ANNUAL REPORT December 31, 1994
Prudential
High Yield
Fund, Inc.
(ICON)
(LOGO)
<PAGE>
PRUDENTIAL
HIGH YIELD
FUND, INC. At A Glance
The Fund invests in securities that are generally rated in the medium to lower
categories by recognized independent rating services, or they may be non-rated
securities that are, in our opinion, of comparable quality. As of December 31,
1994, the majority of holdings were rated B or better by the rating services.
There are greater investment risks associated with non-investment grade bonds,
commonly known as "junk bonds," than investment grade securities.
<TABLE>
Cumulative Total Returns1
As of 12/31/94
<CAPTION>
One Year Five Year Ten Year Since Inception2
<S> <C> <C> <C> <C>
Class A -2.4% N/A N/A +62.1%
Class B -2.9 +58.3% +145.0% +332.3
Class C N/A N/A N/A -0.8
Lipper High Current Yield Avg.3 3.8 +65.6 +157.5 +395.0
</TABLE>
<TABLE>
Average Annual Total Returns1
As of 12/31/94
<CAPTION>
One Year Five Year Ten Year Since Inception2
<S> <C> <C> <C> <C>
Class A 6.3% N/A N/A +9.4%
Class B 7.9 +9.5% +9.4% +9.7
Class C N/A N/A N/A 1.8
</TABLE>
Past performance is not indicative of future results. Principal and investment
return will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
1 Source: Prudential Mutual Fund Management Inc. and Lipper Analytical Services,
Inc. The cumulative total returns do not take into account sales charges. The
average annual returns do take into account applicable sales charges. The Fund
charges a maximum front-end sales load of 4% for Class A shares and a
contingent deferred sales charge of 5%, 4%, 3%, 2%, 1% and 1% for six years,
for Class B shares. Class C shares have a 1% CDSC for one year. Beginning in
February 1995, Class B shares will automatically convert to Class A shares on
a quarterly basis, after approximately seven years.
2 Inception dates: 1/22/90 Class A; 3/29/79 Class B; 8/1/94 Class C.
3 The Lipper high current yield average tracked 93 funds for one year, 60 funds
for five years, 32 funds for ten years and 20 funds since inception of the
Class B shares on 3/29/79.
<PAGE>
<TABLE>
Five Largest Holdings
<CAPTION>
% of Total
As of 12/31/94 Portfolio
<S> <C>
1. Pathmark Stores 1.9%
Retail supermarkets
2. Mesa Capital Corp. 1.5%
Oil and gas exploration
and production
3. Stone Container Corp. 1.4%
Building products
4. Fort Howard Paper Corp. 1.4%
Paper products and packaging
5. Flagstar Corp. 1.3%
Restaurant chain
</TABLE>
Understanding
Performance
Historical Investment Results represent the cumulative total returns for a
specified period. These returns assume the reinvestment of dividends and
distributions but do not take into account the applicable sales charges.
Average Annual Total Returns are not actual yearly results but even out
performance so that investors can compare different funds on an equal basis.
These returns take into account sales charges and would produce the same
results as the historic total returns for the same period if performance had
been constant.
Growth of an Assumed
Investment of $10,000 in the
Prudential High Yield Fund
Class A
from inception on
1/22/90 through 12/31/94
(GRAPH)
The above chart represents historical performance of Class A
shares and assumes a front-end sales load of 4%. The net amount
invested, after taking into account the front-end sales load,
was $9,600.
Key
/ / Value of shares
initially purchased plus
shares acquired
through reinvestment
of all dividends and
distributions.
// Value of shares
initially purchased with
all distributions taken
in cash.
Class B
from inception on
3/29/79 through 12/31/94
The above chart represents historical performance of Class B
shares and does not assume the effects of a contingent deferred
sales charge. (Class B shares are subject to a CDSC of 5%, 4%, 3%,
2%, 1% and 1% during the first six years.)
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate and an investor's shares may be worth more or
less than the original amount when redeemed. Performance data for Class C
shares is not included since the share class commenced operations less than
one year ago.
<PAGE>
Letter to
Shareholders
February 1, 1995
Dear Shareholder:
In the past year, non-investment grade bond yields have risen while their
prices have fallen in a market dominated by rising interest rates. High yield
bonds, however, generally performed better than their investment grade
counterparts. We're pleased to announce that the Prudential High Yield Fund has
produced above-average total returns, as reported by Lipper Analytical Services
Inc.
1994 Investment Results
Total Returns
(GRAPH)
Source: Prudential Investment Corporation. For purposes of comparison only.
Bonds as measured by the Lehman Brothers government/corporate aggregate. High
yield bonds as measured by the First Boston High Yield Index. U.S. stocks as
measured by the S&P 500 Index. U.S. money markets as measured by IBC/Donoghue's
all taxable funds average.
How We Fared.
The Prudential High Yield Fund's income has risen substantially this year,
keeping pace with higher interest rates in the bond market. Interest rates have
been rising because the Federal Reserve is in the midst of a campaign to stave
off inflation -- hopefully without choking off economic growth. In February,
the central bank began raising short-term interest rates and the federal funds
rate (the overnight interbank lending rate) stood at 5.5% on December 31, 1994,
up from 3% a year earlier, as a result. The Fund's 30-day SEC yield for Class
A shares rose to 11.5% from 8.9% during the same time; Class B share yields
rose to 11.3% and Class C share yields stood at 11.3% at year end.
But rising yields mean falling bond prices and that's also been reflected in
the Fund's net asset value per share, which is down about $1.00 since last year.
Preparing for Slower Growth.
Since we believe the Federal Reserve will be successful in its plan to cool
growth in the U.S., we're preparing the portfolio for a slowdown by watching
credit quality closely. Of course, we've always concentrated our purchases
among B-rated companies that are strong enough to possibly warrant a credit
rating upgrade while still paying a high enough coupon to support our dividend
payout. As the economic recovery has been tempered by higher interest rates,
we are scrutinizing every issue we purchase to make sure their issuers have the
management depth and financial strength to withstand a slowdown. Some of the
better cyclical companies we've purchased recently include G-1 Holdings and
American Standard.
-1-
<PAGE>
We're also trying to capitalize on rising interest rates by putting money to
work in the new issue market. Since high yield bonds have generated negative
total returns in 1994, much less cash has flowed into mutual funds than in
prior years. That created a buyer's market for new securities -- to entice
buyers, high yield issuers must offer higher coupons. Currently, we can obtain
about 100 basis points (equivalent to one percentage point) in additional yield
from new bonds compared to bonds traded in the secondary market. We recently
purchased new issues from chemical company -- Rexene and forest products
company -- Stone Container.
Naturally, we tried to steer clear of companies that didn't have the cash
flow strength to avoid default. In fact, we were successful in selling several
holdings, like Kash and Karry, Acme Holdings and Equitable Bag, many months
before they defaulted.
On the Hill:
In 1995, Congress is set to consider an initiative that would restore full
income tax deductibility for individual retirement account contributions for
middle-income wage earners. In addition, Congress will also debate creation of
a new tax-deferred savings account, called "the American Dream Savings
Account." Prudential Mutual Funds supports both of these proposals, and we
urge you to share your own opinion with your Congressional representatives.
Fund Update:
Beginning in February 1995, Class B shareholders should begin to notice a
change in their Fund holdings. That's when Class B shares will begin to convert
to Class A shares, on a quarterly basis, approximately seven years after
purchase. As you may know, Class A shares generally carry lower annual
distribution expenses than Class B shares. Accordingly, after conversion, you
will earn higher total returns on your investment than you would have as a
Class B shareholder. This conversion will be processed automatically and won't
require any further action on your part.
Looking Ahead.
Although we anticipate the Federal Reserve will tighten the money supply at
least once more in the first quarter of 1995, we believe that long-term
Treasury rates are near their highs for this economic cycle. That means Gross
Domestic Product growth will probably slow in 1995, possibly to below 3% per
year and the U.S. might enjoy an extended period of stable growth until 1996.
High yield bonds should do well in that kind of environment -- continued growth
in sales and cashflow should benefit companies and their respective
bondholders. One note of caution is appropriate: if the Federal Reserve's plan
backfires and the U.S. economy slumps, expect a difficult period for the high
yield bond market.
We anticipate a better year for high yield bonds in 1995 and thank you for
choosing the Prudential High Yield Fund for your bond investment.
Sincerely,
Lawrence C. McQuade
President
Lars Berkman
Portfolio Manager
Note: Co-portfolio manager George Edwards has transferred from the Prudential
Investment Corp. to manage high yield portfolios for Prudential's institutional
group. Lars Berkman will assume portfolio management responsibility for the
Fund, in addition to managing the high yield credit analysis team.
-2-
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC. Portfolio of Investments
December 31, 1994
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
LONG-TERM INVESTMENTS--95.3%
Bonds--94.2%
Aerospace--2.0%
K & F Industries,
Inc.,
Sr. Sec'd.
Notes,
11.875%,
B1 $ 15,585 12/1/03......... $ 15,156,413
P.A. Holdings
Corp.,
Sr. Sub. Notes,
B3 2,851 13.75%, 7/15/99... 2,993,550
Rohr, Inc., Sr.
Notes,
11.625%,
Ba3 18,500 5/15/03......... 18,407,500
Sequa Corp.,
Sr. Sub. Notes,
9.375%,
B3 27,750 12/15/03........ 24,420,000
Talley
Manufacturing &
Technolgy, Inc.,
Sr. Notes,
10.75%,
B2 9,000 10/15/03........ 8,100,000
--------------
69,077,463
--------------
Airlines--0.6%
NWA, Inc., Sr.
Notes,
(cost
$10,689,376;
purchased-1994),
12.09%,
NR 11,688D 12/31/00........ 11,278,591
USAir, Inc., Sr.
