<PAGE>
The
High Yield
Plus Fund,
Inc.
SEMI
ANNUAL
REPORT
September 30, 1999
<PAGE>
Letter To Shareholders October 15, 1999
Dear Shareholder:
While the high yield market showed signs of strength during
the first part of the six month period, that strength quickly
ebbed during the summer, and it is fair to say that the high
yield market experienced a difficult period from June through
September. The last several months of the semi-annual period
have been marked by poor demand for high yield securities,
as reflected in redemptions from open-end mutual funds,
generally weak liquidity in fixed income markets, and
escalating credit problems, as evidenced by a sharply
higher rate of default. With respect to the default rate,
we would note that the par default rate, as tracked by
Credit Suisse First Boston is running at 2.8% through
August 31, 1999. Annualized, this would equate to a
rate of 4.2%. This rate would be up significantly
from last year's rate of 1.1%. Default rates for
the overall market last peaked in the 1990-1991 time
frame, when they ran at 8.0% and 9.3% respectively.
Despite the rapid increase in the market's default rate, we
see few similarities between the 1990 and 1999 markets. At
the start of the decade, the US economy was in recession.
(Leveraged companies tend to be more damaged by recession
given their large, fixed, high cost debt.) More importantly,
during the 1989--1990 timeframe, commercial banks, particularly
the money center banks, were encountering severe credit problems
and many were capital constrained. The FDIC acted to limit
lending to "highly leveraged transactions" effectively
restricting lending to high yield companies. This broad
lack of financing proved fatal to many issuers already
struggling with weak economic conditions. (In addition,
the public debt markets and the insurance sector were also
capital constrained at the time.)
Today the US economy is firm, if not vibrant. While
commercial banks may be less amenable to lending to certain
leveraged sectors such as energy, finance and healthcare,
these trends are on the margin and do not reflect regulatory
prohibitions. In fact, most banks today are well capitalized.
Perhaps more comforting, the global economy appears to be
strengthening. Going forward, we expect that a stronger Asia
and Europe will provide positive momentum for some of the
more cyclical industries that have been hurt by commodity
weakness over the last several years. This may give these
issuers a spell of relief and also reopen their access to
capital. (We would argue that over the last two years, the
extreme recession in Asia and a sluggish Europe had a much
more deleterious effect on US industrial companies than commonly
supposed; most industries today are irreversibly global in nature.)
While the high yield market appears to have priced in a fairly
significant default rate, we believe that the overall default
rate may moderate over the next year assuming the global economy
progresses as expected. Given these observations, we believe
that the market's weak technical conditions, exacerbated by
credit fears, have created some compelling valuations.
1
<PAGE>
Fund Performance.
The Fund's total returns for periods ended September 30,
1999 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 27 closed-end
high yield leveraged funds; we would note that the degree
of leverage varies substantially amongst the funds in the
group. In addition, we have provided the returns of the
First Boston Global High Yield Index, an unmanaged Trader
Priced Portfolio constructed to mirror the high yield debt
market including fixed income, non-convertible, and U.S.
dollar denominated securities that must be rated BB or
below by Moody's or S&P, which does not contain any
leverage. The Fund's performance over the year benefited
from its exposure to certain Yankee issues (US$ foreign
issuers) that appreciated during the year, following upon
extreme weakness a year ago.
<TABLE>
TOTAL RETURNS
For the Periods Ended September 30, 1999
<CAPTION>
6 Months 12 Months 24 Months
<S> <C> <C> <C>
High Yield Plus Fund (NAV)1 (1.7)% 10.2% (2.4)%
Lipper CEHY -- Leveraged (2.0) 3.4 (1.5)
First Boston High Yield (0.5)% 3.9 -1.7
</TABLE>
1 Represents NAV-basis performance calculations as provided by
Lipper Analytical Services, Inc. Past performance is no guarantee
of future results.
During the period, the Fund was not immune to defaults. (Any
default experience is included in the Fund's returns above.)
While our experience with several defaults during the period
was clearly disappointing, we would observe that our strategy
of investing with a high degree of diversification, thereby
limiting exposure to any single issuer, mitigates some degree
of default risk. Because the market has been extremely risk
averse as of late, valuations of "troubled" securities are
perhaps unduly pressured. In some instances, this may create
attractive investment opportunities. Our challenge is always
to balance potential return relative to underlying risk.
