-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CAii+cp4OOllTeLC5fWg51I9+UV4mDB8KlPjS1T3A80VzbIGT95n9RTuv38ZQYnM cYxV2tHHyBWDzGQjPO4tkQ== 0000828990-95-000001.txt : 19960102 0000828990-95-000001.hdr.sgml : 19960102 ACCESSION NUMBER: 0000828990-95-000001 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951129 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HIGH YIELD PLUS FUND INC CENTRAL INDEX KEY: 0000828990 STANDARD INDUSTRIAL CLASSIFICATION: 0000 STATE OF INCORPORATION: MD FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05468 FILM NUMBER: 95597039 BUSINESS ADDRESS: STREET 1: 199 WATER ST CITY: NEW YORK STATE: NY ZIP: 10292 BUSINESS PHONE: 2122141250 MAIL ADDRESS: STREET 1: ONE SEAPORT PLAZA CITY: NEW YORK STATE: NY ZIP: 10292 N-30D 1 HIGH YIELD PLUS FUND 9/30/95 N30-D SEMI ANNUAL REPORT September 30, 1995 The High Yield Plus Fund, Inc. (LOGO) Letter to Shareholders November 6, 1995 Dear Shareholder: During the first six months of the Fund's fiscal year, the high yield market was fairly robust. In particular, the performance of the market benefited both from the drop in interest rates and the ensuing strong demand for high yield issues during the first three months of the year. The second quarter was more subdued as rates stabilized and investors appeared to step back to assess valuations in light of the threat of a heavy new issue calendar. While plenty of new offerings did come to fruition during the month of September, the market has remained somewhat muted with virtually all attention being directed towards new issuance. Our focus has been on uncovering companies that should weather the economic slowdown without impinging on the strength of their balance sheets. To that end, we have intentionally been scouring the secondary market (as well as the new issue market) for potential opportunities. During the first half of the year, we also reduced some of the Fund's exposure to cyclical industries such as steel, where we believe market dynamics have turned. In the paper sector, we have shifted our exposure to those grades of paper that typically perform better later in the business cycle. Again, our general investment theme is to maintain or increase our exposure in those issues (cyclical or not) that are striving to reduce debt with free cash flow, as we believe this is a prudent goal at this point in the economic cycle. The Fund's total return was as follows for the periods ended September 30, 1995. We have also provided the returns of the Lipper Closed-End Leveraged High Yield category, an average of 19 closed-end high yield funds; we would note that the degree of leverage varies substantially amongst the funds in the group. Investment Objective The Fund seeks high current income by invest-ing in a portfolio of high yield debt securities. Capital appreciation is a secondary objective. -1- TOTAL RETURNS As of September 30, 1995
3 Months 6 Months 12 Months High Yield Plus Fund (at NAV)* 3.9% 11.4% 15.4% Lipper Closed-End Leveraged High Yield Average** 3.5% 9.6% 15.2%
*The Fund's total return represents the change in net asset value from the beginning of the period noted through September 30, 1995 and assumes the reinvestment of dividends and distributions. Shares of the Fund are traded on the NYSE. Past performance is no guarantee of future results. **An average of 19 closed-end leveraged bond funds tracked by Lipper Analytical Services, Inc. Stock Listing The High Yield Plus Fund, Inc.'s common stock is traded on the New York Stock Exchange under the symbol "HYP" and is frequently listed as "HighYld-PlsFd" in the financial sections of newspapers. It is also listed in a closed-end fund table every Monday in The Wall Street Journal. As of September 30, 1995, the Fund's total invested assets of $108 million represented 117% of the Fund's net assets of $92 million. Total borrowings were $16 million, a decrease of $3 million from March 31, 1995. We have intentionally scaled back the Fund's leverage during this period of market strength. We may increase the degree of leverage in the future if market valuations become more compelling. The Fund's largest holdings include K & F Industries (the leading US supplier of aircraft braking systems), Fort Howard Corporation (leading US manufacturer of commercial tissue products), Sweetheart Cup (major cup and food container supplier), Container Corporation of America (linerboard and newsprint producer) and Magma Copper (copper mining and smelting); in aggregate, these holdings represent 12% of invested assets. The yield to maturity, average years to maturity and duration of the portfolio were 10.7%, 8.4 years and 5.1 years, respectively, as of September 30, 1995. This compares to 11.3%, 8.5 years and 5.5 years, respectively, as of March 31, 1995. Average ratings have remained steady at B1/B+. Thank you for your interest in the Fund, and we look forward to continuing the Fund's investment program. Sincerely, Catherine A. Smith Portfolio Manager Senior Vice President Wellington Management Company -2- - - ---------------------------------------------------------- THE HIGH YIELD PLUS FUND, INC. Portfolio of Investments September 30, 1995 (Unaudited)