Notes,
B3 1,250 9.625%, 2/1/01.... 687,500
B3 19,250 10.00%, 7/1/03.... 10,587,500
--------------
22,553,591
--------------
Automotive Parts--2.8%
Doehler Jarvis,
Inc.,
Sr. Notes,
B3 10,000 11.875%, 6/1/02... 9,800,000
Foamex JPS Automotive L.P.,
Sr. Disc. Notes,
Zero Coupon (until 7/1/99),
Caa 19,500@ 14.00%, 7/1/04.... 10,237,500
Sr. Sub. Deb.,
11.875%,
B3 6,910 10/1/04......... 6,599,050
Harvard
Industries,
Inc.,
Sr. Notes,
B3 10,500 12.00%, 7/15/04... 10,578,750
JB Poindexter,
Inc.,
Sr. Notes,
B2 10,000 12.50%, 5/15/04... 9,400,000
JPS Automotive Products
Corp., Sr. Notes,
11.125%,
B2 $ 2,950 6/15/01......... $ 2,832,000
Motor Wheel Corp.,
Sr. Notes,
B2 10,130 11.50%, 3/1/00.... 9,370,250
Penda Industries,
Inc.,
Sr. Notes,
B2 7,000 10.75%, 3/1/04.... 6,300,000
SPX Corp.,
Sr. Sub. Notes,
B3 31,750 11.75%, 6/1/02.... 31,591,250
--------------
96,708,800
--------------
Broadcasting & Other
Media--9.1%
Ackerly Communications, Inc.,
Sr. Sec'd. Notes,
B+* 10,000 10.75%, 10/1/03... 9,525,000
Adelphia Communications
Corp., Sr. Notes,
B3 24,500 12.50%, 5/15/02... 22,907,500
9.50%, 2/15/04,
NR 15,692 PIK............. 11,297,988
Allbritton Communications Co.,
Sr. Sub. Deb.,
B3 9,500 11.50%, 8/15/04... 9,547,500
Bell Cablemedia
Co.,
Sr. Disc. Notes,
Zero Coupon
(until 7/15/99),
B2 26,500 11.95%, 7/15/04... 14,177,500
Cablevision Industries Corp.,
Sr. Notes,
B1 7,500 10.75%, 1/30/02... 7,462,500
B1 26,000 9.25%, 4/1/08..... 23,270,000
Cablevision System Corp.,
Sr. Sub. Deb.,
B3 6,560 10.75%, 4/1/04.... 6,560,000
Sr. Sub. Notes,
B3 20,750 9.875%, 2/15/13... 18,675,000
Century
Communications
Corp., Sr. Sub.
Notes,
11.875%,
B2 30,385 10/15/03........ 31,676,363
</TABLE>
-3- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
Broadcasting & Other Media
(cont'd.)
Chancellor Broadcasting Co.,
Sr. Sub. Notes,
B3 $ 12,000 12.50%, 10/1/04... $ 12,000,000
Continental Cablevision, Inc.,
Sr. Deb.,
Ba2 17,000 9.50%, 8/1/13..... 15,555,000
Sr. Sub. Deb.,
B1 15,700 11.00%, 6/1/07.... 15,935,500
Cooke Media Group, Inc.,
Sub. Deb.,
NR 2,000 11.625%, 4/1/99... 1,880,000
Diamond Cable Co.,
Sr. Disc. Notes,
Zero Coupon
(until 9/30/99),
B3 16,750 13.25%, 9/30/04... 8,207,500
Falcon Holdings Corp. L.P.,
Sr. Sub. Notes, PIK,
NR 18,450 11.00%, 9/15/03... 16,051,512
Jones Intercable,
Inc.,
Sr. Sub. Deb.,
B1 3,250 10.50%, 3/1/08.... 3,185,000
Marcus Cable Operating
Co. L.P.,
Sr. Sub. Disc. Notes,
Zero Coupon
(until 2/1/00),
B3 41,250 13.50% 8/1/04..... 21,862,500
NWCG Holdings Corp.,
Sr. Sec'd. Disc. Notes,
Zero Coupon,
Caa 19,000 6/15/99......... 9,690,000
Outdoor Systems,
Inc.,
Sr. Notes,
B2 6,550 10.75%, 8/15/03... 5,895,000
Robin Media Group, Inc.,
Sr. Sub. Deb.,
NR 1,000 11.125%, 4/1/97... 950,000
Rogers Cablesystems, Inc.,
Sr. Sec'd. Deb.,
Ba3 10,000 10.125%, 9/1/12... 9,550,000
Scott Cable
Communications,
Inc., Sub. Deb.,
NR $ 2,000 12.25%, 4/15/01... $ 1,600,000
United Artists, Inc.,
Sr. Sec'd. Notes,
Ba3 8,500 11.50%, 5/1/02.... 8,776,250
United Int'l. Holdings, Inc.,
Sr. Disc. Notes,
Zero Coupon,
B3 49,500@ 11/15/99........ 24,997,500
Videotron
Holdings,
Sr. Disc. Notes,
Zero Coupon
(until 7/1/99),
B3 10,500 11.125%, 7/1/04... 5,512,500
--------------
316,747,613
--------------
Building & Related
Industries--5.5%
American Standard, Inc.,
Sr. Sub. Deb.,
Zero Coupon
(until 6/1/98),
B1 33,500 10.50%, 6/1/05.... 21,523,750
Baldwin Co., Sr.
Notes,
B2 14,500 10.375%, 8/1/03... 7,830,000
Building Material
Corp.
of America, Sr.
Def'd. Notes,
Ser. B,
Zero Coupon
(until 7/1/99),
BB* 29,750 11.75%, 7/1/04.... 15,172,500
Continental Homes
Holdings, Sr.
Notes,
B1 10,000 12.00%, 8/1/99.... 9,400,000
Del Webb Corp.,
Sr. Notes,
10.875%,
Ba3 7,000 3/31/00......... 6,650,000
Sr. Sub. Deb.,
B2 2,250 9.75%, 3/1/03..... 1,867,500
Essex Group, Inc.,
Sr. Notes,
B1 3,250 10.00%, 5/1/03.... 3,055,000
Greystone Homes,
Inc.,
Gtd. Sr. Notes,
B3 15,000 10.75%, 3/1/04.... 12,675,000
</TABLE>
-4- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
Building & Related Industries
(cont'd.)
Hovnanian K
Enterprises,
Inc., Sub.
Notes,
B1 $ 15,000 11.25%, 4/15/02... $ 12,525,000
Inter-City Prods.
Corp.,
Sr. Sec'd.
Notes,
Ba3 15,560 9.75%, 3/1/00..... 14,509,700
J.M. Peters, Inc.,
Sr. Notes,
B3 10,000@ 12.75%, 5/1/02.... 8,300,000
Nortek, Inc.,
Sr. Sub. Notes,
B3 25,125 9.875%, 3/1/04.... 22,361,250
NVR, Inc., Sr.
Notes,
B2 12,100 11.00%, 4/15/03... 10,164,000
The Presley
Companies,
Sr. Notes,
B2 9,000 12.50%, 7/1/01.... 7,740,000
Ryland Group,
Inc.,
Sr. Sub. Notes,
Ba3 8,950 10.50%, 7/15/02... 8,010,250
Ba3 11,050 9.625%, 6/1/04.... 9,282,000
Southdown, Inc.,
Sr. Sub. Notes,
14.00%,
NR 12,800 10/15/01........ 14,240,000
UDC Homes, Inc.,
Sr. Notes,
B2 7,000 11.75%, 4/30/03... 4,620,000
--------------
189,925,950
--------------
Casinos--6.6%
Aztar Corp.,
Sr. Sub. Notes, Ser. B,
B2 6,650 11.00%, 10/1/02... 6,051,500
Sr. Sub. Notes,
B2 23,000 13.75%, 10/1/04... 23,345,000
Bally's Casino,
Inc.,
Sr. Disc. Notes,
Zero Coupon,
B3 16,750 6/15/98......... 10,217,500
Bally's Park Place
Funding, Inc.,
First Mtge.
Bonds,
B1 $ 38,000 9.25%, 3/15/04.... $ 32,680,000
Casino America,
Inc.,
First Mtge.
Bonds,
11.50%,
B1 9,000 11/15/01........ 7,570,000
Casino Magic Finance Corp.,
First Mtge. Bonds,
11.50%,
B1 13,500 10/15/01........ 8,640,000
Empress River
Casino Finance
Corp.,
Sr. Notes,
B1 15,000 10.75%, 4/1/02.... 13,725,000
GB Property Funding Corp.,
First Mtge. Notes,
10.875%,
B2 4,000 1/15/04......... 3,240,000
Grand Casino Resorts, Inc.,
First Mtge. Notes, Ser. B,
NR 11,000 12.50%, 2/1/00.... 10,340,000
Hollywood Casino Corp.,
Sr. Sec'd. Notes,
NR 10,547 14.00%, 4/1/98.... 10,441,530
Lady Luck Gaming
Finance Corp.,
First Mtge.
Notes,
B2 6,000 10.50%, 3/1/01.... 2,340,000
President
Riverboat
Casinos, Inc.,
Sr. Sub. Notes,
B2 5,000@ 13.00%, 9/15/01... 4,512,500
PRT Funding Corp.,
Sr. Notes,
11.625%,
B3 7,000 4/15/04......... 4,865,000
Resorts Int'l.,
Inc.,
First Mtge.
Notes,
B3 7,960 7.25%, 6/30/00.... 6,499,892
Santa Fe Hotel,
Inc.,
First Mtge.
Notes,
11.00%,
B2 11,000@ 12/15/00........ 9,900,000
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
Casinos (cont'd.)
Showboat, Inc.,
Gtd. First Mtge. Bonds,
Ba3 $ 3,000 9.25%, 5/1/08..... $ 2,505,000
Sr. Sub. Notes,
B2 14,500 13.00%, 8/1/09.... 13,775,000
Station Casinos,
Inc.,
Sr. Sub. Notes,
B2 18,800 9.625%, 6/1/03.... 15,792,000
Trump Plaza Funding, Inc.,
First Mtge. Notes,
10.875%,
B3 25,015 6/15/01......... 19,011,400
Trump Taj Mahal
Funding, Inc.,
First Mtge.
Bonds, Class B,
PIK,
Caa 34,082 11.35% 11/15/99... 22,664,222
--------------
228,115,544
--------------
Chemicals--4.3%
Arcadian Partners
L.P.,
Sr. Notes, Ser.