The Fund is leveraged and has a $50 million credit line provided
by BankBoston and State Street Bank and Trust. As of September
30, 1999, the Fund had drawn $40 million on the line. Borrowings
fluctuate depending on investment opportunities. As of September
30, 1999, the Fund's shares were priced at $7.25. This price
reflected a 6.5% premium to the Fund's net asset value of
$6.81 per share. The Fund's monthly dividend rate of $0.0725
per share equates to an annualized yield of 12.0% relative to
the 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, 1999
(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--136.3%
CORPORATE BONDS--130.1%
- ------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--3.1%
Argo-Tech Corp., Sr. Sub. Notes B3 8.625% 10/01/07 $ 990 $ 846,450
L-3 Communications Corp., Sr. Sub. Notes B2 8.50 5/15/08 750 716,250
Loral Space & Communications Ltd., Sr. Notes B1 9.50 1/15/06 1,000 852,500
Moog, Inc., Sr. Sub. Notes, Ser. B B1 10.00 5/01/06 750 761,250
------------
3,176,450
- ------------------------------------------------------------------------------------------------------------------------------
Automotive--4.4%
Accuride Corp., Sr. Sub. Notes B2 9.25 2/01/08 1,250 1,184,375
Exide Corp., Sr. Notes B1 10.00 4/15/05 850 841,500
Federal-Mogul Corp., Sr. Notes Ba2 8.80 4/15/07 500 494,765
Johnstown America Industries, Inc., Sr. Sub. Notes B2 11.75 8/15/05 1,000 1,020,000
Key Plastics, Inc., Sr. Sub. Notes, Ser. B B3 10.25 3/15/07 500 415,000
LDM Technologies, Inc., Sr. Sub. Notes, Ser. B B3 10.75 1/15/07 695 618,550
------------
4,574,190
- ------------------------------------------------------------------------------------------------------------------------------
Building & Related Industries--1.4%
Anthony Crane Rental L.P., Sr. Notes B3 10.375 8/01/08 500 450,000
Nortek, Inc.,
Sr. Notes, Ser. B B1 9.25 3/15/07 350 340,375
Sr. Notes B1 8.875 8/01/08 750 710,625
------------
1,501,000
- ------------------------------------------------------------------------------------------------------------------------------
Cable--7.2%
Adelphia Communications Corp.,
Sr. Notes B1 9.875 3/01/07 650 663,000
Sr. Notes, Ser. B B1 8.375 2/01/08 750 703,125
Sr. Notes, Ser. B B1 7.75 1/15/09 250 226,250
Cablevision S.A., Sr. Notes B1 13.75 5/01/09 500 465,000
Century Communications Corp., Sr. Disc. Notes B1 Zero 3/15/03 225 157,500
Charter Communications Holdings, Sr. Notes B2 8.25 4/01/07 2,000 1,865,000
Insight Midwest L.P., Sr. Notes B1 9.75 10/01/09 345 345,000
Multicanal S.A.,
Sr. Notes, Ser. E B1 13.125 4/15/09 450 419,625
Sr. Notes B1 10.50 2/01/07 500 397,500
Sr. Notes B1 10.50 4/15/18 230 174,800
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments as
of September 30, 1999
(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)
NTL, Inc., Sr. Notes, Ser. B B3 10.00% 2/15/07 $ 750 $ 768,750
Optel, Inc., Sr. Notes Caa3 11.50 7/01/08 1,250 800,000
Rogers Communications, Inc., Sr. Notes B2 8.875 7/15/07 500 512,500
------------
7,498,050
- ------------------------------------------------------------------------------------------------------------------------------
Chemicals--6.6%
Acetex Corp., Sr. Sec. Notes (Canada) B3 9.75 10/01/03 750 (d) 660,000
ARCO Chemical Co. Ba3 9.375 12/15/05 1,000 980,000
ARCO Chemical Co. Ba3 9.80 2/01/20 1,250 1,187,500
Huntsman ICI Chemicals LLC, Sr. Sub. Notes B2 10.125 7/01/09 805 790,913
Lyondell Chemical Co., Sr. Sub. Notes B2 10.875 5/01/09 655 658,275
PCI Chemicals Canada, Inc., Sr. Notes, Ser. B (Canada) B2 9.25 10/15/07 750 (d) 562,500
Philipp Brothers Chemicals, Inc., Sr. Sub. Notes B3 9.875 6/01/08 500 440,000
Pioneer Americas Acquisition Corp., Sr. Notes, Ser. B B2 9.25 6/15/07 15 11,550
Royster-Clark, Inc., First Mtge. Notes B2 10.25 4/01/09 490 445,900
Sterling Chemical Holdings, Inc.,
Sr. Sub. Notes Caa3 11.75 8/15/06 270 162,000
Sr. Sub. Notes Caa3 11.25 4/01/07 625 362,500
Texas Petrochemicals Corp., Sr. Sub. Notes, Ser. B B3 11.125 7/01/06 750 630,000
------------
6,891,138
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Goods & Services--7.5%
Allied Waste North America, Inc.,
Sr. Notes Ba3 7.625 1/01/06 750 667,500
Sr. Sub. Notes B2 10.00 8/01/09 750 684,375
Bell Sports, Inc., Sr. Sub. Notes B3 11.00 8/15/08 670 676,700
Corning Consumer Prod. Co., Sr. Sub. Notes B3 9.625 5/01/08 1,350 1,066,500
Evenflo Co., Inc., Sr. Notes, Ser. B B2 11.75 8/15/06 500 490,000
Pillowtex Corp., Sr. Sub. Notes, Ser. B B3 9.00 12/15/07 750 465,000
Polaroid Corp., Sr. Notes Ba3 11.50 2/15/06 905 944,594
Revlon Worldwide, Sr. Disc. Notes, Ser. B Caa3 Zero 3/15/01 750 412,500
Simmons Co., Sr. Sub. Notes B3 10.25 3/15/09 500 492,500
True Temper Sports, Inc., Sr. Sub. Notes B3 10.875 12/01/08 1,000 950,000
Westpoint Stevens, Inc., Sr. Notes Ba3 7.875 6/15/08 1,000 900,000
------------
7,749,669
- ------------------------------------------------------------------------------------------------------------------------------
Containers--2.5%
BWay Corp., Sr. Sub. Notes, Ser. B B2 10.25 4/15/07 750 750,000
Consumers Packaging, Inc., Sr. Notes B1 9.75 2/01/07 730 657,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as
of September 30, 1999
(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>
- ------------------------------------------------------------------------------------------------------------------------------
Containers (cont'd.)
