-----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, CQ6IJi71TdeY5JSAzuPlIOGBwiGNGA/dRBPnT4Teuxe5auhHeWny41iHNf5A/U3A 8W2VOr2R1/WEag9GcRrZjw== 0000828990-96-000004.txt : 19970110 0000828990-96-000004.hdr.sgml : 19970110 ACCESSION NUMBER: 0000828990-96-000004 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961209 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: 96677773 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, INC. The High Yield Plus Fund, Inc. SEMI ANNUAL REPORT Sept 30, 1996 Letter To Shareholders October 11, 1996 Dear Shareholder: The high yield market showed surprising strength during the six-month period ended September 30, 1996 despite the increase in longer-term interest rates and the general uncertainty in the fixed income markets regarding the outlook for interest rates. The high yield market's stability, continuing the trend evidenced during 1995, was driven by generally favorable economic conditions and healthy demand for high yield securities. In fact, both the flow of funds into high yield mutual funds as well as the volume of new high yield bond issuance have been particularly strong this year. As a result of the positive market conditions, valuations, especially in the lower- quality tier of the high yield market, appear full. Market participants have rationalized these relative valuations with expectations that the economy will remain firm and positive cash flows into the sector will continue unabated. This market euphoria has been mirrored in the US equity markets, which have reached striking new levels this year, even as this letter is being written. Despite the healthy market conditions the high yield market is enjoying today, we would caution that valuations in many instances do not appear to offer adequate returns to compensate for potential credit risk. Our strategy remains to focus on issuers that appear to offer potential improvements in debt servicing capabilities and/or have attractive asset bases to fall back upon if operating conditions become less amenable in the future. The Fund's total returns for the periods ended September 30, 1996 are shown on the following table. We have also provided the returns of the Lipper Closed-End Leveraged High Yield category, an average of 17 closed-end high yield funds; we would note that the degree of leverage varies substantially amongst the funds in the group. TOTAL RETURNS As of 9/30/96
6 Months 12 Months 24 Months HYP 7.2% 14.2% 30.7% Lipper CELHY 7.8% 14.9% 33.1%
As of September 30, 1996, the Fund's total invested assets of $112 million represented 117% of the Fund's net assets of $96 million. Total borrowings were $17 million, unchanged from the March 31, 1996 year end. (Borrowings did fluctuate modestly during the six month period, however.) The yield to maturity and average years to maturity were 9.8% and 7.8 years, respectively, as of September 30, 1996; this compares to 10.1% and 8.6 years as of March 31, 1996. Much of the decrease in yield reflects market appreciation during the period, which resulted chiefly from the strong buyer demand for high yield instruments. Average ratings have remained steady at B1/B+. Some of the Fund's larger holdings include securities of Fort Howard Corporation, the leading US manufacturer of commercial tissue paper; Sweetheart Cup, a major 1 producer of disposable food containers; Container Corporation of America, a significant producer of containerboard and other paper/packaging products; Bell & Howell Company, an information services and document management provider, and Wyman-Gordon, a manufacturer of large structural parts chiefly for the aerospace industry. The Fund's shares closed the period at $8.88 per share. This price reflected a premium of 3.1% to the Fund's net asset value of $8.61 per share. The monthly dividend of $0.07 per share ($0.84 per share annualized) equates to a yield of 9.5% on the closing stock price. For comparison, this dividend yield was 280 basis points in excess of the 10-Year Treasury bond yield as of September 30, 1996. Thank you for your interest in the Fund, and we look forward to continuing the Fund's investment program. Sincerely yours, Catherine A. Smith Portfolio Manager Senior Vice President Wellington Management Company, LLP 2 Portfolio of Investments as of September 30, 1996 (Unaudited) THE HIGH YIELD PLUS FUND, INC. - - ------------------------------------------------------------ - - --------------------
