
(Argentina)
B1 1,500(D) 11.875%, 11/1/04....... 1,496,250
Turner Broadcasting
Systems,
Inc., Sr. Deb.,
Ba2 1,500 8.40%, 2/1/24.......... 1,450,515
World Color Press, Inc.
Sr. Sub. Notes,
B1 1,000 9.125%, 3/15/03........ 997,500
Young Broadcasting
Inc.,
Sr. Sub. Notes,
B2 1,000 11.75%, 11/15/04....... 1,110,000
B2 500 10.125%, 2/15/05....... 525,000
------------
9,772,765
------------
Metals--11.1%
AK Steel Corp.,
Sr. Notes,
Ba3 1,250 10.75%, 4/1/04......... 1,335,937
Armco, Inc., Sr. Notes,
B2 1,750 9.375%, 11/1/00........ 1,715,000
Bethlehem Steel Corp.,
Sr. Notes,
B1 1,250 10.375%, 9/1/03........ 1,281,250
GS Technologies
Operating Co., Inc.,
Sr. Notes,
B2 800 12.25%, 10/1/05........ 796,000
Haynes International
Inc.,
Sr. Sub. Notes,
Ca 750 13.50%, 8/15/99........ 525,000
Kaiser Aluminum &
Chemical Corp., Sr.
Notes,
B1 500 9.875%, 2/15/02........ 500,000
Magma Copper Co.,
Sr. Sub. Notes,
Ba3 2,000 12.00%, 12/15/01....... 2,195,000
Russel Metals Inc.,
Sr. Notes,
B3 250 10.25%, 7/15/00........ 241,875
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------
Principal
Moody's Amount Value
Rating (000) Description (Note 1)
<S> <C> <C> <C>
- - ----------------------------------------------------------
Metals--(cont'd.)
Weirton Steel Corp.,
Sr. Notes,
B2 $ 750 10.875%, 10/15/99...... $ 757,500
Wheeling Pittsburgh
Corp.,
Sr. Notes,
B1 1,000 9.375%, 11/15/03....... 915,000
------------
10,262,562
------------
Paper & Packaging--11.8%
Aracruz Celulose, S.A.,
Bonds,
NR 250(D) 9.00%, 7/22/98,
(Brazil)............. 245,625
Container Corp. of
America,
Sr. Notes,
B2 950 10.75%, 5/1/02......... 999,875
B2 1,250 9.75%, 4/1/03.......... 1,256,250
Domtar, Inc.,
Sr. Notes,
Ba1 1,500 11.75%, 3/15/99........ 1,648,125
Fort Howard Paper
Corp.,
Sr. Notes,
B1 2,000 9.25%, 3/15/01......... 1,975,000
B1 200 8.25%, 2/1/02.......... 190,000
Sr. Sub. Notes,
B2 750 9.00%, 2/1/06.......... 705,000
Rainy River Forest
Products, Inc., Sr.
Sec'd. Notes,
Ba3 500 10.75%, 10/15/01....... 535,000
Repap New Brunswick
Inc.,
First Priority, Sr.
Sec'd. Notes,
Ba3 750 9.875%, 7/15/00........ 755,625
Second Priority, Sr.
Sec'd. Notes,
B2 750 10.625%, 4/15/05....... 761,250
Repap Wisconsin Inc.,
First Priority, Sr.