- - ---------------------------------------------------------- Principal Moody's Amount Value Rating (000) Description (Note 1) - - ---------------------------------------------------------- LONG-TERM INVESTMENTS--114.0% Corporate Bonds--109.9% Aerospace/Defense--6.1% K & F Industries, Inc., Sr. Sec. Notes, B1 $ 350 11.875%, 12/1/03....... $ 364,875 Sr. Sub. Deb., B2 2,500 13.75%, 8/1/01......... 2,593,750 Rohr, Inc., Sr. Notes, Ba3 1,250 11.625%, 5/15/03....... 1,331,250 Wyman Gordon Co., Sr. Notes, B1 1,350 10.75%, 3/15/03........ 1,377,000 ------------ 5,666,875 ------------ Basic Industries-Manufacturing--21.4% American Standard, Inc., Sr. Deb., Ba3 250 11.375%, 5/15/04....... 275,000 Sr. Sub. Deb., Zero Coupon, (until 6/1/98), B1 2,000 10.50%, 6/1/05......... 1,625,000 Bell & Howell Co., Deb., Ser. B, B3 1,250 Zero Coupon, 3/1/05.... 768,750 Sr. Notes, B1 500 9.25%, 7/15/00......... 502,500 Cabot Safety Acquisition Corp., Sr. Sub. Notes, B3 1,250 12.50%, 7/15/05........ 1,300,000 Calmar Inc., Sr. Sub. Notes, B3 1,075 11.50%, 8/15/05........ 1,085,750 Day International Group Inc., Sr. Sub. Notes, B3 500 11.125%, 6/1/05........ 507,500 Dominion Textile USA, Inc., Sr. Notes, Ba3 500 8.875%, 11/1/03........ 500,000 Envirosource, Inc., Sr. Notes, B3 1,250 9.75%, 6/15/03......... 1,143,750 Essex Group, Inc., Sr. Notes, B1 $ 500 10.00%, 5/1/03......... $ 485,000 Exide Corp., Sr. Notes, B1 350 10.75%, 12/15/02....... 372,750 B1 500 10.00%, 4/15/05........ 527,500 Fairfield Manufacturing, Sr. Sub. Notes, Caa 950 11.375%, 7/1/01........ 902,500 Graphic Controls Corp., Sr. Sub. Notes, B3 500 12.00%, 9/15/05........ 503,750 IDEX Corp., Sr. Sub. Notes, Ba3 250 9.75%, 9/15/02......... 260,000 Interlake Corp., Sr. Notes, B2 250 12.00%, 11/15/01....... 258,750 Sr. Sub. Deb., B3 900 12.125%, 3/1/02........ 882,000 Jordan Industries, Inc., Sr. Notes, B3 1,000 10.375%, 8/1/03........ 935,000 Lear Seating Corp., Sub. Notes, B2 1,000 8.25%, 2/1/02.......... 972,500 Lear Siegler Seating Corp., Sr. Sub. Notes, B2 500 11.25%, 7/15/00........ 523,750 Lone Star Industries, Inc., Sr. Notes, NR 500 10.00%, 7/31/03........ 501,250 Overhead Door Corp., Sr. Notes, B1 1,000 12.25%, 2/1/00......... 955,000 Penda Corp., Sr. Notes, Ser. B, B2 750 10.75%, 3/1/04......... 637,500 Portola Packaging Inc., Sr. Notes, B2 375 10.75%, 10/1/05........ 377,812
See Notes to Financial Statements. 3
- - ---------------------------------------------------------- Principal Moody's Amount Value Rating (000) Description (Note 1) - - ---------------------------------------------------------- Basic Industries-Manufacturing--(cont'd.) Silgan Holdings, Inc., Sr. Deb., B3 $ 785 Zero Coupon, until (6/15/96), 13.25%, 12/15/02..... $ 733,975 Specialty Equipment Cos. Inc., Sr. Sub. Notes, B3 1,000 11.375%, 12/1/03....... 1,042,500 Thermadyne Holdings Corp., Sr. Notes, B3 750 10.25%, 5/1/02......... 750,000 Ucar Global Enterprises Inc., Sr. Sub. Notes, B+* 415 12.00%, 1/15/05........ 462,725 ------------ 19,792,512 ------------ Cable--6.0% Cablevision Industries Corp., B1 850 9.25%, 4/1/08, Sr. Deb.................. 903,125 Cablevision Systems Corp., Sr. Sub. Deb., B3 250 9.875%, 2/15/13........ 261,250 Comcast Corp., Sr. Sub. Deb., B1 400 9.375%, 5/15/05........ 406,000 Continental Cablevision, Inc., Sr. Deb., Ba2 500 9.00%, 9/1/08.......... 511,250 Sr. Sub. Deb., B1 550 11.00%, 6/1/07......... 607,750 Galaxy Telecom, L.P., Sr. Sub. Notes, B3 1,000 12.375%, 10/1/05....... 997,500 Marcus Cable Operating Co., L.P., Sr. Sub. Disc. Notes, B3 500 Zero Coupon, (until 2/1/00), 13.50%, 8/1/04....... 340,000 Sr. Sub. Notes, Caa 750 Zero Coupon, (until 6/15/00), 14.25%, 12/15/05..... 435,000 Videotron Ltd., Sr. Sub. Notes, Ba3 1,000(D) 10.25%, 10/15/02 (Canada)............. 1,040,000 ------------ 5,501,875 ------------ Chemicals--4.4% Agriculture Minerals & Chemicals, Inc., Sr. Notes, Ba3 $ 500 10.75%, 9/30/03........ $ 523,750 Arcadian Partners L.P., Sr. Notes, B2 1,350 10.75%, 5/1/05......... 1,417,500 General Chemical Corp., Sr. Sub. Notes, B2 500 9.25%, 8/15/03......... 487,500 Huntsman Corp., First Mtge. Notes, B1 500 10.625%, 4/15/01....... 532,500 Rexene Corp., Sr. Notes, B1 500 11.75%, 12/1/04........ 536,250 Sherritt, Inc., Deb., B1 450 10.50%, 3/31/14........ 455,625 Uniroyal Technology Corp., Sr. Notes, B2 100 11.75%, 6/1/03......... 92,000 ------------ 4,045,125 ------------ Computers & Electrical Equipment--0.8% Digital Equipment Corp., Deb., Ba1 750 7.75%, 4/1/23.......... 702,188 ------------ Consumer Goods & Services--5.6% American Safety Razor Co., Sr. Notes, Ser. A, B1 500 9.875%, 8/1/05......... 500,000 Fieldcrest Cannon, Inc., Sr. Sub. Deb., B1 250 11.25%, 6/15/04........ 262,500 Gruma S.A de C.V., Notes, (Mexico) NR 700(D) 9.75%, 3/9/98.......... 675,500 Kindercare Learning Centers, Inc., Sr. Notes, Ba3 250 10.375%, 6/1/01........ 257,500 Sweetheart Cup, Inc., Sr. Sub. Notes, B2 2,750 10.50%, 9/1/03......... 2,695,000
See Notes to Financial Statements. 4
