UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement. [_] Soliciting Material pursuant to
[_] Confidential, For Use of the Section 240. 14a-11(c) of Section
Commission Only (as permitted 240. 14a-12.
by Rule 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[_] Definitive Additional Materials.
The High Yield Plus Fund Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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THE HIGH YIELD PLUS FUND, INC.
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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To our Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Meeting")
of The High Yield Plus Fund, Inc. ("Fund") will be held on August 17, 2004 at
10:00 a.m., Eastern Time, at Gateway Center Three, 100 Mulberry Street, Newark,
New Jersey 07102-4077 for the following purposes:
(1) To elect two Class I Directors of the Fund; and
(2) To consider and act upon any other business as may properly come
before the Meeting or any adjournment thereof.
Only holders of common stock of record at the close of business on June 18,
2004 are entitled to notice of and to vote at the Meeting or any adjournments
thereof.
By Order of the Board of Directors,
/s/ ARTHUR BROWN
ARTHUR J. BROWN
SECRETARY
Dated: July 2, 2004
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YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY STOCKHOLDER
WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO INDICATE VOTING
INSTRUCTIONS ON THE ENCLOSED FORM OF PROXY, DATE AND SIGN IT, AND RETURN IT IN
THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES.
TO AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK
YOUR COOPERATION IN MAILING YOUR PROXY PROMPTLY, NO MATTER HOW LARGE OR SMALL
YOUR HOLDINGS MAY BE.
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THE HIGH YIELD PLUS FUND, INC.
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
AUGUST 17, 2004
INTRODUCTION
This Proxy Statement is furnished to the stockholders of The High Yield
Plus Fund, Inc. ("Fund") on behalf of the Board of Directors of the Fund (the
"Board") in connection with the solicitation of stockholder votes by proxy to be
voted at the Annual Meeting of Stockholders or any adjournments thereof
("Meeting") to be held on August 17, 2004 at 10:00 a.m., Eastern Time, at
Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077. As
discussed more fully below, stockholders of the Fund are being asked to vote on
a proposal to elect two Directors of the Fund. The Board knows of no business
other than the election of the Directors that will be presented for
consideration at the Meeting. If any other matter is properly presented, it is
the intention of the persons named in the enclosed proxy to vote in accordance
with their best judgment.
If the enclosed form of proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. A proxy may nevertheless be revoked at any time prior
to its use by written notification received by the Fund, by the execution of a
subsequently dated proxy or by attending the Meeting and voting in person.
However, if no instructions are specified on a properly executed proxy, shares
will be voted "FOR" the election of each nominee for Director and "FOR" or
"AGAINST" any other matters acted upon at the Meeting in the discretion of the
persons named as proxies.
The close of business on June 18, 2004 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Meeting (the "Record Date"). Stockholders on the Record Date will be entitled to
one vote for each share held, with no shares having cumulative voting rights. As
of the Record Date, the Fund had 15,931,764.2479 shares of common stock
outstanding and entitled to vote. It is expected that the Notice of Annual
Meeting, Proxy Statement and form of proxy first will be mailed to stockholders
on or about July 13, 2004.
The solicitation is made primarily by the mailing of this Proxy Statement
and the accompanying proxy. Supplementary solicitations may be made, without
cost to the Fund, by mail, telephone, telegraph or in person by regular
employees of Prudential Securities Incorporated ("Prudential Securities"), an
affiliate of Prudential Investments LLC, the Fund's administrator
("Administrator"). All expenses in connection with preparing this Proxy
Statement and its enclosures, and additional solicitation expenses including
reimbursement of brokerage firms and others for their expenses in forwarding
proxy solicitation materials to the beneficial owners of shares, will be borne
by the Fund.
The presence at the Meeting, in person or by proxy, of stockholders
entitled to cast a majority of the Fund's outstanding common stock is required
for a quorum. Each outstanding full share of a Fund is entitled to one vote, and
each outstanding fractional share thereof is entitled to a proportionate
fractional share of one vote. The affirmative vote of a majority of the shares
present at the Meeting is required to elect each Director. In the event that a
quorum is present at the Meeting but sufficient votes to approve a proposed item
are not received, the persons named as proxies may propose one or more
adjournments of such Meeting to permit further solicitation of proxies. Any such
adjourn-
1
ments will require the affirmative vote of a majority of those shares present at
the Meeting or represented by proxy. In such case, the persons named as proxies
will vote those proxies that they are entitled to vote in favor of such item
"FOR" such an adjournment, and will vote those proxies required to be voted
against such item "AGAINST" such an adjournment. A stockholder vote may be taken
on the nominations in this Proxy Statement prior to any such adjournment if
sufficient votes have been received and it is otherwise appropriate.
Broker non-votes are shares held in "street name" for which a broker
indicates that it has not received instructions from the beneficial owners or
other persons entitled to vote and for which the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be counted
as shares present for purposes of determining whether a quorum is present but
will not be voted "FOR" or "AGAINST" any adjournment or proposal. Accordingly,
abstentions and broker non-votes effectively will be a vote "AGAINST" an
adjournment or "AGAINST" the proposed nominees for Directors because the
required vote is a percentage of the shares present at the Meeting.
As of the Record Date, Management does not know of any person or group who
owned of record or beneficially 5% or more of the Fund's outstanding common
stock. In addition, Directors and officers of the Fund, in the aggregate, owned
less than 1% of the Fund's outstanding common stock as of June 18, 2004.
STOCKHOLDERS MAY OBTAIN A FREE COPY OF THE FUND'S MOST RECENT ANNUAL REPORT
BY CALLING EQUISERVE TRUST COMPANY, N.A. TOLL-FREE AT (800) 451-6788 OR BY
MAILING A WRITTEN REQUEST TO EQUISERVE TRUST COMPANY, N.A., P.O. BOX 43010,
PROVIDENCE, RHODE ISLAND 02940-3010.
ELECTION OF DIRECTORS
PROPOSAL
The Fund's Board of Directors is divided into three classes, designated
Class I, Class II and Class III, with the members of each class serving for a
term of three years or until their successors are elected and qualified. The
classification of the Fund's Directors helps to promote the continuity and
stability of the Fund's management and policies because the majority of the
Directors at any given time will have prior experience as Directors of the Fund.
Because of this classification, under normal circumstances, at least two
stockholder meetings, instead of one, are required to effect a change in a
majority of the Directors.