Principal Moody's Interest Maturity Amount Value Description Rating Rate Date (000) (Note 1) - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ LONG-TERM INVESTMENTS--113.7% CORPORATE BONDS--109.7% - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Aerospace/Defense--8.9% Howmet Corp., Sr. Sub. Notes B3 10.00% 12/01/03 $ 1,605 $ 1,721,362 K & F Industries, Inc., Sr. Sec. Notes B1 11.875 12/01/03 350 378,000 Sr. Sub. Notes B2 10.375 9/01/04 1,250 1,293,750 Moog, Inc., Sr. Sub. Notes B2 10.00 5/01/06 1,285 1,317,125 Northrop-Grumman Corp., Deb. Baa3 9.375 10/15/24 525 582,414 Rohr, Inc., Sr. Notes Ba3 11.625 5/15/03 1,250 1,371,875 Wyman-Gordon Co., Sr. Notes Ba3 10.75 3/15/03 1,750 1,881,250 - - ------------ 8,545,776 - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Basic Industries--Manufacturing--23.0% Advanced Micro Devices, Inc., Sr. Sec. Notes Ba1 11.00 8/01/03 500 516,250 American Standard, Inc., Sr. Deb. Ba3 11.375 5/15/04 250 270,625 Sr. Sub. Deb., Zero Coupon (until 6/1/98) B1 10.50 6/01/05 1,500 1,376,250 Associated Materials, Inc., Sr. Sub. Notes B3 11.50 8/15/03 470 447,675 Bell & Howell Holdings Co., Sr. Disc. Deb., Ser. B, Zero Coupon (until 3/1/00) B3 11.50 3/01/05 1,955 1,392,937 Bell & Howell Co., Sr. Notes B1 9.25 7/15/00 750 761,250 Cabot Safety Acquisition Corp., Sr. Sub. Notes B3 12.50 7/15/05 750 828,750 Collins & Aikman Products Co., Sr. Sub. Notes B3 11.50 4/15/06 1,350 1,420,875 Coltec Industries, Inc., Sr. Notes B1 9.75 4/01/00 900 931,500 Delco Remy International, Inc., Sr. Sub. Notes B2 10.625 8/01/06 360 369,000 Dominion Textile (USA), Inc., Guaranteed Sr. Notes Ba2 8.875 11/01/03 350 341,250 Guaranteed Sr. Notes Ba2 9.25 4/01/06 435 432,825 Envirosource, Inc., Sr. Notes B3 9.75 6/15/03 350 332,500 Essex Group, Inc., Sr. Notes B1 10.00 5/01/03 1,000 1,025,000 Exide Corp., Sr. Notes B1 10.75 12/15/02 350 364,875 Sr. Notes B1 10.00 4/15/05 500 512,500 Graphic Contols Corp., Sr. Sub. Notes, Ser. A B3 12.00 9/15/05 500 541,250 Great Lakes Carbon Corp., Sr. Sec. Notes Ba3 10.00 1/01/06 1,000 1,047,500 Hayes Wheels International, Inc., Sr. Sub. Notes B3 11.00 7/15/06 340 357,850
- - ------------------------------------------------------------ - - -------------------- See Notes to Financial Statements. 3 ----- Portfolio of Investments as of September 30, 1996 (Unaudited) THE HIGH YIELD PLUS FUND, INC. - - ------------------------------------------------------------ - - --------------------
Principal Moody's Interest Maturity Amount Value Description Rating Rate Date (000) (Note 1) - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Basic Industries--Manufacturing (cont'd.) IDEX Corp., Sr. Sub. Notes Ba3 9.75% 9/15/02 $ 250 $ 258,125 The Interlake Corp., Sr. Notes B2 12.00 11/15/01 250 267,500 Sr. Sub. Deb. B3 12.125 3/01/02 1,000 1,045,000 Lear Seating Corp., Sr. Sub. Notes Ba3 11.25 7/15/00 500 517,500 Sub. Notes B1 8.25 2/01/02 750 738,750 Penda Corp., Sr. Notes, Ser. B B2 10.75 3/01/04 750 727,500 PMI Acquisition Corp., Sr. Sub. Notes B2 10.25 9/01/03 1,000 1,020,000 Portola Packaging, Inc., Sr. Notes B2 10.75 10/01/05 250 262,500 Silgan Holdings, Inc., Sr. Disc. Deb. B3 13.25 12/15/02 261 264,915 Specialty Equipment Co., Inc., Sr. Sub. Notes B3 11.375 12/01/03 1,000 1,072,500 Thermadyne Holdings Corp., Sr. Notes B3 10.25 5/01/02 750 765,000 UCAR Global Enterprises, Inc., Sr. Sub. Notes B2 12.00 1/15/05 415 473,619 Walbro Corp., Sr. Notes Ba3 9.875 7/15/05 1,000 1,020,000 Westinghouse Electric Corp., Sr. Notes Ba1 8.875 6/01/01 425 433,428 - - ------------ 22,136,999 - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Cable--7.0% Cablevision Industries Corp., Sr. Deb., Ser. B Ba2 9.25 4/01/08 500 513,900 Cablevision Systems Corp., Sr. Sub. Notes B2 9.25 11/01/05 1,000 967,500 Sr. Sub. Notes B2 9.875 5/15/06 475 475,000 Comcast Corp., Sr. Sub. Deb. B1 9.375 5/15/05 400 406,000 Sr. Sub. Deb. B1 9.125 10/15/06 750 746,250 Lenfest Communications, Inc., Sr. Sec. Notes Ba3 8.375 11/01/05 500 468,750 Marcus Cable Operating Co., L.P., Sr. Sub. Disc. Notes, Zero Coupon (until 8/1/99) B3 13.50 8/01/04 500 390,000 Sr. Sub. Disc. Notes, Zero Coupon (until 6/15/00) Caa 14.25 12/15/05 250 170,000 Rifkin Acquisitions Partners, L.L.L.P., Sr. Sub. Notes B3 11.125 1/15/06 1,000 1,030,000 TCI Communications, Inc., Sr. Deb. Ba1 9.25 1/15/23 500 486,605 Videotron Ltd., Sr. Sub. Notes, (Canada) Ba3 10.25 10/15/02 1,000 D 1,052,500 - - ------------ 6,706,505
- - ------------------------------------------------------------ - - -------------------- 4 See Notes to Financial Statements. Portfolio of Investments as of September 30, 1996 (Unaudited) THE HIGH YIELD PLUS FUND, INC. - - ------------------------------------------------------------ - - --------------------