A,
B2 30,250 10.75%, 5/1/05.... 28,435,000
G-I Holdings,
Inc.,
Sr. Notes,
Zero Coupon,
Ba3 40,000 10/1/98......... 24,700,000
Harris Chemical NA, Inc.,
Gtd. Sr. Notes,
Zero Coupon
(until 1/15/96),
B2 9,200 10.25%, 7/15/01... 7,567,000
Huntsman Corp.,
First Mtge.
Notes,
10.625%,
B1 13,000 4/15/01......... 13,260,000
B1 3,500 11.00%, 4/15/04... 3,640,000
Indspec Chemical Corp.,
Sr. Sub. Notes,
Zero Coupon
(until 12/1/98),
10.50%,
NR 19,427 12/1/03......... 11,073,390
Laroche Industies,
Inc.,
Sr. Sub. Notes,
B3 6,000 13.00%, 8/15/04... 5,520,000
NL Industries,
Inc.,
Sr. Notes,
Zero Coupon
(until
10/15/98),
13.00%,
B2 $ 28,080 10/15/05........ $ 17,409,600
Sr. Sec'd. Notes,
11.75%,
B1 15,500 10/15/03........ 15,500,000
Polymer Group,
Inc.,
Sr. Notes,
(cost
$8,500,000;
purchased-1994),
Caa 8,500D 12.25%, 7/15/02... 8,117,500
Rexene Corp.,
Sr. Notes,
B1 12,000 11.75%, 12/1/04... 12,300,000
UCC Investors Holdings, Inc.,
Sr. Disc. Notes,
Zero Coupon
(until 5/1/98),
B3 5,300 12.00%, 5/1/05.... 3,511,250
--------------
151,033,740
--------------
Consumer Goods--1.9%
Apparel Ventures,
Inc.,
Sr. Notes, Ser.
B,
12.25%,
NR 2,000 12/31/00........ 1,790,000
Astrum Int'l.
Corp., Notes,
B3 17,761 11.50%, 6/8/03.... 17,849,805
Florsheim Shoe
Co.,
Sr. Notes,
B1 4,000 12.75%, 9/1/02.... 3,880,000
Health O Meter,
Inc.,
Sr. Sub. Notes,
NR 7,000@ 13.00%, 8/15/02... 6,300,000
JB Williams Holdings, Inc.,
Sr. Notes,
B3 5,500 12.00%, 3/1/04.... 5,142,500
MacAndrews &
Forbes
Group, Inc.,
Sub. Notes,
NR 6,400 12.25%, 7/1/96.... 6,336,000
Playtex Family Products
Corp., Sr. Sub. Notes,
B3 6,400 9.00%, 12/15/03... 5,568,000
</TABLE>
-6- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
Consumer Goods (cont'd.)
Revlon Consumer
Products Corp.,
Deb.,
10.875%,
B2 $ 5,450 7/15/10......... $ 5,082,125
Sr. Notes,
NR 5,000 9.375%, 4/1/01.... 4,475,000
Sr. Sub. Notes,
B3 11,000 10.50%, 2/15/03... 9,845,000
--------------
66,268,430
--------------
Diversified Industries--3.9%
Envirodyne Industries, Inc.,
Sr. Notes,
B2 21,500 10.25%, 12/1/01... 15,050,000
Fairchild Corp.,
Sr. Notes,
B3 3,400 12.25%, 3/15/96... 3,374,160
Sub. Deb.,
12.00%,
B3 5,000 10/15/01........ 4,500,000
Fairchild Industries, Inc.,
Sr. Sec'd. Notes,
B2 13,700 12.25%, 2/1/99.... 13,426,000
IMO Industries,
Inc.,
Sr. Sub. Deb.,
B3 20,698 12.25%, 8/15/97... 20,698,000
B3 5,750 12.00%, 11/1/01... 5,800,313
Interlake Corp.,
Sr. Sub. Deb.,
B3 23,625 12.125%, 3/1/02... 21,971,250
Jordan Industries,
Inc.,
Sr. Notes,
B3 27,000 10.375%, 8/1/03... 24,030,000
Sr. Sub. Disc.
Deb.,
Zero Coupon
(until 2/1/98),
Caa 4,500 11.75%, 8/1/05.... 2,250,000
Kenetech Corp.,
Sr. Sec'd.
Notes,
12.75%,
B2 8,750 12/15/02........ 9,187,500
Lamson & Sessions
Co.,
Sr. Sub. Deb.,
B2 $ 1,000 14.00%, 6/1/97.... $ 1,010,000
MAXXAM Group,
Inc.,
Sr. Sec'd. Disc.
Notes,
Zero Coupon
(until 8/1/98),
B3 2,000 12.25%, 8/1/03.... 1,140,000
Newflo Corp.,
Sub. Notes,
13.25%,
B3 10,000 11/15/02........ 9,850,000
Remington Arms,
Inc., Sr. Sub.
Notes,
(cost
$5,002,375;
purchased-1994)
B2 5,800D 10.00%, 12/1/03... 4,872,000
--------------
137,159,223
--------------
Drugs & Health Care--4.4%
American Medical Int'l., Inc.,
Sr. Deb.,
Ba2 8,402 11.25%, 6/1/15.... 8,822,100
Sr. Notes,
11.00%,
Ba2 5,425 10/15/00........ 5,642,000
Charter Medical
Corp.,
Sr. Sub. Notes,
B2 39,950 11.25%, 4/15/04... 41,148,500
Community Health Systems,
Inc., Sr. Sub. Deb.,
10.25%,
B2 3,000 11/30/03........ 2,970,000
Continental Medical System,
Inc., Sr. Sub. Notes,
10.875%,
B2 27,500 8/15/02......... 22,137,500
Healthtrust, Inc.,
Sub. Notes,
B1 19,874 10.75%, 5/1/02.... 21,116,125
OrNda Healthcorp,
Inc.,
Sr. Sub. Notes,
B2 39,440 12.25%, 5/15/02... 42,200,800
Surgical Health
Corp.,
Sr. Sub. Notes,
B3 4,750 11.50%, 7/15/04... 4,750,000
</TABLE>
-7- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
Drugs & Health Care (cont'd.)
Total Renal Care,
Inc.,
Sr. Disc. Notes,
Zero Coupon
(until 8/15/97),
B3 $ 5,000@ 12.00%, 8/15/04... $ 3,750,000
--------------
152,537,025
--------------
Energy--4.8%
Clark R&M Holdings, Inc.,
Sr. Sec'd. Notes, Ser. A,
Zero Coupon,
B1 20,000 2/15/00......... 11,400,000
Empire Gas Corp.,
Sr. Sec'd. Notes,
7.00% (until 7/15/99),
Caa 10,750@ 10.00%, 7/15/04... 8,008,750
Falcon Drilling,
Inc.,
Sr. Notes,
B2 8,250 9.75%, 1/15/01.... 7,837,500
Forest Oil Corp.,
Sr. Sub. Notes,
B3 10,000 11.25%, 9/1/03.... 8,850,000
Gulf Canada Resources, Ltd.,
Sr. Sub. Deb.,
B2 25,580 9.25%, 1/15/04.... 23,469,650
Maxus Energy
Corp.,
Deb.
11.50%,
B1 6,750 11/15/15........ 6,210,000
Notes,
B1 15,000 9.375%, 11/1/03... 12,600,000
Mesa Capital
Corp.,
Sec'd. Disc.
Notes,
Zero Coupon
(until 6/30/95),
B3 58,601 12.75%, 6/30/98... 50,543,362
Nuevo Energy
Corp.,
Sr. Sub. Notes,
B3 6,000 12.50%, 6/15/02... 6,150,000
Petroleum Heat &
Power, Inc.,
Sub. Deb.,
B2 5,000 9.375%, 2/1/06.... 4,200,000
Sub. Notes,
B2 5,500 10.125%, 4/1/03... 5,005,000
Triton Energy
Corp.,
Sr. Sub. Disc.
Notes,
Zero Coupon
(until
12/15/96),
B1 $ 13,000 9.75%, 12/15/00... $ 9,701,250
Wainoco Oil Corp.,
Sr. Notes,
B1 11,850 12.00%, 8/1/02.... 12,087,000
--------------
166,062,512
--------------
Entertainment--0.2%
Imax Corp., Sr.
Notes,
NR 5,000 7.00%, 3/1/01..... 4,175,000
Plitt Theatres,
Inc.,
Sr. Sub. Notes,
10.875%,
B3 3,000 6/15/04......... 2,790,000
--------------
6,965,000
--------------
Financial Services--1.4%
Chartwell Reinsurance Corp.,
Sr. Notes,
Ba3 4,000 10.25%, 3/1/04.... 3,520,000
Delaware
Management
Holdings, Inc.,
Sr. Sec'd.
Notes,
Ba3 5,100 10.25%, 3/15/04... 5,329,500
Lomas Mortgage USA, Inc.,
Sr. Notes,
B1 14,700 10.25%, 10/1/02... 12,201,000
Reliance Group
Holdings,
Inc., Sr. Sub.
Deb.,
B1 18,700 9.75%, 11/15/03... 16,362,500
Scotsman Group,
Inc.,
Sr. Sec'd.
Notes,
B1 13,250 9.50%, 12/15/00... 11,991,250
--------------
49,404,250
--------------
Food & Beverage--4.8%
Chiquita Brands Int'l., Inc.,
Sub. Notes,
B3 2,225 11.50%, 6/1/01.... 2,169,375
Del Monte Corp.,
Sub. Notes,
(cost
$16,653,992;
purchased-1993),
12.25%, 9/1/02,
NR 17,201D PIK............. 15,996,930
</TABLE>
-8- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
Food & Beverage (cont'd.)
Di Giorgio Corp.,
Sr. Notes,
B2 $ 9,000 12.00%, 2/15/03... $ 8,640,000
Fresh Del Monte Produce,
N.V., Sr. Notes,
B1 18,050 10.00%, 5/1/03.... 12,274,000
Heileman Acquisition Corp.,
Sr. Sub. Notes,
B3 13,421 9.625%, 1/31/04... 8,723,650
PF Acquisition
Corp.,
Sr. Sub. Notes,
(cost
$12,500,000;
purchased-1994)
B3 12,500D 12.75%, 2/1/05.... 12,500,000
Pilgrim's Pride
Corp.,
Sr. Sub. Notes,
B3 10,000 10.875%, 8/1/03... 9,425,000
PM Holdings Corp.,
Sub. Notes,
Zero Coupon
(until 9/1/00),
NR 12,437@ 11.50%, 9/1/05.... 5,550,011
Premium Standard Farms L.P.,
Sr. Sec'd. Notes,
(cost $10,000,000;
purchased-1994)
NR 10,000D 12.25%, 6/15/04... 10,050,000
Sr. Sec'd. Disc. Notes,
(cost $27,730,698;
purchased-1993)
Zero Coupon
(until 9/15/96),
NR 34,627D 12.00%, 9/15/03... 27,701,600
Seven-Up/RC
Bottling Co.,
Sr. Sec'd.