Silgan Holdings, Inc.,
Sr. Sub. Deb. B1 9.00% 6/01/09 $ 1,000 $ 960,000
Sub. Deb., PIK B1 13.25 7/15/06 200 218,000
------------
2,585,000
- ------------------------------------------------------------------------------------------------------------------------------
Energy & Related Goods & Services--3.4%
Abraxas Petroleum Corp., Sr. Notes, Ser. B Caa2 11.50 11/01/04 500 345,000
Clark R & M, Inc., Sr. Notes Ba3 8.625 8/15/08 500 437,500
Frontier Oil Corp., Sr. Notes B1 9.125 2/15/06 750 712,500
Kelley Oil & Gas Corp., Sr. Sub. Notes, Ser. B Ca 10.375 10/15/06 350 171,500
P & L Coal Holdings Corp., Sr. Notes Ba3 8.875 5/15/08 1,000 972,500
RAM Energy, Inc., Sr. Notes Caa1 11.50 2/15/08 635 295,275
RBF Finance Co., Sr. Sec. Notes Ba3 11.00 3/15/06 370 388,500
Tatneft Finance, Gtd. Bonds (Russia) Ca 9.00 10/29/02 500 (d) 242,500
------------
3,565,275
- ------------------------------------------------------------------------------------------------------------------------------
Entertainment--1.1%
Carmike Cinemas, Inc., Sr. Sub. Notes, Ser. B B2 9.375 2/01/09 750 690,000
Loews Cineplex Entertainment Corp., Sr. Sub. Notes B3 8.875 8/01/08 500 445,000
------------
1,135,000
- ------------------------------------------------------------------------------------------------------------------------------
Financial Services--5.1%
Bangkok Bank Public Co., Deb. (Thailand) B+(c) 8.75 3/15/07 1,000 (d) 799,300
FirstFed Financial Corp., Sr. Notes B2 11.75 10/01/04 500 505,000
Fugi JGB Investment LLC Ba1 9.87 12/31/49 500 505,000
Ocwen Federal Bank, Sub. Deb. B1 12.00 6/15/05 500 470,000
Olympic Financial, Ltd., Sr. Notes B3 11.50 3/15/07 750 (e) 562,500
Thai Farmers Bank Ltd., Sub. Notes (Thailand) Ba1 8.25 8/21/16 1,500 (d) 997,500
Western Financial Svgs. Bank, Sub. Cap. Deb. B2 8.875 8/01/07 1,640 1,451,400
------------
5,290,700
- ------------------------------------------------------------------------------------------------------------------------------
Food & Lodging--3.3%
Del Monte Foods Co., Sr. Disc. Notes, Zero Coupon (until
12/15/02) Caa1 12.50 12/15/07 1,137 835,695
John Q. Hammons Hotels., First Mtge. Bonds B2 8.875 2/15/04 1,500 1,372,500
Purina Mills, Inc., Sr. Sub. Notes Ca 9.00 3/15/10 500 (b) 115,000
Vlasic Foods International, Inc., Sr. Sub. Notes B2 10.25 7/01/09 1,250 1,131,250
------------
3,454,445
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5
<PAGE>
Portfolio of Investments as
of September 30, 1999
(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>
- ------------------------------------------------------------------------------------------------------------------------------
Gaming--2.4%
Hollywood Casino Corp., Sr. Sub. Notes B3 11.25% 5/01/07 $ 1,000 $ 1,007,500
Lady Luck Gaming Corp., First Mtge. Notes B2 11.875 3/01/01 1,000 1,010,000
Venetian Casino Resort LLC, First Mtge. Notes B3 12.25 11/15/04 600 474,000
------------
2,491,500
- ------------------------------------------------------------------------------------------------------------------------------
General Industrial--8.3%
Anchor Glass Container Corp., First Mtge. Notes B2 11.25 4/01/05 685 685,000
AXA S.A. De CV, Gtd. Notes (Mexico) B1 9.00 8/04/04 850 (d) 714,000
Clark Material Handling Co., Sr. Notes, Ser. D B1 10.75 11/15/06 1,500 1,200,000
Grove Worldwide LLC, Sr. Sub. Notes Caa1 9.25 5/01/08 595 285,600
Henry Co., Sr. Notes, Ser. B B3 10.00 4/15/08 1,000 660,000
International Wire Group, Inc., Sr. Sub. Notes, Ser. B B3 11.75 6/01/05 750 766,875
IT Group, Inc., Sr. Sub. Notes B3 11.25 4/01/09 500 472,500
Neenah Corp., Sr. Sub. Notes, Ser. B B3 11.125 5/01/07 750 690,000
Numatics, Inc., Sr. Sub. Notes, Ser. B B3 9.625 4/01/08 375 315,000
Terex Corp., Sr. Sub. Notes, Ser. D B2 8.875 4/01/08 750 705,000
United Rentals, Inc., Sr. Sub. Notes B1 9.00 4/01/09 1,500 1,410,000
WESCO Distribution, Inc., Sr. Sub. Notes B2 9.125 6/01/08 750 705,000
------------
8,608,975
- ------------------------------------------------------------------------------------------------------------------------------
Grocery Stores--1.0%
Homeland Stores, Inc., Sr. Notes NR 10.00 8/01/03 1,250 1,037,500
- ------------------------------------------------------------------------------------------------------------------------------
Health Care--8.0%
Alaris Medical Systems, Inc., Sr. Sub. Notes B3 9.75 12/01/06 850 773,500
Alaris Medical, Inc., Sr. Disc. Notes Caa1 11.125 8/01/08 750 386,250
Beverly Enterprises, Inc., Sr. Notes Ba3 9.00 2/15/06 750 645,937
Columbia/HCA Healthcare Corp., Notes Ba2 7.25 5/20/08 720 630,029
Conmed Corp., Sr. Sub. Notes B3 9.00 3/15/08 750 690,000
DJ Orthopedics LLC, Sr. Sub. Notes B3 12.625 6/15/09 1,250 1,178,125
Mediq, Inc., Sr. Sub. Notes B3 11.00 6/01/08 1,250 812,500
Packard Bioscience Co., Sr. Sub. Notes, Ser. B B3 9.375 3/01/07 250 230,000
Tenet Healthcare Corp., Sr. Sub. Notes, Ser. B Ba3 8.125 12/01/08 850 775,625
Triad Hospitals Holdings, Inc., Sr. Sub. Notes B3 11.00 5/15/09 855 846,450
Universal Hospital Svcs., Sr. Notes B3 10.25 3/01/08 1,750 1,347,500
------------
8,315,916
- ------------------------------------------------------------------------------------------------------------------------------
Home Building & Real Estate--6.6%
Beazer Homes USA, Inc., Sr. Notes Ba3 8.875 4/01/08 1,250 1,125,000
D.R. Horton, Inc., Sr. Notes Ba1 8.00 2/01/09 750 678,750
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6
<PAGE>
Portfolio of Investments as
of September 30, 1999
(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 Building & Real Estate (cont'd.)