Sec'd. Notes,
B1 250 9.25%, 2/1/02.......... 240,625
S. D. Warren Co.
Sr. Sub. Notes,
B1 425 12.00%, 12/15/04....... 469,625
Stone Container Corp.,
Sr. Notes,
B1 $ 750 11.875%, 12/1/98....... $ 806,250
Sr. Sub. Notes,
B2 250 11.00%, 8/15/99........ 260,000
------------
10,848,250
------------
Retail--2.2%
Levitz Furniture Corp.,
Sr. Notes,
B2 500 12.375%, 4/15/97....... 500,000
Sr. Sub. Notes,
B3 1,250 9.625%, 7/15/03........ 993,750
Payless Cashways, Inc.,
Sr. Sub. Notes,
Ba3 750 9.125%, 4/15/03........ 577,500
------------
2,071,250
------------
Transportation--1.5%
Northwest Airlines,
Inc.,
Notes,
B2 750 8.625%, 8/1/96......... 757,500
USAir, Inc.,
Pass-through Certs.,
93-A,
B1 700 10.375%, 3/1/13........ 654,500
------------
1,412,000
------------
Utilities--3.9%
Cleveland Electric
Illuminating
Co., First Mtge.
Bonds,
Ba2 950 9.50%, 5/15/05, Ser.
B.................... 951,330
Long Island Lighting
Co., Deb.,
Ba1 500 8.90%, 7/15/19......... 495,535
Midland Funding Corp.,
Sec'd. Lease Oblig.
Bd.,
B2 500 11.75%, 7/23/05, Ser.
A.................... 525,000
Texas-New Mexico Pwr
Co.,
Sec. Deb.,
B1 1,500 10.75%, 9/15/03........ 1,590,000
------------
3,561,865
------------
Total corporate bonds
(cost $99,407,891)... 101,432,868
------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- - ----------------------------------------------------------
Principal
Moody's Amount Value
Rating (000) Description (Note 1)
<S> <C> <C> <C>
- - ----------------------------------------------------------
Foreign Government
Obligations(D)--3.2%
Argentina Republic,
B1 $ 1,250 8.375%, 12/20/03....... $ 929,688
NR 1,000 5.00%, 3/31/23......... 485,000
Republic of Brazil,
collateralized
increasing rate
bonds,
NR 750 6.00%, 9/15/13......... 398,906
NR 2,116 4.00%, 4/15/14......... 1,121,487
------------
Total foreign
government
obligations
(cost $2,977,473).... 2,935,081
------------
Shares Common Stock**--0.1%
-------
94,444 Triangle Wire & Cable,
Inc.
(cost $986,250)...... 118,055
------------
Preferred Stocks--0.8%
10,375 BCP Essex Holdings
Ser. A............... 264,562
4,700 California Federal
Bank................. 517,000
------------
Total preferred stocks
(cost $742,650)...... 781,562
------------
Total long-term
investments
(cost
$104,114,264)........ 105,267,566
------------
Principal
Amount
(000) SHORT-TERM INVESTMENTS--3.5%
-------
$ 3,210 Lanston (Aubrey G.) &
Co. Inc., repurchase
agreements, 6.40%,
dated 9/29/95, due
10/2/95 in the amount
of $3,211,712 (cost
$3,210,000; collater-
alized by $3,155,000
U.S. Treasury Notes,
6.75%, due 6/30/99;
approximate value
including accrued
interest-$3,839,240)... 3,210,000
------------
Total Investments--117.5%
(cost $107,324,264;
Note 3).............. 108,477,566
Liabilities in excess
of other
assets--(17.5%)...... (16,179,179)
------------
Net Assets--100%....... $ 92,298,387
------------
------------
</TABLE>
- - ---------------
* --Standard & Poor's rating.
** --Non-income producing securities.
NR --Not rated by Moody's or Standard & Poor's.
(D) --US$ Denominated Foreign Bonds.
PIK --Payment in Kind.
- - ----------------------------------------------------------
THE HIGH YIELD PLUS FUND, INC.