The current Class I Directors, Eugene C. Dorsey and David E. A. Carson,
each have terms expiring in 2004. The Fund's Nominating Committee, consisting
solely of the Directors of the Fund who are not "interested persons" of the
Fund, as defined in the Investment Company Act of 1940 (the "1940 Act")
("Independent Directors"), reviewed the qualifications, experience and
background of Mr. Dorsey. Based upon this review, the Committee determined that
nominating Mr. Dorsey would be in the best interests of the Fund's stockholders.
The Fund's Board believes Mr. Dorsey is well suited for service on the Board due
to his familiarity with the Fund, as a result of his prior service as Director,
and his familiarity with closed-end and open-end investment company operations.
The Fund's Nominating Committee also reviewed the qualifications, experience and
background of Mr. Carson, who was appointed to the Board on May 25, 2004. Based
upon this review, the Committee determined that nominating Mr. Carson would be
in the best interests of the Fund's stockholders. The Fund's Board believes Mr.
Carson is well suited for service on the Board due to his familiarity with the
mutual fund industry as well as his prior experience in serving as Director for
certain mutual fund complexes.
At a meeting on May 25, 2004, the Board received the recommendation of the
Nominating Committee. After discussion and consideration of, among other things,
their respective backgrounds, the Board voted to nominate Eugene C. Dorsey and
David E. A. Carson (collectively, the "Director Nominees") for election as Class
I Directors with a term expiring in 2007.
2
It is the intention of the persons named in the enclosed form of proxy to
vote in favor of the election of Messrs. Dorsey and Carson. Messrs. Dorsey and
Carson each have consented to be named in this Proxy Statement and to serve as
Directors if elected. The Board of Directors has no reason to believe that
Messrs. Dorsey and Carson will become unavailable for election as Directors, but
if that should occur before the Meeting, the proxies will be voted for such
other nominees as the Board of Directors may recommend. None of the Directors is
related to one another.
The following tables set forth certain information regarding each of the
Directors and officers of the Fund. Unless otherwise noted, each of the
Directors and officers has engaged in the principal occupation listed in the
following table for five years or more.
3
INFORMATION REGARDING NOMINEES
FOR ELECTION AT 2004 ANNUAL MEETING
NUMBER OF
PORTFOLIOS
POSITION(S) HELD IN FUND
WITH FUND AND PRINCIPAL OCCUPATION COMPLEX
LENGTH OF DURING PAST FIVE YEARS AND OVERSEEN
NAME, ADDRESS(1), AGE TIME SERVED(2) OTHER DIRECTORSHIPS HELD BY DIRECTOR(3) BY DIRECTOR(4)
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CLASS I (TERM EXPIRING IN 2007, IF ELECTED)
INDEPENDENT DIRECTORS
EUGENE C. DORSEY, Director since 1996. Retired. Chairman, Independent Sector, 1
Age 77 Washington, D.C. (national coalition of
philanthropic organizations) (1989-1992);
President, Chief Executive Officer and Trustee,
Gannett Foundation (now Freedom Forum)
publisher of four Gannett newspapers (1963-1981);
Vice President of Gannett Co., Inc. (publishing)
(1978-1981); former Chairman of the American
Council for the Arts; former Director, Advisory
Board of Chase Manhattan Bank of Rochester.
DAVID E. A. CARSON, Director since 2004. Retired. Director (January 2000 to May 2000), 4
Age 69 Chairman (January 1999 to December 1999),
Chairman and Chief Executive Officer (January
1998 to December 1998) and President, Chairman
and Chief Executive Officer (1983-1997) of
People's Bank.
Currently, Director or Trustee of 90 portfolios
within the Prudential mutual fund complex(5);
Director of United Illuminating and
UIL Holdings (utility company).
4
INFORMATION REGARDING DIRECTORS
WHOSE CURRENT TERMS CONTINUE
NUMBER OF
PORTFOLIOS
POSITION(S) HELD IN FUND
WITH FUND AND PRINCIPAL OCCUPATION COMPLEX
LENGTH OF DURING PAST FIVE YEARS AND OVERSEEN
NAME, ADDRESS(1), AGE TIME SERVED(2) OTHER DIRECTORSHIPS HELD BY DIRECTOR(3) BY DIRECTOR(4)
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CLASS II (TERM EXPIRING IN 2005)
INDEPENDENT DIRECTORS
ROBERT E. LA BLANC, Director since 1999. President of Robert E. La Blanc Associates, Inc. 4
Age 70 (information technologies consulting) (since 1981);
Vice-Chairman of Continental Telecom, Inc.
(1979-1981); General Partner at Salomon
Brothers Inc. (1969-1979).
Currently, Director or Trustee of 98 portfolios
within the Prudential mutual fund complex(5);
Director of FiberNet Telecom Group, Inc.
(telecommunications), Computer Associates
International, Inc. (computer software), Avatech
Solutions, Inc. (computer software), Titan
Corporation (electronics) and Chartered
Semiconductor Manufacturing, Ltd.
(semiconductors); Trustee of Manhattan College.
DOUGLAS H. Director since 1996. Chairman, President and CEO of Gannett Co., Inc. 4
MCCORKINDALE, (publishing and media) (since February 2001);
Age 64 President and CEO (June 2000-January 2001),
President (1997-April 2000) and Vice Chairman
(1984-1997) of Gannett Co., Inc.
Currently, Director or Trustee of 91 portfolios within
the Prudential mutual fund complex(5); Director of
Gannett Co., Inc., Lockheed Martin Corp. (aerospace
and defense), Continental Airlines, Inc., and Mutual
Insurance Company, Ltd.
5
NUMBER OF
PORTFOLIOS
POSITION(S) HELD IN FUND
WITH FUND AND PRINCIPAL OCCUPATION COMPLEX
LENGTH OF DURING PAST FIVE YEARS AND OVERSEEN
NAME, ADDRESS(1), AGE TIME SERVED(2) OTHER DIRECTORSHIPS HELD BY DIRECTOR(3) BY DIRECTOR(4)
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CLASS III (TERM EXPIRING IN 2006)
INDEPENDENT DIRECTORS
CLAY T. WHITEHEAD, Director since 2000. President of YCO, Inc. (telecommunications) 4
Age 65 (since 1987); Distinguished Visiting Professor,
George Mason University (since 2003).
Currently, Director or Trustee of 96 portfolios
within the Prudential mutual fund complex(5).
DIRECTOR WHO IS AN "INTERESTED PERSON"(6)
THOMAS T. MOONEY, Director since 1988. Chief Executive Officer, Rochester Business 1
Age 62 Also Chairman of Alliance, Inc. (since 2002) (economic development
the Board and and business advocacy); Director and Vice-President,
President. Hi Technology of Rochester (since 2004); President,
Greater Rochester Metro Chamber of Commerce
(1976-2002); formerly Deputy City Manager and
City Manager of Rochester, New York; formerly
Deputy County Manager of the County of
Monroe, New York.