Kaufman & Broad Home Corp., Sr. Sub. Notes B1 9.625% 11/15/06 $ 250 $ 251,250
LNR Property Corp., Sr. Sub. Notes B1 10.50 1/15/09 750 738,750
Presley Companies, Sr. Notes Caa3 12.50 7/01/01 1,000 835,000
Ryland Group, Inc., Sr. Sub. Notes B1 8.25 4/01/08 750 690,000
Standard Pacific Corp., Sr. Notes Ba2 8.50 6/15/07 750 708,750
U.S. Home Corp., Sr. Sub. Notes B1 8.88 8/15/07 500 450,000
Webb Delaware Corp., Sr. Sub. Deb. B2 10.25 2/15/10 1,500 1,395,000
------------
6,872,500
- ------------------------------------------------------------------------------------------------------------------------------
Media & Communications--11.5%
Ackerley Group, Inc., Sr. Sub. Notes, Ser. B B2 9.00 1/15/09 750 716,250
Big Flower Press Holdings, Inc., Sr. Sub. Notes B2 8.625 12/01/08 750 720,000
Echostar DBS Corp., Notes B2 9.25 2/01/06 1,000 987,500
Fox/Liberty Networks LLC,
Sr. Disc. Notes, Zero Coupon (until 8/15/02) Ba1 9.75 8/15/07 1,000 785,000
Sr. Notes Ba1 8.875 8/15/07 260 262,600
Globo Comunicacoes e Participacoes S.A., Notes (Brazil) B2 10.50 12/20/06 1,750 (d) 1,308,125
Innova S de R.L., Sr. Notes (Mexico) B3 12.875 4/01/07 1,750 (d) 1,426,250
Lin Holdings Corp., Sr. Disc. Notes, Zero Coupon (until
3/1/03) B3 10.00 3/01/08 1,350 884,250
Sullivan Graphics, Inc., Sr. Sub. Notes Caa1 12.75 8/01/05 1,000 1,020,000
Sun Media Corp., Sr. Sub. Notes B1 9.50 5/15/07 500 512,500
TV Azteca S.A. de CV, (Brazil)
Gtd. Sr. Notes B1 10.50 2/15/07 1,250 (d) 962,500
Gtd. Sr. Notes, Ser. A B1 10.125 2/15/04 500 (d) 405,000
Von Hoffmann Press, Inc., Sr. Sub. Notes B3 10.875 5/15/07 700 686,000
World Color Press, Inc., Sr. Sub. Notes Baa3 8.375 11/15/08 1,250 1,237,500
------------
11,913,475
- ------------------------------------------------------------------------------------------------------------------------------
Metals, Mining & Related--6.3%
AK Steel Corp., Sr. Notes Ba2 9.125 12/15/06 500 497,500
Ameristeel Corp., Sr. Notes Ba3 8.75 4/15/08 500 497,500
Bayou Steel Corp., First Mtge. Notes B1 9.50 5/15/08 1,250 1,181,250
Bulong Operation Pty Ltd., Sr. Notes B3 12.50 12/15/08 315 316,575
Companhia Vale do Rio Doce., Notes (Brazil) NR 10.00 4/02/04 750 (d) 742,500
CSN Iron S.A., Gtd. Notes (Brazil) B2 9.125 6/01/07 750 (d) 560,625
Freeport-McMoran Copper & Gold., Sr. Notes B3 7.50 11/15/06 480 355,200
Kaiser Aluminum & Chemical Corp., Sr. Notes, Ser. B B1 10.875 10/15/06 750 757,500
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7
<PAGE>
Portfolio of Investments as
of September 30, 1999
(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, Mining & Related (cont'd.)