- - ---------------------------------------------------------- Principal Moody's Amount Value Rating (000) Description (Note 1) - - ---------------------------------------------------------- Consumer Goods & Services--(cont'd.) Westpoint Stevens, Inc., Sr. Notes, B1 $ 750 8.75%, 12/15/01........ $ 744,375 ------------ 5,134,875 ------------ Energy & Related Goods & Services--4.9% Energy Ventures Inc., Sr. Notes, NR 750 10.25%, 3/15/04........ 780,000 Global Marine, Inc., Sr. Sec. Notes, B1 250 12.75%, 12/15/99....... 276,250 Plains Resources Inc., Sr. Sub. Notes, B3 500 12.00%, 10/1/99........ 515,000 Santa Fe Energy Resources, Inc., Sr. Sub. Deb., B1 1,250 11.00%, 5/15/04........ 1,331,250 Seagull Energy Corp., Sr. Sub. Notes, B2 500 8.625%, 8/1/05......... 475,000 Transportadora De Gas, Medium-Term Notes, NR 350(D) 7.75%, 12/23/98 (Argentina).......... 317,625 YPF Sociedad Anonima, Unsec'd. Notes (Argentina), B1 1,000(D) 8.00%, 2/15/04......... 855,000 ------------ 4,550,125 ------------ Financial Services--3.8% Banco Rio de la Plata S.A., Unsec'd. Notes (Argentina), B1 500(D) 8.75%, 12/15/03........ 380,000 Dime Bancorp, Inc., Sr. Notes, Ba3 1,250 10.50%, 11/15/05....... 1,368,750 Firstfed Financial Corp. Delaware, Unsec'd. Notes, B2 500 11.75%, 10/1/04........ 500,000 I C H Corp., Sr. Sub. Notes, C 300 11.25%, 12/1/96........ 201,000 Imperial Credit Industries, Inc., Sr. Notes, B1 $ 1,250 9.75%, 1/15/04......... $ 1,100,000 ------------ 3,549,750 ------------ Food & Lodging--3.9% ARA Services, Inc., Sr. Notes, Ba1 500 10.625%, 8/1/00........ 552,500 John Q. Hammons Hotels, First Mtge. Notes, B1 250 8.875%, 2/15/04........ 236,250 La Quinta Motor Inns, Inc., Sr. Sub. Notes, Ba3 1,000 9.25%, 5/15/03......... 1,047,500 Purina Mills Inc., Sr. Sub. Notes, B2 1,250 10.25%, 9/1/03......... 1,281,250 Red Roof Inns, Inc., Sr. Notes, B3 500 9.625%, 12/15/03....... 486,250 ------------ 3,603,750 ------------ Gaming--0.9% GB Property Funding Corp., First Mtge. Notes, B2 1,000 10.875%, 1/15/04....... 842,500 ------------ Grocery Stores--4.5% Big V Supermarkets, Sr. Sub. Notes, Ser. B, B3 1,750 11.00%, 2/15/04........ 1,426,250 Brunos Inc., Sr. Notes, B3 500 10.50%, 8/1/05......... 485,000 Dominick's Finer Foods, Inc., Sr. Sub. Notes, B3 650 10.875%, 5/1/05........ 659,750 Eagle Food Centers Inc., Sr. Notes, B1 1,000 8.625%, 4/15/00........ 540,000 Kash N Karry Food Stores Inc., Sr. Notes, PIK, B3 801 11.50%, 2/1/03......... 788,788 Star Markets Co., Inc., Sr. Sub. Notes, B3 250 13.00%, 11/1/04........ 243,750 ------------ 4,143,538 ------------
See Notes to Financial Statements. 5
- - ---------------------------------------------------------- Principal Moody's Amount Value Rating (000) Description (Note 1) - - ---------------------------------------------------------- Health Care--2.9% OrNda Healthcorp, Sr. Sub. Notes, B2 $ 1,500 11.375%, 8/15/04....... $ 1,668,750 Tenet Healthcare Corp., Sr. Notes, Ba2 325 9.625%, 9/1/02......... 343,688 Sr. Sub. Notes, Ba3 600 10.125%, 3/1/05........ 634,500 ------------ 2,646,938 ------------ Home Building & Real Estate--3.6% Beazer Homes USA Inc., Sr. Notes, B1 500 9.00%, 3/1/04.......... 455,000 Continental Homes Holdings, Sr. Notes, B1 1,000 12.00%, 8/1/99......... 1,040,000 Del Webb Corp., Sr. Notes, Ba3 500 10.875%, 3/31/00....... 512,500 Sr. Sub. Deb., B2 750 9.00%, 2/15/06......... 695,625 Toll Corp., Sr. Sub. Notes, Ba3 600 10.50%, 3/15/02........ 621,000 ------------ 3,324,125 ------------ Media & Communications--10.6% Granite Broadcasting Corp., Sr. Sub. Deb., B3 500 12.75%, 9/1/02......... 556,250 Sr. Sub. Notes, B3 1,000 10.375%, 5/15/05....... 1,020,000 Heritage Media Services Corp., Sr. Sec'd. Notes, Ba3 1,000 11.00%, 6/15/02........ 1,070,000 Infinity Broadcasting Corp., Sr. Sub. Notes, Ba3 250 10.375%, 3/15/02....... 267,500 Paging Network, Inc., Sr. Sub. Notes, B2 500 11.75%, 5/15/02........ 550,000 B2 375 10.125%, 8/1/07........ 390,937 SFX Broadcasting, Inc., Sr. Sub. Notes, B2 $ 325 11.375%, 10/1/00....... $ 338,813 Telefonica de Argentina S.A., Unsec'd. Notes, (Argentina) B1 1,500(D) 11.875%, 11/1/04....... 1,496,250 Turner Broadcasting Systems, Inc., Sr. Deb., Ba2 1,500 8.40%, 2/1/24.......... 1,450,515 World Color Press, Inc. Sr. Sub. Notes, B1 1,000 9.125%, 3/15/03........ 997,500 Young Broadcasting Inc., Sr. Sub. Notes, B2 1,000 11.75%, 11/15/04....... 1,110,000 B2 500 10.125%, 2/15/05....... 525,000 ------------ 9,772,765 ------------ Metals--11.1% AK Steel Corp., Sr. Notes, Ba3 1,250 10.75%, 4/1/04......... 1,335,937 Armco, Inc., Sr. Notes, B2 1,750 9.375%, 11/1/00........ 1,715,000 Bethlehem Steel Corp., Sr. Notes, B1 1,250 10.375%, 9/1/03........ 1,281,250 GS Technologies Operating Co., Inc., Sr. Notes, B2 800 12.25%, 10/1/05........ 796,000 Haynes International Inc., Sr. Sub. Notes, Ca 750 13.50%, 8/15/99........ 525,000 Kaiser Aluminum & Chemical Corp., Sr. Notes, B1 500 9.875%, 2/15/02........ 500,000 Magma Copper Co., Sr. Sub. Notes, Ba3 2,000 12.00%, 12/15/01....... 2,195,000 Russel Metals Inc., Sr. Notes, B3 250 10.25%, 7/15/00........ 241,875
See Notes to Financial Statements. 6