Currently, Director or Trustee of 81 portfolios within
the Prudential mutual fund complex(5); Director of Blue
Cross Blue Shield of Rochester (insurance), Executive
Service Corps of Rochester, Inc. (management
consulting), Rochester Individual Practice
Association, Inc. (health care) and Rural/Metro
Medical Services, Inc. (ambulance service).
6
INFORMATION ABOUT THE FUND'S OFFICERS
POSITION(S) HELD WITH FUND PRINCIPAL OCCUPATION
NAME, ADDRESS(1), AGE AND LENGTH OF TIME SERVED(2) DURING PAST FIVE YEARS
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ARTHUR J. BROWN, Age 55 Secretary since 1988. Partner, Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, NW (law firm and counsel to the Fund).
Washington, D.C. 20036
R. CHARLES MILLER, Age 46 Assistant Secretary Partner, Kirkpatrick & Lockhart LLP.
1800 Massachusetts Avenue, NW since 1999.
Washington, D.C. 20036
GRACE C. TORRES, Age 44 Treasurer and Principal Senior Vice President and Assistant
Financial and Treasurer (since May 2003) of American
Accounting Officer Skandia Investment Services, Inc. and
since 2002. American Skandia Advisory Services,
Inc.; Senior Vice President (since January
2000) of Prudential Investments LLC;
First Vice President (December 1996-January
2000) of Prudential Investments LLC;
First Vice President (March 1993-1999) of
Prudential Securities.
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(1) The address for each Director and Ms. Torres is c/o the Fund, Gateway
Center Three, 100 Mulberry Street, Newark, New Jersey 07102.
(2) Each Director serves until the expiration of his or her term and until his
or her successor is elected and qualified, or until his or her death or
resignation, or removal as provided in the Fund's by-laws or charter or by
statute. Officers of the Fund are elected and appointed by the Board of
Directors for one-year terms.
(3) This column includes only directorships of companies required to report to
the Securities and Exchange Commission under the Securities Exchange Act of
1934 (that is, "public companies") or other investment companies registered
under the 1940 Act.
(4) The Fund's Fund Complex consists of a group of four portfolios of
investment companies that are advised or sub-advised by Wellington
Management Company, LLP, the Fund's investment adviser ("Investment
Adviser"). The Fund's Fund Complex includes the Fund, Strategic Partners
Real Estate Securities Fund and the Mortgage Backed Securities Portfolio
and U.S. Government Money Market Portfolio of Target Portfolio Trust.
(5) The Prudential mutual fund complex consists of all investment companies
managed by Prudential Investments LLC. Effective May 1, 2004, the funds for
which Prudential Investments LLC serves as manager include The Prudential
Mutual Funds, Strategic Partners Funds, The Prudential Variable Contract
Accounts 2, 10, 11, The Target Portfolio Trust, The Prudential Series Fund,
Inc., American Skandia Trust, and Prudential's Gibraltar Fund.
(6) Indicates an "interested person" of the Fund, as defined in 1940 Act. Mr.
Mooney is deemed to be an "interested person" by reason of his service as
an officer of the Fund.
7
COMPENSATION OF DIRECTORS
The Fund currently pays each Director an annual fee of $5,000, plus travel
and other out-of-pocket expenses incurred by the Directors in attending Board
meetings. Directors also receive $500 for each committee meeting they attend
held on the same day as a Board meeting, $500 for each telephonic Board or
committee meeting they attend and $1,000 for each in-person special Board or
committee meeting they attend. Due to his additional duties as Chairman of the
Board, Mr. Mooney receives an additional annual fee of $4,000 from the Fund. The
table below includes certain information relating to the compensation of the
Fund's Directors paid by the Fund for the fiscal year ended March 31, 2004, as
well as information regarding compensation from the Fund's Fund Complex for the
year ended December 31, 2003. Annual Board fees may be reviewed periodically and
changed by the Fund's Board.
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COMPENSATION TABLE
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Pension or Total
Retirement Compensation
Benefits Estimated From the
Accrued as Annual Fund and
Aggregate Part of the Benefits the Fund
Compensation Fund's Upon Complex Paid
Name of Director From the Fund Expenses Retirement to Directors
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David E. A. Carson* N/A N/A N/A N/A
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Eugene C. Dorsey** $6,500 N/A N/A $ 6,000
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Robert E. La Blanc $6,500 N/A N/A $10,741
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Douglas H. McCorkindale $5,500 N/A N/A $ 8,112
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Thomas T. Mooney $9,000 N/A N/A $14,160
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Clay T. Whitehead $6,000 N/A N/A $ 8,742
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* Mr. Carson was appointed to the Board on May 25, 2004.
** All compensation from the Fund and Fund Complex to Mr. Dorsey for the
calendar year ended December 31, 2003 represents deferred compensation. Mr.
Dorsey received aggregate compensation for that period from the Fund and
the Fund Complex, including accrued interest, in the amounts of $5,000 and
$5,000 respectively.
DIRECTORS' OWNERSHIP OF FUND SECURITIES
The following table sets forth the dollar range of equity securities
beneficially owned by each Director in the Fund and in all registered investment
companies in the Fund Complex as of December 31, 2003.
AGGREGATE DOLLAR AGGREGATE DOLLAR RANGE OF SECURITIES
RANGE OF SECURITIES IN INVESTMENT COMPANIES OVERSEEN
NAME OF DIRECTOR IN THE FUND BY DIRECTOR IN FUND COMPLEX
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INDEPENDENT DIRECTORS
David E. A. Carson None None
Eugene C. Dorsey None None
Robert E. LaBlanc $1-$10,000 $10,001-$50,000
Douglas H. McCorkindale None None
Clay T. Whitehead $1-$10,000 $1-$10,000
DIRECTORS WHO ARE "INTERESTED PERSONS"
Thomas T. Mooney None None
Douglas H. McCorkindale, an Independent Director of the Fund, owns limited
partnership interests in four hedge funds managed by an affiliate of the
Investment Adviser.
8
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board of Directors met four times during the Fund's fiscal year ended
March 31, 2004, and each Director, except Mr. McCorkindale, attended at least
75% of the total number of meetings of the Board. Mr. McCorkindale attended two
of the four meetings of the Board. The Board of Directors has an Audit
Committee, a Nominating Committee and a Qualified Legal Compliance Committee
("QLCC"). Each of the Committees consists of all those Directors who are not
"interested persons" of the Fund, as defined in the 1940 Act, and who are
"independent" as defined in the listing standards of the New York Stock Exchange
("NYSE") (the "Independent Directors") except for the QLCC, which consists of
all such Directors except Mr. Carson.