Principal Moody's Interest Maturity Amount Value Description Rating Rate Date (000) (Note 1) - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Chemicals--4.4% Agriculture Minerals & Chemicals, Inc., Sr. Notes Ba3 10.75% 9/30/03 $ 500 $ 530,000 Arcadian Partners, L.P., Sr. Notes, Ser. B B2 10.75 5/01/05 1,000 1,100,000 General Chemical, Sr. Sub. Notes B2 9.25 8/15/03 500 495,000 Harris Chemical North America, Inc., Sr. Sec. Disc. Notes B2 10.25 7/15/01 250 255,000 Rexene Corp., Sr. Notes B1 11.75 12/01/04 500 545,000 Sterling Chemicals Holdings, Inc., Sr. Sub. Notes B3 11.75 8/15/06 625 653,125 Texas Petrochemicals Corp., Sr. Sub. Notes B3 11.125 7/01/06 175 184,625 Viridian, Inc., Deb. (Canada) Ba3 10.50 3/31/14 450 D 493,875 - - ------------ 4,256,625 - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Computers & Electrical Equipment--1.7% Digital Equipment Corp., Deb. Ba1 7.75 4/01/23 750 644,220 Unisys Corp., Sr. Notes B1 12.00 4/15/03 1,000 1,035,000 - - ------------ 1,679,220 - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Consumer Goods & Services--5.5% American Safety Razor Co., Sr. Notes, Ser. B B1 9.875 8/01/05 500 511,250 Gruma S.A. de C.V., Notes (Mexico) NR 9.75 3/09/98 700 D 717,500 Remington Products Co., L.L.C., Sr. Sub. Notes B3 11.00 5/15/06 500 505,000 Sweetheart Cup, Inc., Guaranteed Sr. Sub. Notes B3 10.50 9/01/03 2,750 2,805,000 Westpoint Stevens, Inc., Sr. Notes Ba3 8.75 12/15/01 750 759,375 - - ------------ 5,298,125 - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Energy & Related Goods & Services--6.8% Energy Ventures, Inc., Sr. Notes B1 10.25 3/15/04 750 798,750 Flores & Rucks, Inc., Sr. Sub. Notes B3 9.75 10/01/06 335 339,606 Global Marine Inc., Sr. Notes Ba1 12.75 12/15/99 250 270,000 Mesa Operating Co., Sr. Sub. Disc. Notes, Zero Coupon (until 7/1/01) B2 11.625 7/01/06 625 400,000 Sr. Sub. Notes B2 10.625 7/01/06 300 315,000 Plains Resources, Inc., Sr. Sub. Notes B2 10.25 3/15/06 1,000 1,040,000 Santa Fe Energy Resources, Inc., Sr. Sub. Deb. B1 11.00 5/15/04 1,250 1,362,500 Seagull Energy Corp., Sr. Sub. Notes B1 8.625 8/01/05 250 247,500 Transportadora de Gas del Sur S.A. (Argentina) Notes B1 10.25 4/25/01 500 D 508,751 Med. Term Notes B1 7.75 12/23/98 350 D 343,000
- - ------------------------------------------------------------ - - -------------------- See Notes to Financial Statements. 5 ----- Portfolio of Investments as of September 30, 1996 (Unaudited) THE HIGH YIELD PLUS FUND, INC. - - ------------------------------------------------------------ - - --------------------
Principal Moody's Interest Maturity Amount Value Description Rating Rate Date (000) (Note 1) - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Energy & Related Goods & Services (cont'd.) YPF Sociedad Anonima, Unsec'd. Notes (Argentina) B1 8.00% 2/15/04 $ 1,000 D $ 937,500 - - ------------ 6,562,607 - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Financial Services--3.9% Dime Bancorp, Sr. Notes Ba3 10.50 11/15/05 1,250 1,375,000 First Nationwide Escrow Corp., Sr. Sub. Notes Ba3 10.625 10/01/03 120 125,550 First Nationwide Parent, Sr. Exchange Notes B2 12.50 4/15/03 750 811,875 FirstFed Financial Corp., Notes B2 11.75 10/01/04 500 510,000 Imperial Credit Industries, Inc., Sr. Notes B1 9.75 1/15/04 1,000 965,000 - - ------------ 3,787,425 - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Gaming--1.3% GB Property Funding Corp., First Mtge. Notes B3 10.875 1/15/04 750 652,500 Trump Atlantic City Assoc., First Mtge. Notes B1 11.25 5/01/06 580 571,300 - - ------------ 1,223,800 - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Grocery Stores--3.2% Big V Supermarkets, Inc., Sr. Sub. Notes, Ser. B B3 11.00 2/15/04 500 482,500 Bruno's, Inc., Sr. Sub. Notes B3 10.50 8/01/05 500 512,500 Dominick's Finer Foods, Inc., Sr. Sub. Notes B3 10.875 5/01/05 500 541,250 Grand Union Co., Sr. Notes B3 12.00 9/01/04 1,000 1,010,000 Smiths Food & Drug Ctrs., Inc., Sr. Sub. Notes B3 11.25 5/15/07 500 531,250 - - ------------ 3,077,500 - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Health Care--5.5% Beverly Enterprises, Inc., Sr. Notes B1 9.00 2/15/06 375 364,688 Dade International Inc., Sr. Sub. Notes B3 11.125 5/01/06 390 417,300 Integrated Health Svcs., Inc., Sr. Sub. Notes B1 10.25 4/30/06 500 516,250 OrNda Healthcorp, Sr. Sub. Notes B2 11.375 8/15/04 1,250 1,393,750 Owens & Minor, Inc., Sr. Sub. Notes B1 10.875 6/01/06 1,085 1,133,825 Quorum Health Group, Inc., Sr. Sub. Notes B1 8.75 11/01/05 500 501,250 Tenet Healthcare Corp., Sr. Notes Ba1 9.625 9/01/02 325 352,625 Sr. Sub. Notes Ba3 10.125 3/01/05 600 651,000 - - ------------ 5,330,688
- - ------------------------------------------------------------ - - -------------------- 6 See Notes to Financial Statements. Portfolio of Investments as of September 30, 1996 (Unaudited) THE HIGH YIELD PLUS FUND, INC. - - ------------------------------------------------------------ - - --------------------