Notes,
Caa 13,980 11.50%, 8/1/99.... 11,743,200
Specialty Foods
Corp.,
Sr. Sec'd. Disc. Notes,
Zero Coupon
(until 8/15/99),
Caa 4,000 13.00%, 8/15/05... 1,610,000
Specialty Foods
Corp.,
Sr. Sub. Notes,
B3 $ 18,850 11.25%, 8/15/03... $ 16,399,500
Sr. Unsec'd.
Notes,
B2 25,000 10.25%, 8/15/01... 22,250,000
White Rose Foods,
Inc.,
Sr. Notes,
Zero Coupon,
NR 6,250 11/1/98......... 3,375,000
--------------
168,408,266
--------------
Leasing--0.1%
Tiphook Finance
Corp.,
Sr. Notes,
Caa 4,000 7.125%, 5/1/98.... 2,920,000
--------------
Leisure & Tourism--2.2%
Bally's Grand,
Inc.,
First Mtge.
Notes,
10.375%,
NR 31,400 12/15/03........ 27,318,000
Cinemark USA,
Inc.,
Sr. Notes,
B1 10,750 12.00%, 6/1/02.... 11,180,000
Four Seasons Hotels, Inc.,
Notes,
(cost $10,793,500;
purchased-1994)
B1 11,300D 9.125%, 7/1/00.... 10,509,000
Host Marriott
Corp.,
Sr. Notes,
B1 8,498 10.625%, 2/1/00... 8,498,000
Host Marriott Hospitality,
Inc., Sr. Notes,
10.875%,
B1 5,236 11/1/01......... 5,314,540
B1 1,312 10.50%, 5/1/06.... 1,305,440
John Q Hammonds Hotels,
First Mtge. Notes,
B1 1,750 8.875%, 2/15/04... 1,513,750
Kloster Cruise
Ltd.,
Sr. Sec'd.
Notes,
B2 5,000 13.00%, 5/1/03.... 4,500,000
Red Roof Inns,
Inc.,
Sr. Notes,
9.625%,
B3 8,500 12/15/03........ 7,820,000
--------------
77,958,730
--------------
</TABLE>
-9- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
Miscellaneous Services--0.6%
Americold Corp.,
First Mtge. Bonds, Ser. B,
B2 $ 10,000 11.50%, 3/1/05.... $ 9,000,000
Clean Harbors,
Inc.,
Sr. Notes,
B2 5,000 12.50%, 5/15/01... 4,787,500
L A Petite Holdings Corp.,
Sr. Sec'd. Notes,
B3 5,565 9.625%, 8/1/01.... 5,203,275
Solon Automated Services,
Inc., Sr. Notes,
B1 3,000 12.75%, 7/15/01... 2,850,000
--------------
21,840,775
--------------
Paper & Forest Products--7.5%
Container Corp.,
Sr. Notes, Ser.
A,
B2 23,500 11.25%, 5/1/04.... 24,087,500
Domtar, Inc.,
Notes,
Ba1 18,300 12.00%, 4/15/01... 19,032,000
Sr. Notes,
Ba1 500 11.75%, 3/15/99... 513,750
Foamex L.P., Sr.
Notes,
B1 13,500 11.25%, 10/1/02... 12,825,000
Fort Howard Paper Corp.,
Jr. Sub. Deb.,
14.125%,
B3 27,250 11/1/04......... 27,454,375
Sr. Sub. Notes,
B2 10,300 9.00%, 2/1/06..... 8,858,000
Sub. Deb.,
12.625%,
B2 10,200 11/1/00......... 10,506,000
Gaylord Container Corp.,
Sr. Notes,
B3 3,750 11.50%, 5/15/01... 3,862,500
Sr. Sub. Disc.
Deb.,
Zero Coupon
(until 5/15/96),
12.75%,
Caa 12,000 5/15/05......... 10,620,000
Indah Kiat Int'l. Finance Co.,
Sr. Sec'd. Notes, Ser. C,
Ba3 11,000 12.50%, 6/15/06... 10,697,500
Ivex Holdings
Corp.,
Sr. Disc. Deb.,
Ser. B,
Zero Coupon
(until 3/15/00),
Caa $ 10,500 13.25%, 3/15/05... $ 4,200,000
Ivex Packaging
Corp.,
Sr. Sub. Notes,
12.50%,
B3 12,000 12/15/02........ 11,940,000
Malette, Inc.,
Sr. Sec'd.
Notes,
Ba3 9,500 12.25%, 7/15/04... 9,595,000
Pacific Lumber
Co.,
Sr. Notes,
B3 23,923 10.50%, 3/1/03.... 22,248,390
SD Warren Co.,
Sr. Sub. Notes,
(cost
$15,000,000;
purchased-1994),
12.00%,
B1 15,000D/@ 12/15/04........ 15,337,500
Seminole Kraft
Corp.,
Sub. Notes,
13.50%,
NR 2,399 10/15/96........ 2,399,000
Stone Consolidated, Inc.,
Sr. Sub. Notes,
10.25%,
B1 17,000 12/15/00........ 16,745,000
Stone Container
Corp.,
Sr. Notes,
11.875%,
B1 15,272 12/1/98......... 15,806,520
B1 35,500 9.875%, 2/1/01.... 33,370,000
--------------
260,098,035
--------------
Plastic Products--0.8%
Applied Extrusion
Technology,
Inc.,
Sr. Notes, Ser.
B,
B3 14,500 11.50%, 4/1/02.... 14,355,000
Plastic Specialty
&
Technology,
Inc.,
Sr. Notes,
B3 12,000 11.25%, 12/1/03... 10,560,000
Uniroyal Technology Corp.,
Notes,
B2 4,000 11.75%, 6/1/03.... 3,240,000
--------------
28,155,000
--------------
</TABLE>
-10- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
Pollution Control--0.3%
ICF Kaiser Int'l.,
Inc.,
Sr. Sub. Notes,
12.00%,
B3 $ 12,000 12/31/03........ $ 10,320,000
--------------
Publishing--3.6%
Affiliated
Newspapers,
Sr. Disc. Notes,
Zero Coupon
(until 7/1/99),
B3 17,000@ 13.25%, 7/1/06.... 8,670,000
Affinity Group,
Inc.,
Sr. Sub. Notes,
11.50%,
B2 8,400 10/15/03........ 8,190,000
American Media
Operations,
Inc.,
Sr. Sub. Notes,
11.625%,
B1 9,000 11/15/04........ 9,225,000
Bell & Howell Co., Deb.,
Zero Coupon
(until 3/1/00),
B3 49,035 11.25%, 3/1/05.... 23,904,562
Big Flower Press,
Inc.,
Sr. Sub. Notes,
B3 12,500 10.75%, 8/1/03.... 11,625,000
Garden State Newspapers,
Sr. Sub. Notes,
B2 10,000 12.00%, 7/1/04.... 10,000,000
Mail-Well Envelope Corp.,
Sr. Sub. Notes,
B3 8,500 10.50%, 2/15/04... 7,395,000
Marvel Holdings,
Inc.,
Sr. Notes,
Zero Coupon,
B3 25,750 4/15/98......... 15,836,250
Neodata Services,
Inc.,
Sr. Def'd.
Notes,
Zero Coupon
(until 5/1/96),
12.00%, 5/1/03,
B3 14,500 Ser. B.......... 11,310,000
Sullivan Graphics,
Inc.,
Sr. Sub. Notes,
Ca 9,500 15.00%, 2/1/00.... 10,070,000
Williamhouse
Regency
Delaware, Inc.,
Sr. Sub. Deb.,
B2 $ 11,000 11.50%, 6/15/05... $ 10,120,000
--------------
126,345,812
--------------
Restaurants--2.3%
Carrols Corp., Sr.
Notes,
B3 4,500 11.50%, 8/15/03... 4,140,000
Family Restaurants, Inc.,
Sr. Notes,
B1 16,000 9.75%, 2/1/02..... 12,560,000
Sr. Sub. Disc.
Notes,
Zero Coupon
(until 2/1/97),
B3 35,000 10.875%, 2/1/04... 18,550,000
Flagstar Corp.,
Sr. Notes,
B2 31,200 10.75%, 9/15/01... 29,250,000
10.875%,
B2 300 12/1/02......... 279,000
Sr. Sub. Deb.,
Caa 18,500 11.25%, 11/1/04... 15,262,500
--------------
80,041,500
--------------
Retail--5.7%
Apparel Retailers,
Inc.,
Sr. Disc. Deb.,
Zero Coupon
(until 8/15/98),
Caa 19,250 12.75%, 8/15/05... 10,780,000
Barnes & Noble,
Inc.,
Sr. Sub. Notes,
11.875%,
B2 17,400 1/15/03......... 18,618,000
Bradlees, Inc.,
Sr. Sub. Notes,
B2 16,800 11.00%, 8/1/02.... 15,288,000
B2 5,650 9.25%, 3/1/03..... 4,661,250
Brylane L.P.,
Sr. Sub. Notes,
B2 10,000 10.00%, 9/1/03.... 9,800,000
Cole National
Corp.,
Sr. Notes,
B1 18,600 11.25%, 10/1/01... 17,484,000
</TABLE>
-11- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
Retail (cont'd.)
Color Tile, Inc.,
Sr. Notes,
10.75%,
B2 $ 20,000 12/15/01........ $ 17,600,000
Federated
Department
Stores, Inc.,
Sr. Notes, Ser.