AUDIT COMMITTEE
The Fund has a standing Audit Committee that consists of all the
Independent Directors of the Fund, currently Messrs. Carson, Dorsey, La Blanc,
McCorkindale and Whitehead, all of whom are independent and financially
literate, as defined in Section 303 of the listing standards of the New York
Stock Exchange. The Board has also determined in accordance with Section 303
that at least one member of the Audit Committee possesses accounting or related
financial management expertise and qualifies as an "audit committee financial
expert." The Audit Committee's function is to select independent accountants to
conduct the annual audit of the Fund's financial statements; review with the
independent accountants the outline, scope and results of this annual audit and
review the performance and approval all fees charged by the independent
accountants for audit, audit-related and other professional services. In
addition, the Audit Committee meets with the independent accountants and
representatives of management to review accounting activities and areas of
financial reporting and internal controls. The Audit Committee, because it
consists solely of the Independent Directors, also determines, at least
annually, whether the Fund's advisory and other arrangements should be approved
for continuance for the following year.
The Fund has adopted a written charter for the Audit Committee, which is
attached as Exhibit A to this Proxy Statement. The Fund's Audit Committee has
received written disclosures and the letter required by Independence Standards
Board Standard No. 1, as may be modified or supplemented, from KPMG LLP
("KPMG"), independent public accountants for the Fund. The Audit Committee has
discussed with KPMG such firm's independence with respect to the Fund and
certain matters required to be discussed by Statements on Auditing Standards No.
61. The Audit Committee has considered whether the provision of non-audit
services by the Fund's independent public accountants is compatible with
maintaining the independence of those accountants.
The Audit Committee met three times during the fiscal year ended March 31,
2004. Messrs. Dorsey and LaBlanc were in attendance at each of the Audit
Committee meetings; Mr. Whitehead attended two of the three Audit Committee
meetings; Mr. McCorkindale attended one of the three Audit Committee meetings.
In addition, the Committee met on May 25, 2004 to review the Fund's audited
financial statements. All members of the Committee attended that meeting.
Attached as Exhibit B is a copy of the Audit Committee's Report with respect to
the Fund's audited financial statements. Following the Audit Committee's review
and discussion regarding the audit of the Fund's financial statements with fund
management and the independent public accountants, the Audit Committee
recommended to the Directors that the Fund's audited financial statements for
the 2003 fiscal period be included in the Fund's Annual Report to Stockholders.
NOMINATING COMMITTEE
The Fund has a standing Nominating Committee that currently consists of all
of the Independent Directors of the Fund, Messrs. Carson, Dorsey, La Blanc,
McCorkindale and Whitehead. The Nominating Committee's primary responsibility is
to recommend nominees for election as Fund Director to the full Board of
Directors. The Fund has not adopted a charter of the Nominating Committee
although there are procedures that the Committee follows to identify and
evaluate potential nominees. The Nominating Committee did not meet during the
fiscal year ended March 31, 2004.
9
NOMINEE QUALIFICATIONS. The Nominating Committee considers, among other
things, whether prospective nominees have distinguished records in their primary
careers, high integrity and commitment to fulfill the fiduciary duties inherent
in Board membership. The Committee also considers whether prospective nominees
have knowledge in areas important to the Board's operations, such as background
or education in finance, auditing, or, the workings of the securities markets.
For candidates to serve as independent directors, independence from the Fund's
investment adviser, its affiliates and other principal service providers is
critical, as is an independent and questioning mindset. The Committee also
considers whether the prospective candidates' workloads would allow them to
attend the vast majority of Board meetings, be available for service on Board
committees, and devote the additional time and effort necessary to keep up with
Board matters and the rapidly changing regulatory environment in which the Fund
operates.
IDENTIFICATION OF NOMINEES. The Nominating Committee considers prospective
candidates from stockholders and any other source it deems appropriate. The
Committee will consider nominees recommended by stockholders if such proposed
nominations are submitted in writing to the attention of the Chairperson of the
Committee, Eugene C. Dorsey (addressed c/o the Fund, Gateway Center Three, 100
Mulberry Street, Newark, New Jersey 07102). The Committee initially evaluates
prospective candidates on the basis of the information it receives, considered
in light of the criteria discussed above. The Committee must receive at least
the following information regarding a candidate: (1) name; (2) date of birth;
(3) education; (4) business, professional or other relevant experience and areas
of expertise; (5) current business, professional or other relevant experience
and areas of expertise; (6) current business and home addresses and contact
information; (7) other board positions or prior experience; and (8) any
knowledge and experience relating to investment companies and investment company
governance. Those prospective candidates that appear likely to be able to fill a
significant need of the Board would be contacted by a Committee member by
telephone to discuss the position; if there appeared to be sufficient interest,
an in-person meeting with the Committee would be arranged. Any request by
management to meet with the prospective candidate would be given appropriate
consideration. The Fund has not paid a fee to third parties to assist in finding
nominees.
QUALIFIED LEGAL COMPLIANCE COMMITTEE
The Fund has a standing Qualified Legal Compliance Committee that currently
consists of all of the Independent Directors of the Fund except Mr. Carson,
currently Messrs. Dorsey, La Blanc, McCorkindale and Whitehead. The QLCC
receives, reviews and takes appropriate action with respect to any report made
or referred to the QLCC by an attorney of evidence of a material violation of
applicable U.S. federal or state securities law, material breach of fiduciary
duty under U.S. federal or state law or a similar material violation by the Fund
or by an officer, director, employee or agent of the Fund. The QLCC did not meet
during the fiscal period ended March 31, 2004.
The Board of Directors does not have a standing compensation committee.
Directors must be elected by a vote of a majority of the shares present at
the Meeting in person or by proxy and entitled to vote thereon.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" THE NOMINEES.
- --------------------------------------------------------------------------------
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), Section 30(f) of the 1940 Act and Securities and Exchange
Commission ("SEC") regulations thereunder, the Fund's officers and Directors,
persons owning more than 10% of the Fund's common stock and certain personnel of
the Investment Adviser
10
are required to report their transactions in the Fund's common stock to the SEC,
the New York Stock Exchange and the Fund. Officers, Directors and greater than
ten percent stockholders of the Fund are required by SEC regulations to furnish
the Fund with copies of all Forms 3, 4 and 5 they file.