Principal Moody's Interest Maturity Amount Value Description Rating Rate Date (000) (Note 1) - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Home Builder & Real Estate--1.5% Toll Corp., Sr. Sub. Notes Ba3 10.50% 3/15/02 $ 600 $ 625,500 Del Webb Corp., Sr. Notes Ba3 10.875 3/31/00 500 505,000 Sr. Sub. Deb. B2 9.00 2/15/06 350 336,000 - - ------------ 1,466,500 - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Media & Communications--12.0% Arch Communications Group, Inc., Sr. Disc. Notes, Zero Coupon (until 3/15/01) B3 10.875 3/15/08 1,250 700,000 Benedek Communications Corp., Sr. Sub. Disc. Notes, Zero Coupon (until 5/15/01) B3 13.25 5/15/06 1,475 870,250 Big Flower Press, Inc., Sr. Sub. Notes B2 10.75 8/01/03 500 510,000 Chancellor Broadcasting Co., Sr. Sub. Notes B3 9.375 10/01/04 1,000 990,000 Cobb Theatres, Sr. Sec. Notes B2 10.625 3/01/03 250 257,500 Granite Broadcasting Corp., Sr. Sub. Deb B3 12.75 9/01/02 500 550,000 Sr. Sub. Notes B3 10.375 5/15/05 500 505,000 Heritage Media Services, Inc., Sr. Sec. Notes Ba1 11.00 6/15/02 250 267,500 JCAC, Inc., Sr. Sub. Notes B2 10.125 6/15/06 250 257,500 MobileMedia Communications, Inc., Sr. Sub. Notes B3 9.375 11/01/07 1,250 1,000,000 Muzak L.P., Muzak Capital, Sr. Notes Ba3 10.00 10/01/03 255 256,594 Paging Network, Inc., Sr. Sub. Notes B2 11.75 5/15/02 250 267,500 Sr. Sub. Notes B2 10.125 8/01/07 250 253,750 Plitt Theatres, Inc., Sr. Sub. Notes B3 10.875 6/15/04 500 506,250 Telefonica de Argentina S.A., Notes (Argentina) B1 11.875 11/01/04 1,000 D 1,065,000 Teleport Communications, Sr. Disc. Notes, Zero Coupon (until 7/01/01) B1 11.125 7/01/07 420 268,800 Western Wireless Corp., Sr. Sub. Notes B3 10.50 6/01/06 250 253,750 World Color Press, Inc., Sr. Sub. Notes B1 9.125 3/15/03 1,250 1,237,500 Young Broadcasting Inc., Guaranteed Sr. Sub. Notes B2 11.75 11/15/04 1,000 1,080,000 Sr. Sub. Notes B2 10.125 2/15/05 500 497,500 - - ------------ 11,594,394 - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Metals--10.4% AK Steel Corp., Sr. Notes Ba2 10.75 4/01/04 1,000 1,090,000 Armco Inc., Sr. Notes B2 9.375 11/01/00 1,750 1,750,000
- - ------------------------------------------------------------ - - -------------------- See Notes to Financial Statements. 7 ----- Portfolio of Investments as of September 30, 1996 (Unaudited) THE HIGH YIELD PLUS FUND, INC. - - ------------------------------------------------------------ - - --------------------
Principal Moody's Interest Maturity Amount Value Description Rating Rate Date (000) (Note 1) - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Metals (cont'd.) Bethlehem Steel Corp., Sr. Notes B1 10.375% 9/01/03 $ 1,250 $ 1,318,750 Companhia Vale do Rio Doce, Notes (Brazil) NR 10.00 4/02/04 750 D 773,437 Metalurgica Gerdau S.A., Notes (Brazil) NR 11.125 5/24/04 375 D 382,969 Northwestern Steel & Wire Co., Sr. Notes B1 9.50 6/15/01 1,500 1,443,750 NS Group, Inc., Sr. Sec. Notes B3 13.50 7/15/03 1,000 1,000,000 Oregon Steel Mills, Inc., First Mtge. Notes B1 11.00 6/15/03 285 299,606 Weirton Steel Corp., Sr. Notes B2 10.875 10/15/99 750 768,750 Sr. Notes B2* 11.375 7/01/04 750 753,750 Wheeling Pittsburgh Corp., Sr. Notes B1 9.375 11/15/03 420 399,000 - - ------------ 9,980,012 - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Paper & Packaging--10.0% Container Corp., Sr. Notes B1 9.75 4/01/03 1,250 1,268,750 Sr. Notes, Ser. B B1 10.75 5/01/02 1,000 1,050,000 Domtar, Inc., Sr. Notes (Canada) Ba1 8.75 8/01/06 85 D 86,700 Fort Howard Corp., Sr. Notes B1 9.25 3/15/01 2,000 2,040,000 Sr. Notes B1 8.25 2/01/02 200 196,000 Sr. Sub. Notes B2 9.00 2/01/06 750 738,750 Grupo Int'l. Durango, S.A. de C.V., Notes (Mexico) B1 12.625 8/01/03 230 D 245,238 Rainy River Forest Products, Inc., Sr. Sec. Notes (Canada) Ba1 10.75 10/15/01 500 D 538,125 Repap New Brunswick, Inc., First Priority Sr. Sec. Notes (Canada) B1 9.875 7/15/00 750 D 765,000 Second Priority Sr. Sec. Notes (Canada) B3 10.625 4/15/05 750 D 755,625 Repap Wisconsin, Inc., First Priority Sr. Sec. Notes B2 9.25 2/01/02 250 253,125 S.D. Warren Co., Sr. Sub. Notes, Ser. B B1 12.00 12/15/04 425 457,937 Stone Container Corp., Sr. Notes B1 11.875 12/01/98 500 528,750 Tembec Finance Corp., Guaranteed Sr. Notes (Canada) B1 9.875 9/30/05 710 D 685,150 - - ------------ 9,609,150 - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Retail--1.3% Brylane Capital Corp., Sr. Sub. Notes, Ser. B B2 10.00 9/01/03 750 766,875 Guitar Ctr. Mgmt. Co., Inc., Sr. Notes B2 11.00 7/01/06 500 520,000 - - ------------ 1,286,875
- - ------------------------------------------------------------ - - -------------------- 8 See Notes to Financial Statements. Portfolio of Investments as of September 30, 1996 (Unaudited) THE HIGH YIELD PLUS FUND, INC. - - ------------------------------------------------------------ - - --------------------