B,
NR 10,000# 11.29%, 6/30/02... 10,087,500
Hills Stores Co.,
Sr. Notes,
NR 19,500 10.25%, 9/30/03... 18,135,000
Musicland Group,
Inc.,
Sr. Sub. Notes,
B1 3,000 9.00%, 6/15/03.... 2,490,000
Orchard Supply
Corp.,
Sr. Notes,
B2 8,000 9.375%, 2/15/02... 6,640,000
Pier 1 Imports,
Inc.,
Sub. Deb.,
B1 1,797 11.50%, 7/15/03... 1,850,910
Specialty
Retailers, Inc.,
Sr. Sub. Notes,
B3 9,040 11.00%, 8/15/03... 8,136,000
Thrifty Payless,
Inc.,
Sr. Notes,
B2 22,000@ 11.75%, 4/15/03... 21,560,000
Sr. Sub. Notes,
B3 22,000 12.25%, 4/15/04... 22,440,000
Wherehouse Entertainment, Inc.,
Sr. Sub. Notes, Ser. B,
B3 5,250 13.00%, 8/1/02.... 2,625,000
Wickes Lumber Co.,
Sr. Sub. Disc.
Notes,
11.625%,
B3 10,000 12/15/03........ 9,700,000
--------------
197,895,660
--------------
Steel & Metals--6.2%
Envirosource,
Inc.,
Sr. Notes,
B3 14,725 9.75%, 6/15/03.... 12,663,500
Florida Steel
Corp.,
First Mtge.
Notes,
11.50%,
Ba3 6,050 12/15/00........ 5,929,000
Geneva Steel Co.,
Sr. Notes,
11.125%,
B1 $ 6,000 3/15/01......... $ 5,640,000
B1 10,500 9.50%, 1/15/04.... 8,872,500
GS Technologies
Operating, Inc.,
Sr. Notes,
B2 8,250 12.00%, 9/1/04.... 8,146,875
Horsehead Industries, Inc.,
Sr. Sub. Ext. Reset Notes,
B1 9,472 15.75%, 6/1/97.... 9,756,160
Sub. Notes,
B2 10,000 14.00%, 6/1/99.... 9,900,000
Kaiser Aluminum &
Chemical Corp.,
Sr. Notes,
B1 18,750 9.875%, 2/15/02... 17,203,125
Sr. Sub. Notes,
B2 21,850 12.75%, 2/1/03.... 22,013,875
Republic Engineered Steels,
Inc., First Mtge. Bonds,
9.875%,
B2 18,650 12/15/01........ 16,878,250
Sherritt, Inc.,
Deb.,
B1 24,000 10.50%, 3/31/14... 23,130,000
Silgan Corp.,
Sr. Sub. Deb.,
B3 11,695 11.75%, 6/15/02... 12,104,325
Silgan Holdings,
Inc.,
Sr. Disc. Deb.,
Zero Coupon
(until 6/15/96),
B3 26,865 13.25% 12/15/02... 22,566,600
Tubos De Acero De
Mexico S A,
Unsec'd. Notes,
(cost
$4,987,500;
purchased-1994),
NR 5,000D 13.75%, 12/8/99... 4,900,000
WCI Steel, Inc.,
Sr. Notes,
B1 15,000 10.50%, 3/1/02.... 14,400,000
Wheeling Pittsburgh Corp.,
Sr. Notes,
9.375%,
B1 25,000 11/15/03........ 21,250,000
--------------
215,354,210
--------------
</TABLE>
-12- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
Supermarkets--6.4%
Farm Fresh, Inc.,
Sr. Notes,
B2 $ 12,750 12.25%, 10/1/00... $ 11,092,500
B2 1,250 12.25%, 10/1/00... 1,075,000
Food 4 Less Super-
markets, Inc.,
Sr. Disc. Notes,
Ser. B,
Zero Coupon
(until
12/15/97),
15.25%,
Caa 13,000 12/15/04........ 9,620,000
Sr. Notes,
B1 9,245 10.45%, 4/15/00... 9,060,100
Sr. Sub. Notes,
B3 4,950 13.75%, 6/15/01... 5,370,750
Grand Union Co.**,
Sr. Notes,
11.375%,
B2 14,300DD 2/15/99......... 12,727,000
B3 8,200DD 11.25%, 7/15/00... 7,298,000
Pathmark Stores,
Inc.,
Jr. Sub. Notes,
Zero Coupon
(until 11/1/99),
B3 19,400 10.75%, 11/1/03... 9,894,000
Sr. Sub. Notes,
B2 28,488 9.625%, 5/1/03.... 25,354,320
Sub. Notes,
11.625%,
B3 21,500 6/15/02......... 20,640,000
12.625%,
B3 10,500 6/15/02......... 10,500,000
Penn Traffic Co.,
Sr. Sub. Notes,
B2 24,400 9.625%, 4/15/05... 21,228,000
Pueblo Xtra
Int'l., Inc.,
Sr. Notes,
B2 19,605 9.50%, 8/1/03..... 16,468,200
Ralphs Grocery
Co.,
Sr. Sub. Notes,
B2 26,732 10.25%, 7/15/02... 26,264,190
B2 15,000 9.00%, 4/1/03..... 14,550,000
Smittys Super Value, Inc.,
Sr. Sub. Notes,
(cost $4,500,000;
purchased-1994)
NR 4,500D/@ 12.75%, 6/15/04... 4,415,625
Southland Corp.,
Sr. Sub. Deb.,
B2 $ 10,000 12.00%, 6/15/09... $ 9,800,000
Star Markets Co.,
Sr. Sub. Notes,
(cost
$6,000,000;
purchased-1994)
13.00%,
B3 6,000D 11/1/04,........ 6,105,000
--------------
221,462,685
--------------
Technology--0.7%
Berg Electronics,
Inc.,
Sr. Sub. Deb.,
B3 2,500 11.375%, 5/1/03... 2,481,250
Unisys Corp.,
Notes,
Ba3 12,350 13.50%, 7/1/97.... 13,214,500
Waters Corp.,
Sr. Sub. Notes,
B3 9,000 12.75%, 9/30/04... 9,045,000
--------------
24,740,750
--------------
Telecommunications--1.8%
Call-Net Enterprises, Inc.,
Sr. Disc. Notes,
Zero Coupon
(until 12/1/99),
B2 18,000 13.25%, 12/1/04... 9,405,000
Cencall Communica-
tions Corp.,
Sr. Disc. Notes,
Zero Coupon
(until 1/15/99),
Caa 24,000 13.25%, 1/15/04... 8,400,000
Dial Call Communications,
Inc., Sr. Disc. Notes,
Zero Coupon
(until 12/15/98),
10.25%,
Caa 4,250 12/15/05........ 1,232,500
Mobilemedia Commu-
nications, Inc.,
Sr. Notes,
Zero Coupon
(until 12/1/98),
10.50%,
B3 21,000 12/1/03......... 11,970,000
</TABLE>
-13- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Value
(Unaudited) (000) Description (Note 1)
<C> <C> <S> <C>
Telecommunications (cont'd.)
Nextel Communications,
Inc., Sr. Disc. Notes,
Zero Coupon
(until 9/1/98),
B3 $ 18,620 11.50%, 9/1/03.... $ 7,261,800
Zero Coupon
(until 2/15/99),
B3 16,000 9.75%, 8/15/04.... 5,600,000
Pricellular Wireless Corp.,
Sr. Sub. Disc.
Notes,
(cost
$9,142,607;
purchased-1994),
Zero Coupon
(until
11/15/97),
14.00%,
Caa 13,500D 11/15/01........ 8,910,000
USA Mobile
Communications,
Inc., Sr. Notes,
B3 8,000 14.00%, 11/1/04... 8,160,000
--------------
60,939,300
--------------
Textiles--1.9%
CMI Industries,
Inc.,
Sr. Sub. Notes,
B1 12,970 9.50%, 10/1/03.... 10,765,100
Dan River, Inc.,
Sr. Sub. Notes,
10.125%,
B3 12,000 12/15/03........ 10,800,000
Forstmann Textiles, Inc.,
Sr. Sub. Notes,
B3 10,633 14.75%, 4/15/99... 10,951,475
JPS Textile Group, Inc.,
Sr. Sub. Disc. Notes,
Caa 4,531 10.85%, 6/1/99.... 2,786,565
Sr. Sub. Notes,
Caa 3,771 10.25%, 6/1/99.... 2,319,164
Westpoint Stevens, Inc.,
Sr. Sub. Deb.,
9.375%,
B3 31,850 12/15/05........ 28,824,250
--------------
66,446,554
--------------
Transportation/Trucking/
Shipping--1.8%
Great Dane
Holdings, Inc.,
Sr. Sub. Notes,
Caa $ 19,750 12.75%, 8/1/01.... $ 19,552,500
Moran Transport
Co.,
Gtd. First Mtge.
Notes, Ser. B,
NR 4,000 11.75%, 7/15/04... 3,780,000
OMI Corp., Sr.
Notes,
B3 14,500 10.25%, 11/1/03... 12,470,000
TNT Transport,
Sr. Notes,
B1 10,000 11.50%, 4/15/04... 9,937,500
Transtar Holdings
L.P.,
Sr. Disc. Notes,
Zero Coupon
(until
12/15/99),
13.375%,
B-* 21,308 12/15/03........ 11,026,890
Trism, Inc.,
Sr. Sub. Notes,
10.75%,
B2 5,250 12/15/00........ 4,987,500
--------------
61,754,390
--------------
Total bonds
(cost
$3,554,622,839).. 3,277,240,808
--------------
<CAPTION>
Shares Preferred Stocks--0.7%
----------
<C> <C> <S> <C>
Color Tile, Inc.
$13.00
(cost
$5,000,000;
purchased-1992)... 5,000,000
200,000D
Color Tile, Inc.,
$14.50, Sr.
Cum............. 3,360,000
20,000DD Premium Standard
Farms, $12.50
(cost
$1,834,000;
purchased-1992)... 1,907,360
18,340D/DD Republic
Engineered
Steels, Inc.,
(cost
$2,593,264;
purchased-1994)... 2,636,564
234,361D Riggs National
Corp., $10.75... 5,493,880
224,240
</TABLE>
-14- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Preferred Stocks (cont'd.)