Weirton Steel Corp., Sr. Notes B2 11.375% 7/01/04 $ 1,250 $ 1,212,500
Wells Aluminum Corp., Sr. Notes, Ser. B B2 10.125 6/01/05 440 422,400
------------
6,543,550
- ------------------------------------------------------------------------------------------------------------------------------
Paper & Packaging--10.9%
American Pad & Paper Co., Sr. Sub. Notes, Ser. B Caa1 13.00 11/15/05 350 112,000
APP Int'l. Finance Co., (Indonesia)
Sec. Notes Caa1 11.75 10/01/05 500 (d) 320,000
Sec. Notes Caa1 3.50 4/30/03 750 (d) 366,600
Aracruz Celulose S.A., Notes (Brazil) B2 10.375 1/31/02 1,750 (d) 1,736,875
Bahia Sul Celulose S.A., (Brazil) NR 10.625 7/10/04 1,350 (d) 1,242,000
Container Corp. of America,
Sr. Notes B2 9.75 4/01/03 500 512,500
Sr. Notes, Ser. B B2 10.75 5/01/02 1,000 1,040,000
Doman Industries Ltd., (Canada)
Sr. Notes Caa1 8.75 3/15/04 1,250 (d) 887,500
Sr. Sec. Notes B3 12.00 7/01/04 1,000 (d) 1,005,000
Klabin Fabricadora de Papel e Celulose S.A., Gtd. Notes
(Brazil) NR 11.00 8/12/04 500 (d) 485,000
Pacifica Papers, Inc., Sr. Notes B1 10.00 3/15/09 750 761,250
Packaging Corp. of America, Sr. Sub. Notes B3 9.625 4/01/09 940 947,050
Pindo Deli Finance Mauritius Ltd., Gtd Sr. Notes
(Indonesia) Caa1 10.75 10/01/07 1,750 (d) 936,250
Repap New Brunswick, Inc., Sr. Notes (Canada) Caa1 10.625 4/15/05 500 (d) 436,250
Tembec Inds, Inc., Gtd. Sr. Notes (Canada) Ba3 8.625 6/30/09 500 (d) 490,000
------------
11,278,275
- ------------------------------------------------------------------------------------------------------------------------------
Retail--0.1%
Leslies Poolmart, Inc., Sr. Notes B2 10.375 7/15/04 100 96,000
- ------------------------------------------------------------------------------------------------------------------------------
Technology--11.0%
Advanced Micro Devices, Inc., Sr. Sec. Notes B2 11.00 8/01/03 455 410,637
Amkor Technologies, Inc.,
Sr. Notes Ba3 9.25 5/01/06 1,500 1,485,000
Sr. Sub. Notes B2 10.50 5/01/09 500 480,000
Chippac International Ltd., Sr. Sub. Notes B3 12.75 8/01/09 365 366,825
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 8
<PAGE>
Portfolio of Investments as
of September 30, 1999
(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>
- ------------------------------------------------------------------------------------------------------------------------------
Technology (cont'd)
DecisionOne Holdings Corp.,
Sr. Disc. Deb., Zero Coupon (until 8/1/02) C(c) 11.50% 8/01/08 $ 1,000 (e) $ 7,500
Sr. Sub. Notes C(c) 9.75 8/01/07 500 20,000
Exodus Communications, Inc., Sr. Notes B-(c) 11.25 7/01/08 990 1,003,650
Fairchild Semiconductor Corp.,
Sr. Sub. Notes B3 10.375 10/01/07 145 142,825
Sr. Sub. Notes B3 10.125 3/15/07 745 726,375
Fisher Scientific International, Inc., Sr. Sub. Notes B3 9.00 2/01/08 1,500 1,402,500
Integrated Circuit Systems, Inc., Sr. Sub. Notes B3 11.50 5/15/09 850 816,000
Intersil Corp., Sr. Sub. Notes B3 13.25 8/15/09 500 515,000
Orbital Imaging Corp., Sr. Notes, Ser. D NR 11.625 3/01/05 750 510,000
Samsung Electronics America, Inc., Gtd. Notes Ba1 9.75 5/01/03 1,500 1,530,000
SCG Holding Corp., Sr. Notes B2 12.00 8/01/09 675 691,875
Zilog, Inc., Sr. Sec. Notes B2 9.50 3/01/05 1,500 1,368,750
------------
11,476,937
- ------------------------------------------------------------------------------------------------------------------------------
Telecommunications--15.0%
American Mobile Satellite, Inc., Sr. Notes NR 12.25 4/01/08 500 (e) 355,000
Concentric Network Corp., Sr. Notes B-(c) 12.75 12/15/07 750 (e) 757,500
Covad Communications Group, Inc.,
Sr. Disc. Notes B3 12.50 2/15/09 500 472,500
Sr. Disc. Notes, Ser. B B3 13.50 3/15/08 1,000 515,000
E Spire Communications Insurance, Sr. Disc. Notes NR 12.75 4/01/06 500 260,000
GST Network Funding, Inc., Sr. Disc. Notes,
Zero Coupon (until 5/1/03) NR 10.50 5/01/08 1,500 750,000
GST Telecommunications, Inc., Sr. Sub. Notes,
Zero Coupon (until 11/15/02) NR 12.75 11/15/07 500 515,000
Hermes Europe Railtel BV, Sr. Notes B3 10.375 1/15/09 1,000 975,000
Hyperion Telecommunications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 4/15/01) B3 13.00 4/15/03 265 223,925
Sr. Sec. Notes, Ser. B B3 12.25 9/01/04 1,250 1,318,750
ICO Global Commerce, Sr. Notes Caa2 15.00 8/01/05 250 (b) 47,500
Intermedia Communications, Inc.,
Sr. Notes B2 8.875 11/01/07 250 219,375
Sr. Notes B2 8.60 6/01/08 750 646,875
Sr. Notes, Ser. B B2 9.50 3/01/09 500 453,750
Iridium Cap. Corp.,
Gtd. Notes Caa3 14.00 7/15/05 750 (b) 75,000
Gtd. Sr. Notes, Ser. D Caa3 10.875 7/15/05 500 (b) 50,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 9
<PAGE>
Portfolio of Investments as
of September 30, 1999
(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.)