Statement of Assets and Liabilities
September 30, 1995
(Unaudited)
- - ----------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments, at value (cost
$107,324,264)........................ $108,477,566
Cash................................... 4,330
Interest receivable.................... 2,558,084
Receivable for investments sold........ 983,457
Deferred expenses and other assets..... 83,146
------------
Total assets......................... 112,106,583
------------
Liabilities
Loan payable (Note 4).................. 16,000,000
Payable for investments purchased...... 2,530,961
Dividends payable...................... 857,758
Accrued expenses....................... 183,610
Loan interest payable (Note 4)......... 167,895
Advisory fee payable................... 38,155
Administration fee payable............. 15,262
Deferred director's fees............... 14,555
------------
Total liabilities.................... 19,808,196
------------
Net Assets............................. $ 92,298,387
------------
------------
Net assets were comprised of:
Common stock, at par................. $ 110,872
Paid-in capital in excess of par..... 101,889,328
------------
102,000,200
Undistributed net investment
income............................... 592,389
Accumulated net realized loss on
investments.......................... (11,447,504)
Net unrealized appreciation on
investments.......................... 1,153,302
------------
Net assets, September 30, 1995....... $ 92,298,387
------------
------------
Net asset value per share
($92,298,387 / 11,087,190 shares of
common stock issued and
outstanding)......................... $8.32
------------
------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
8
<PAGE>
<PAGE>
- - ----------------------------------------------------------
THE HIGH YIELD PLUS FUND, INC.
Statement of Operations
Six Months Ended September 30, 1995
(Unaudited)
- - ----------------------------------------------------------
<TABLE>
Net Investment Income
<S> <C>
Income
Interest.............................. $ 5,831,128
Dividends............................. 35,516
------------
5,866,644
------------
Expenses
Investment advisory fee............... 228,889
Administration fee.................... 91,556
Custodian's fees and expenses......... 40,000
Reports to shareholders............... 27,000
Transfer agent's fees and expenses.... 24,000
Legal fees and expenses............... 19,000
Insurance expense..................... 16,000
Audit fee............................. 15,000
Directors fees........................ 12,000
Miscellaneous......................... 7,534
------------
Total operating expenses............ 480,979
Loan interest expense (Note 4)........ 630,322
------------
Total expenses...................... 1,111,301
------------
Net investment income................... 4,755,343
------------
Realized and Unrealized
Gain on Investments
Net realized gain on investment
transactions.......................... 22,180
Net change in unrealized appreciation on
investments........................... 5,074,798
------------
Net gain on investments................. 5,096,978
------------
Net Increase in Net Assets Resulting
from Operations......................... $ 9,852,321
------------
------------
</TABLE>
- - ----------------------------------------------------------
THE HIGH YIELD PLUS FUND, INC.
Statement of Cash Flows
Six Months Ended September 30, 1995
(Unaudited)
- - ----------------------------------------------------------
<TABLE>
<S> <C>
Increase (Decrease) in Cash
Cash flows from operating activities
Interest and dividends received
(excluding
discount amortization of
$423,303)............................. $ 5,482,893
Operating expenses paid............... (513,120)
Loan interest and commitment fee
paid................................ (847,383)
Purchases of short-term portfolio
investments, net.................... 305,000
Purchases of long-term portfolio
investments......................... (31,203,421)
Proceeds from disposition of long-term
portfolio investments............... 33,935,604
Deferred expenses and other assets.... 16,043
------------
Net cash from operating activities.... 7,175,616
------------
Cash used for financing activities
Net proceeds from decrease in notes
payable............................. (3,000,000)
Cash dividends paid (excluding
reinvestment of dividends of
$393,310)........................... (4,171,488)
------------
Net cash used for financing
activities.......................... (7,171,488)
------------
Net increase in cash.................. 4,128
Cash at beginning of period........... 202
------------
Cash at end of period................. $ 4,330
------------
------------
Reconciliation of Net Increase in Net Assets
to Net Cash from Operating Activities
Net increase in net assets resulting
from operations....................... $ 9,852,321
------------
Decrease in investments................. 2,423,177
Net realized gain on investment
transactions.......................... (22,180)
Net change in unrealized appreciation of
investments........................... (5,074,798)
Increase in receivable for investments
sold.................................. (684,238)
Decrease in interest receivable......... 39,552
Decrease in deferred expenses and
other assets.......................... 16,043
Increase in payable for investments
purchased............................. 874,941
Decrease in accrued expenses and other
liabilities........................... (249,202)
------------
Total adjustments..................... (2,676,705)
------------
Net cash from operating
activities.......................... $ 7,175,616
------------
------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
9
<PAGE>
<PAGE>
- - ----------------------------------------------------------
THE HIGH YIELD PLUS FUND, INC.