120,000D/DD SD Warren Co., $14.00
(cost $3,000,000;
purchased-1994)................. $ 3,120,000
443,487 UDC Homes, Inc.................. 1,108,718
West Federal Holdings, Inc.,
81,631D/DD Cum. Sr. Pfd.,
$15.50 (cost $8,000,000;
purchased-1988)................. 816
26,078D/DD Sr. Pfd., Ser A, $15.50
(cost $674,047;
purchased-1990)................. 261
--------------
Total preferred stocks
(cost $35,490,075).............. 22,627,599
--------------
Common StocksDD--0.2%
72,580D Dr. Pepper Bottling Co., Cl. A,
(cost $65,322;
purchased-1992)................. 254,030
428,333 EnviroSource, Inc............... 1,418,853
62,162 Gaylord Container Corp., Cl.
A............................... 567,228
323,881 Mayflower Group, Inc............ 2,914,929
31,559D Peachtree Cable Assn., Ltd.,
(cost $315,590;
purchased-1986)................. 307,700
60,000 Specialty Foods Acquisition
Corp............................ 45,000
1,122,335 Triton Group Ltd................ 1,753,648
--------------
Total common stocks
(cost $15,822,661).............. 7,261,388
--------------
<CAPTION>
Warrants WarrantsDD--0.2%
- -----------
<C> <S> <C>
2,000 Apparel Ventures, Inc.,
expiring 12/15/00............... 90,000
22,841 Casino America, Inc.,
expiring 11/15/96............... 11,421
81,000 Casino Magic Corp.,
expiring 10/14/96............... 4,050
14,273D Dial Call Communications, Inc.,
(cost $0; purchased-1993)
expiring 12/15/05............... 17,841
742,254 Gaylord Container Corp.,
expiring 7/31/96................ 5,381,342
57,600 ICF Kaiser Int'l., Inc.,
expiring 12/31/96............... $ 57,600
70,000 Southdown, Inc.,
expiring 10/15/96............... 280,000
--------------
Total warrants
(cost $667,527)................. 5,842,254
--------------
Total long-term investments
(cost $3,606,603,102)........... 3,312,972,049
--------------
<CAPTION>
Principal SHORT-TERM INVESTMENTS--3.5%
Amount
(000)
- -----------
<C> <S> <C>
Time Deposits--3.5%
Chemical Bank NA,
$ 73,779 6.25%, 1/3/95................... 73,779,000
Mitsubishi Bank, Ltd.,
46,399 7.00%, 1/3/95................... 46,399,000
--------------
(cost $120,178,000)............. 120,178,000
--------------
Total Investments--98.7%
(cost $3,726,781,102; Note 4)... 3,433,150,049
Other assets in excess
of liabilities--1.3%............ 44,467,918
--------------
Net Assets--100%................ $3,477,617,967
--------------
--------------
</TABLE>
- ---------------
NR--Not rated by Moody's or Standard & Poor's.
PIK--Payment in kind securities.
* Standard & Poor's rating.
** Issuer is in default of January 15, 1995 and February 15, 1995 interest
payments.
D Indicates a restricted security; the aggregate cost of such
securities is $162,982,271. The aggregate value ($153,938,318) is
approximately 4.4% of net assets.
DD Non-income producing securities.
# Indicates a when-issued security.
L.P.--Limited Partnership.
@ Consists of more than one class of securities traded together as a unit;
generally bonds with attached stock or warrants.
The Fund's current Prospectus contains a description of Moody's and Standard &
Poor's ratings.
-15- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets December 31, 1994
-----------------
<S> <C>
Investments, at value (cost $3,726,781,102)........................................... $ 3,433,150,049
Cash.................................................................................. 557,025
Interest receivable................................................................... 76,477,787
Receivable for investments sold....................................................... 13,772,083
Receivable for Fund shares sold....................................................... 4,973,949
Other assets.......................................................................... 92,597
-----------------
Total assets...................................................................... 3,529,023,490
-----------------
Liabilities
Payable for Fund shares reacquired.................................................... 29,078,798
Payable for investments purchased..................................................... 15,648,583
Due to Distributor.................................................................... 2,123,284
Dividends payable..................................................................... 1,873,410
Accrued expenses...................................................................... 1,443,586
Due to Manager........................................................................ 1,237,862
-----------------
Total liabilities................................................................. 51,405,523
-----------------
Net Assets............................................................................ $ 3,477,617,967
-----------------
-----------------
Net assets were comprised of:
Common stock, at par................................................................ $ 4,532,568
Paid-in capital in excess of par.................................................... 4,343,639,953
-----------------
4,348,172,521
Undistributed net investment income................................................. 5,909,907
Accumulated net realized loss on investments........................................ (582,833,408)
Net unrealized depreciation of investments.......................................... (293,631,053)
-----------------
Net assets, December 31, 1994....................................................... $ 3,477,617,967
-----------------
-----------------
Class A:
Net asset value and redemption price per share
($161,434,887 / 21,011,095 shares of common stock issued and outstanding)......... $7.68
Maximum sales charge (4% of offering price)......................................... .32
-----------------
Maximum offering price to public.................................................... $8.00
-----------------
-----------------
Class B:
Net asset value, offering price and redemption price per share
($3,311,323,471 / 431,612,306 shares of common stock issued and outstanding)...... $7.67
-----------------
-----------------
Class C:
Net asset value, offering price and redemption price per share
($4,859,609 / 633,429 shares of common stock issued and outstanding).............. $7.67
-----------------
-----------------
</TABLE>
See Notes to Financial Statements.
-16-
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
Net Investment Income December 31, 1994
-----------------
<S> <C>
Income
Interest............................ $ 394,251,049
Dividends........................... 3,933,771
-----------------
Total income...................... 398,184,820
-----------------
Expenses
Distribution fee--Class A............. 248,276
Distribution fee--Class B............. 26,750,316
Distribution fee--Class C............. 8,870
Management fee........................ 15,562,791
Transfer agent's fees and expenses.... 4,642,000
Reports to shareholders............... 1,505,000
Franchise taxes....................... 735,000
Custodian's fees and expenses......... 539,000
Registration fees..................... 141,000
Insurance expense..................... 90,000
Legal fees............................ 75,000
Audit fee............................. 66,000
Directors' fees....................... 45,200
Miscellaneous......................... 56,896
-----------------
Total operating expenses.......... 50,465,349
Loan commitment fees (Note 2)......... 187,500
-----------------
Total expenses.................... 50,652,849
-----------------
Net investment income................. 347,531,971
-----------------
Realized and Unrealized
Loss on Investments
Net realized loss on investment
transactions........................ (17,213,168)
Net change in unrealized depreciation
of
investments......................... (437,098,902)
-----------------
Net loss on investments............... (454,312,070)
-----------------
Net Decrease in Net Assets
Resulting from Operations............. $ (106,780,099)
-----------------
-----------------
</TABLE>
PRUDENTIAL HIGH YIELD FUND, INC.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
Increase (Decrease) -------------------------------
in Net Assets 1994 1993
-------------- --------------
<S> <C> <C>
Operations
Net investment
income............... $ 347,531,971 $ 331,613,772
Net realized gain
(loss) on
investment
transactions......... (17,213,168) 133,427,257
Net change in
unrealized
appreciation/depreciation
of investments....... (437,098,902) 67,689,568
-------------- --------------
Net increase (decrease)
in net assets
resulting from
operations........... (106,780,099) 532,730,597
-------------- --------------
Net equalization
credits.............. 53,408 1,248,705
-------------- --------------
Dividends and distributions (Note 1)
Dividends from net
investment income
Class A............ (16,316,609) (14,769,464)
Class B............ (331,100,240) (316,844,308)
Class C............ (115,122) --
-------------- --------------
(347,531,971) (331,613,772)
-------------- --------------
Dividends in excess
of net investment
income
Class A............ (381,078) (186,125)
Class B............ (9,346,220) (3,992,885)
Class C............ (3,979) --
-------------- --------------
(9,731,277) (4,179,010)
-------------- --------------
Fund share transactions
(Note 5)
Net proceeds from
shares
issued............. 1,151,307,757 1,608,810,431
Net asset value of
shares
issued to
shareholders in
reinvestment of
dividends and
distributions...... 169,199,573 159,560,823
Cost of shares
reacquired......... (1,294,875,001) (1,044,468,067)
-------------- --------------
Increase in net
assets from Fund
share
transactions....... 25,632,329 723,903,187
-------------- --------------
Total increase
(decrease)............. (438,357,610) 922,089,707
Net Assets
Beginning of year...... 3,915,975,577 2,993,885,870
-------------- --------------
End of year............ $3,477,617,967 $3,915,975,577
-------------- --------------
-------------- --------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-17-
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
Notes to Financial Statements
Prudential High Yield Fund, Inc. (the ``Fund''), is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The primary investment objective of the Fund is to maximize current
income through investment in a diversified portfolio of high yield fixed-income
securities which, in the opinion of the Fund's investment adviser, do not
subject the Fund to unreasonable risks. As a secondary investment objective, the
Fund will seek capital appreciation but only when consistent with its primary
objective. Lower rated or unrated (i.e. high yield) securities are more likely
to react to developments affecting market risk (general market liquidity) and
credit risk (an issuer's inability to meet principal and interest payments on
its obligations) than are more highly rated securities, which react primarily to
movements in the general level of interest rates. The ability of issuers of debt
securities held by the Fund to meet their obligations may be affected by
economic developments in a specific industry or region.
Note 1. Accounting The following is a summary
Policies of significant accounting poli-
cies followed by the Fund in the preparation of
its financial statements.
Security 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 prices provided by
principal market makers and pricing agents. 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 last bid price
quoted on such day. Securities issued in private placements are valued at the
mean between the bid and asked prices provided by principal market makers. Any
security for which a reliable market quotation is unavailable is valued at fair
value as determined in good faith by or under the direction of the Fund's Board
of Directors.
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, which approximates market value.
In connection with transactions in repurchase agreements, it is the Fund's
policy that its custodian or designated subcustodians, under triparty repurchase
agreements as the case may be, take possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest and, to the extent that any repurchase
transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. 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.
The Fund may invest up to 10% of its total assets in securities which are not
readily marketable, including those which are restricted as to disposition under
securities law (``restricted securities''). Certain issues of restricted
securities held by the Fund at December 31, 1994 include registration rights
under which the Fund may demand registration by the issuer, some of which are
currently under contract to be registered. Restricted securities are valued
pursuant to the valuation procedures noted above.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of portfolio
securities are calculated on an identified cost basis. Interest income is
recorded on an accrual basis and dividend income is recorded on the ex-dividend
date. The Fund accretes original issue discounts as adjustments to interest
income. Income from payment in kind bonds is recorded daily based on an
effective interest method.