McLeodUSA, Inc., Sr. Notes B1 9.25% 7/15/07 $ 750 $ 744,375
PsiNet, Inc.,
Sr. Notes B3 11.50 11/01/08 750 761,250
Sr. Notes B3 11.00 8/01/09 500 492,500
Sr. Notes B3 10.00 2/15/05 500 480,000
RCN Corp. B3 10.00 10/15/07 500 480,000
RSL Communications Plc. B2 9.875 11/15/09 750 660,000
Teligent, Inc., Sr. Notes Caa1 11.50 12/01/07 750 690,000
Time Warner Telecom LLC, Sr. Notes B2 9.75 7/15/08 500 510,000
Verio, Inc.,
Sr. Notes B3 11.25 12/01/08 350 358,750
Sr. Notes B3 10.375 4/01/05 500 495,000
Viatel, Inc., Sr. Notes Caa1 11.50 3/15/09 1,000 970,000
Winstar Communications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 10/15/00) Caa1 14.00 10/15/05 1,500 1,282,500
------------
15,559,550
- ------------------------------------------------------------------------------------------------------------------------------
Transportation--3.1%
Airtran Airlines, Sr. Sec. Notes, Ser. B B2 10.50 4/15/01 500 490,000
Atlas Air, Inc., Sr. Notes B3 10.75 8/01/05 240 242,400
MRS Logisticasa S.A., Sr. Notes (Brazil) B(c) 10.625 8/15/05 1,000 (d) 695,000
TFM S.A. De CV,
Sr. Disc. Notes B2 11.75 6/15/09 750 420,000
Sr. Notes B2 10.25 6/15/07 350 311,500
Valujet, Inc., Sr. Notes B3 10.25 4/15/01 1,250 1,062,500
------------
3,221,400
- ------------------------------------------------------------------------------------------------------------------------------
Utilities--0.3%
IEBA-Invers Electric Co., Notes BB(c) 9.00 9/16/04 500 315,000
------------
Total corporate bonds (cost $150,094,572) 135,151,495
- ------------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS--1.5%
Republic of Brazil, Bonds B2 11.625 4/15/04 1,020 (d) 956,250
Republic of Brazil, Bonds, FRB B2 5.875 4/15/24 1,000 (d) 637,500
------------
Total foreign government obligations (cost $1,533,396) 1,593,750
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 10
<PAGE>
Portfolio of Investments as
of September 30, 1999
(Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moodys Interest Maturity Value
Description Rating Rate Date Shares (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS(a)
Fitzgeralds Gaming Corp. -- -- -- 12,540 $ 12
SF Holding Group, Class C -- -- -- 4,070 41
------------
Total common stocks (cost $125) 53
- ------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--4.4%
Concentric Network Corp., PIK CCC-(c) 13.50% -- 1,069 983,623
Fairfield Mfg., Inc., Exchangeable, PIK B3 11.25 -- 1,000 990,000
Fitzgeralds Gaming Corp., Cumulative Redeemable NR 15.00 -- 10,000 20,000
Granite Broadcasting Corp., Cumulative Exchangeable, PIK B3 12.75 -- 423 410,475
IXC Communications, Inc., Jr. Pfd. Exchangeable Ser. Caa 6.75 -- 1 202
Lady Luck Gaming Corp., Ser. A NR 11.50 -- 7,000 294,000
R & B Falcon Corp., Sr. Pref. B-(c) 13.88 -- 831 788,999
SF Holdings Group, Inc., Exchangeable, PIK NR 13.75 -- 125 350,720
Superior Nat'l. Capital Trust B1 10.75 -- 750 693,750
------------
Total preferred stocks (cost $5,456,681) 4,531,769
- ------------------------------------------------------------------------------------------------------------------------------
WARRANTS(a)--0.3%
American Mobile Satellite Corp., expiring 4/1/08 -- -- -- 280 11,200
Benedek Communications Corp., expiring 7/1/07 -- -- -- 5,500 11,000
Concentric Network Corp., expiring 12/15/07 -- -- -- 255 45,900
MGC Communications, Inc., expiring 10/1/04 -- -- -- 500 44,750
R & B Falcon Corp., expiring 5/1/09 -- -- -- 800 200,000
------------
Total warrants (cost $17,500) 312,850
- ------------------------------------------------------------------------------------------------------------------------------
Total Investments--136.3%
(cost $157,102,274; Note 3) 141,589,917
Liabilities in excess of other assets--(36.3)% (37,689,556)
------------
Net Assets--100% $103,900,361
------------
------------
</TABLE>
- ---------------
(a) --Non-income-producing security.
(b) --Represents issuer in default on interest payments;
non-income-producing security.
(c) --S&P rating because there is no Moody's Rating.
(d) --US$ Denominated Foreign Bonds.
(e) --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 S&P.
FRB --Floating Rate Bond.
LLC --Limited Liability Corporation.
L.P. --Limited Partnership.
PIK --Payment in Kind.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 11
<PAGE>
Statement of Assets and Liabilities
(Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets September 30, 1999
<S> <C>
Investments, at value (cost $157,102,274).............................................................. $ 141,589,917
Cash................................................................................................... 553,425
Interest receivable.................................................................................... 4,093,521
Receivable for investments sold........................................................................ 630,967
Other assets........................................................................................... 59,999
------------------
Total assets........................................................................................ 146,927,829
------------------
Liabilities
Loan payable (Note 4).................................................................................. 40,000,000
Payable for investments purchased...................................................................... 1,285,656
Dividends payable...................................................................................... 1,108,271
Loan interest payable (Note 4)......................................................................... 484,031
Accrued expenses....................................................................................... 69,063
Advisory fee payable................................................................................... 43,617
Deferred directors' fees............................................................................... 19,383
Administration fee payable............................................................................. 17,447
------------------
Total liabilities................................................................................... 43,027,468
------------------
Net Assets............................................................................................. $ 103,900,361
------------------
------------------
Net assets were comprised of:
Common stock, at par................................................................................ $ 152,644
Paid-in capital in excess of par.................................................................... 129,579,422
------------------
129,732,066
Undistributed net investment income................................................................. 802,319
Accumulated net realized loss on investments........................................................ (11,121,667 )
Net unrealized depreciation of investments.......................................................... (15,512,357 )
------------------
Net assets, September 30, 1999...................................................................... $ 103,900,361
------------------
------------------
Net asset value per share ($103,900,361 / 15,264,445 shares of common stock issued and outstanding).... $6.81
------------------
------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 12
<PAGE>
THE HIGH YIELD PLUS FUND, INC.