Based solely on the Fund's review of the copies of such forms, and
amendments thereto, furnished to it during or with respect to its most recent
fiscal period, and written representations from certain reporting persons that
they were not required to file Form 5 with respect to the most recent fiscal
period, the Fund believes that all of its officers, Directors, greater than ten
percent beneficial owners and other persons subject to Section 16 of the 1934
Act due to the requirements of Section 30 of the 1940 Act (i.e., any investment
adviser or affiliated person of the Fund's investment adviser) have complied
with all filing requirements applicable to them with respect to transactions
during the Fund's most recent fiscal period.
DIRECTOR ATTENDANCE AT MEETINGS AND STOCKHOLDER COMMUNICATIONS
Mr. Mooney, or another Director of the Fund in his absence, attends and
chairs the Fund's Annual Meeting of Stockholders. Stockholders may send written
communications to the Fund's Board of Directors or to an individual Director by
mailing such correspondence to Thomas T. Mooney (addressed c/o The High Yield
Plus Fund, Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102).
Such communications must be signed by the stockholder and identify the class and
number of shares held by the stockholder. Properly submitted stockholder
communications will, as appropriate, be forwarded to the entire Board or to the
individual Director. Any stockholder proposal submitted pursuant to Rule 14a-8
under the 1934 Act must continue to meet all the requirements of Rule 14a-8. See
"Stockholder Proposals" below.
INFORMATION ON THE FUND'S INDEPENDENT ACCOUNTANTS
At a meeting held on February 25, 2004, upon the recommendation of the
Audit Committee, a majority of the Independent Directors, selected KPMG as
independent accountants for the Fund for the fiscal year ended March 31, 2004.
The selection of KPMG was ratified by the entire Board. KPMG has advised the
Fund that, to the best of its knowledge and belief, as of the record date, no
KPMG professional had any direct or material indirect ownership interest in the
Fund inconsistent with independent professional standards pertaining to
accountants. Representatives of KPMG are not expected to be present at the
Meeting but have been given the opportunity to make a statement if they so
desire and will be available should any matter arise requiring their presence.
In reliance on Rule 32a-4 under the 1940 Act, the Fund is not seeking
shareholder ratification of the selection of KPMG as independent accountants.
Prior to the appointment of KPMG as the Fund's independent accountants,
PricewaterhouseCoopers LLP ("PwC") was the Fund's independent accountants. At
the February 25, 2004 meeting, the Board determined not to reappoint PwC as
independent accountants for the Fund. PwC's reports on the financial statements
for the two years preceding their release contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles. During the two fiscal years immediately
preceding PwC's release, there were no disagreements with such accountants on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure.
INDEPENDENT PUBLIC ACCOUNTANTS' FEES
The SEC's auditor independence rules require the Audit Committee of the
Fund to pre-approve (a) all audit and permissible non-audit services provided by
the Fund's independent accountants directly to the Fund and (b) those
permissible non-audit services provided by the Fund's independent accountants to
Wellington, Prudential and any entity controlling, controlled by or under common
control with Wellington or Prudential that provides ongoing services to the Fund
(the "Affiliated Service Providers"), if the services relate directly to the
operations and financial reporting of the Fund.
11
The tables below set forth the fees billed by PwC and KPMG for the fiscal
years ended March 31, 2003 and March 31, 2004, respectively, for (i) all audit
and non-audit services provided directly to the Fund and (ii) those non-audit
services provided to the Fund's Affiliated Service Providers that relate
directly to the Fund's operations and financial reporting, and, therefore,
require Audit Committee pre-approval. Services under the caption:
o AUDIT FEES are for the audit of the Fund's annual financial statements
included in the Fund's reports to stockholders and in connection with
statutory and regulatory filing or engagements;
o AUDIT-RELATED FEES include assurance and related services reasonably
related to the performance of the audit of financial statements not
included in Audit Fees;
o TAX FEES include tax compliance, tax advice and tax planning; and
o ALL OTHER FEES are for other products and services provided.
FEES FOR AUDIT AND NON-AUDIT SERVICES PROVIDED DIRECTLY TO THE FUND:
For the fiscal year ended March 31, 2003.
AUDIT FEES AUDIT-RELATED FEES($) TAX FEES ALL OTHER FEES
---------- --------------------- -------- --------------
$30,000 None None None
For the fiscal year ended March 31, 2004.
AUDIT FEES AUDIT-RELATED FEES($) TAX FEES ALL OTHER FEES
---------- --------------------- -------- --------------
$22,500 None None None
FEES FOR NON-AUDIT SERVICES PROVIDED TO THE FUND'S AFFILIATED SERVICE PROVIDERS
FOR WHICH PRE-APPROVAL BY THE COMMITTEE WAS REQUIRED:
For the fiscal year ended March 31, 2003.
AUDIT-RELATED FEES($) TAX FEES ALL OTHER FEES
--------------------- -------- --------------
None None None
For the fiscal year ended March 31, 2004.
AUDIT-RELATED FEES($) TAX FEES ALL OTHER FEES
--------------------- -------- --------------
None None None
12
AGGREGATE NON-AUDIT FEES FOR SERVICES PROVIDED TO THE FUND AND ITS AFFILIATED
SERVICE PROVIDERS, REGARDLESS OF WHETHER PRE-APPROVAL WAS REQUIRED.
For the fiscal year ended March 31, 2003.
AGGREGATE NON-AUDIT FEES($)
-------------------------------
$836,000
For the fiscal year ended March 31, 2004.
AGGREGATE NON-AUDIT FEES($)
-------------------------------
None
The Audit Committee of the Fund has reviewed the non-audit services
provided by the Fund's independent accountants to the Fund's Affiliated Service
Providers that were not subject to the Committee's pre-approval and has
determined that the provision of such services is compatible with maintaining
the accountants' independence.
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES.
Audit, audit-related and tax compliance services provided to the Fund on an
annual basis require pre-approval by the Fund's Audit Committee. The Audit
Committee pre-approves these services on a case-by-case basis. As noted above,
the Audit Committee also must approve other non-audit services provided to the
Fund and those non-audit services provided to the Fund's Affiliated Service
Providers that relate directly to the operations and financial reporting of the
Fund.
OTHER MATTERS
No business, other than as set forth above, is expected to come before the
Meeting. Should any other matters requiring a vote of stockholders properly come
before the Meeting, in accordance with the Fund's By-Laws, the laws of the state
of Maryland and the proxy rules under the 1934 Act, the persons named in the
enclosed proxy will vote thereon in accordance with their best judgment in the
interests of the Fund. The Chairperson of the Meeting may refuse to acknowledge
the introduction of any stockholder proposal not made in accordance with the
procedures set forth below in the section entitled "Stockholder Proposals".
