<PAGE>
The
High Yield
Plus Fund,
Inc.
SEMI
ANNUAL
REPORT
September 30, 2000
<PAGE>
Letter To Shareholders October 19, 2000
Dear Shareholder:
Unfortunately, the high yield market has continued
to experience difficult market conditions since the
writing of our March 31, 2000 annual letter. Weak
technical conditions, lack of demand, and a less
than accommodating credit environment are plaguing
the high yield market. We believe the market's
weakness, however disappointing relative to
absolute returns, has created select, compelling
investment opportunities. Near-term we expect the
market's performance to remain pressured given the
overarching technical weakness. Contrary to the
weakness of the high yield market, the US economy
continues to thrive, unemployment is at record
lows, and inflation is not an ungainly threat.
Despite the tentative bounce in high yield
sentiment during the month of June, which followed
upon positive flows into the high yield mutual
funds, negative sentiment returned during the
latter half of the summer. High yield mutual fund
outflows resumed their pace. The equity market has
been following suit with high yield as of late.
Valuations of companies that do not meet investors'
expectations are sharply punished. The paucity of
liquidity in the high yield market has probably not
been enhanced by the merger and acquisition
activity that has been taking place amongst the
leading investment banks, broker-dealers and
commercial banks. The CSFB and DLJ merger, for
instance, consolidates two fairly active high yield
desks into one.
As we have remarked in our prior letters, credit
quality continues to be a concern, and the
commercial banks have been tightening their lending
standards. (Despite the robust economy, the
banking regulators have asked commercial banks to
step up their standards to ensure strong loan
quality in the future. It remains to be seen if
the regulators overstep their bounds and force a
credit recession.) One complicating factor that
did not usually surface during the last credit
recession is the advent of broad bank loan
syndication. Thus, should a high yield company
require covenant relief in its bank loans, it
becomes a difficult process for the company to
achieve consensus from a banking group that may
involve a dozen or more disparately opinioned
entities.
Valuations appear attractive for the long-term
investor. Select distressed credits appear
particularly interesting. The difference in yield
between the 10-year US Treasury and the high yield
market as measured by Lehman widened another 50 odd
basis points during the last six months to over 700
basis points. The average dollar price of the
market is in the low $80's, as measured by several
broad indices. Default rates for the market remain
at high levels, running presently in a low 5% rate
annualized. Market yields appear to be discounting
for some, if not all, the credit and liquidity
risk.
1
<PAGE>
Fund Performance
The Fund's total returns for periods ended
September 30, 2000 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.
TOTAL RETURNS
For the Periods Ended September 30, 2000
<TABLE>
<CAPTION>
6 Months 1 Year 2 Years
<S> <C> <C> <C>
High Yield Plus Fund (NAV)1 -2.2% -1.3% 8.7%
Lipper CEHY - Leveraged -2.0 -2.3 0.5
</TABLE>
1 Represents NAV-basis performance calculations as
provided by Lipper Analytical Services, Inc. Past
performance is no guarantee of future results.
The Fund is leveraged and has a $50 million credit
line provided by BankBoston and State Street Bank
and Trust. As of September 30, 2000, the Fund had
drawn $34 million on the line. Borrowings
fluctuate depending on investment opportunities and
relative valuations. As of September 30, 2000, the
Fund's shares were priced at $6.64. This price
reflected a premium of 13.3% to the Fund's net
asset value of $5.86 per share. (The average
premium of the Funds in the Lipper Leveraged Closed
End universe was 2.4% as of September 30, 2000.)
The Fund's monthly dividend rate of $0.0725 per
share equates to an annualized yield of 13.1%
relative to the stock price. This yield was more
than twice the 5.8% yield of the US 10-Year
Treasury as of September 30, 2000.
As always, we appreciate your interest in the Fund.
Sincerely yours,
Catherine A. Smith
Portfolio Manager
Senior Vice President
Wellington Management Company, llp
<PAGE>
Portfolio of Investments as of
September 30, 2000 (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--133.2%
CORPORATE BONDS--127.2%
------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--2.6%
Argo-Tech Corp., Sr. Sub. Notes B3 8.625% 10/01/07 $ 435 $ 358,875
Hexcel Corp., Sr. Sub. Notes B2 9.75 1/15/09 720 669,600
Loral Space & Communications Ltd., Sr. Notes B1 9.50 1/15/06 750 543,750
Moog, Inc., Sr. Sub. Notes, Ser. B B1 10.00 5/01/06 750 738,750
------------
2,310,975
------------------------------------------------------------------------------------------------------------------------------
Automotive--3.3%
Accuride Corp., Sr. Sub. Notes B2 9.25 2/01/08 500 425,000
Exide Corp., Sr. Notes B1 10.00 4/15/05 1,000 770,000
Federal-Mogul Corp.,
Sr. Notes Ba2 8.80 4/15/07 500 190,000
Notes Ba2 7.75 7/01/06 500 195,000
Notes Ba2 7.50 1/15/09 500 190,000
Key Plastics, Inc., Sr. Sub. Notes, Ser. B Caa 10.25 3/15/07 1,250(b) 87,500
LDM Technologies, Inc., Sr. Sub. Notes, Ser. B B3 10.75 1/15/07 500 325,000
Prestolite Electric, Inc., Gtd. Sr. Notes B3 9.625 2/01/08 1,235 827,450
------------
3,009,950
------------------------------------------------------------------------------------------------------------------------------
Cable--11.0%
Adelphia Communications Corp.,
Sr. Notes, Ser. B B2 9.875 3/01/07 650 612,625
Sr. Notes B2 8.375 2/01/08 1,000 865,000
Sr. Notes B2 7.75 1/15/09 250 208,125
Cablevision S.A., Sr. Notes (Argentina) B1 13.75 5/01/09 500(d) 446,250
Charter Communications Holdings,
Sr. Notes B2 8.25 4/01/07 1,000 907,500
Sr. Notes B2 10.00 4/01/09 500 488,750
CSC Holdings, Inc., Debs., Ser B Ba1 8.125 8/15/09 750 742,972
Insight Midwest L.P., Sr. Notes B1 9.75 10/01/09 750 751,875
Multicanal S.A. (Argentina),
Notes B1 10.50 2/01/07 500(d) 392,500
Notes B1 10.50 4/15/18 230(d) 154,100
NTL Communications Corp., Sr. Notes B2 9.875 11/15/09 EUR 250 191,775
NTL Inc., Sr. Notes, Ser. B B2 10.00 2/15/07 $ 500 462,500
RCN Corp.,
Sr. Notes B3 10.00 10/15/07 500 365,000
Sr. Notes B3 10.125 1/15/10 500 365,000
Rogers Communications, Inc., Sr. Notes (Canada) Ba2 8.875 7/15/07 500(d) 500,000
</TABLE>
--------------------------------------------------------------------------------
See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments as of
September 30, 2000 (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.)
