(ICON)
Prudential
High Yield
Fund, Inc.
SEMI
ANNUAL
REPORT
June 30, 1997
(LOGO)
<PAGE>
Prudential High Yield Fund, Inc.
Performance At A Glance.
High yield corporate bonds posted substantial returns over
the past six months,
although the Federal Reserve increased the overnight bank
lending rate for the
first time in two years to ward off higher inflation. A
vigorous U.S. economy
and successive highs in the stock market helped stimulate
investor appetite for
high yield bonds. The Prudential High Yield Fund provided
competitive returns
over the six-month reporting period.
<TABLE>
<CAPTION>
Cumulative
Total
Returns1
As of 6/30/97
Six One Five
Ten Since
Months Year Years
Years Inception2
<S> <C> <C> <C>
<C> <C>
Class A 5.5% 15.1%
69.6% N/A 127.4%
Class B 5.2 14.5
64.7 133.4% 498.2
Class C 5.2 14.5
N/A N/A 37.3
Class Z 5.7 15.4
N/A N/A 14.9
Lipper High
Current Yld Avg3 5.9 14.8
68.8 153.1 ***
</TABLE>
<TABLE>
<CAPTION>
Average
Annual Total
Returns1
As of 6/30/97
One Five
Ten Since
Year Years
Years Inception2
<S> <C> <C>
<C> <C>
Class A 10.5%
10.2% N/A 11.1%
Class B 9.5
10.4 8.9% 10.3
Class C 13.5
N/A N/A 11.5
Class Z 15.4
N/A N/A 11.0
</TABLE>
<TABLE>
<CAPTION>
Dividends
& Yields
As of 6/30/97 Total Dividends 30-
Day
Paid for Six Mos. SEC
Yield
<S> <C> <C>
Class A $0.38
8.33%
Class B $0.36 8.06
Class C $0.36 8.06
Class Z $0.39 8.83
</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.
1Source: Prudential Investments Fund Management and Lipper
Analytical Services.
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 declining
contingent deferred sales charge (CDSC) 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. Class B
shares automatically convert to Class A shares on a
quarterly basis, after
approximately seven years. Class Z shares are not subject to
a sales charge or
a distribution fee.
2Inception dates: 1/22/90 Class A; 3/29/79 Class B; 8/1/94
Class C and 3/1/96
Class Z.
3Lipper average returns are for 182 funds for six months,
163 funds for one
year, 62 funds for five years and 45 funds for 10 years.
*** Lipper Since Inception returns are: Class A, 138.6%;
Class B, 578.4%;
Class C, 37.9% and Class Z, 16.7% for all funds in each
Lipper share class.
How Investments Compared.
(As of 6/30/97)
(GRAPH)
Source: Lipper Analytical Services. Financial markets
change, so a mutual
fund's past performance should never be used to predict
future results. The
risks to each of the investments listed above are different
- -- we provide 12-
month total returns for several Lipper mutual fund
categories to show you that
reaching for higher returns means tolerating more risk. The
greater the risk,
the larger the potential reward or loss. In addition, we've
included
historical 20-year average annual returns. These returns
assume the
reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors
have received higher
historical total returns from stocks than from most other
investments. Smaller
capitalization stocks offer greater potential for long-term
growth but may be
more volatile than larger capitalization stocks.
General Bond Funds provide more income than stock funds,
which can help smooth
out their total returns year by year. But their prices still
fluctuate
(sometimes significantly) and their returns have been
historically lower than
those of stock funds.
General Municipal Debt Funds invest in bonds issued by state
governments,
state agencies and/or municipalities. This investment
provides income that is
usually exempt from federal and state income taxes.
Money Market Funds attempt to preserve a constant share
value; they don't
fluctuate much in price but, historically, their returns
have been generally
among the lowest of the major investment categories.
<PAGE>
Lars M. Berkman, Fund Manager
Portfolio
Manager's Report
The Fund invests primarily in corporate bonds rated BBB or
lower by independent
rating agencies. These bonds are below investment grade and
are commonly known
as junk bonds. As a result, these bonds are subject to
greater risk of default
than investment grade bonds. The Fund is well diversified.