WELLINGTON MANAGEMENT COMPANY, LLP
Wellington Management Company, LLP, 75 State Street, Boston, Massachusetts
02109, is the Fund's Investment Adviser. The Investment Adviser is a
Massachusetts limited liability partnership of which the following persons are
managing partners: Laurie A. Gabriel, Duncan M. McFarland and John R. Ryan. The
Investment Adviser is a professional investment-counseling firm which provides
investment services to investment companies, employee benefit plans, endowment
funds, foundations and other institutions and individuals. As of March 31, 2004,
the Investment Adviser held discretionary investment authority over client
assets totaling approximately $416 billion. The Investment Adviser and its
predecessor organizations have provided investment advisory services to
investment companies since 1933 and to investment-counseling clients since 1960.
The Investment Adviser is not affiliated with the Administrator, Prudential
Investments LLC, which is located at Gateway Center Three, 100 Mulberry Street,
Newark, New Jersey 07102-4077.
13
STOCKHOLDER PROPOSALS
The Fund's By-Laws require stockholders wishing to nominate Directors or
make proposals to be voted on at the Fund's annual meeting to provide notice to
the Secretary of the Fund at least 90 days in advance of the anniversary of the
date that the Fund's Proxy Statement for its previous year's annual meeting was
first released to stockholders. Accordingly, if a stockholder intends to present
a proposal at the Fund's annual meeting of stockholders in 2005 and desires to
have the proposal included in the Fund's Proxy Statement and form of proxy for
that meeting, the stockholder must deliver the proposal to the offices of the
Fund at Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102-4077
by April 8, 2005. The notice must contain information sufficient to identify the
nominee(s) or proposal and to establish that the stockholder beneficially owns
shares that would be entitled to vote on the nomination or proposal. Stockholder
nominations and proposals that are submitted in a timely manner will not
necessarily be included in the Fund's proxy materials. Inclusion of such
nomination or proposal is subject to limitation under the federal securities
laws. Stockholder nominations or proposals not received by April 8, 2005 will
not be considered "timely" within the meaning of Rule 14a-4(c) of the 1934 Act.
ANNUAL REPORT DELIVERY
The Fund will furnish, without charge, a copy of its Annual Report for the
Fund's last fiscal year to any stockholder upon request. Such requests should be
directed to the Fund at Gateway Center Three, 100 Mulberry Street, Newark, New
Jersey 07102-4077.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING
TRUSTEES AND THEIR NOMINEES
Please advise the Fund, at Gateway Center Three, 100 Mulberry Street,
Newark, New Jersey 07102-4077, whether other persons are beneficial owners of
shares for which proxies are being solicited and, if so, the number of copies of
the Proxy Statement you wish to receive in order to supply copies to such
beneficial owners of shares.
By order of the Board of Directors,
/s/ ARTHUR BROWN
ARTHUR J. BROWN
SECRETARY
Dated: July 2, 2004
14
THE HIGH YIELD PLUS FUND, INC.
NOTICE OF ANNUAL MEETING
TO BE HELD ON
AUGUST 17, 2004
AND
PROXY STATEMENT
PROXY STATEMENT
APPENDIX A
THE HIGH YIELD PLUS FUND, INC.
AUDIT COMMITTEE CHARTER
I. AUDIT COMMITTEE MEMBERSHIP AND QUALIFICATIONS
The Audit Committee of The High Yield Plus Fund, Inc. (the "Fund") shall
consist of at least three members appointed by the Board of Directors ("Board").
The Board may replace members of the Audit Committee for any reason.
No member of the Audit Committee shall be an "interested person" of the
Fund, as that term is defined in Section 2(a)(19) of the Investment Company Act
of 1940 ("Investment Company Act"), nor shall any member receive any
compensation from the Fund except compensation for service as a member of the
Board or a committee of the Board. Each member of the Audit Committee must be
"financially literate"--I.E., able to read and understand a company's financial
statements, including the balance sheet, income statement and cash flow
statement. In addition, at least one member of the Audit Committee must have
finance, accounting or related financial management expertise.
The Board shall determine annually whether any member of the Audit
Committee is an "audit committee financial expert" as defined in Item 3 of Form
N-CSR.
II. PURPOSES OF THE AUDIT COMMITTEE
The purposes of the Audit Committee are:
(a) to oversee the accounting and financial reporting processes of the
Fund and its internal control over financial reporting and, as the
Committee deems appropriate, to inquire into the internal control over
financial reporting of certain third-party service providers;
(b) to oversee the quality and integrity of the Fund's financial
statements and the independent audit thereof;
(c) to oversee, or, as appropriate, assist Board oversight of, the Fund's
compliance with legal and regulatory requirements that relate to the
Fund's accounting and financial reporting, internal control over
financial reporting and independent audits;
(d) to approve prior to appointment the engagement of the Fund's
independent auditors and, in connection therewith, to review and
evaluate the qualifications, independence and performance of the
Fund's independent auditors;
(e) to act as a liaison between the Fund's independent auditors and the
full Board;
(f) to prepare an audit committee report as required by Item 306 of
Regulation S-K to be included in proxy statements relating to the
election of Directors; and
The independent auditors for the Fund shall report directly to the Audit
Committee.
III. DUTIES AND POWERS OF THE AUDIT COMMITTEE
To carry out its purposes, the Audit Committee shall have the following
duties and powers:
(a) to select and approve in advance the retention of auditors to annually
audit and provide their opinion on the Fund's financial statements; to
oversee the performance of the auditors and, if the Committee deems it
appropriate, to approve the termination of their engagement; to
recommend that those Board members who are not "interested persons"
(as that term is defined in Section 2(a)(19) of the Investment Company
Act) approve such retention or termination; and, in connection with
the foregoing, to review and evaluate matters potentially affecting
the independence and capabilities of the auditors. In evaluating the
auditor's
A-1
qualifications, performance and independence, the Audit Committee
must, among other things, obtain and review a report by the auditor,
at least annually, describing the following items:
(i) the audit firm's internal quality-control procedures;
(ii) any material issues raised by the most recent internal
quality-control review, or peer review, of the audit firm, or by
any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or
more independent audits carried out by the firm, and any steps
taken to deal with any such issues; and
(iii) all relationships between the independent auditor and the Fund,
as well as the Fund's investment adviser or administrator or any
control affiliate thereof that provides ongoing services to the
Fund.