Principal Moody's Interest Maturity Amount Value Description Rating Rate Date (000) (Note 1) - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Utilities--3.3% Cleveland Electric Illuminating Co., First Mtge. Bonds, Ser. B Ba2 9.50% 5/15/05 $ 250 $ 256,510 El Paso Electric Co., First Mtge. Bonds, Ser. C Ba3 8.25 2/01/03 317 313,830 First Mtge. Bonds, Ser. D Ba3 8.90 2/01/06 1,000 1,012,070 Texas-New Mexico Pwr. Co., Sec. Deb. B1 10.75 9/15/03 1,500 1,578,750 - - ------------ 3,161,160 - - ------------ Total corporate bonds (cost $103,376,261) 105,703,361 - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Foreign Government Obligations--2.5% Federal Republic of Brazil, Exit Bonds B1 6.00 9/15/13 750 D 517,500 Federal Republic of Brazil, Capitilization Bonds B1 8.00 4/15/14 1,100 D 774,606 Republic of Argentina, Bonds B1 8.375 12/20/03 1,250 D 1,123,438 - - ------------ Total foreign government obligations (cost $2,156,194) 2,415,544 - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Common Stocks--0.1% Shares Triangle Wire & Cable, Inc. (cost $94,444) - - -- -- -- 94,444 141,666 - - ------------ - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Preferred Stocks--1.4% Benedek Communications Corp., PIK B3 15.00 -- 550 627,000 California Federal Bank, Noncumm. Perpetual, Ser. B B2 10.625 -- 4,700 518,175 Silgan Holdings, Inc., PIK B3 13.25 -- 178 190,460 - - ------------ Total preferred stocks (cost $1,198,000) 1,335,635 - - ------------ Total long-term investments (cost $106,824,899 ) 109,596,206 SHORT-TERM INVESTMENTS--3.0% - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Repurchase Agreement--3.0% Principal Amount (000) Swiss Bank Corporation, dated 9/30/96, in the amount of $2,900,459 (cost $2,900,000; approximate value including accrued interest--$2,952,510) - - -- 5.70 10/01/96 $ 2,900 2,900,000 - - ------------ - - ------------------------------------------------------------ - - ------------------------------------------------------------ - - ------ Total Investments--116.7 % (cost $ 109,724,899; Note 4 ) 112,496,206 Liabilities in excess of other assets--(16.7)% (16,116,058) - - ------------ Net Assets--100% $ 96,380,148 - - ------------ - - ------------
- - --------------- * --Standard & Poor's rating. NR --Not rated by Moody's or Standard & Poor's. D --US$ Denominated Foreign Bonds. PIK --Payment in Kind. - - ------------------------------------------------------------ - - -------------------- See Notes to Financial Statements. 9 ----- Statement of Assets and Liabilities (Unaudited) THE HIGH YIELD PLUS FUND, INC. - - ------------------------------------------------------------ - - -------------------- Assets September 30, 1996 Investments, at value (cost $109,724,899)............................................... ............... $ 112,496,206 Cash........................................................ ........................................... 4,262 Interest receivable.................................................. .................................. 2,674,009 Receivable for investments sold........................................................ ................ 153,792 Deferred expenses and other assets...................................................... ............... 48,529 - - ------------------ Total assets...................................................... .................................. 115,376,798 - - ------------------ Liabilities Loan payable (Note 4).......................................................... ........................ 17,000,000 Payable for investments purchased................................................... ................... 911,737 Dividends payable..................................................... ................................. 784,065 Accrued expenses.................................................... ................................... 116,063 Loan interest payable (Note 4).......................................................... ............... 108,368 Advisory fee payable..................................................... .............................. 39,296 Deferred directors' fees........................................................ ....................... 21,403 Administration fee payable..................................................... ........................ 15,718 - - ------------------ Total liabilities................................................. .................................. 18,996,650 - - ------------------ Net Assets...................................................... ....................................... $ 96,380,148 - - ------------------ - - ------------------ Net assets were comprised of: Common stock, at par......................................................... ....................... $ 111,973 Paid-in capital in excess of par......................................................... ........... 102,818,366 - - ------------------ 102,930,339 Undistributed net investment income...................................................... ........... 527,181 Accumulated net realized loss on investments................................................. ....... (9,848,679 ) Net unrealized appreciation of investments................................................. ......... 2,771,307 - - ------------------ Net assets, September 30, 1996........................................................ .............. $ 96,380,148 - - ------------------ - - ------------------ Net asset value per share ($96,380,148 / 11,197,339 shares of common stock issued and outstanding)..... $8.61 - - ------------------ - - ------------------