Telewest Communications PLC (United Kingdom),
Sr. Notes B1 11.25% 11/01/08 $ 750(d) $ 750,000
Sr. Notes B1 9.875 2/01/10 500(d) 460,000
United Pan-Europe Communications N.V. (Netherlands),
Sr. Notes B2 10.875 8/01/09 685(d) 580,538
Sr. Notes B2 11.25 2/01/10 750(d) 652,500
------------
9,897,010
------------------------------------------------------------------------------------------------------------------------------
Chemicals--7.8%
Acetex Corp., Sr. Sec. Notes (Canada) B3 9.75 10/01/03 500(d) 480,000
ARCO Chemical Co.,
Deb. Ba3 9.375 12/15/05 1,000 990,000
Deb. Ba3 9.80 2/01/20 1,250 1,225,000
Borden Chemicals & Plastics L.P., Sr. Notes B1 9.50 5/01/05 915 667,950
Geo Specialty Chemicals, Inc., Sr. Sub. Notes B3 10.125 8/01/08 500 440,000
Georgia Gulf Corp., Sr. Notes B1 10.375 11/01/07 125 125,625
Huntsman ICI Chemicals LLC, Sr. Sub. Notes B2 10.125 7/01/09 805 792,925
Lyondell Chemical Co., Sr. Sub. Notes B2 10.875 5/01/09 655 636,988
PCI Chemicals Canada, Inc., Sr. Sec. Notes, Ser. B
(Canada) B3 9.25 10/15/07 545(d) 343,350
Philipp Brothers Chemicals, Inc., Sr. Sub. Notes B3 9.875 6/01/08 500 375,000
Sterling Chemical Holdings, Inc.,
Sr. Sub. Notes Ca 11.75 8/15/06 500 375,000
Sr. Sub. Notes Ca 11.25 4/01/07 750 577,500
------------
7,029,338
------------------------------------------------------------------------------------------------------------------------------
Consumer Goods & Services--4.2%
Bell Sports, Inc., Sr. Sub. Notes B3 11.00 8/15/08 670 676,700
Burlington Industries, Inc., Notes B1 7.25 9/15/05 1,000 540,000
Corning Consumer Products Co., Sr. Sub. Notes B3 9.625 5/01/08 1,500 570,000
Polaroid Corp., Notes Ba3 11.50 2/15/06 500 518,750
Simmons Co., Sr. Sub. Notes, Ser. B B3 10.25 3/15/09 500 470,000
True Temper Sports, Inc., Sr. Sub. Notes B3 10.875 12/01/08 1,000 975,000
------------
3,750,450
------------------------------------------------------------------------------------------------------------------------------
Containers--2.1%
BWay Corp., Sr. Sub. Notes, Ser. B B2 10.25 4/15/07 650 624,000
Consumers Packaging, Inc., Sr. Notes (Canada) Caa1 9.75 2/01/07 750(d) 150,000
Owens Corning, Notes Ba2 7.50 5/01/05 1,500(b) 555,000
Silgan Holdings, Inc.,
Sub. Deb., PIK B1 13.25 7/15/06 200 212,000
Sr. Sub. Debs. B1 9.00 6/01/09 350 322,000
------------
1,863,000
</TABLE>
--------------------------------------------------------------------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as of
September 30, 2000 (Unaudited) THE HIGH YIELD PLUS FUND, INC.
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------
Energy & Related Goods & Services--6.4%
Canadian Forest Oil, Ltd., Sr. Sub. Notes B2 8.75% 9/15/07 $ 500 $ 485,000
Clark R & M, Inc., Sr. Notes Ba3 8.625 8/15/08 1,250 1,031,250
Frontier Oil Corp., Sr. Notes B2 9.125 2/15/06 750 675,000
Newpark Resources, Inc., Sr. Sub. Notes, Ser. B B2 8.625 12/15/07 330 311,850
P & L Coal Holdings Corp.,
Sr. Notes Ba3 8.875 5/15/08 500 495,000
Sr. Sub. Notes B2 9.625 5/15/08 350 339,500
Pen Holdings, Inc., Sr. Notes, Ser. B B2 9.875 6/15/08 1,000 750,000
Pioneer Natural Resources Co., Sr. Notes Ba2 9.625 4/01/10 500 526,250
RAM Energy, Inc., Sr. Notes Caa 11.50 2/15/08 985 748,600
RBF Finance Co., Notes Ba3 11.00 3/15/06 370 427,350
------------
5,789,800
------------------------------------------------------------------------------------------------------------------------------
Financial Services--4.2%
Banco Nacional de Desenvolvimento Economico e Social,
Notes (Brazil) B1 11.25 9/20/05 500(d) 502,500
Bangkok Bank Public Co., Debs. (Thailand) B+(c) 8.75 3/15/07 500(d) 439,975
GS Escrow Corp., Sr. Notes Ba1 7.125 8/01/05 750 691,005
Ocwen Federal Bank., Sub. Debs. B1 12.00 6/15/05 500 455,000
Thai Farmers Bank Ltd., Sub. Notes (Thailand) Ba3 8.25 8/21/16 500(d) 390,000
Western Financial Savings Bank, Sub. Debs. B2 8.875 8/01/07 1,505 1,339,450
------------
3,817,930
------------------------------------------------------------------------------------------------------------------------------
Food & Lodging--1.3%
John Q. Hammons Hotels, First Mtge. Bonds B2 8.875 2/15/04 1,250 1,187,500
------------------------------------------------------------------------------------------------------------------------------
Gaming--0.6%
Hollywood Casino Corp., Sr. Sub. Notes B3 11.25 5/01/07 500 523,750
------------------------------------------------------------------------------------------------------------------------------
General Industries--8.9%
Allied Waste North America, Inc.,
Sr. Notes Ba3 7.625 1/01/06 750 671,250
Sr. Sub. Notes B2 10.00 8/01/09 1,350 1,174,500
Anchor Glass Container Corp., First Mtge. Notes B2 11.25 4/01/05 685 513,750
Aqua Chemical, Inc., Sr. Sub. Notes Caa2 11.25 7/01/08 640 448,000
Grove Worldwide LLC, Sr. Sub. Notes Caa 9.25 5/01/08 1,715 171,500
Haynes International, Inc., Sr. Notes B3 11.625 9/01/04 1,000 775,000
Henry Co., Sr. Notes, Ser. B Caa 10.00 4/15/08 1,110 555,000
IT Group, Inc., Sr. Sub. Notes, Ser. B B3 11.25 4/01/09 500 440,000
</TABLE>
--------------------------------------------------------------------------------
See Notes to Financial Statements. 5
<PAGE>
Portfolio of Investments as of
September 30, 2000 (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>
------------------------------------------------------------------------------------------------------------------------------
General Industries (cont'd.)