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
September 30,
Net Investment Income 1999
<S> <C>
Income
Interest.............................. $ 8,451,571
Dividends............................. 143,773
------------------
8,595,344
------------------
Expenses
Investment advisory fee............... 277,555
Administration fee.................... 111,022
Custodian's fees and expenses......... 61,000
Transfer agent's fees and expenses.... 34,000
Legal fees and expenses............... 33,000
Reports to shareholders............... 26,000
Audit fee and expenses................ 14,000
Directors' fees and expenses.......... 7,000
Miscellaneous......................... 17,411
------------------
Total operating expenses........... 580,988
Loan interest expense (Note 4)........ 1,246,871
------------------
Total expenses..................... 1,827,859
------------------
Net investment income.................... 6,767,485
------------------
Realized and Unrealized
Loss on Investments
Net realized loss on investment
transactions.......................... (3,823,596)
Net change in unrealized depreciation of
investments........................... (4,814,744)
------------------
Net loss on investments.................. (8,638,340)
------------------
Net Decrease in Net Assets
Resulting from Operations................ $ (1,870,855)
------------------
------------------
</TABLE>
THE HIGH YIELD PLUS FUND, INC.
Statement of Cash Flows (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
September
30,
Increase (Decrease) in Cash 1999
<S> <C>
Cash flows provided from operating activities
Interest and dividends received (excluding
discount amortization of $889,965)........ $ 7,467,643
Operating expenses paid...................... (141,999)
Loan interest and commitment fee paid........ (1,432,133)
Purchases of long-term portfolio
investments............................... (59,927,748)
Proceeds from disposition of long-term
portfolio investments..................... 59,469,456
Deferred expenses and other assets........... (110)
------------
Net cash provided from operating
activities................................ 5,435,109
------------
Cash used for financing activities
Net increase in notes payable................ 5,000,000
Cash dividends paid (excluding reinvestment
of dividends of $405,330)................. (6,217,782)
------------
Net cash used for financing activities....... (1,217,782)
------------
Net increase in cash......................... 4,217,327
Cash (overdraft) at beginning of period...... (3,663,902)
------------
Cash at end of period........................ $ 553,425
------------
------------
Reconciliation of Net Decrease in Net Assets
to Net Cash Provided from Operating Activities
Net decrease in net assets resulting from
operations................................... $(1,870,856)
------------
Increase in investments......................... (1,033,320)
Net realized loss on investment transactions.... 3,823,596
Net change in unrealized depreciation of
investments.................................. 4,814,744
Decrease in receivable for investments sold..... 1,360,359
Increase in interest and dividends receivable... (237,736)
Increase in deferred expenses and other
assets....................................... (110)
Decrease in payable for investments purchased... (1,675,295)
Increase in accrued expenses and other
liabilities.................................. 253,727
------------
Total adjustments............................ 7,305,965
------------
Net cash provided from operating
activities................................ $ 5,435,109
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13
<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 1999 1999
------------ ------------
<S> <C> <C>
Operations
Net investment income....... $ 6,767,485 $ 10,941,903
Net realized loss on
investment
transactions............. (3,823,596) (4,154,864)
Net change in unrealized
depreciation of
investments.............. (4,814,744) (13,817,809)
------------ ------------
Net decrease in net assets
resulting from
operations............... (1,870,855) (7,030,770)
Dividends from net investment
income...................... (6,627,425) (10,590,243)
Net proceeds from rights
offering of Fund shares..... -- 24,581,103
Value of Fund shares issued to
shareholders in reinvestment
of dividends................ 405,330 474,849
------------ ------------
Total increase (decrease)...... (8,092,950) 7,434,939
Net Assets
Beginning of period............ 111,993,311 104,558,372
------------ ------------
End of period(a)............... $103,900,361 $111,993,311
------------ ------------
------------ ------------
- ---------------
(a) Includes undistributed net
investment income of....... $ 802,319 $ 662,259
------------ ------------
</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 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.
- --------------------------------------------------------------------------------
14
<PAGE>
Notes to Financial Statements (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
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, 1999, were $58,252,453 and $58,109,097,
respectively.
The federal income tax basis of the Fund's investments, as of September 30,
1999, was $157,222,274 and, accordingly, net unrealized depreciation for federal
income tax purposes was $15,635,683 (gross unrealized appreciation--$1,317,530;
gross unrealized depreciation--($16,953,213).
For federal income tax purposes, the Fund has a capital loss carryforward as of
March 31, 1999 of approximately $3,646,000 of which $1,337,000 expires in 2003,
$1,806,000 expires in 2004 and $503,000 expires in 2007. Accordingly, no capital
gains distributions are expected to be paid to shareholders until net gains have
been realized in excess of such carryforward. The Fund elected to treat net
capital losses of approximately $3,378,600 incurred in the five month period
ended March 31, 1999 as having incurred in this fiscal year.
- ------------------------------------------------------------
Note 4. Borrowings
The Fund has a credit agreement with two unaffiliated lenders. The maximum
commitment under this agreement is $50,000,000. 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, 1999 was $44,000,000 at a
weighted average interest rate of 5.63%. The maximum face amount of borrowings
outstanding at any month-end during the six months ended September 30, 1999 was
$47,000,000. The current borrowings of $40,000,000 (at a weighted average
interest rate of 5.84%) mature throughout the period from October 8, 1999 to
February 4, 2000.