Within the junk bond
market, our research staff looks for bonds with attractive
yields and improving
credit quality. There can be no assurance that the Fund will
achieve its
investment objective.
We're Cautious.
We generally look for better-rated bonds, namely those in
the B and BB
categories within the high yield bond market. Why? Because
were cautious. If
the economy weakens, these bonds should hold their value
better than lesser-
rated bonds, which carry more credit risk.
Strategy Session.
Another Banner Year?
After high yield corporate bonds led all other types of
bonds in total return
in 1996, investors began the new year wondering if a repeat
performance was in
store. For the first six months of the year, the average
high yield fund
tracked by Lipper returned more than twice as much as the 10-
year Treasury
note and also beat the return on investment grade corporate
bonds as measured
by the Merrill Lynch Corporate Master index.
High yield bonds fared well as a robust U.S. economy allowed
the average
company that issues high yield debt to increase earnings and
cash flow. As a
result, the underwriting quality for new high yield bond
issues continued to
improve. The economy raced ahead during the first quarter of
1997. Because
such growth can ignite higher inflation, the Federal Reserve
voted in March to
raise the overnight bank lending rate by a quarter
percentage point to 5.5% to
cool off the economy. The rate increase briefly caused high
yield bond prices
to fall and the volume of newly issued debt to slow, but
both rebounded nicely
in the second quarter. Investors have also flocked to high
yield bonds as a
booming U.S stock market enabled many high yield companies
to issue stock and
use the proceeds to reduce debt and improve financial
strength.
We stuck with our strategy of buying bonds of larger
companies that are rated
a strong single-B and BB. These bonds of better quality
companies do not carry
as large a coupon as those of lesser quality firms. Still,
they offer superior
financial strength and a greater chance to be upgraded to
investment grade over
the next few years if the economy continues to expand.
Credit Quality.
Expressed as a percentage of
total investments as of 6/30/97.
(PIE CHART)
<PAGE>
What Went Well.
Good Tidings Boost Bond Prices.
Your Fund is heavily invested in the cable television
sector, where a flurry of
transactions have reduced the debt of certain major
companies and reaffirmed
the asset values of the industry. This sparked an increase
in cable television
bond prices during the second quarter. Most notably,
Cablevision Systems bonds
appreciated in value following an announcement that News
Corp. and
Telecommunications Inc. will pay $850 million for a 40%
stake in the sports
television business of Cablevision Systems to create a
national chain of cable
television sports channels. Comcast Corp. bonds benefitted
from a $1billion
investment by Microsoft to speed up development of a two-
way, broadband fiber-
optic network. The cable television industry has generally
reported solid
earnings, further enhancing the appeal of its bonds to high
yield debt
investors.
We also hold significant positions in the telecommunications
sector, where
more good news swept debt prices higher. The senior
unsecured note rating of
MFS Communications Co. Inc. was upgraded by a credit rating
agency after
WorldCom Inc. completed its $15.5 billion acquisition of MFS
Communications.
McLeod Inc, another of our holdings, reported plans to buy
Consolidated
Communications Inc. in a $420 million transaction that will
create a combined
company to be called McLeodUSA. One rating agency affirmed
the corporate credit
rating of McLeod, while another put McLeod on review for a
possible upgrade.
And Not So Well.
Disappointed Hopes.
Growing disappointment that there had not been a string of
mergers between
wireless cable television firms and local telephone
companies fueled a sharp
sell-off in wireless cable television bonds. Wireless cable
firms can transmit
cable signals to subscribers more cheaply than traditional
cable companies.
Thus we initially thought wireless cable firms would be
natural merger partners
for local telephone companies looking to compete with cable
companies who were
thought to be moving aggressively into telephony.
As it turned out, the cable companies failed to develop a
viable telephone
product so local telephone company interest in wireless
cable television waned.
Investors caught wind of this and dumped wireless cable
bonds. We sold our two
remaining wireless cable holdings in the first quarter.