- - ---------------------------------------------------------- Principal Moody's Amount Value Rating (000) Description (Note 1) - - ---------------------------------------------------------- Metals--(cont'd.) Weirton Steel Corp., Sr. Notes, B2 $ 750 10.875%, 10/15/99...... $ 757,500 Wheeling Pittsburgh Corp., Sr. Notes, B1 1,000 9.375%, 11/15/03....... 915,000 ------------ 10,262,562 ------------ Paper & Packaging--11.8% Aracruz Celulose, S.A., Bonds, NR 250(D) 9.00%, 7/22/98, (Brazil)............. 245,625 Container Corp. of America, Sr. Notes, B2 950 10.75%, 5/1/02......... 999,875 B2 1,250 9.75%, 4/1/03.......... 1,256,250 Domtar, Inc., Sr. Notes, Ba1 1,500 11.75%, 3/15/99........ 1,648,125 Fort Howard Paper Corp., Sr. Notes, B1 2,000 9.25%, 3/15/01......... 1,975,000 B1 200 8.25%, 2/1/02.......... 190,000 Sr. Sub. Notes, B2 750 9.00%, 2/1/06.......... 705,000 Rainy River Forest Products, Inc., Sr. Sec'd. Notes, Ba3 500 10.75%, 10/15/01....... 535,000 Repap New Brunswick Inc., First Priority, Sr. Sec'd. Notes, Ba3 750 9.875%, 7/15/00........ 755,625 Second Priority, Sr. Sec'd. Notes, B2 750 10.625%, 4/15/05....... 761,250 Repap Wisconsin Inc., First Priority, Sr. Sec'd. Notes, B1 250 9.25%, 2/1/02.......... 240,625 S. D. Warren Co. Sr. Sub. Notes, B1 425 12.00%, 12/15/04....... 469,625 Stone Container Corp., Sr. Notes, B1 $ 750 11.875%, 12/1/98....... $ 806,250 Sr. Sub. Notes, B2 250 11.00%, 8/15/99........ 260,000 ------------ 10,848,250 ------------ Retail--2.2% Levitz Furniture Corp., Sr. Notes, B2 500 12.375%, 4/15/97....... 500,000 Sr. Sub. Notes, B3 1,250 9.625%, 7/15/03........ 993,750 Payless Cashways, Inc., Sr. Sub. Notes, Ba3 750 9.125%, 4/15/03........ 577,500 ------------ 2,071,250 ------------ Transportation--1.5% Northwest Airlines, Inc., Notes, B2 750 8.625%, 8/1/96......... 757,500 USAir, Inc., Pass-through Certs., 93-A, B1 700 10.375%, 3/1/13........ 654,500 ------------ 1,412,000 ------------ Utilities--3.9% Cleveland Electric Illuminating Co., First Mtge. Bonds, Ba2 950 9.50%, 5/15/05, Ser. B.................... 951,330 Long Island Lighting Co., Deb., Ba1 500 8.90%, 7/15/19......... 495,535 Midland Funding Corp., Sec'd. Lease Oblig. Bd., B2 500 11.75%, 7/23/05, Ser. A.................... 525,000 Texas-New Mexico Pwr Co., Sec. Deb., B1 1,500 10.75%, 9/15/03........ 1,590,000 ------------ 3,561,865 ------------ Total corporate bonds (cost $99,407,891)... 101,432,868 ------------
See Notes to Financial Statements. 7
- - ---------------------------------------------------------- Principal Moody's Amount Value Rating (000) Description (Note 1) - - ---------------------------------------------------------- Foreign Government Obligations(D)--3.2% Argentina Republic, B1 $ 1,250 8.375%, 12/20/03....... $ 929,688 NR 1,000 5.00%, 3/31/23......... 485,000 Republic of Brazil, collateralized increasing rate bonds, NR 750 6.00%, 9/15/13......... 398,906 NR 2,116 4.00%, 4/15/14......... 1,121,487 ------------ Total foreign government obligations (cost $2,977,473).... 2,935,081 ------------ Shares Common Stock**--0.1% ------- 94,444 Triangle Wire & Cable, Inc. (cost $986,250)...... 118,055 ------------ Preferred Stocks--0.8% 10,375 BCP Essex Holdings Ser. A............... 264,562 4,700 California Federal Bank................. 517,000 ------------ Total preferred stocks (cost $742,650)...... 781,562 ------------ Total long-term investments (cost $104,114,264)........ 105,267,566 ------------ Principal Amount (000) SHORT-TERM INVESTMENTS--3.5% ------- $ 3,210 Lanston (Aubrey G.) & Co. Inc., repurchase agreements, 6.40%, dated 9/29/95, due 10/2/95 in the amount of $3,211,712 (cost $3,210,000; collater- alized by $3,155,000 U.S. Treasury Notes, 6.75%, due 6/30/99; approximate value including accrued interest-$3,839,240)... 3,210,000 ------------ Total Investments--117.5% (cost $107,324,264; Note 3).............. 108,477,566 Liabilities in excess of other assets--(17.5%)...... (16,179,179) ------------ Net Assets--100%....... $ 92,298,387 ------------ ------------
- - --------------- * --Standard & Poor's rating. ** --Non-income producing securities. NR --Not rated by Moody's or Standard & Poor's. (D) --US$ Denominated Foreign Bonds. PIK --Payment in Kind. - - ---------------------------------------------------------- THE HIGH YIELD PLUS FUND, INC. Statement of Assets and Liabilities September 30, 1995 (Unaudited) - - ---------------------------------------------------------- Assets Investments, at value (cost $107,324,264)........................ $108,477,566 Cash................................... 4,330 Interest receivable.................... 2,558,084 Receivable for investments sold........ 983,457 Deferred expenses and other assets..... 83,146 ------------ Total assets......................... 112,106,583 ------------ Liabilities Loan payable (Note 4).................. 16,000,000 Payable for investments purchased...... 2,530,961 Dividends payable...................... 857,758 Accrued expenses....................... 183,610 Loan interest payable (Note 4)......... 167,895 Advisory fee payable................... 38,155 Administration fee payable............. 15,262 Deferred director's fees............... 14,555 ------------ Total liabilities.................... 19,808,196 ------------ Net Assets............................. $ 92,298,387 ------------ ------------ Net assets were comprised of: Common stock, at par................. $ 110,872 Paid-in capital in excess of par..... 101,889,328 ------------ 102,000,200 Undistributed net investment income............................... 592,389 Accumulated net realized loss on investments.......................... (11,447,504) Net unrealized appreciation on investments.......................... 1,153,302 ------------ Net assets, September 30, 1995....... $ 92,298,387 ------------ ------------ Net asset value per share ($92,298,387 / 11,087,190 shares of common stock issued and outstanding)......................... $8.32 ------------ ------------