International Wire Group, Inc.,
Sr. Sub. Notes B3 11.75% 6/01/05 $ 250 $ 251,875
Sr. Sub. Notes, Ser. B B3 11.75 6/01/05 250 251,875
Mastec, Inc., Sr. Sub. Notes Ba1 7.75 2/01/08 250 237,500
Neenah Corp., Sr. Sub. Notes, Ser. B B3 11.125 5/01/07 500 387,500
Numatics Inc., Gtd. Sr. Notes B3 9.625 4/01/08 375 296,250
United Rentals, Inc., Sr. Sub. Notes B1 9.00 4/01/09 750 660,000
Waste Management, Inc., Sr. Notes Ba1 6.875 5/15/09 500 448,385
WESCO Distribution, Inc., Sr. Sub. Notes B2 9.125 6/01/08 750 705,000
------------
7,987,385
------------------------------------------------------------------------------------------------------------------------------
Grocery Stores--0.9%
Homeland Stores, Inc., Sr. Notes NR 10.00 8/01/03 1,250 812,500
------------------------------------------------------------------------------------------------------------------------------
Health Care--8.8%
Alaris Medical, Inc., Sr. Disc. Notes, Zero Coupon (until
8/1/03) Caa 11.125 8/01/08 750 180,000
Alaris Medcial Systems, Sr. Sub. Notes B3 9.75 12/01/06 700 507,500
Beverly Enterprises, Inc., Sr. Notes B1 9.00 2/15/06 750 697,500
Bio-Rad Labs, Inc., Sr. Sub. Notes B2 11.625 2/15/07 550 577,500
Conmed Corp., Sr. Sub. Notes B3 9.00 3/15/08 1,100 924,000
Dade International, Inc., Sr. Sub. Notes B2 11.125 5/01/06 2,000 640,000
DJ Orthopedics LLC, Sr. Sub. Notes B3 12.625 6/15/09 1,250 1,175,000
Mediq, Inc., Sr. Sub. Notes C 11.00 6/01/08 1,740(b) 52,200
Packard Bioscience Inc., Sr. Sub. Notes, Ser. B B3 9.375 3/01/07 250 228,750
Tenet Healthcare Corp., Sr. Sub. Notes, Ser. B Ba3 8.125 12/01/08 850 816,000
Triad Hospitals Holdings, Inc., Sr. Sub. Notes B3 11.00 5/15/09 855 876,375
Universal Hospital Services Inc., Sr. Sub. Notes B3 10.25 3/01/08 1,750 1,207,500
------------
7,882,325
------------------------------------------------------------------------------------------------------------------------------
Home Building & Real Estate--7.5%
Anthony Crane Rental L.P., Sr. Notes Caa 10.375 8/01/08 1,000 510,000
Beazer Homes USA Inc., Sr. Notes Ba3 8.875 4/01/08 1,250 1,181,250
D.R. Horton, Inc., Sr. Notes Ba1 8.00 2/01/09 750 697,500
LNR Property Corp., Sr. Sub. Notes B1 10.50 1/15/09 750 742,500
Owens Illinois, Inc., Sr. Notes Ba1 7.85 5/15/04 205 174,250
Presley Companies, Sr. Notes Caa 12.50 7/01/01 1,000 945,000
Ryland Group, Inc., Sr. Sub. Notes B1 8.25 4/01/08 750 667,500
Standard Pacific Corp., Sr. Notes Ba2 8.50 6/15/07 750 708,750
Webb (Del E.) Corp., Sr. Sub. Debs. B2 10.25 2/15/10 1,150 1,098,250
------------
6,725,000
</TABLE>
--------------------------------------------------------------------------------
See Notes to Financial Statements. 6
<PAGE>
Portfolio of Investments as of
September 30, 2000 (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>
------------------------------------------------------------------------------------------------------------------------------
Media & Entertainment--9.3%
Ackerley Group Inc., Sr. Sub. Notes, Ser. B B2 9.00% 1/15/09 $ 750 $ 705,000
American Color Graphics, Inc., Sr. Sub. Notes Caa 12.75 8/01/05 1,000 995,000
Carmike Cinemas, Inc., Sr. Sub. Notes, Ser. B C 9.375 2/01/09 635(b) 174,625
Echostar Corp., Sr. Notes B2 9.25 2/01/06 500 490,000
Globo Comunicacoes e Participacoes S.A., Notes (Brazil) B2 10.50 12/20/06 1,500(d) 1,335,000
Lin Holdings Corp., Sr. Disc. Notes, Zero Coupon (until
3/1/03) B3 10.00 3/01/08 750 543,750
Lin Televison Corp., Sr. Sub. Notes B2 8.375 3/01/08 500 476,250
Loews Cineplex Entertainment Corp., Sr. Sub. Notes Caa 8.875 8/01/08 500 200,000
STC Broadcasting, Inc., Sr. Sub. Notes B3 11.00 3/15/07 350 346,500
Sun Media Corp., Sr. Sub. Notes (Canada) B1 9.50 5/15/07 500(d) 503,750
TV Azteca S.A. de C.V. (Brazil),
Gtd. Sr. Notes, Ser. A B1 10.125 2/15/04 500(d) 482,500
Gtd. Sr. Notes, Ser. B B1 10.50 2/15/07 750(d) 697,500
Von Hoffmann Press, Inc., Sr. Sub. Notes B3 10.875 5/15/07 700 644,000
World Color Press, Inc., Sr. Sub. Notes Baa3 8.375 11/15/08 750 727,733
------------
8,321,608
------------------------------------------------------------------------------------------------------------------------------
Metals--6.4%
Alaska Steel Corp.,
Sr. Notes Ba2 9.125 12/15/06 500 496,250
Sr. Notes Ba2 7.875 2/15/09 250 227,500
Algoma Steel, Inc., First Mtge. Notes (Canada) B2 12.375 7/15/05 350(d) 250,250
Bayou Steel Corp., First Mtge. Notes B2 9.50 5/15/08 1,250 950,000
Bucyrus International, Inc., Sr. Notes Caa 9.75 9/15/07 750 225,000
Bulong Operation Pty. Ltd., Sr. Notes Caa 12.50 12/15/08 315(b) 151,200
CSN Iron S.A., Gtd. Notes (Brazil) B2 9.125 6/01/07 500(d) 412,500
Freeport-McMoran Copper & Gold, Inc., Sr. Notes B3 7.50 11/15/06 750 495,000
Kaiser Aluminum & Chemical Corp., Sr. Notes, Ser. B B1 10.875 10/15/06 750 735,000
LTV Corp.,
Gtd. Sr. Notes Ba3 8.20 9/15/07 350 175,000
Sr. Notes Ba3 11.75 11/15/09 1,330 691,600
Weirton Steel Corp., Sr. Notes B2 11.375 7/01/04 1,250 1,000,000
------------
5,809,300
------------------------------------------------------------------------------------------------------------------------------
Paper & Packaging--6.3%
Container Corp. of America, Gtd. Sr. Notes, Ser. B B2 10.75 5/01/02 1,000 1,017,500
Doman Industries Ltd. (Canada),
Sr. Notes Caa 8.75 3/15/04 1,005(d) 723,600
Sr. Sec. Notes B3 12.00 7/01/04 1,000(d) 1,005,000
Gaylord Container Corp., Sr. Sub. Notes Ca 9.875 2/15/08 1,750 700,000
Millar Western Forest Products Ltd., Sr. Notes (Canada) B2 9.875 5/15/08 500(d) 460,000
</TABLE>
--------------------------------------------------------------------------------
See Notes to Financial Statements. 7
<PAGE>
Portfolio of Investments as of
September 30, 2000 (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>
------------------------------------------------------------------------------------------------------------------------------
Paper & Packaging (cont'd.)