Net investment income, (other than distribution fees), and unrealized and
realized gains or losses are allocated daily to each class of shares of the Fund
based upon the relative proportion of net assets of each class at the beginning
of the day.
Federal Income Taxes: It is the intent of the Fund 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 its shareholders.
Therefore, no federal income tax provision is required.
Dividends and Distributions: The Fund declares daily and pays dividends of net
investment income monthly and makes 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. These differences are primarily due to differing
treatments for market discount and wash sales.
-18-
<PAGE>
<PAGE>
Equalization: The Fund follows the accounting practice known as equalization, by
which a portion of the proceeds from sales and costs of reacquisitions of Fund
shares, equivalent on a per share basis to the amount of distributable net
investment income on the date of the transaction, is credited or charged to
undistributed net investment income. As a result, undistributed net investment
income per share is unaffected by sales or reacquisitions of the Fund's shares.
Reclassification of Capital Accounts: The Fund accounts and reports for
distributions to shareholders in accordance with AICPA Statement of Position
93-2: Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. The
effect of applying this statement was to increase undistributed net investment
income by $2,891,897, increase accumulated net realized loss on investments by
$2,866,418 and decrease paid-in capital by $25,479. This was primarily the
result of market discount incurred for the year ended December 31, 1994. Net
investment income, net realized gains and net assets were not affected by this
change.
Note 2. Agreements The Fund has a management
agreement with Prudential Mutual Fund Management,
Inc. (``PMF''). Pursuant to this agreement PMF has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PMF has entered into a subadvisory agreement with The Prudential
Investment Corporation (``PIC''); PIC furnishes investment advisory services in
connection with the management of the Fund. PMF pays for the cost of the
subadviser's services, the compensation of officers of the Fund, occupancy and
certain clerical and bookkeeping costs of the Fund. The Fund bears all other
costs and expenses.
The management fee paid PMF is computed daily and payable monthly, at an
annual rate of .50% of the Fund's average daily net assets up to $250 million,
.475% of the next $500 million, .45% of the next $750 million, .425% of the next
$500 million, .40% of the next $500 million, .375% of the next $500 million and
.35% of the Fund's average daily net assets in excess of $3 billion.
The Fund has distribution agreements with Prudential Mutual Fund
Distributors, Inc. (``PMFD''), which acts as the distributor of the Class A
shares of the Fund, and with Prudential Securities Incorporated (``PSI''), which
acts as distributor of the Class B and Class C shares of the Fund (collectively
the ``Distributors''). The Fund compensates the Distributors for distributing
and servicing the Fund's Class A, Class B and Class C shares, pursuant to plans
of distribution (the ``Class A, B and C Plans''), regardless of expenses
actually incurred by them. The distribution fees are accrued daily and payable
monthly.
On July 19, 1994, shareholders of the Fund approved amendments to the Class A
and Class B distribution plans under which the distribution plans became
compensation plans, effective August 1, 1994. Prior thereto, the distribution
plans were reimbursement plans, under which PMFD and PSI were reimbursed for
expenses actually incurred by them up to the amount permitted under the Class A
and Class B Plans, respectively. The Fund is not obligated to pay any prior or
future excess distribution costs (costs incurred by the Distributors in excess
of distribution fees paid by the Fund or contingent deferred sales charges
received by the Distributors). The rate of the distribution fees charged to
Class A and Class B shares of the Fund did not change under the amended plans of
distribution. The Fund began offering Class C shares on August 1, 1994.
Pursuant to the Class A, B and C Plans, the Fund compensates the Distributors
for distribution-related activities at an annual rate of up to .30 of 1%, .75 of
1% and 1%, of the average daily net assets of the Class A, B and C shares,
respectively. Such expenses under the Plans were .15 of 1%, .75 of 1% and .75 of
1% of the average daily net assets of the Class A, B and C shares, respectively,
for the fiscal year ended December 31, 1994.
PMFD has advised the Fund that it has received approximately $1,162,700 in
front-end sales charges resulting from sales of Class A shares during the fiscal
year ended December 31, 1994. From these fees, PMFD paid such sales charges to
dealers (PSI and Prusec) which in turn paid commissions to salespersons.
PSI has advised the Fund that for the fiscal year ended December 31, 1994, it
received approximately $7,028,300 and $200 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.
PMFD is a wholly-owned subsidiary of PMF; PSI, PMF and PIC are indirect,
wholly-owned subsidiaries of The Prudential Insurance Company of America.
The Fund has entered into a credit agreement (the ``Agreement'') with State
Street Bank and Trust Co. with a maximum commitment under the Agreement of
$75,000,000 which expires on December 2, 1995. Interest on any such borrowings
outstanding will be at market rates. The Fund has not borrowed any monies
pursuant to the Agreement but has paid commitment fees at an annual rate of .25
of 1% on the $75,000,000 (unused portion of the credit facility).
-19-
<PAGE>
<PAGE>
Note 3. Other Prudential Mutual Fund Ser-
Transactions vices Inc. (``PMFS''), a
with Affiliates wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent and
during the year ended December 31, 1994, the Fund incurred fees of approximately
$3,484,000 for the services of PMFS. As of December 31, 1994, $283,000 of such
fees were due to PMFS. Transfer agent fees and expenses in the Statement of
Operations include certain out-of-pocket expenses paid to non-affiliates.
Note 4. Portfolio Purchases and sales of invest-
Securities ment securities, other than
short-term investments, for the year ended
December 31, 1994 were $2,645,518,074 and $2,642,120,439, respectively.
The federal income tax basis of the Fund's investments, including short-term
investments, as of December 31, 1994 was $3,728,084,787; accordingly, net
unrealized depreciation for federal income tax purposes was $294,934,738 (gross
unrealized appreciation--$23,985,623; gross unrealized
depreciation--$318,920,361).
For federal income tax purposes, the Fund has a capital loss carryforward as
of December 31, 1994 of approximately $548,496,700 of which $34,055,200 expires
in 1997, $326,104,800 expires in 1998, $77,895,200 expires in 1999 and
$110,441,500 expires in 2000. Accordingly, no capital gains distribution is
expected to be paid to shareholders until net gains have been realized in excess
of the aggregate of such amounts.
The Fund will elect to treat net capital losses of approximately $33,033,000
incurred in the two month period ended December 31, 1994 as having been incurred
in the following fiscal year.
Note 5. Capital The Fund offers Class A,
Class B and Class C shares. Class A shares are
sold with a front-end sales charge of up to 4.00%. Class B shares are sold with
a contingent deferred sales charge which declines from 5% to zero depending on
the period of time the shares are held. Class C shares are sold with a
contingent deferred sales charge of 1% during the first year. Class B shares
will automatically convert to Class A shares on a quarterly basis approximately
seven years after purchase commencing in or about February 1995.
The Fund has 1.5 billion shares of $.01 par value common stock authorized;
designated 375 million of Class A shares, 750 million of Class B shares, and 375
million of Class C shares.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- -------------------------- ------------ --------------
<S> <C> <C>
Year ended December 31,
1994:
Shares sold............... 19,908,158 $ 161,976,895
Shares issued in reinvest-
ment of dividends and
distributions........... 1,113,364 9,044,345
Shares reacquired......... (19,711,310) (160,632,506)
------------ --------------
Net increase in shares
outstanding............. 1,310,212 $ 10,388,734
------------ --------------
------------ --------------
Year ended December 31,
1993:
Shares sold............... 18,365,837 $ 156,524,638
Shares issued in reinvest-
ment of dividends and
distributions........... 977,024 8,361,257
Shares reacquired......... (12,601,264) (107,709,836)
------------ --------------
Net increase in shares
outstanding............. 6,741,597 $ 57,176,059
------------ --------------
------------ --------------
Class B
- --------------------------
Year ended December 31,
1994:
Shares sold............... 118,792,264 $ 983,331,141
Shares issued in reinvest-
ment of dividends and
distributions........... 19,713,254 160,105,285
Shares reacquired......... (138,058,355) (1,133,205,930)
------------ --------------
Net increase in shares
outstanding............. 447,163 $ 10,230,496
------------ --------------
------------ --------------
Year ended December 31,
1993:
Shares sold............... 170,594,560 $1,452,285,793
Shares issued in reinvest-
ment of dividends and
distributions........... 17,695,392 151,199,566
Shares reacquired......... (109,825,578) (936,758,231)
------------ --------------
Net increase in shares
outstanding............. 78,464,374 $ 666,727,128
------------ --------------
------------ --------------
Class C
- --------------------------
August 1, 1994* through
December 31, 1994:
Shares sold............... 757,753 $ 5,999,721
Shares issued in reinvest-
ment of dividends....... 6,428 49,943
Shares reacquired......... (130,752) (1,036,565)
------------ --------------
Net increase in shares
outstanding............. 633,429 $ 5,013,099
<CAPTION>
------------ --------------
------------ --------------
</TABLE>
- ---------------
*Commencement of offering of Class C shares.