It is a responsibility of the Audit Committee to engage actively in a
dialogue with the auditors with respect to any disclosed relationship
or services that may impact the objectivity and independence of the
auditor and to take, or recommend that the full Board take,
appropriate action to oversee the independence of the auditor.
(b) to approve prior to appointment the engagement of the auditor to
provide other audit services to the Fund or to provide non-audit
services to the Fund, its investment adviser, administrator or any
entity controlling, controlled by, or under common control with its
investment adviser or administrator ("adviser/administrator
affiliate") that provides ongoing services to the Fund, if the
engagement by the investment adviser, administrator or
adviser/administrator affiliate relates directly to the operations and
financial reporting of the Fund;
(c) to develop, to the extent deemed appropriate by the Audit Committee,
policies and procedures for pre-approval of the engagement of the
Fund's auditors to provide any of the services described in (b) above;
(d) to consider the controls applied by the auditors and any measures
taken by management in an effort to assure that all items requiring
pre-approval by the Audit Committee are identified and referred to the
Committee in a timely fashion;
(e) to consider whether the non-audit services provided by the Fund's
auditor to the Fund's investment adviser, administrator or
adviser/administrator affiliate that provides ongoing services to the
Fund, which services were not pre-approved by the Audit Committee, are
compatible with maintaining the auditor's independence;
(f) to review the arrangements for and scope of the annual audit and any
special audits;
(g) to review and approve the fees proposed to be charged to the Fund by
the auditors for each audit and non-audit service;
(h) to consider information and comments from the auditors with respect to
the Fund's accounting and financial reporting policies, procedures and
internal control over financial reporting (including the Fund's
critical accounting policies and practices), to consider management's
responses to any such comments and, to the extent the Audit Committee
deems necessary or appropriate, to promote improvements in the quality
of the Fund's accounting and financial reporting;
(i) to consider information and comments from the auditors with respect
to, and meet with the auditors to discuss any matters of concern
relating to, the Fund's financial statements, including any
adjustments to such statements recommended by the auditors, to review
the auditors' opinion on the Fund's financial statements, and to
discuss with management and the independent auditor the Fund's annual
audited financial statements and other periodic financial statements,
including the Fund's disclosures under "Management's Discussion of
Fund Performance";
A-2
(j) to resolve disagreements between management and the auditors regarding
financial reporting;
(k) to consider any difficulties that may have arisen in the course of the
audit, including any limitations upon the scope of the audit;
(l) to review with the Fund's principal executive officer and/or principal
financial officer in connection with required certifications on Form
N-CSR any significant deficiencies in the design or operation of
internal control over financial reporting or material weaknesses
therein and any reported evidence of fraud involving management or
other employees who have a significant role in the Fund's internal
control over financial reporting;
(m) to establish procedures for the receipt, retention and treatment of
complaints received by the Fund relating to accounting, internal
accounting controls, or auditing matters, and the confidential,
anonymous submission by employees of the Fund, its investment adviser,
administrator or any other provider of accounting related services for
the Fund, of concerns about accounting or auditing matters, and to
address reports from attorneys or auditors of possible violations of
federal or state law or fiduciary duty;
(n) to discuss generally the Fund's earnings press releases, as well as
any financial information and earnings guidance provided to analysts
and rating agencies, e.g., the types of information to be disclosed
and the type of presentation to be made;
(o) to review in a general manner, but not as a committee to assume
responsibility for, the Fund's processes with respect to risk
assessment and risk management;
(p) to set clear policies relating to the hiring by entities within the
Fund's investment company complex1 of employees or former employees of
the independent auditors;
(q) to investigate or initiate an investigation of reports of
improprieties or suspected improprieties in connection with the Fund's
accounting or financial reporting;
(r) to report its activities to the full Board on a regular basis and to
make such recommendations with respect to the above and other matters
as the Audit Committee may deem necessary or appropriate; and
(s) to perform such other functions and to have such powers as may be
necessary or appropriate in the efficient and lawful discharge of the
powers provided in this Charter.
The Audit Committee shall have the resources and authority from the Fund
that is appropriate to discharge its responsibilities, including appropriate
funding, as determined by the Committee, for payment of compensation to the
auditors for the purpose of conducting the audit and rendering their audit
report, the authority to retain and compensate special counsel and other experts
or consultants as the Committee deems necessary, and the authority to obtain
specialized training for Audit Committee members.
- ------------------
(1) "Investment company complex" includes:
o the fund and its investment adviser or sponsor;
o any entity controlling, controlled by or under common control with the
investment adviser or sponsor, if the entity (i) is an investment
adviser or sponsor or (ii) is engaged in the business of providing
administrative, custodian, underwriting or transfer agent services to
any investment company, investment adviser or sponsor; and
o any investment company, hedge fund or unregistered fund that has an
investment adviser included in the definition set forth in either of
the two bullet points above.
A-3
The Audit Committee may delegate any portion of its authority, including
the authority to grant pre-approvals of audit and permitted non-audit services,
to a subcommittee of one or more members. Any decisions of the subcommittee to
grant pre-approvals shall be presented to the full Audit Committee at its next
regularly scheduled meeting.
IV. ROLE AND RESPONSIBILITIES OF THE AUDIT COMMITTEE
The function of the Audit Committee is oversight; it is management's
responsibility to maintain appropriate systems for accounting and internal
control over financial reporting, and the auditor's responsibility to plan and
carry out a proper audit. Specifically, Fund management is responsible for: (1)
the preparation, presentation and integrity of the Fund's financial statements;
(2) the maintenance of appropriate accounting and financial reporting principles
and policies; and (3) the maintenance of internal control over financial
reporting and other procedures designed to assure compliance with accounting
standards and related laws and regulations. The independent auditors are
responsible for planning and carrying out an audit consistent with applicable
legal and professional standards and the terms of their engagement letter.
Nothing in this Charter shall be construed to reduce the responsibilities or
liabilities of the Fund's service providers, including the auditors.
Although the Audit Committee is expected to take a detached and questioning
approach to the matters that come before it, the review of a Fund's financial
statements by the Audit Committee is not an audit, nor does the Committee's
review substitute for the responsibilities of the Fund's management for
preparing, or the independent auditors for auditing, the financial statements.
Members of the Audit Committee are not full-time employees of the Fund and, in
serving on this Committee, are not, and do not hold themselves out to be, acting
as accountants or auditors. As such, it is not the duty or responsibility of the
Committee or its members to conduct "field work" or other types of auditing or
accounting reviews or procedures.