Statement of Changes in Net Assets
(Unaudited)
- - ----------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year
September Ended
Increase (Decrease) 30, March 31,
in Net Assets 1995 1995
----------- -----------
<S> <C> <C>
Operations
Net investment income..... $ 4,755,343 $ 9,564,828
Net realized gain (loss)
on investment
transactions............ 22,180 (4,961,981)
Net change in unrealized
appreciation/depreciation
of investments.......... 5,074,798 (906,562)
----------- -----------
Net increase in net assets
resulting from
operations.............. 9,852,321 3,696,285
Dividends paid to
shareholders from net
investment income......... (4,651,637) (9,430,522)
Value of Fund shares issued
to shareholders in
reinvestment of
dividends................. 393,310 740,429
----------- -----------
Total increase (decrease)... 5,593,994 (4,993,808)
Net Assets
Beginning of period......... 86,704,393 91,698,201
----------- -----------
End of period............... $92,298,387 $86,704,393
----------- -----------
----------- -----------
</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 (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
through investment in publicly or privately offered high yield debt securities
rated in the medium to lower categories by recognized rating services or
non-rated 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 The following is a summary of
significant accounting policies 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 mean between the
most recently quoted bid and asked prices provided by principal market makers
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.
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.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian take possession of the
underlying collateral securities, the value of which exceeds the principal
amount of the repurchase transaction including accrued interest. If the seller
defaults, and the value of the collateral declines or if bankruptcy proceedings
are commenced with respect to the seller
See Notes to Financial Statements.
10
<PAGE>
<PAGE>
of the security, realization of the collateral by the Fund may be delayed or
limited.
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 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 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.
Federal Income 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
Mutual Fund Management, Inc. (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 Purchases and sales of invest-
Securities ment securities, other than
short-term investments, for the six months ended
September 30, 1995, aggregated $32,078,362 and $34,619,842, respectively.
During the six months ended September 30, 1995, the Fund entered into
$1,397,058 of securities transactions on a principal basis with Prudential
Securities Incorporated, an affiliate of the Administrator.
The cost basis of investments for federal income tax purposes was
substantially the same as for financial reporting purposes, and, accordingly,
as of September 30, 1995, net unrealized appreciation for federal income tax
purposes was $1,153,302 (gross unrealized appreciation--$3,670,944; gross
unrealized depreciation--$2,517,642).
For federal income tax purposes, the Fund has a capital loss carryforward as
of March 31, 1995 of approximately $8,906,000 of which $6,507,000 expires in
2000 and $2,399,000 expires in 2003. 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 agree-
ment with an unaffiliated lender. The maximum
commitment under this agreement is $30,000,000. 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, 1995 was $16,428,571 at
a
weighted average interest rate of 7.65%. The maximum face amount of borrowings
outstanding at any month end during the six months ended September 30, 1995 was
$20,000,000. The current borrowings of $16,000,000 (at a weighted average
interest rate of 7.00%) mature throughout the period from October 26, 1995 to
February 22, 1996.
The Fund has paid commitment fees at an annual rate of .25 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, 1995 and the fiscal year ended March 31,
1995, the Fund
11
<PAGE>
<PAGE>
issued 47,750 and 92,154 shares in connection with reinvestment of dividends,
respectively.
Note 6. Dividends On October 16, 1995 the
Board of Directors of the Fund declared a dividend
of $0.07 per share payable on November 10, 1995, to shareholders of record on
October 31, 1995.