See Notes to Financial Statements. See Notes to Financial Statements. 8 - - ---------------------------------------------------------- THE HIGH YIELD PLUS FUND, INC. Statement of Operations Six Months Ended September 30, 1995 (Unaudited) - - ---------------------------------------------------------- Net Investment Income Income Interest.............................. $ 5,831,128 Dividends............................. 35,516 ------------ 5,866,644 ------------ Expenses Investment advisory fee............... 228,889 Administration fee.................... 91,556 Custodian's fees and expenses......... 40,000 Reports to shareholders............... 27,000 Transfer agent's fees and expenses.... 24,000 Legal fees and expenses............... 19,000 Insurance expense..................... 16,000 Audit fee............................. 15,000 Directors fees........................ 12,000 Miscellaneous......................... 7,534 ------------ Total operating expenses............ 480,979 Loan interest expense (Note 4)........ 630,322 ------------ Total expenses...................... 1,111,301 ------------ Net investment income................... 4,755,343 ------------ Realized and Unrealized Gain on Investments Net realized gain on investment transactions.......................... 22,180 Net change in unrealized appreciation on investments........................... 5,074,798 ------------ Net gain on investments................. 5,096,978 ------------ Net Increase in Net Assets Resulting from Operations......................... $ 9,852,321 ------------ ------------
- - ---------------------------------------------------------- THE HIGH YIELD PLUS FUND, INC. Statement of Cash Flows Six Months Ended September 30, 1995 (Unaudited) - - ---------------------------------------------------------- Increase (Decrease) in Cash Cash flows from operating activities Interest and dividends received (excluding discount amortization of $423,303)............................. $ 5,482,893 Operating expenses paid............... (513,120) Loan interest and commitment fee paid................................ (847,383) Purchases of short-term portfolio investments, net.................... 305,000 Purchases of long-term portfolio investments......................... (31,203,421) Proceeds from disposition of long-term portfolio investments............... 33,935,604 Deferred expenses and other assets.... 16,043 ------------ Net cash from operating activities.... 7,175,616 ------------ Cash used for financing activities Net proceeds from decrease in notes payable............................. (3,000,000) Cash dividends paid (excluding reinvestment of dividends of $393,310)........................... (4,171,488) ------------ Net cash used for financing activities.......................... (7,171,488) ------------ Net increase in cash.................. 4,128 Cash at beginning of period........... 202 ------------ Cash at end of period................. $ 4,330 ------------ ------------ Reconciliation of Net Increase in Net Assets to Net Cash from Operating Activities Net increase in net assets resulting from operations....................... $ 9,852,321 ------------ Decrease in investments................. 2,423,177 Net realized gain on investment transactions.......................... (22,180) Net change in unrealized appreciation of investments........................... (5,074,798) Increase in receivable for investments sold.................................. (684,238) Decrease in interest receivable......... 39,552 Decrease in deferred expenses and other assets.......................... 16,043 Increase in payable for investments purchased............................. 874,941 Decrease in accrued expenses and other liabilities........................... (249,202) ------------ Total adjustments..................... (2,676,705) ------------ Net cash from operating activities.......................... $ 7,175,616 ------------ ------------
See Notes to Financial Statements. See Notes to Financial Statements. 9 - - ---------------------------------------------------------- THE HIGH YIELD PLUS FUND, INC. Statement of Changes in Net Assets (Unaudited) - - ----------------------------------------------------------
Six Months Ended Year September Ended Increase (Decrease) 30, March 31, in Net Assets 1995 1995 ----------- ----------- Operations Net investment income..... $ 4,755,343 $ 9,564,828 Net realized gain (loss) on investment transactions............ 22,180 (4,961,981) Net change in unrealized appreciation/depreciation of investments.......... 5,074,798 (906,562) ----------- ----------- Net increase in net assets resulting from operations.............. 9,852,321 3,696,285 Dividends paid to shareholders from net investment income......... (4,651,637) (9,430,522) Value of Fund shares issued to shareholders in reinvestment of dividends................. 393,310 740,429 ----------- ----------- Total increase (decrease)... 5,593,994 (4,993,808) Net Assets Beginning of period......... 86,704,393 91,698,201 ----------- ----------- End of period............... $92,298,387 $86,704,393 ----------- ----------- ----------- -----------