Five Largest Holdings.
3.0% Tenet Healthcare
Drugs & Health Care
2.6% HMH Properties
Leisure & Tourism
2.5% Cablevision Systems
Cable
2.5% Rogers Cablesystems
Cable
2.1% Outdoor Systems Inc.
Broadcasting
Expressed as a percentage of total investments as of
6/30/97.
Looking Ahead.
We are cautiously optimistic. Three factors will drive high
yield bond
performance -- prices on Treasury securities; U.S. economic
conditions; and
the volume of new high yield bond issuance. Inflation
remains in check, so we
expect relatively stable prices on Treasurys. The economy
will likely expand
more slowly during the second half of the year than in the
first, providing
conditions in which the average corporate issuer of high
yield bonds can
generate increased sales and cash flow plus a corresponding
gradual improvement
in financial strength and credit quality. Finally, we expect
the amount of
newly issued high yield bonds to continue to be readily
absorbed by investors
such as insurance companies, pension funds and mutual funds.
- ------------------------------------------------------------
- -------------------
1
<PAGE>
President's Letter
August 4, 1997
(PHOTO)
Dear Shareholder:
With the midpoint of 1997 behind us, I'm pleased to report
that the recent
news from the financial markets has been decidedly upbeat.
The Dow Jones
Industrial Average has gained more than 20% through the end
of June, while
lower long-term interest rates have made bonds an attractive
investment.
This stands in contrast to April when the Dow fell 10% from
a record high on
fears of higher interest rates and surging inflation.
Interest rates have
since fallen as the economy slowed and the Dow has reached
several new highs.
The market swings we've seen this year illustrate the
importance of "staying
the course" to your financial goal. We realize that
maintaining investment
discipline when faced with market uncertainty isn't easy.
Here are some
thoughts that may help:
- - Keep Your Expectations Realistic. The best investors know
that financial
markets rise and fall -- and so too, will the value of
their investments.
Over time, however, stocks have been shown to produce
very attractive
returns that were well ahead of inflation. And where
income is the primary
goal, bonds have also provided attractive returns.
- - Remember Your Time Horizon. If your investment goals are
long term (several
years or more), so should your time horizon. During this
period, it's not
unusual for stocks and bonds to experience several
periods of market
uncertainty.
- - We're On Your Side. Your Prudential Securities Financial
Advisor or Pruco
Securities Registered Representative can help you
understand what's
happening in the financial markets. They can assist you
in making informed
decisions based upon a thorough knowledge of your
financial needs and long-
term goals. Call him or her today.
Thank you for your continued confidence in Prudential mutual
funds. We'll do
everything we can to keep you informed and to earn your
trust.
Sincerely,
Brian M. Storms
President, Prudential Mutual Funds & Annuities
- ------------------------------------------------------------
- -------------------
2
<PAGE>
Portfolio of Investments
as of June 30, 1997 (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description
Rating Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
LONG-TERM INVESTMENTS--92.0%
BONDS--88.3%
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Aerospace--0.8%