- - ------------------------------------------------------------ - - -------------------- 10 See Notes to Financial Statements. THE HIGH YIELD PLUS FUND, INC. Statement of Operations (Unaudited) - - ------------------------------------------------------------
Six Months Ended September 30, Net Investment Income 1996 Income Interest................................... $ 5,761,644 Dividends.................................. 48,102 ----------- - - -- 5,809,746 ----------- - - -- Expenses Investment advisory fee.................... 236,822 Administration fee......................... 94,729 Custodian's fees and expenses.............. 43,000 Legal fees and expenses.................... 23,000 Transfer agent's fees and expenses......... 19,000 Reports to shareholders.................... 18,000 Audit fees and expenses.................... 16,000 Directors' fees and expenses............... 16,000 Insurance expense.......................... 14,000 Miscellaneous.............................. 14,356 ----------- - - -- Total operating expenses................ 494,907 Loan interest expense (Note 4)............. 595,339 ----------- - - -- Total expenses.......................... 1,090,246 ----------- - - -- Net investment income......................... 4,719,500 ----------- - - -- Realized and Unrealized Gain on Investments Net realized gain on investment transactions............................... 863,585 Net change in unrealized appreciation/depreciation of investments... 947,807 ----------- - - -- Net gain on investments....................... 1,811,392 ----------- - - -- Net Increase in Net Assets Resulting from Operations..................... $ 6,530,892 ----------- - - -- ----------- - - --
THE HIGH YIELD PLUS FUND, INC. Statement of Cash Flows (Unaudited) - - ------------------------------------------------------------ Increase (Decrease) in Cash Cash flows provided from operating activities Interest and dividends received (excluding discount amortization of $432,429)....... $ 6,117,845 Operating expenses paid..................... (548,722) Loan interest and commitment fee paid....... (573,292) Maturities of short-term portfolio investments, net......................... (2,630,000) Purchases of long-term portfolio investments.............................. (30,561,674) Proceeds from disposition of long-term portfolio investments.............................. 32,410,078 Deferred expenses and other assets.......... 48,056 ---------- - - -- Net cash provided from operating activities............................... 4,262,291 ---------- - - -- Cash used for financing activities............. Cash dividends paid (excluding reinvestment of dividends of $451,489)................ (4,259,917) ---------- - - -- Net cash used for financing activities...... (4,259,917) ---------- - - -- Net increase in cash........................ 2,374 Cash at beginning of period................. 1,888 ---------- - - -- Cash at end of period....................... $ 4,262 ---------- - - -- ---------- - - -- Reconciliation of Net Increase in Net Assets to Net Cash from Operating Activities Net increase in net assets resulting from operations.................................. $ 6,530,892 ---------- - - -- Decrease in investments........................ (1,150,886) Net realized gain on investment transactions... (863,585) Net change in unrealized appreciation of investments................................. (947,807) Decrease in receivable for investments sold.... 1,685,598 Increase in interest receivable................ (124,330) Decrease in deferred expenses and other assets...................................... 48,056 Decrease in payable for investments purchased................................... (883,879) Decrease in accrued expenses and other liabilities................................. (31,768) ---------- - - -- Total adjustments........................... (2,268,601) ---------- - - -- Net cash provided from operating activities............................... $ 4,262,291 ---------- - - -- ---------- - - --
- - ------------------------------------------------------------ - - -------------------- See Notes to Financial Statements. 11 ----- THE HIGH YIELD PLUS FUND, INC. Statement of Changes in Net Assets (Unaudited) - - ------------------------------------------------------------