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, 1999 and the fiscal year ended March 31,
1999, the Fund issued 55,649 and 60,734 shares in connection with reinvestment
of dividends, respectively.
- ------------------------------------------------------------
Note 6. Dividends
On August 23, 1999 the Board of Directors of the Fund declared dividends of
$0.0725 per share payable on October 8, November 5 and December 10 to
shareholders of record on September 30, October 29 and November 30,
respectively.
- --------------------------------------------------------------------------------
See Notes to Financial Statements 15
<PAGE>
Financial Highlights (Unaudited) THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended March 31,
September 30, ---------------------------------------------------------
1999 1999 1998 1997 1996 1995
------------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................ $ 7.36 $ 9.21 $ 8.54 $ 8.44 $ 7.85 $ 8.38
------------- -------- -------- ------- ------- -------
Income from investment operations
Net investment income............................... .44 .88 .84 .82 .84 .87
Net realized and unrealized gain (loss) on
investments...................................... (.55) (1.59) .67 .12 .59 (.54)
------------- -------- -------- ------- ------- -------
Total from investment operations................. (.11) (.71) 1.51 .94 1.43 .33
------------- -------- -------- ------- ------- -------
Less dividends and distributions
Dividends from net investment income................ (.44) (.88) (.84) (.82) (.84) (.86)
Distributions in excess of net investment income.... -- -- -- (.02) -- --
------------- -------- -------- ------- ------- -------
Total dividends.................................. (.44) (.88) (.84) (.84) (.84) (.86)
------------- -------- -------- ------- ------- -------
Capital change in respect to issuance of
shares........................................ -- (.26) -- -- -- --
------------- -------- -------- ------- ------- -------
Net asset value, end of period(a)................... $ 6.81 $ 7.36 $ 9.21 $ 8.54 $ 8.44 $ 7.85
------------- -------- -------- ------- ------- -------
------------- -------- -------- ------- ------- -------
Market price per share, end of period(a)............ $ 7.25 $ 7.1875 $ 9.125 $ 9.00 $ 8.75 $ 8.00
------------- -------- -------- ------- ------- -------
------------- -------- -------- ------- ------- -------
TOTAL INVESTMENT RETURN(b):......................... 6.93% (12.36)% 11.25% 13.38% 20.80% 6.33%
------------- -------- -------- ------- ------- -------
------------- -------- -------- ------- ------- -------
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted)............. $ 103,900 $111,993 $104,558 $96,042 $94,091 $86,704
Average net assets (000 omitted).................... $ 108,571 $ 94,437 $100,766 $95,946 $92,855 $87,734
Ratio to average net assets:
Expenses, before loan interest, commitment fees
and nonrecurring expenses..................... 1.07%(c) 1.11% 1.07% 1.08% 1.01% 1.11%
Total expenses................................... 3.37%(c) 3.14% 2.44% 2.32% 2.29% 2.71%
Net investment income............................ 12.47%(c) 11.60% 9.41% 9.63% 10.18% 10.90%
Portfolio turnover rate............................. 39% 94% 112% 60% 60% 47%
Total debt outstanding at end of period (000
omitted)......................................... $ 40,000 $ 35,000 $ 30,000 $18,000 $17,000 $19,000
Asset coverage per $1,000 of debt outstanding....... $ 3,598 $ 4,204 $ 4,485 $ 6,336 $ 6,535 $ 5,563
</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. 16
<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 23, 1999 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
----------------------------- ------ -------- ---------
Douglas H. McCorkindale II 3 years 2002
Directors whose term of office continued beyond this meeting are
Eugene C. Dorsey and Thomas T. Mooney.
(2) To approve the proposed changes to the Fund's fundamental
investment restrictions, including:
(A) Minor wording changes in the Fund's fundamental
investment restriction on underwriting securities.
(B) Clarification in wording of the Fund's fundamental
restriction on portfolio diversification with respect to 75% of
the Fund's total assets.
(C) Clarification of the Fund's fundamental restriction
regarding real estate investments and the types of real estate
related securities in which the Fund may invest.
(D) Modification of the Fund's fundamental restriction
on investing in commodities to broaden the exception to the
prohibition on buying and selling physical commodities
to cover all financial derivative instruments.
(E) Elimination of the Fund's fundamental restriction
on investments in oil, gas and mineral programs.
(F) Elimination of the Fund's fundamental restriction
on investing in companies for the purpose of exercising control or
management.
(G) Elimination of the Fund's fundamental restriction
on purchasing securities issued by other investment companies.
(H) Elimination of the Fund's fundamental restriction on
selling securities short.
(3) To ratify the selection of PricewaterhouseCoopers LLP
as independent public accountants for the year ending March 31,
2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
Director/Matter Votes for Votes against Votes withheld Abstentions
---------------------------- ---------- -------------- --------------- ------------
<C> <S> <C> <C> <C> <C> <C>
(1) Douglas H. McCorkindale 8,309,513 -- 321,845 --
(2) Amendment of investment
restrictions
(A) 8,113,855 128,175 274,631 --
(B) 8,403,785 456,576 284,237 --
(C) 8,250,254 608,116 275,320 --
(D) 8,162,417 864,281 287,120 --
(E) 8,077,868 770,188 218,001 --
(F) 8,155,486 671,109 300,602 --
(G) 8,219,050 621,142 254,491 --
(H) 8,015,202 187,184 282,313 --
(3) PricewaterhouseCoopers LLP 8,295,886 140,901 -- 172,259
</TABLE>
- --------------------------------------------------------------------------------
17
<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.
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18
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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 LLP
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, 1999, 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