Pacifica Papers, Inc., Sr. Notes B1 10.00% 3/15/09 $ 740 $ 740,000
Paperboard Industries International, Inc., Sr. Notes B2 8.375 9/15/07 750 630,000
Repap New Brunswick, Inc., Sr. Sec. Notes (Canada) B2 9.00 6/01/04 350(d) 364,000
------------
5,640,100
------------------------------------------------------------------------------------------------------------------------------
Retail--0.3%
Leslie's Poolmart, Inc., Sr. Notes B3 10.375 7/15/04 350 269,500
------------------------------------------------------------------------------------------------------------------------------
Technology--9.9%
Amkor Technology, Inc.,
Sr. Notes Ba3 9.25 5/01/06 1,250 1,246,875
Sr. Sub. Notes B1 10.50 5/01/09 500 508,750
Cooperative Computing, Inc., Sr. Sub. Notes B3 9.00 2/01/08 1,000 390,000
Details Holding Corp., Sr. Disc. Notes, Zero Coupon (until
11/15/02) Caa1 12.50 11/15/07 750 592,500
Exodus Communications, Inc.,
Sr. Notes B3 11.25 7/01/08 990 975,150
Sr. Notes B3 11.625 7/15/10 250 251,250
Fairchild Semiconductor Corp., Sr. Sub. Notes B2 10.125 3/15/07 745 745,000
Flextronics International Ltd., Sr. Sub. Notes Ba3 9.875 7/01/10 375 388,125
Intersil Corp., Sr. Notes B1 13.25 8/15/09 485 562,600
MCMS, Inc., Sr. Sub. Notes, Ser. B Ca 9.75 3/01/08 2,000 1,380,000
Orbital Imaging Corp., Sr. Notes, Ser. B CCC(c) 11.625 3/01/05 500 185,000
Viasystems, Inc.,
Sr. Sub. Notes B3 9.75 6/01/07 1,045 971,850
Sr. Sub. Notes, Ser. B B3 9.75 6/01/07 805 748,650
------------
8,945,750
------------------------------------------------------------------------------------------------------------------------------
Telecommunications--16.1%
Call-Net Enterprises, Inc., Sr. Notes (Canada) B2 9.375 5/15/09 1,250(d) 562,500
Concentric Network Corp., Sr. Notes B(c) 12.75 12/15/07 500 521,250
Flag Telecommunications Holdings Ltd., Sr. Notes (Bermuda) B2 11.625 3/30/10 1,350(d) 1,188,000
Global Crossing Holdings Ltd. (Bermuda),
Sr. Notes Ba2 9.125 11/15/06 750(d) 742,500
Sr. Notes Ba2 9.625 5/15/08 500(d) 497,500
GST Telecommunications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 11/15/02) D 12.75 11/15/07 500 5,000
GT Group Telecommunications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 2/1/05), Sen. Disc.
Exch. Note (Canada) Caa 13.25 2/01/10 850 (d) 340,000
</TABLE>
--------------------------------------------------------------------------------
See Notes to Financial Statements. 8
<PAGE>
Portfolio of Investments as of
September 30, 2000 (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.)