Note 7. Quarterly Data
<TABLE>
<CAPTION>
Net increase
Net realized and (decrease)
unrealized in net assets
Net investment
gains (losses) on resulting from
Total income
investments operations
Quarterly period ended income Amount Per share
Amount Per share Amount Per share
<S> <C> <C> <C> <C>
<C> <C> <C>
- - ------------------------- ---------- ------------------------
- - -------------------------- --------------------------
June 30, 1993 $2,878,196 $2,486,023 $ .23 $
3,090,065 $ .28 $ 5,576,088 $ .51
September 30, 1993 2,850,368 2,424,730 .22
(371,379) (.03) 2,053,351 .19
December 31, 1993 2,910,043 2,386,055 .22
3,568,620 .33 5,954,675 .55
March 31, 1994 3,142,078 2,536,997 .23
(8,000,128) (.73) (5,463,131) (.50)
June 30, 1994 2,933,382 2,346,706 .22
(2,820,555) (.26) (473,849) (.04)
September 30, 1994 2,945,636 2,292,398 .21
(1,179,941) (.11) 1,112,457 .10
December 31, 1994 3,096,863 2,494,098 .22
(3,550,452) (.32) (1,056,354) (.10)
March 31, 1995 2,970,090 2,431,626 .22
1,682,405 .15 4,114,031 .37
June 30, 1995 2,991,367 2,400,272 .22
3,820,040 .34 6,220,312 .56
September 30, 1995 2,875,277 2,355,071 .21
1,276,938 .12 3,632,009 .33
<CAPTION>
Dividends
and Share
distributions price
Quarterly period ended Amount Per share High Low
<S> <C> <C> <C> <C>
- - ------------------------- ------------------------ ------------
June 30, 1993 $2,290,592 $.210 $9 $8 1/2
September 30, 1993 2,295,791 .210 9 1/8 8 1/2
December 31, 1993 2,298,401 .210 9 8 3/8
March 31, 1994 2,353,581 .215 9 1/4 8 1/4
June 30, 1994 2,386,034 .218 8 5/8 7 5/8
September 30, 1994 2,390,230 .218 8 3/8 7 3/4
December 31, 1994 2,339,889 .212 7 3/4 7 1/4
March 31, 1995 2,314,369 .210 8 1/8 8
June 30, 1995 2,320,211 .210 8 5/8 8 1/4
September 30, 1995 2,331,426 .210 8 3/4 8 1/4
</TABLE>
12
<PAGE>
<PAGE>
- - --------------------------------------------------------------------------------
THE HIGH YIELD PLUS FUND, INC.
Financial Highlights
(Unaudited)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Year Ended March 31,
September 30,
- - -----------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE: 1995 1995 1994
1993 1992 1991
------------- -------------
- - ------------- ------------- ------------- -------------
<S> <C> <C> <C>
<C> <C> <C>
Net asset value, beginning of
period.......................... $ 7.85 $ 8.38 $ 8.48
$ 7.91 $ 6.80 $ 7.22
------------- -------------
- - ------------- ------------- ------------- -------------
Income from investment operations
Net investment income............. .43 .87 .90
.89 .87 .99
Net realized and unrealized gain
(loss) on investments........... .46 (.54) (.15)
.52 1.11 (.41)
------------- -------------
- - ------------- ------------- ------------- -------------
Total from investment
operations...................... .89 .33 .75
1.41 1.98 .58
------------- -------------
- - ------------- ------------- ------------- -------------
Less dividends and distributions
Dividends from net investment
income.......................... (.42) (.86) (.85)
(.84) (.87) (.99)
Distributions in excess of net
investment income............... -- -- --
-- -- (.01)
------------- -------------
- - ------------- ------------- ------------- -------------
Total dividends and
distributions................... (.42) (.86) (.85)
(.84) (.87) (1.00)
------------- -------------
- - ------------- ------------- ------------- -------------
Net asset value, end of period.... $ 8.32 $ 7.85 $ 8.38
$ 8.48 $ 7.91 $ 6.80
------------- -------------
- - ------------- ------------- ------------- -------------
------------- -------------
- - ------------- ------------- ------------- -------------