- - ---------------------------------------------------------- THE HIGH YIELD PLUS FUND, INC. Notes to Financial Statements (Unaudited) - - ---------------------------------------------------------- The High Yield Plus Fund, Inc. (the ``Fund'') was organized in Maryland on February 3, 1988, as a diversified, closed-end management investment company. The Fund had no transactions until April 4, 1988, when it sold 11,000 shares of common stock for $102,300 to Wellington Management Company (the ``Investment Adviser''). Investment operations commenced on April 22, 1988. The Fund's primary objective is to provide a high level of current income to shareholders through investment in publicly or privately offered high yield debt securities rated in the medium to lower categories by recognized rating services or non-rated securities of comparable quality. As a secondary investment objective, the Fund will seek capital appreciation, but only when consistent with its primary objective. The ability of issuers of debt securities held by the Fund to meet their obligations may be affected by economic developments in a specific industry or region. Note 1. Accounting The following is a summary of significant accounting policies Policies followed by the Fund in the preparation of its financial statements. Securities Valuation: Portfolio securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed to be over-the-counter, are valued at the mean between the most recently quoted bid and asked prices provided by principal market makers or in the absence of such price, as determined in good faith by the Board of Directors of the Fund. Any security for which the primary market is on an exchange is valued at the last sales price on such exchange on the day of valuation or, if there was no sale on such day, the closing bid price. Short-term securities which mature in more than 60 days are valued at current market quotations. Short-term securities which mature in 60 days or less are valued at amortized cost. In connection with transactions in repurchase agreements with U.S. financial institutions, it is the Fund's policy that its custodian take possession of the underlying collateral securities, the value of which exceeds the principal amount of the repurchase transaction including accrued interest. If the seller defaults, and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller See Notes to Financial Statements. 10 of the security, realization of the collateral by the Fund may be delayed or limited. Cash Flow Information: The Fund invests in securities and pays dividends from net investment income and distributions from net realized gains which are paid in cash or are reinvested at the discretion of shareholders. These activities are reported in the Statement of Changes in Net Assets and additional information on cash receipts and cash payments is presented in the Statement of Cash Flows. Accounting practices that do not affect reporting activities on a cash basis include carrying investments at value and amortizing discounts on debt obligations. Cash, as used in the Statement of Cash Flows, is the amount reported as ``Cash'' in the Statement of Assets and Liabilities. Securities Transactions and Investment Income: Security transactions are recorded on the trade date. Realized gains and losses from securities transactions are calculated on the identified cost basis. Interest income, which is comprised of three elements; stated coupon rate, original issue discount and market discount, is recorded on an accrual basis. Dividend income is recorded on the ex-dividend date. Federal Income Taxes: It is the Fund's policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders. Therefore, no federal income tax provision is required. Dividends and Distributions: The Fund expects to declare and pay dividends of net investment income monthly and make distributions at least annually of any net capital gains. Dividends and distributions are recorded on the ex-dividend date. Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. Note 2. Agreements The Fund has agreements with the Investment Adviser and with Prudential Mutual Fund Management, Inc. (the ``Administrator''). The Investment Adviser makes investment decisions on behalf of the Fund; the Administrator provides occupancy and certain clerical and accounting services to the Fund. The Fund bears all other costs and expenses. The investment advisory agreement provides for the Investment Adviser to receive a fee, computed weekly and payable monthly at an annual rate of .50% of the Fund's average weekly net assets. The administration agreement provides for the Administrator to receive a fee, computed weekly and payable monthly at an annual rate of .20% of the Fund's average weekly net assets. Note 3. Portfolio Purchases and sales of