Hermes Europe Railtel B.V. (Netherlands),
Sr. Notes B3 11.50% 8/15/07 $ 250(d) $ 117,500
Sr. Notes B3 10.375 1/15/09 1,000(d) 450,000
Hyperion Telecommunications, Inc., Sr. Sec. Notes, Ser. B B3 12.25 9/01/04 1,000 985,000
Intermedia Communications, Inc.,
Sr. Notes, Ser. B B2 8.875 11/01/07 250 237,500
Sr. Notes, Ser. B B2 8.60 6/01/08 250 237,500
Iridium Cap. Corp.,
Sen. Notes, Ser. B C 14.00 7/15/05 750(b) 22,500
Gtd. Sr. Notes, Ser. D C 10.875 7/15/05 500(b) 15,000
Level 3 Communications, Inc.,
Sr. Notes B3 11.00 3/15/08 500 485,000
Sr. Notes B3 10.75 3/15/08 EUR 465 384,297
McLeod USA, Inc., Sr. Notes B1 9.25 7/15/07 $ 350 330,750
Metromedia Fiber Network, Inc., Sr. Notes B2 10.00 12/15/09 500 465,000
Millicom Int'l. Cellular S.A., Sr. Sub. Disc. Notes, Zero
Coupon (until 6/1/01) (Luxembourg) Caa 13.50 6/01/06 1,250(d) 1,075,000
PsiNet Inc.,
Sr. Notes B3 10.00 2/15/05 535 347,750
Sr. Notes B3 11.50 11/01/08 500 335,000
Sr. Notes B3 11.00 8/01/09 500 325,000
Rhythms Netconnections, Inc., Sr. Notes, Ser. B B3 14.00 2/15/10 1,000 660,000
Teligent, Inc., Sr. Notes Caa 11.50 12/01/07 500 215,000
Time Warner Telecom LLC, Sr. Notes B2 9.75 7/15/08 500 450,000
Viatel, Inc.,
Sr. Notes B3 11.25 4/15/08 250 132,500
Sr. Notes B3 11.50 3/15/09 1,000 540,000
Williams Communications Group, Sr. Notes B2 10.875 10/01/09 500 460,000
Winstar Communicaions, Inc., Sr. Notes B3 12.50 4/15/08 1,750 1,242,500
Worldwide Fiber, Inc., Sr. Sub. Notes B3 12.00 8/01/09 1,250 1,100,000
------------
14,469,547
------------------------------------------------------------------------------------------------------------------------------
Textiles and Related Industries--2.1%
Galey & Lord, Inc., Sr. Sub. Notes Ca 9.125 3/01/08 1,000 635,000
Pillowtex Corp., Sr. Sub. Notes, Ser. B Ca 9.00 12/15/07 2,250 405,000
Westpoint Stevens, Inc., Sr. Notes B1 7.875 6/15/08 1,000 832,500
------------
1,872,500
------------------------------------------------------------------------------------------------------------------------------
Transportation--4.3%
Air Trans Airlines, Inc., Sr. Sec. Notes, Ser. B B2 10.50 4/15/01 500 485,000
Atlas Air, Inc., Sr. Notes B1 10.75 8/01/05 500 515,000
Kansas City Southern Railway Co., Sr. Notes Ba2 9.50 10/01/08 245 248,675
</TABLE>
--------------------------------------------------------------------------------
See Notes to Financial Statements. 9
<PAGE>
Portfolio of Investments as of
September 30, 2000 (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>
------------------------------------------------------------------------------------------------------------------------------
Transportation (cont'd.)
MRS Logistica S.A., Sr. Notes (Brazil) B(c) 10.625% 8/15/05 $ 1,000(d) $ 865,000
TFM S.A. de C.V. (Mexico),
Sr. Notes B2 10.25 6/15/07 750(d) 703,125
Sr. Disc. Debs., Zero Coupon (until 6/15/02) B2 11.75 6/15/09 500(d) 378,750
Valujet, Inc., Sr. Notes B3 10.25 4/15/01 750 690,000
------------
3,885,550
------------------------------------------------------------------------------------------------------------------------------
Utilities--2.9%
Calpine Corp., Sr. Notes Ba1 8.625 8/15/10 1,000 993,350
CMS Energy Corp.,
Sub. Notes Ba3 7.625 11/15/04 500 482,740
Sr. Notes Ba3 7.50 1/15/09 250 222,985
IEBA-Invers Electric Co., Notes B+(c) 9.00 9/16/04 1,000 350,000
TNP Enterprises, Inc., Sr. Sub. Notes Ba3 10.25 4/01/10 500 515,000
------------
2,564,075
------------
Total corporate bonds (cost $135,874,071) 114,364,843
------------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS--0.9%
Republic of Brazil, Bonds, FRB (cost $538,494) B2 14.50 10/15/09 693(d) 764,314
------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS(a)--0.8%
Shares
---------
DecisionOne Holdings Corp. -- -- -- 1,387 39
Fitzgeralds Gaming Corp. -- -- -- 12,540 13
Pathmark Stores, Inc. -- -- -- 54,268 668,175
SF Holdings Group, Class C -- -- -- 219 1,095
------------
Total common stocks (cost $1,978,513) 669,322
------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--4.1%
Fairfield Mfg., Inc., Exchangeable, PIK B3 11.25 -- 1,000 810,000
Granite Broadcasting Corp., Cumulative Exchangeable, PIK B3 12.75 -- 290 217,796
NEXTLINK Communications, Inc., Sr. Preferred Exchangeable,
PIK NR 13.80 -- 1,182 1,022,747
R & B Falcon Corp., Sr. Pref. B-(c) 13.88 -- 952 1,218,447
SF Holding Group, Inc.,
Exchangeable, PIK NR 13.75 -- 96 384,000
------------
Total preferred stocks (cost $3,597,137) 3,652,990
</TABLE>
--------------------------------------------------------------------------------
See Notes to Financial Statements. 10
<PAGE>
Portfolio of Investments as of
September 30, 2000 (Unaudited) THE HIGH YIELD PLUS FUND, INC.
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expiration Value
Description Date Warrants (Note 1)
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------
WARRANTS(a)--0.2%
DecisionOne Holdings Corp.,
Class A 4/18/07 685 $ 57
Class B 4/18/07 1,180 99
Class C 4/18/07 700 59
GT Group Telecommmunications, Inc. 2/1/10 850 85,000
Motient Corp. 4/1/08 280 11,200
Benedek Communications Corp. 7/1/07 5,500 11,000
Concentric Network Corp. 12/15/07 255 102,000
Pathmark Stores, Inc. 9/19/10 10,086 12,607
------------
Total warrants (cost $51,315) 222,022
------------
Total long-term investments (cost $142,039,530) 119,673,491
---------------------------------------------------------------------------------------------------------------------------------
Principal
Interest Maturity Amount
Rate Date (000)
-------- ---------- ---------
SHORT-TERM INVESTMENT--0.4%
Repurchase Agreement
Lehman Brothers Hldgs., Inc., dated 9/29/00, due in the 6 10/02/00 $ 389 389,000
amount of $389,212 (cost $389,000; collateralized by .53%
$1,995,000 U.S. Treasury Bond strips, 11/25/27;
approximate value $403,409)
------------------------------------------------------------------------------------------------------------------------------
Total Investments--133.6%
(cost $142,428,530; Note 3) 120,062,491
Other assets in excess of liabilities--(33.6)% (30,181,816)
------------
Net Assets--100% $ 89,880,675
------------
------------
</TABLE>
---------------
(a)--Non-income producing security.
(b)-- Represents issuer in default on interest payments; non-income producing
security.
(c)--Standard & Poor's Rating.
(d)--US$ Denominated Foreign Bonds.
FRB--Floating Rate Bond.
LLC--Limited Liability Corporation.
L.P.--Limited Partnership.
NR--Not rated by Moody's or Standard & Poor's.
N.V.--Naamluze Vennootschap (Dutch).
PIK--Payment in Kind.
PLC--Public Limited Company (British).
S.A.--Sociedad Anonima (Spanish) or Societe Anonyme (French).