-20-
<PAGE>
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
Class A Class
B
-------------------------------------------------------
- -------------------------------------
January 22,
1990D
Year Ended December 31, through Year Ended
December 31,
---------------------------------------- December 31,
- -------------------------------------
1994 1993 1992 1991 1990 1994 1993
1992
-------- -------- -------- ------- ------------ ---------- ----------
----------
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of
period.............. $ 8.70 $ 8.19 $ 7.88 $ 6.72 $ 8.49 $ 8.69 $ 8.19
$ 7.88
-------- -------- -------- ------- -------- ---------- ----------
----------
Income from
investment
operations
Net investment
income.............. .80 .84 .90 .93 1.01 .76 .79
.85
Net realized and
unrealized gain
(loss) on
investments......... (1.00) .52 .32 1.26 (1.74) (1.00) .51
.32
-------- -------- -------- ------- ------ ---------- ----------
----------
Total from
investment
operations........ (.20) 1.36 1.22 2.19 (.73) (.24) 1.30
1.17
-------- -------- -------- ------- ------ ---------- ----------
----------
Less distributions
Dividends from net
investment income... (.80) (.84) (.90) (.93) (1.01) (.76) (.79)
(.85)
Dividends in excess
of net investment
income.............. (.02) (.01) -- -- -- (.02) (.01)
--
Distributions from
paid-in
capital in excess of
par................. -- -- (.01) (.10) (.03) --
- -- (.01)
-------- -------- -------- ------- ------ ---------- ----------
----------
Total
distributions..... (.82) (.85) (.91) (1.03) (1.04) (.78) (.80)
(.86)
-------- -------- -------- ------- ------ ---------- ----------
----------
Net asset value,
end of period....... $ 7.68 $ 8.70 $ 8.19 $ 7.88 $ 6.72 $ 7.67 $ 8.69
$ 8.19
-------- -------- -------- ------- ------ ---------- ----------
----------
-------- -------- -------- ------- ------ ---------- ----------
----------
TOTAL RETURN#........ (2.35)% 17.32% 15.97% 34.29% (9.15)% (2.92)% 16.54%
15.30%
-------- -------- -------- ------- ------ ---------- ----------
----------
-------- -------- -------- ------- ------ ---------- ----------
----------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000)........ $161,435 $171,364 $106,188 $54,025 $ 21,448 $3,311,323 $3,745,985
$2,887,698
Average net assets
(000)............... $165,517 $149,190 $ 81,129 $37,194 $ 15,594 $3,566,709 $3,389,439
$2,582,922
Ratios to average net
assets:##
Expenses, including
distribution
fees.............. .78% .76% .85% .88% .93%* 1.38% 1.36%
1.45%
Expenses, excluding
distributions
fees.............. .63% .61% .70% .73% .78%* .63% .61%
.70%
Net investment
income............ 9.86% 9.93% 10.96% 12.73% 13.58%* 9.28% 9.35%
10.29%
Portfolio turnover
rate................ 74% 85% 68% 51% 40% 74%
85% 68%
<CAPTION>
Class C
------------
August 1,
1994DD
through
December 31,
1991 1990 1994
---------- ---------- ------------
<S> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of
period.............. $ 6.71 $ 8.52 $ 8.05
---------- ---------- -----
Income from
investment
operations
Net investment
income.............. .88 1.00 .32
Net realized and
unrealized gain
(loss) on
investments......... 1.26 (1.76) (.37)
---------- ---------- -----
Total from
investment
operations........ 2.14 (.76) (.05)
---------- ---------- -----
Less distributions
Dividends from net
investment income... (.88) (1.02) (.32)
Dividends in excess
of net investment
income.............. -- -- (.01)
Distributions from
paid-in
capital in excess of
par................. (.09) (.03) --
---------- ---------- -----
Total
distributions..... (.97) (1.05) (.33)
---------- ---------- -----
Net asset value,
end of period....... $ 7.88 $ 6.71 $ 7.67
---------- ---------- -----
---------- ---------- -----
TOTAL RETURN#........ 33.62% (9.52)% (0.79)%
---------- ---------- -----
---------- ---------- -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000)........ $2,199,127 $1,626,067 $4,860
Average net assets
(000)............... $1,970,257 $1,994,229 $2,840
Ratios to average net
assets:##
Expenses, including
distribution
fees.............. 1.48% 1.55% 1.48%*
Expenses, excluding
distributions
fees.............. .73% .80% .73%*
Net investment
income............ 11.65% 13.34% 9.80%*
Portfolio turnover
rate................ 51% 40% 74%
</TABLE>
- ---------------
* Annualized.
D Commencement of offering of Class A shares.
DD Commencement of offering Class C shares.
# Total return does not consider the effects of sales loads. Total return
is calculated assuming a purchase of shares on the first day and a sale
on the last day of each period reported and includes reinvestment of
dividends and distributions. Total returns for periods of less than a
full year are not annualized.
## Because of the event referred to in DD and the timing of such, the
ratios for the Class C shares are not necessarily comparable to that of
Class A or B shares and are not necessarily indicative of future ratios.
See Notes to Financial Statements.
-21-
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Prudential High Yield Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prudential High Yield Fund, Inc.
(the ``Fund'') at December 31, 1994, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
``financial statements'') are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1994 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 21, 1995
-22-
<PAGE>
Prudential High Yield Fund, Inc.
Comparison of Change in Value of $10,000 Investment in High Yield Fund and
The Lehman Bros. High Yield Index
<TABLE>
Average Annual Total Returns
<CAPTION>
With Sales Load
1 Year Since Inception (1/22/90)
<S> <C> <C>
- -6.3% 9.4%
<CAPTION>
Without Sales Load
1 Year Since Inception (1/22/90)
<S> <C> <C>
- -2.4% 10.3%
</TABLE>
Class A
(GRAPH)
<TABLE>
Average Annual Total Returns
<CAPTION>
With Sales Load
1 Year 5 Year 10 Year
<S> <C> <C>
- -7.9% 9.5% 9.4
<CAPTION>
Without Sales Load
1 Year 5 Year 10 Year
<S> <C> <C>
- -2.9% 9.6% 9.4%
</TABLE>
Class B
(GRAPH)
<TABLE>
Average Annual Total Returns
With Sales Load
<CAPTION>
1 Year Since Inception (8/1/94)
<S> <C> <C>
N/A -1.8%
<CAPTION>
Without Sales Load
1 Year Since Inception (8/1/94)
<S> <C> <C>
N/A -0.8%
</TABLE>
Class C
(GRAPH)
Lehman High Yield Index Prudential High Yield Fund, Inc.
Past performance is not predictive of future performance and an investor's
shares when redeemed may be worth more or less than their original cost.
These graphs are furnished to you in accordance with SEC regulations. They
compare a $10,000 investment in the Prudential High Yield Fund, Inc. (Class A,
Class B and Class C) with a similar investment in the S&P 500 Index by
portraying the initial account values at the commencement of operations of each
class, and subsequent account values at the end of each fiscal year (December
31), as measured on a quarterly basis, beginning in 1990 for Class A shares, in
1984 for Class B shares and in 1994 for Class C shares. For purposes of the
graphs, and unless otherwise indicated, in the accompanying tables it has been
assumed (a) that the maximum applicable front-end sales charge was deducted
from the initial $10,000 investment in Class A shares; (b) the maximum
applicable contingent deferred sales charge was deducted from the value of the
investment in Class B and Class C shares, assuming full redemption on December
31, 1994; (c) all recurring fees (including management fees) were deducted; and
(d) all dividends and distributions were reinvested. Class B shares will
automatically convert to Class A shares, on a quarterly basis, beginning
approximately seven years after purchase. This conversion feature is not
reflected in the graph.
The High Yield Index is a weighted index comprised of corporate securities with
one or more years remaining to maturity that are publicly issued, rated below
investment grade and have $50 million or more outstanding. The High Yield Index
is an unmanaged index and includes the reinvestment of all dividends, but does
not reflect the payment of transaction costs and advisory fees associated with
an investment in the Fund. The securities that comprise the High Yield Index
may differ substantially from the securities in the Fund's portfolio. The High
Yield Index is not the only index which may be used to characterize performance
of high yield bonds and other indexes may portray different comparative
performance.
<PAGE>
The Prudential Mutual Fund Family
- ------------------------------------------------------------------------------
Prudential Mutual Fund Management offers a broad range of mutual funds designed
to meet your individual needs. We welcome you to review the investment options
available through our family of funds. For more information on the Prudential
Mutual Funds, including charges and expenses, contact your Prudential
Securities Financial Advisor or Pruco Securities Representative or telephone
the Funds at (800) 225-1852 for a free prospectus. Read the prospectus
carefully before you invest or send money.
Taxable Bond Funds
Prudential Adjustable Rate Securities Fund, Inc.
Prudential Diversified Bond Fund, Inc.
Prudential GNMA Fund, Inc.
Prudential Government Income Fund, Inc.
(formerly known as Prudential
Government Plus Fund)
Prudential Government Securities Trust
Intermediate Term Series
Prudential High Yield Fund, Inc.
Prudential Structured Maturity Fund, Inc.
Income Portfolio
Prudential U.S. Government Fund
The BlackRock Government Income Trust
Tax-Exempt Bond Funds
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Yield Series
Insured Series
Modified Term Series
Prudential Municipal Series Fund
Arizona Series
Florida Series
Georgia Series
Hawaii Income Series
Maryland Series
Massachusetts Series
Michigan Series
Minnesota Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
Global Funds
Prudential Europe Growth Fund, Inc.
Prudential Global Fund, Inc.
Prudential Global Genesis Fund, Inc.
Prudential Global Natural Resources Fund, Inc.
Prudential Intermediate Global Income Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential Short-Term Global Income Fund, Inc.
Global Assets Portfolio
Short-Term Global Income Portfolio
Global Utility Fund, Inc.
Equity Funds
Prudential Allocation Fund
(formerly known as Prudential FlexiFund)
Conservatively Managed Portfolio
Strategy Portfolio
Prudential Equity Fund, Inc.
Prudential Equity Income Fund
Prudential Growth Opportunity Fund, Inc.
Prudential IncomeVertible(R) Fund, Inc.
Prudential Multi-Sector Fund, Inc.
Prudential Strategist Fund, Inc.
(formerly known as Prudential Growth Fund)
Prudential Utility Fund, Inc.
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Money Market Funds
- -Taxable Money Market Funds
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Special Money Market Fund
Money Market Series
Prudential MoneyMart Assets
Tax-Free Money Market Funds
Prudential Tax-Free Money Fund
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
- -Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund
- -Institutional Money Market Funds
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
<PAGE>
Directors
Delayne Dedrick Gold
Arthur Hauspurg
Harry A. Jacobs, Jr.
Lawrence C. McQuade
Stephen P. Munn
Richard A. Redeker
Louis A. Weil, III
Officers
Lawrence C. McQuade, President
David W. Drasnin, Vice President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
S. Jane Rose, Secretary
Ronald Amblard, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributors
Prudential Mutual Fund Distributors, Inc.
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Sullivan & Cromwel
l125 Broad Street
New York, NY 10004
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll Free (800) 225-1852, Collect (908) 417-7555
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
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74435F205 (LOGO)
74435F304