invest- Securities ment securities, other than short-term investments, for the six months ended September 30, 1995, aggregated $32,078,362 and $34,619,842, respectively. During the six months ended September 30, 1995, the Fund entered into $1,397,058 of securities transactions on a principal basis with Prudential Securities Incorporated, an affiliate of the Administrator. The cost basis of investments for federal income tax purposes was substantially the same as for financial reporting purposes, and, accordingly, as of September 30, 1995, net unrealized appreciation for federal income tax purposes was $1,153,302 (gross unrealized appreciation--$3,670,944; gross unrealized depreciation--$2,517,642). For federal income tax purposes, the Fund has a capital loss carryforward as of March 31, 1995 of approximately $8,906,000 of which $6,507,000 expires in 2000 and $2,399,000 expires in 2003. Accordingly, no capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such carryforward. Note 4. Borrowings The Fund has a credit agree- ment with an unaffiliated lender. The maximum commitment under this agreement is $30,000,000. Interest on any such borrowings is based on market rates and is payable at maturity. The average daily balance outstanding during the six months ended September 30, 1995 was $16,428,571 at a weighted average interest rate of 7.65%. The maximum face amount of borrowings outstanding at any month end during the six months ended September 30, 1995 was $20,000,000. The current borrowings of $16,000,000 (at a weighted average interest rate of 7.00%) mature throughout the period from October 26, 1995 to February 22, 1996. The Fund has paid commitment fees at an annual rate of .25 of 1% on any unused portion of the credit facility. Commitment fees are included in ``Loan Interest'' as reported on the Statement of Assets and Liabilities and on the Statement of Operations. Note 5. Capital There are 100 million shares of $.01 par value common stock authorized. During the six months ended September 30, 1995 and the fiscal year ended March 31, 1995, the Fund 11 issued 47,750 and 92,154 shares in connection with reinvestment of dividends, respectively. Note 6. Dividends On October 16, 1995 the Board of Directors of the Fund declared a dividend of $0.07 per share payable on November 10, 1995, to shareholders of record on October 31, 1995. Note 7. Quarterly Data
Net increase Net realized and (decrease) unrealized in net assets Net investment gains (losses) on resulting from Total income investments operations Quarterly period ended income Amount Per share Amount Per share Amount Per share - - ------------------------- ---------- ------------------------ - - -------------------------- -------------------------- June 30, 1993 $2,878,196 $2,486,023 $ .23 $ 3,090,065 $ .28 $ 5,576,088 $ .51 September 30, 1993 2,850,368 2,424,730 .22 (371,379) (.03) 2,053,351 .19 December 31, 1993 2,910,043 2,386,055 .22 3,568,620 .33 5,954,675 .55 March 31, 1994 3,142,078 2,536,997 .23 (8,000,128) (.73) (5,463,131) (.50) June 30, 1994 2,933,382 2,346,706 .22 (2,820,555) (.26) (473,849) (.04) September 30, 1994 2,945,636 2,292,398 .21 (1,179,941) (.11) 1,112,457 .10 December 31, 1994 3,096,863 2,494,098 .22 (3,550,452) (.32) (1,056,354) (.10) March 31, 1995 2,970,090 2,431,626 .22 1,682,405 .15 4,114,031 .37 June 30, 1995 2,991,367 2,400,272 .22 3,820,040 .34 6,220,312 .56 September 30, 1995 2,875,277 2,355,071 .21 1,276,938 .12 3,632,009 .33 Dividends and Share distributions price Quarterly period ended Amount Per share High Low - - ------------------------- ------------------------ ------------ June 30, 1993 $2,290,592 $.210 $9 $8 1/2 September 30, 1993 2,295,791 .210 9 1/8 8 1/2 December 31, 1993 2,298,401 .210 9 8 3/8 March 31, 1994 2,353,581 .215 9 1/4 8 1/4 June 30, 1994 2,386,034 .218 8 5/8 7 5/8 September 30, 1994 2,390,230 .218 8 3/8 7 3/4 December 31, 1994 2,339,889 .212 7 3/4 7 1/4 March 31, 1995 2,314,369 .210 8 1/8 8 June 30, 1995 2,320,211 .210 8 5/8 8 1/4 September 30, 1995 2,331,426 .210 8 3/4 8 1/4
12 - - -------------------------------------------------------------------------------- THE HIGH YIELD PLUS FUND, INC. Financial Highlights (Unaudited) - - --------------------------------------------------------------------------------
Six Months Ended Year Ended March 31, September 30, - - ----------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE: 1995 1995 1994 1993 1992 1991 ------------- ------------- - - ------------- ------------- ------------- ------------- Net asset value, beginning of period.......................... $ 7.85 $ 8.38 $ 8.48 $ 7.91 $ 6.80 $ 7.22 ------------- ------------- - - ------------- ------------- ------------- ------------- Income from investment operations Net investment income............. .43 .87 .90 .89 .87 .99 Net realized and unrealized gain (loss) on investments........... .46 (.54) (.15) .52 1.11 (.41) ------------- ------------- - - ------------- ------------- ------------- ------------- Total from investment operations...................... .89 .33 .75 1.41 1.98 .58 ------------- ------------- - - ------------- ------------- ------------- ------------- Less dividends and distributions Dividends from net