In discharging their duties the members of the Audit Committee are entitled
to rely on information, opinions, reports, or statements, including financial
statements and other financial data, if prepared or presented by: (1) one or
more officers of the Fund whom the Director reasonably believes to be reliable
and competent in the matters presented; (2) legal counsel, public accountants,
or other persons as to matters the Director reasonably believes are within the
person's professional or expert competence; or (3) a Board committee of which
the Director is not a member.
V. OPERATIONS OF THE AUDIT COMMITTEE
(a) The Audit Committee shall meet on a regular basis and at least [two]
times per year and is empowered to hold special meetings as
circumstances require. The chair or a majority of the members shall be
authorized to call a meeting of the Audit Committee and send notice
thereof. Notice of meetings shall be made to each member by any
reasonable means at least one week in advance of a meeting, except two
days' notice of a meeting shall be sufficient when, in the judgment of
the chair or a majority of the members, more notice is impractical or
special circumstances exist requiring a meeting in less than a week's
time.
(b) The Audit Committee shall ordinarily meet in person; however, members
may attend telephonically, and the Committee may act by written
consent, to the extent permitted by law and by the Fund's By-laws.
(c) The Audit Committee shall have the authority to meet privately and to
admit non-members individually by invitation.
(d) The Audit Committee shall regularly meet, in separate executive
sessions, with representatives of Fund management, internal auditors
and the Fund's independent auditors. The Committee may also request to
meet with internal legal counsel and compliance personnel of the
Fund's investment adviser or administrator and with other entities
that provide significant accounting or administrative services to the
Fund to discuss matters relating to the Fund's accounting and
compliance as well as other Fund-related matters.
A-4
(e) The Audit Committee shall prepare and retain minutes of its meetings
and appropriate documentation of decisions made outside of meetings by
delegated authority.
(f) The Audit Committee may select one of its members to be the chair and
may select a vice chair.
(g) A majority of the members of the Audit Committee shall constitute a
quorum for the transaction of business at any meeting of the
Committee. The action of a majority of the members of the Audit
Committee present at a meeting at which a quorum is present shall be
the action of the Committee.
(h) The Board shall adopt and approve this Charter and may amend it on the
Board's own motion. The Audit Committee shall review this Charter at
least annually and recommend to the full Board any changes the
Committee deems appropriate.
(i) The Audit Committee shall evaluate its performance at least annually.
A-5
APPENDIX B
THE HIGH YIELD PLUS FUND, INC.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors of The High Yield Plus Fund,
Inc. (the "Fund") operates pursuant to a Charter dated May 25, 2004, which sets
forth the role of the Audit Committee in the Fund's financial reporting process.
Pursuant to the Charter, the role of the Audit Committee is to oversee the
Fund's accounting and financial reporting processes and the quality and
integrity of the Fund's financial statements and the independent audit of those
financial statements. The Committee is responsible for, among other things,
recommending the initial and ongoing engagement of the auditors and reviewing
the scope and results of the Fund's annual audit with the Fund's independent
auditors. Fund management is responsible for the preparation, presentation and
integrity of the Fund's financial statements and for the procedures designed to
assure compliance with accounting standards and applicable laws and regulations.
The independent auditors for the Fund are responsible for planning and carrying
out proper audits and reviews.
The Audit Committee met on May 25, 2004 to review the Fund's audited
financial statements for the fiscal period ended March 31, 2004. In performing
this oversight function, the Audit Committee has reviewed and discussed the
audited financial statements with the Funds' management and their independent
auditors, KPMG, LLP ("KPMG"). The Audit Committee has discussed with KPMG the
matters required to be discussed by Statement on Auditing Standards No. 61, and
has received the written disclosures and the letter from KPMG required by
Independence Standards Board Standard No. 1. The Audit Committee also has
discussed with KPMG its independence.
The members of the Audit Committee are not employed by the Fund as experts
in the fields of auditing or accounting and are not employed by the Fund for
accounting, financial management or internal control purposes. Members of the
Audit Committee rely without independent verification on the information
provided and the representations made to them by management and KPMG.
Based upon this review and related discussions, and subject to the
limitation on the role and responsibilities of the Audit Committee set forth
above and in the Charter, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Fund's Annual
Report to Stockholders for the fiscal period ended March 31, 2004.
The members of the Audit Committee are listed below. Each has been
determined to be independent pursuant to New York Stock Exchange Rule 303.01.
David E. A. Carson Douglas C. McCorkindale
Eugene C. Dorsey Clay T. Whitehead
Robert E. La Blanc
May 25, 2004
B-1
THE HIGH YIELD PLUS FUND, INC.
PROXY
STATEMENT
THE HIGH
YIELD PLUS
FUND, INC.
NOTICE OF
ANNUAL MEETING
TO BE HELD ON
AUGUST 17, 2004
AND
PROXY STATEMENT
PROXY
THE HIGH YIELD PLUS FUND, INC.
GATEWAY CENTER THREE
100 MULBERRY STREET
NEWARK, NEW JERSEY 07102-4077
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Lori E. Bostrom and Arthur J. Brown as proxies,
each with the power of substitution, and hereby authorizes each of them to
represent and to vote, as designated on the reverse side of this card, all the
shares of common stock of The High Yield Plus Fund, Inc. (the "Fund") held of
record on June 18, 2004 at the Annual Meeting of Stockholders to be held on
August 17, 2004, or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR"
THE NOMINEES PRINTED ON THE REVERSE SIDE OF THIS CARD.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name appears hereon. Joint owners should each sign.
When signing as executor, administrator, attorney, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer, giving full title. If a partnership,
please sign in partnership name by an authorized person, giving full title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- --------------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------------- ---------------------------------------------------
- --------------------------------------------------------- ---------------------------------------------------
--------
| | PLEASE MARK VOTES AS IN
| X | THIS EXAMPLE
--------
- --------------------------------------------------------------------------------
THE HIGH YIELD PLUS FUND, INC.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote "FOR" the following nominees:
1. Election of Directors.
Class I Nominees: (01) Eugene C. Dorsey
(02) David E.A. Carson
--- ---
For All Nominees | | | | Withheld from
--- --- All Nominees
---
| |
--- __________________________________________
For all nominee(s) except as written above
For Against Abstain
2. To consider and act upon any --- --- ---
other business as may properly | | | | | |
come before the meeting and any --- --- ---
adjournment thereof.
Mark box at right if an address ---
change or comment has been | |
noted on the reverse side of this ---
card.
Please be sure to sign and date this Proxy
Signature: ____________________ Date: ______________
Signature: ____________________ Date: ______________