--------------------------------------------------------------------------------
See Notes to Financial Statements. 11
<PAGE>
Statement of Assets and Liabilities (Unaudited) THE HIGH YIELD PLUS FUND, INC.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets
September 30, 2000
<S> <C>
-------------------------------------------------------------------------------------------------------------------------------
Investments, at value (cost $142,428,530)................................................................. $120,062,491
Cash...................................................................................................... 498,090
Interest receivable....................................................................................... 3,834,883
Receivable for investments sold........................................................................... 1,685,532
Other assets.............................................................................................. 77,858
Unrealized appreciation on forward currency contracts..................................................... 12,560
------------------
Total assets........................................................................................... 126,171,414
------------------
Liabilities
Loan payable (Note 4)..................................................................................... 34,000,000
Dividends payable......................................................................................... 1,107,516
Payable for investments purchased......................................................................... 644,523
Loan interest payable (Note 4)............................................................................ 402,385
Accrued expenses.......................................................................................... 57,323
Advisory fee payable...................................................................................... 40,204
Deferred directors' fees.................................................................................. 22,706
Administration fee payable................................................................................ 16,082
------------------
Total liabilities...................................................................................... 36,290,739
------------------
Net Assets................................................................................................ $ 89,880,675
------------------
------------------
Net assets were comprised of:
Common stock, at par................................................................................... $ 153,499
Paid-in capital in excess of par....................................................................... 130,129,604
------------------
130,283,103
Undistributed net investment income.................................................................... 466,022
Accumulated net realized loss on investments and foreign currencies.................................... (18,514,647)
Net unrealized depreciation on investments and foreign currencies...................................... (22,353,803)
Net assets, September 30, 2000......................................................................... $ 89,880,675
------------------
------------------
Net asset value per share ($89,880,675 / 15,349,887 shares of common stock issued and outstanding)........ $5.86
------------------
------------------
</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 2000
<S> <C>
Income
Interest................................... $ 8,152,871
Dividends.................................. 56,250
-------------
8,209,121
-------------
Expenses
Investment advisory fee.................... 241,476
Administration fee......................... 96,590
Custodian's fees and expenses.............. 63,000
Legal fees and expenses.................... 55,000
Reports to shareholders.................... 49,000
Insurance expense.......................... 26,000
Transfer agent's fees and expenses......... 19,000
Audit fees................................. 14,000
Listing fee................................ 12,000
Directors' fees and expenses............... 8,000
Miscellaneous.............................. 8,679
-------------
Total operating expenses................ 592,745
Loan interest expense (Note 4)............. 1,266,541
-------------
Total expenses.......................... 1,859,286
-------------
Net investment income......................... 6,349,835
-------------
Realized and Unrealized Gain
(Loss) on Investments and Foreign Currencies
Net realized gain (loss) on:
Investment transactions.................... (4,614,407)
Foreign currency transactions.............. 54,194
-------------
(4,560,213)
-------------
Net change in unrealized appreciation
(depreciation) on:
Investments................................ (3,839,168)
Foreign currencies......................... 3,729
-------------
(3,835,439)
-------------
Net loss on investments and foreign
currencies................................. (8,395,652)
-------------
Net Decrease in Net Assets
Resulting from Operations..................... $(2,045,817)
-------------
-------------
</TABLE>
THE HIGH YIELD PLUS FUND, INC.
Statement of Cash Flows (Unaudited)
------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
September
30,
Increase (Decrease) in Cash 2000
<S> <C>
Cash flows provided from operating activities
Interest and dividends received (excluding
discount amortization of $1,129,883)...... $ 7,333,132
Operating expenses paid...................... (859,286)
Loan interest paid........................... (1,126,775)
Purchases of short-term portfolio
investments............................... (389,000)
Purchases of long-term portfolio
investments............................... (41,260,866)
Proceeds from disposition of long-term
portfolio investments..................... 50,874,293
Deferred expenses and other assets........... 26,258
------------
Net cash provided from operating
activities................................ 14,597,756
------------
Cash used for financing activities
Net decrease in notes payable................ (8,000,000)
Cash dividends paid (excluding reinvestment
of dividends of $371,139)................. (6,286,509)
------------
Net cash used for financing activities....... (14,286,509)
------------
Net increase in cash......................... 311,247
Cash at beginning of period.................. 186,843
------------
Cash at end of period........................ $ 498,090
------------
------------
Reconciliation of Net Decrease in Net Assets
to Net Cash Provided from Operating Activities
Net decrease in net assets resulting from
operations................................... $(2,045,817)
------------
Decrease in investments......................... 8,143,223
Net realized loss on investment transactions.... 4,560,213
Net decrease in unrealized
appreciation/depreciation of investments..... 3,839,168
Decrease in receivable for investments sold..... 1,132,366
Decrease in interest and dividends receivable... 253,894
Increase in deferred expenses and other
assets....................................... 26,258
Decrease in payable for investments purchased... (1,184,774)
Increase in accrued expenses and other
liabilities.................................. (126,775)
------------
Total adjustments............................ 16,643,573
------------
Net cash provided from operating
activities................................ $14,597,756
------------
------------
</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 2000 2000
------------ ------------
<S> <C> <C>
Operations
Net investment income....... $ 6,349,835 $ 13,584,516
Net realized loss on
investment and foreign
currency transactions.... (4,560,213) (6,624,919)
Net change in unrealized
appreciation
(depreciation) on
investments and foreign
currencies............... (3,835,439) (7,820,751)
------------ ------------
Net decrease in net assets
resulting from
operations............... (2,045,817) (861,154)
Dividends from net investment
income...................... (6,656,365) (13,505,667)
Value of Fund shares issued to
shareholders in reinvestment
of dividends................ 371,139 585,228
------------ ------------
Total decrease................. (8,331,043) (13,781,593)
Net Assets
Beginning of period............ 98,211,718 111,993,311
------------ ------------
End of period(a)............... $ 89,880,675 $ 98,211,718
------------ ------------
------------ ------------
---------------
(a) Includes undistributed net
investment income of....... $ 466,022 $ 772,552
------------ ------------
</TABLE>
Notes to Financial Statements (Unaudited) THE HIGH YIELD PLUS FUND, INC.
------------------------------------------------------------
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.
Foreign Currency Translation: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(i) market value of investment securities, other assets and liabilities--at the
closing daily rate of exchange;
(ii) purchases and sales of investment securities, income and expenses--at the
rate of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange rates
and market values at the close of the fiscal period, the Fund does not
--------------------------------------------------------------------------------
14
<PAGE>
Notes to Financial Statements (Unaudited) THE HIGH YIELD PLUS FUND, INC.
