Managed High Yield Plus Fund Inc. – Fund Commentary

Managed High Yield Plus Fund Inc. (NYSE: HYF) (the “Fund”) is a closed-end management investment company seeking high income, and secondarily, capital appreciation, primarily through investments in lower rated, income-producing debt and related equity securities.

Fund Commentary for the third quarter 2012 from UBS Global Asset Management (Americas) Inc. (“UBS Global AM”), the Fund’s investment manager

Market Review

Risk aversion, which was elevated at times during the second quarter, was largely replaced with robust risk appetite during the third quarter. Economic fundamentals in most developed countries remained weak while numerous macro issues, including the ongoing European sovereign debt crisis, remained. Nevertheless, these headwinds were largely overshadowed by announcements of additional quantitative easing by central banks around the globe, including the US Federal Reserve Board (Fed), the European Central Bank and the Bank of Japan.

The high yield bond market posted strong results during the quarter, with the BofA Merrill Lynch US High Yield Cash Pay Constrained Index (the “Index”) gaining 4.58%. 1 Solid corporate fundamentals, continued low defaults and strong demand from investors seeking to generate incremental yield in the low interest rate environment supported high yield bond prices. From a ratings perspective, better quality rating categories broadly underperformed lower quality bonds, with the BB- and B-rated segments lagging the CCC and below-rated segment.

Performance Review

For the third quarter of 2012, the Fund posted a net asset value total return of 5.46%, and a market price return of 3.04%. On a net asset value basis, the Fund outperformed its benchmark, the Index, which returned 4.58% for the quarter.

During the quarter, issue selection was the primary driver of positive relative returns. Particularly, our holdings in the energy, telecommunications, insurance and diversified financial services sectors were most beneficial. This was somewhat offset by security selection in banks. Sector allocation, overall, was also additive for results, especially our overweights in energy, gaming, services and chemicals. On the downside, underweights to home builders and electric utilities were drags on results, although we added to our allocations to both sectors to move closer to neutral positions at the end of the quarter.

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