Six Months Ended Year Ended Increase (Decrease) September 30, March 31, in Net Assets 1996 1996 Operations Net investment income............ $ 4,719,500 $ 9,449,328 Net realized gain on investment transactions.................. 863,585 757,420 Net change in unrealized appreciation/depreciation of investments................... 947,807 5,744,996 ------------- ----- - - ------ Net increase in net assets resulting from operations..... 6,530,892 15,951,744 Dividends paid to shareholders from net investment income............ (4,693,508) (9,436,822) Value of Fund shares issued to shareholders in reinvestment of dividends........................ 451,489 871,960 ------------- ----- - - ------ Total increase...................... 2,288,873 7,386,882 Net Assets Beginning of period................. 94,091,275 86,704,393 ------------- ----- - - ------ End of period....................... $ 96,380,148 $94,091,275 ------------- ----- - - ------ ------------- ----- - - ------
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, 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 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 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. 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 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 - - ------------------------------------------------------------ - - -------------------- 12 See Notes to Financial Statements Notes to Financial Statements (Unaudited) THE HIGH YIELD PLUS FUND, INC. - - ------------------------------------------------------------ - - -------------------- presented in the Statement of Cash Flows. Accounting practices that do not affect reporting activities on a cash basis include carrying investments at value and amortizing discounts on debt obligations. Cash, as used in the Statement of Cash Flows, is the amount reported as ``Cash'' in the Statement of Assets and Liabilities. Securities Transactions and Net Investment Income: Security transactions are recorded on the trade date. Realized gains and losses from securities transactions are calculated on the identified cost basis. Interest income, which is comprised of three elements; stated coupon rate, original issue discount and market discount, is recorded on an accrual basis. Dividend income is recorded on the ex-dividend date. Expenses are recorded on the accrual basis which may require the use of certain estimates by management. 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 LLC (the ``Administrator''). The Investment Adviser makes investment decisions on behalf of the Fund; the Administrator provides occupancy and certain clerical and accounting services to the Fund. The Fund bears all other costs and expenses. The investment advisory agreement provides for the Investment Adviser to receive a fee, computed weekly and payable monthly at an annual rate of .50% of the Fund's average weekly net assets. The administration agreement provides for the Administrator to receive a fee, computed weekly and payable monthly at an annual rate of .20% of the Fund's average weekly net assets. Note 3. Portfolio Securities Purchases and sales of investment securities, other than short-term investments, for the six months ended September 30, 1996, aggregated $29,676,522 and $31,588,065, respectively. During the six months ended September 30, 1996, the Fund entered into $251,925 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, 1996, net unrealized appreciation for federal income tax purposes was $2,771,307 (gross unrealized appreciation--$4,337,377; gross unrealized depreciation--$1,566,070). For federal income tax purposes, the Fund has a capital loss carryforward as of March 31, 1996 of approximately $10,712,000 of which $6,507,000 expires in 2000, $2,399,000 expires in 2003 and $1,806,000 expires in 2004. Accordingly, no capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such carryforward. - - ------------------------------------------------------------ Note 4. Borrowings The Fund has a credit agreement with an unaffiliated lender. The maximum commitment under this agreement is $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, 1996 was $17,573,770 at a weighted average interest rate of 6.76%. The maximum face amount of borrowings outstanding at any month end during the six months ended September 30, 1996 was $19,000,000. The current borrowings of $17,000,000 (at a weighted average interest rate of 6.72%) mature throughout the period from November 14, 1996 to February 28, 1997. The Fund has paid commitment fees at an annual rate of .10 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. - - ------------------------------------------------------------ - - -------------------- 13 ----- Notes to Financial Statements (Unaudited) THE HIGH YIELD PLUS FUND, INC. - - ------------------------------------------------------------ - - -------------------- Note 5. Capital There are 100 million shares of $.01 par value common stock authorized. During the six months ended September 30, 1996 and the fiscal year ended March 31, 1996, the Fund issued 55,532 and 104,367 shares in connection with reinvestment of dividends, respectively. - - ------------------------------------------------------------ Note 6. Dividends On October 15 and November 15, 1996 the Board of Directors of the Fund declared dividends of $0.07 per share payable on November 8 and December 13, 1996, to shareholders of record on October 31 and November 29, 1996, respectively. - - ------------------------------------------------------------ - - -------------------- 14 Financial Highlights (Unaudited) THE HIGH YIELD PLUS FUND, INC. - - ------------------------------------------------------------ - - --------------------