--------------------------------------------------------------------------------
isolate that portion of the results of operations arising as a result of changes
in the foreign exchange rates from the fluctuations arising from changes in the
market prices of securities held at the end of the fiscal period. Similarly, the
Fund does not isolate the effect of changes in foreign exchange rates from the
fluctuations arising from changes in the market prices of long-term debt
securities sold during the fiscal period. Accordingly, such realized foreign
currency gains and losses are included in the reported net realized gains
(losses) on investment transactions.
Net realized gain on foreign currency transactions represents net foreign
exchange gains or losses from sales and maturities of short-term securities,
holding of foreign currencies, currency gains or losses realized between the
trade and settlement dates on securities transactions, and the difference
between the amounts of interest and foreign taxes recorded on the Fund's books
and the U.S. dollar equivalent amounts actually received or paid. Net unrealized
currency gains and losses from valuing foreign currency denominated assets and
liabilities at fiscal period end exchange rates are reflected as a component of
net unrealized appreciation/depreciation on investments and foreign currencies.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. companies as a result of,
among other factors, the possibility of political and economic instability and
the level of governmental supervision and regulated foreign securities markets.
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' or 'Bankoverdraft' in the Statement of Assets and
Liabilities.
Forward Currency Contracts: A forward currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The Fund enters into a forward currency contract in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings or on specific receivables and payables denominated in a foreign
currency. The contracts are valued daily at current exchange rates and any
unrealized gain or loss is included in net unrealized appreciation or
depreciation on investments and foreign currencies. Gain or loss is realized on
the settlement date of the contract equal to the difference between the
settlement value of the original and renegotiated forward contracts. This gain
or loss, if any, is included in net realized gain (loss) on foreign currency
transactions. Risks may arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of their contracts.
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.
Withholding taxes on foreign dividends have been provided for in accordance with
the Fund's understanding of the applicable country's tax rules and rates.
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.
--------------------------------------------------------------------------------
15
<PAGE>
Notes to Financial Statements (Unaudited) THE HIGH YIELD PLUS FUND, INC.
--------------------------------------------------------------------------------
Note 3. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the six months ended September 30, 2000, were $40,076,092 and $49,684,004,
respectively.
The federal income tax basis of the Fund's investments, as of September 30,
2000, was $142,444,969 and, accordingly, net unrealized depreciation for federal
income tax purposes was $22,382,478 (gross unrealized appreciation--$2,725,033;
gross unrealized depreciation--$25,107,511).
For federal income tax purposes, the Fund has a capital loss carryforward as of
March 30, 2000 of approximately $11,849,000 of which $1,337,000 expires in 2003,
$1,806,000 expires in 2004, $500,000 expires in 2007 and $8,206,000 expires in
2008. 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 will elect to treat net capital losses of approximately $2,072,900
incurred in the five month period ended March 31, 2000 as having occurred in the
current fiscal year.
At September 30, 2000, the Fund had an outstanding forward currency contract to
sell foreign currency as follows:
<TABLE>
<CAPTION>
Value at
Forward Currency Settlement Date Current
Sale Contracts Receivable Value Appreciation
<S> <C> <C> <C>
------------------ --------------- -------- ------------
Euros,
expiring 11/6/00 $ 613,907 $601,347 $ 12,560
--------------- -------- ------------
--------------- -------- ------------
</TABLE>
------------------------------------------------------------
Note 4. Borrowings
The Fund has a credit agreement with an unaffiliated lender. 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, 2000 was $35,967,213 at a
weighted average interest rate of 6.92%. The maximum face amount of borrowings
outstanding at any month-end during the six months ended September 30, 2000 was
$39,000,000 (April 30, 2000). The current borrowings of $34,000,000 (at a
weighted average interest rate of 7.12%) mature throughout the period from
October 4, 2000 to March 12, 2001.
The Fund pays commitment fees at an annual rate of .09 of 1% on any unused
portion of the credit facility.
------------------------------------------------------------
Note 5. Capital
There are 100 million shares of $.01 par value common stock authorized. During
the six months ended September 30, 2000 and the fiscal year ended March 31,
2000, the Fund issued 58,983 and 82,108 shares in connection with reinvestment
of dividends, respectively.
In connection with a rights offering, shareholders of record on December 31,
1998 were issued one-third of a nontransferable right for each full share of
common stock owned, entitling shareholders the opportunity to acquire one newly
issued share of common stock for every whole right held at a subscription price
equal to the lower of 97% of net asset value per share as of the close of
business on the expiration date of the offering, or 95% of the average of the
last reported sales prices per share on the New York Stock Exchange on the
expiration date of the offering and the four preceding business days. On March
5, 1999 the Fund issued 3,799,518 shares of common stock at $6.804 per share and
estimated rights offering costs of $366,000 ($.02 per share) and brokerage and
dealer-manager commissions of $904,817 ($.06 per share) were charged to paid-in
capital resulting in net proceeds to the Fund of $24,581,103. The net asset
value per share of the Fund's common shareholders was reduced by approximately
$.26 per share as a result of this issuance.
------------------------------------------------------------
Note 6. Dividends
On August 23, 2000 the Board of Directors of the Fund declared dividends of
$0.0725 per share payable on October 9, November 10 and December 11 to
shareholders of record on September 29, October 31 and November 30,
respectively.