investment income.......................... (.42) (.86) (.85) (.84) (.87) (.99) Distributions in excess of net investment income............... -- -- -- -- -- (.01) ------------- ------------- - - ------------- ------------- ------------- ------------- Total dividends and distributions................... (.42) (.86) (.85) (.84) (.87) (1.00) ------------- ------------- - - ------------- ------------- ------------- ------------- Net asset value, end of period.... $ 8.32 $ 7.85 $ 8.38 $ 8.48 $ 7.91 $ 6.80 ------------- ------------- - - ------------- ------------- ------------- ------------- ------------- ------------- - - ------------- ------------- ------------- ------------- Market price per share, end of period.......................... $ 8.625 $ 8.00 $ 8.375 $ 8.875 $ 7.75 $ 6.50 ------------- ------------- - - ------------- ------------- ------------- ------------- ------------- ------------- - - ------------- ------------- ------------- ------------- TOTAL INVESTMENT RETURN(b)........ 13.36% 6.33% 3.90% 27.02% 34.28% 9.14% ------------- ------------- - - ------------- ------------- ------------- ------------- ------------- ------------- - - ------------- ------------- ------------- ------------- RATIO/SUPPLEMENTAL DATA: Net assets, end of period (000 omitted)........................ $92,298 $86,704 $91,698 $92,422 $85,742 $73,656 Average net assets (000 omitted)........................ $91,113 $87,734 $96,962 $88,142 $80,703 $70,661 Ratio to average net assets: Expenses, before loan interest, commitment fees and nonrecurring expenses......... 1.05%(a) 1.11% 1.12% 1.20% 1.28% 1.28% Total expenses.................. 2.43%(a) 2.71% 2.01% 2.03% 2.26% 2.21% Net investment income........... 10.41%(a) 10.90% 10.15% 10.94% 11.69% 15.23% Portfolio turnover rate........... 31% 47% 100% 82% 46% 38% Total debt outstanding at end of period (000 omitted)............ $16,000 $19,000 $28,000 $15,000 $15,000 $6,000 Asset coverage(c)................. $6,769 $5,563 $4,275 $7,161 $6,716 $13,276
- - --------------- (a) Annualized (b) Total investment return is calculated assuming a purchase of common stock at the current market value on the first day and a sale at the current market value on the last day of each period reported. Dividends and distributions are assumed for purposes of this calculation to be reinvested at prices obtained under the dividend reinvestment plan. This calculation does not reflect brokerage commissions. Total returns for periods less than one year are not annualized. (c) Per $1,000 of debt outstanding. Contained above is selected data for a share of common stock outstanding, total investment return, ratios to average net assets and other supplemental data for the periods indicated. This information has been determined based upon information provided in the financial statements and market price data for the Fund's shares. See Notes to Financial Statements. 13 SUPPLEMENTAL PROXY INFORMATION The Annual Meeting of Shareholders of The High Yield Plus Fund, Inc. (The ``Fund'') was held on July 31, 1995 at the offices of Prudential Securities Incorporated, One Seaport Plaza, New York, New York. The meeting was held for the following purposes: (1) To elect the following director to serve as follows:
Director Class Term Expiring ------------------ ------ -------- --------- Daniel S. Ahearn I 3 years 1998 Directors whose term of office continued beyond this meeting are Edward D. Beach, Thomas T. Mooney and Robin B. Smith. To ratify the selection of Deloitte & Touche LLP as independent public accountants for the (2) year ending March 31, 1996. (3) To transact such other business as may properly come before the meeting or any adjournment thereof.
The results of the proxy solicitation on the above matters were as follows:
Director/Auditor Votes for Votes against Votes withheld Abstentions ------------------- ---------- -------------- --------------- ------------ (1) Daniel S. Ahearn 8,862,409 -- 135,239 -- (2) Deloitte & Touche LLP 8,885,332 44,117 -- 132,999 (3) There was no other business voted upon at the Annual Meeting of Shareholders.
14 Directors Daniel S. Ahearn Edward D. Beach Thomas T. Mooney Robin B. Smith Investment Adviser Wellington Management Company 75 State Street Boston, Massachusetts 02109 Administrator Prudential Mutual Fund Management, Inc. One Seaport Plaza New York, New York 10292 Custodian and Transfer Agent State Street Bank and Trust Company One Heritage Drive North Quincy, Massachusetts 02171 Independent Accountants Deloitte & Touche LLP Two World Financial Center New York, New York 10281 Legal Counsel Kirkpatrick & Lockhart LLP 1800 M Street, N.W. Washington, D.C. 20036 Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Fund may purchase, from time to time, shares of its common stock at market prices. The accompanying financial statements as of September 30, 1995, were not audited and, accordingly, no opinion is expressed on them. This report is for stockholder information. This is not a prospectus intended for use in the purchase or sale of Fund shares. The High Yield Plus Fund, Inc. One Seaport Plaza New York, NY 10292 For information call toll-free (800) 451-6788 -----END PRIVACY-ENHANCED MESSAGE-----