Six Months Ended Year Ended March 31, September 30, ------------------------------------------ - - ------------- 1996 1996 1995 1994 1993 1992 ------ - - ------- ------- ------- ------- ------- - - ------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period................ $ 8.44 $ 7.85 $ 8.38 $ 8.48 $ 7.91 $ 6.80 -- - - ---- ------- ------- ------- ------- - - ------- Income from investment operations Net investment income............................... .42 .84 .87 .90 .89 .87 Net realized and unrealized gain (loss) on investments...................................... .17 .59 (.54) (.15) .52 1.11 -- - - ---- ------- ------- ------- ------- - - ------- Total from investment operations................. .59 1.43 .33 .75 1.41 1.98 -- - - ---- ------- ------- ------- ------- - - ------- Less dividends and distributions Dividends from net investment income................ (.42) (.84) (.86) (.85) (.84) (.87) -- - - ---- ------- ------- ------- ------- - - ------- Net asset value, end of period(a)................... $ 8.61 $ 8.44 $ 7.85 $ 8.38 $ 8.48 $ 7.91 -- - - ---- ------- ------- ------- ------- - - ------- -- - - ---- ------- ------- ------- ------- - - ------- Market price per share, end of period(a)............ $ 8.875 $ 8.75 $ 8.00 $ 8.375 $ 8.875 $ 7.75 -- - - ---- ------- ------- ------- ------- - - ------- -- - - ---- ------- ------- ------- ------- - - ------- TOTAL INVESTMENT RETURN(b):......................... 6.56% 20.80% 6.33% 3.90% 27.02% 34.28% -- - - ---- ------- ------- ------- ------- - - ------- -- - - ---- ------- ------- ------- ------- - - ------- RATIO/SUPPLEMENTAL DATA: Net assets, end of period (000 omitted)............. $96,380 $94,091 $86,704 $91,698 $92,422 $85,742 Average net assets (000 omitted).................... $94,275 $92,855 $87,734 $96,962 $88,142 $80,703 Ratio to average net assets: Expenses, before loan interest, commitment fees and nonrecurring expenses..................... 1.05%(c) 1.01% 1.11% 1.12% 1.20% 1.28% Total expenses................................... 2.31%(c) 2.29% 2.71% 2.01% 2.03% 2.26% Net investment income............................ 9.98%(c) 10.18% 10.90% 10.15% 10.94% 11.69% Portfolio turnover rate............................. 27% 60% 47% 100% 82% 46% Total debt outstanding at end of year (000 omitted)......................................... $17,000 $17,000 $19,000 $28,000 $15,000 $15,000 Asset coverage per $1,000 of debt outstanding....... $ 6,669 $ 6,535 $ 5,563 $ 4,275 $ 7,161 $ 6,716
- - --------------- (a) NAV and market value are published in The Wall Street Journal each Monday. (b) Total investment return is calculated assuming a purchase of common stock at the current market value on the first day and a sale at the current market value on the last day of each period reported. Dividends and distributions are assumed for purposes of this calculation to be reinvested at prices obtained under the dividend reinvestment plan. This calculation does not reflect brokerage commissions. Total returns for period 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 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. 15 ----- Directors Eugene C. Dorsey Douglas H. McCorkindale Thomas T. Mooney Investment Adviser Wellington Management Company, LLP 75 State Street Boston, MA 02109 Administrator Prudential Mutual Fund Management LLC Gateway Center Three 100 Mulberry Street Newark, NJ 07102-4077 Custodian and Transfer Agent State Street Bank and Trust Company One Heritage Drive North Quincy, MA 02171 Independent Auditors Deloitte & Touche LLP Two World Financial Center New York, NY 10281 Legal Counsel Kirkpatrick & Lockhart LLP 1800 Massachusetts Avenue, N.W. Washington, D.C. 20036 Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Fund may purchase, from time to time, shares of its common stock at market prices. The accompanying financial statements as of September 30, 1996, were not audited and, accordingly, no opinion is expressed on them. The views expressed in this report and the information about the Fund's portfolio holdings are for the period covered by this report and are subject to change thereafter. This report is for stockholder information. This is not a prospectus intended for use in the purchase or sale of Fund shares. The High Yield Plus Fund, Inc. Gateway Center Three 100 Mulberry Street Newark, NJ 07102-4077 For information call toll-free (800) 451-6788 429906100 -----END PRIVACY-ENHANCED MESSAGE-----