--------------------------------------------------------------------------------
16
<PAGE>
Financial Highlights (Unaudited) THE HIGH YIELD PLUS FUND, INC.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended March 31,
September 30, ----------------------------------------------
2000 2000 1999 1998 1997
------------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...................... $ 6.42 $ 7.36 $ 9.21 $ 8.54 $ 8.44
------ -------- -------- -------- -------
Income from investment operations
Net investment income..................................... .41 .89 .88 .84 .82
Net realized and unrealized gain (loss) on investments.... (.53) (.94) (1.59) .67 .12
------ -------- -------- -------- -------
Total from investment operations....................... (.12) (.05) (.71) 1.51 .94
------ -------- -------- -------- -------
Less dividends and distributions
Dividends from net investment income...................... (.44) (.89) (.88) (.84) (.82)
Distributions in excess of net investment income.......... -- -- -- -- (.02)
------ -------- -------- -------- -------
Total dividends and distributions...................... (.44) (.89) (.88) (.84) (.84)
------ -------- -------- -------- -------
Capital charge in respect to issuance of shares........... -- -- (.26) -- --
------ -------- -------- -------- -------
Net asset value, end of period(a)......................... $ 5.86 $ 6.42 $ 7.36 $ 9.21 $ 8.54
------ -------- -------- -------- -------
------ -------- -------- -------- -------
Market price per share, end of period(a).................. $ 6.64 $ 6.1875 $ 7.1875 $ 9.125 $ 9.00
------ -------- -------- -------- -------
------ -------- -------- -------- -------
TOTAL INVESTMENT RETURN(b):............................... 15.00% (2.96)% (12.36)% 11.25% 13.38%
------ -------- -------- -------- -------
------ -------- -------- -------- -------
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted)................... $89,881 $ 98,212 $111,993 $104,558 $96,042
Average net assets (000 omitted).......................... $94,416 $107,803 $ 94,437 $100,766 $95,946
Ratio to average net assets:
Expenses, before loan interest and commitment fees..... 1.25%(c) 1.08% 1.11% 1.07% 1.08%
Total expenses......................................... 3.93%(c) 3.47% 3.14% 2.44% 2.32%
Net investment income.................................. 13.41%(c) 12.60% 11.60% 9.41% 9.63%
Portfolio turnover rate................................... 32% 83% 94% 112% 60%
Total debt outstanding at end of period (000 omitted)..... $34,000 $ 42,000 $ 35,000 $ 30,000 $18,000
Asset coverage per $1,000 of debt outstanding............. $ 3,644 $ 3,338 $ 4,204 $ 4,485 $ 6,336
<CAPTION>
1996
-------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...................... $ 7.85
-------
Income from investment operations
Net investment income..................................... .84
Net realized and unrealized gain (loss) on investments.... .59
-------
Total from investment operations....................... 1.43
-------
Less dividends and distributions
Dividends from net investment income...................... (.84)
Distributions in excess of net investment income.......... --
-------
Total dividends and distributions...................... (.84)
-------
Capital charge in respect to issuance of shares........... --
-------
Net asset value, end of period(a)......................... $ 8.44
-------
-------
Market price per share, end of period(a).................. $ 8.75
-------
-------
TOTAL INVESTMENT RETURN(b):............................... 20.80%
-------
-------
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted)................... $94,091
Average net assets (000 omitted).......................... $92,855
Ratio to average net assets:
Expenses, before loan interest and commitment fees..... 1.01%
Total expenses......................................... 2.29%
Net investment income.................................. 10.18%
Portfolio turnover rate................................... 60%
Total debt outstanding at end of period (000 omitted)..... $17,000
Asset coverage per $1,000 of debt outstanding............. $ 6,535
</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 year 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 year indicated. This information has been determined based upon information
provided in the financial statements and market price data for the Fund's
shares.
--------------------------------------------------------------------------------
See Notes to Financial Statements. 17
<PAGE>
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 24, 2000 at the offices of Prudential Investments Fund Management LLC,
751 Broad Street, Newark, New Jersey. The meeting was held for the following
purposes:
<TABLE>
<CAPTION>
(1) To elect the following directors to serve as follows:
Director Class Term Expiring
------------------------------- ------ -------- ---------
Robert E. LaBlanc I 2 years 2002
<S> <C> <C> <C> <C>
Thomas T. Mooney II 3 years 2003
Clay T. Whitehead II 3 years 2003
Directors whose term of office continued beyond this meeting are Eugene C. Dorsey and Douglas H. McCorkindale.
(2) To ratify the selection of PricewaterhouseCoopers LLP as independent public accountants for the year ending March 31,
2001.
</TABLE>
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
Director/Matter Votes for Votes against Votes withheld Abstentions
---------------------------- ----------- -------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
(1) Robert E. LaBlanc 13,071,799 -- 375,226 --
Thomas T. Mooney 13,044,291 -- 402,734 --
Clay T. Whitehead 13,038,928 -- 408,097 --
(2) PricewaterhouseCoopers LLP 13,152,627 40,367 -- 254,031
</TABLE>
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18
<PAGE>
Other Information (Unaudited) THE HIGH YIELD PLUS FUND, INC.
--------------------------------------------------------------------------------
Dividend Reinvestment Plan. Shareholders may elect to have all distributions of
dividends and capital gains automatically reinvested in Fund shares (Shares)
pursuant to the Fund's Dividend Reinvestment Plan (the Plan). Shareholders who
do not participate in the Plan will receive all distributions in cash paid by
check in United States dollars mailed directly to the shareholders of record (or
if the shares are held in street or other nominee name, then to the nominee) by
the custodian, as dividend disbursing agent. Shareholders who wish to
participate in the Plan should contact the Fund at (800) 451-6788.
State Street Bank and Trust Co. (the Plan Agent) serves as agent for the
shareholders in administering the Plan. After the Fund declares a dividend or
capital gains distribution, if (1) the market price is lower than net asset
value, the participants in the Plan will receive the equivalent in Shares valued
at the market price determined as of the time of purchase (generally, following
the payment date of the dividend or distribution); or if (2) the market price of
Shares on the payment date of the dividend or distribution is equal to or
exceeds their net asset value, participants will be issued Shares at the higher
of net asset value or 95% of the market price. If net asset value exceeds the
market price of Shares on the valuation date or the Fund declares a dividend or
other distribution payable only in cash, the Plan Agent will, as agent for the
participants, receive the cash payment and use it to buy Shares in the open
market. If, before the Plan Agent has completed its purchases, the market price
exceeds the net asset value per share, the average per share purchase price paid
by the Plan Agent may exceed the net asset value per share, resulting in the
acquisition of fewer shares than if the dividend or distribution had been paid
in shares issued by the Fund. The Fund will not issue Shares under the Plan
below net asset value.
There is no charge to participants for reinvesting dividends or capital gain
distributions, except for certain brokerage commissions, as described below. The
Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Fund. There will be no brokerage commissions
charged with respect to shares issued directly by the Fund. However, each
participant will pay a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases in connection with the
reinvestment of dividends and distributions. The automatic reinvestment of
dividends and distributions will not relieve participants of any federal income
tax that may be payable on such dividends or distributions.
The Fund reserves the right to amend or terminate the Plan upon 90 days' written
notice to shareholders of the Fund.
Participants in the Plan may withdraw from the Plan upon written notice to the
Plan Agent and will receive certificates for whole Shares and cash for
fractional Shares.
All correspondence concerning the Plan should be directed to the Plan Agent,
State Street Bank & Trust Company, P.O. Box 8200, Boston, MA 02266-8200.
--------------------------------------------------------------------------------
19
<PAGE>
Directors
Eugene C. Dorsey
Robert E. LaBlanc
Douglas H. McCorkindale
Thomas T. Mooney
Clay T. Whitehead
Investment Adviser
Wellington Management Company, llp
75 State Street
Boston, MA 02109
Administrator
Prudential Investments Fund Management LLP
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 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