Market price per share, end of
period.......................... $ 8.625 $ 8.00 $ 8.375
$ 8.875 $ 7.75 $ 6.50
------------- -------------
- - ------------- ------------- ------------- -------------
------------- -------------
- - ------------- ------------- ------------- -------------
TOTAL INVESTMENT RETURN(b)........ 13.36% 6.33% 3.90%
27.02% 34.28% 9.14%
------------- -------------
- - ------------- ------------- ------------- -------------
------------- -------------
- - ------------- ------------- ------------- -------------
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period (000
omitted)........................ $92,298 $86,704 $91,698
$92,422 $85,742 $73,656
Average net assets (000
omitted)........................ $91,113 $87,734 $96,962
$88,142 $80,703 $70,661
Ratio to average net assets:
Expenses, before loan interest,
commitment fees and
nonrecurring expenses......... 1.05%(a) 1.11% 1.12%
1.20% 1.28% 1.28%
Total expenses.................. 2.43%(a) 2.71% 2.01%
2.03% 2.26% 2.21%
Net investment income........... 10.41%(a) 10.90% 10.15%
10.94% 11.69% 15.23%
Portfolio turnover rate........... 31% 47% 100%
82% 46% 38%
Total debt outstanding at end of
period (000 omitted)............ $16,000 $19,000 $28,000
$15,000 $15,000 $6,000
Asset coverage(c)................. $6,769 $5,563 $4,275
$7,161 $6,716 $13,276
</TABLE>
- - ---------------
(a) Annualized
(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) Per $1,000 of debt outstanding.
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 periods 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.
13
<PAGE>
<PAGE>
SUPPLEMENTAL PROXY INFORMATION
The Annual Meeting of Shareholders of The High Yield Plus Fund, Inc. (The
``Fund'') was held on July 31, 1995 at the offices of Prudential Securities
Incorporated, One Seaport Plaza, New York, New York. The meeting was held for
the following purposes:
(1) To elect the following director to serve as follows:
<TABLE>
<CAPTION>
Director Class Term Expiring
------------------ ------ -------- ---------
Daniel S. Ahearn I 3 years 1998
<S> <C> <C> <C> <C>
Directors whose term of office continued beyond this meeting are Edward
D. Beach, Thomas T.
Mooney and Robin B. Smith.
To ratify the selection of Deloitte & Touche LLP as independent public
accountants for the
(2) year ending March 31, 1996.
(3) To transact such other business as may properly come before the meeting
or any adjournment
thereof.
</TABLE>
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
Director/Auditor Votes for Votes against Votes withheld
Abstentions
------------------- ---------- -------------- ---------------
------------
<S> <C> <C> <C> <C>
<C>
(1) Daniel S. Ahearn 8,862,409 -- 135,239
--
(2) Deloitte & Touche
LLP 8,885,332 44,117 --
132,999
(3) There was no other business voted upon at the Annual Meeting of
Shareholders.
</TABLE>
14
<PAGE>
<PAGE>
Directors
Daniel S. Ahearn
Edward D. Beach
Thomas T. Mooney
Robin B. Smith
Investment Adviser
Wellington Management Company
75 State Street
Boston, Massachusetts 02109
Administrator
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, New York 10292
Custodian and Transfer Agent
State Street Bank and Trust Company
One Heritage Drive
North Quincy, Massachusetts 02171
Independent Accountants
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 M Street, 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, 1995,
were not audited and, accordingly, no opinion is expressed on them.
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.
One Seaport Plaza
New York, NY 10292
For information
call toll-free
(800) 451-6788