L-3 Communications Corp., Sr. Sub. Notes
B2 10.375% 5/01/07 $ 6,000 $
6,345,000
Sequa Corp., Sr. Sub. Notes
B3 9.375 12/15/03 27,750
28,305,000
- --------------
34,650,000
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Automotive Parts--2.4%
Foamex JPS Automotive L.P.,
Sr. Notes
B2 11.125 6/15/01 21,700
23,761,500
Sr. Sub. Notes
B3 9.875 6/15/07 16,300
16,870,500
Hayes Wheels Int'l., Inc.,
Sr. Sub. Notes
B3 11.00 7/15/06 32,000
35,200,000
Sr. Sub. Notes
B3 9.125 7/15/07 25,000
25,000,000
- --------------
100,832,000
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Broadcasting & Other Media--8.9%
Capstar Radio Broadcasting,
Sr. Disc. Notes
NR 12.75 2/01/09 20,200
12,827,000
Sr. Sub. Notes
NR 9.25 7/01/07 16,500
15,922,500
Globo Communications, Sr. Notes
BB-(a) 10.50 12/20/06 25,900
27,454,000
Grupo Televisa S. A., Sr. Notes
Ba3 11.375 5/15/03 20,500
22,396,250
Hollinger Int'l. Publish., Inc.,
Sr. Notes
Ba3 8.625 3/15/05 31,125
31,514,062
Sr. Sub. Notes
B1 9.25 3/15/07 12,750
13,005,000
Lamar Advertising Co., Sr. Sub. Notes
B1 9.625 12/01/06 13,500
13,786,875
Outdoor Systems, Inc.,
Sr. Sub. Notes
B1 9.375 10/15/06 38,000
38,190,000
Sr. Sub. Notes
B1 8.875 6/15/07 50,000
48,750,000
SFX Broadcasting, Inc., Sr. Sub. Notes
B3 10.75 5/15/06 22,820
24,645,600
Sun Media Corp., Sr. Sub. Notes
B3 9.50 5/15/07 14,650
14,869,750
Telemundo Group, Inc., Sr. Disc. Notes
B1 7.00 2/15/06 20,000
19,100,000
TV Azteca S.A. De CV,
Gtd. Sr. Notes
Ba3 10.125 2/15/04 8,300
8,476,375
Gtd. Sr. Notes
Ba3 10.50 2/15/07 25,650
26,163,000
United Artists, Inc., Sr. Sec'd. Notes
Ba3 11.50 5/01/02 20,170
21,052,438
Universal Outdoor, Inc.,
Sr. Sub. Notes
B1 9.75 10/15/06 14,900
15,421,500
Von Hoffmann Press, Inc., Sr. Sub. Notes
B3 10.375 5/15/07 5,250
5,486,250
Young Broadcasting, Inc., Sr. Sub. Notes
B2 10.125 2/15/05 21,300
22,152,000
- --------------
381,212,600
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments
as of June 30, 1997 (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description
Rating Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Building & Related Industries--5.0%
American Builders, Sr. Sub. Notes
B3 10.625% 5/15/07 $ 11,000 $
11,330,000
D.R. Horton, Inc., Sr. Notes
Ba2 8.375 6/15/04 14,000
13,720,000
Falcon Building Prod., Inc.,
Sr. Sub. Disc. Notes
B3 10.50 6/15/07 7,800
4,602,000
Sr. Sub. Notes
B3 9.50 6/15/07 20,150
20,049,250
Falcon Holdings Corp. L.P., Sr. Sub. Notes, PIK
NR 11.00 9/15/03 30,210
30,361,103
Greystone Homes Corp., Sr. Notes
Ba3 10.75 3/01/04 17,350
18,998,250
Kaufman & Broad Home Corp., Sr. Sub. Notes
Ba3 9.625 11/15/06 30,000
31,200,000
Nortek, Inc.,
Sr. Sub. Notes
B2 9.875 3/01/04 25,125
25,753,125
Sr. Notes
Ba3 9.25 3/15/07 17,000
17,340,000
NVR, Inc., Sr. Notes
B2 11.00 4/15/03 15,600
16,692,000
U.S. Home Corp., Sr. Notes
Ba2 9.75 6/15/03 24,580
25,747,550
- --------------
215,793,278
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Cable--8.4%
Cablevision Systems Corp.,
Sr. Sub. Notes
B2 9.25 11/01/05 22,835
23,520,050
Sr. Sub. Notes
B2 9.875 2/15/13 25,950
26,858,250
CCA Holdings Corp., Sr. Sub. Notes
NR 13.00 12/31/99 11,000
13,585,000
Comcast UK Cable Corp., Sr. Disc. Deb.,
Zero Coupon (until 11/15/00)
B2 11.20 11/15/07 19,900
14,925,000
Diamond Cable Co.,
Sr. Disc. Notes, Zero Coupon (until 3/31/04)
B3 13.25 9/30/04 30,860
25,768,100
Sr. Disc. Notes, Zero Coupon (until 12/15/00)
B3 11.75 12/15/05 19,000
13,157,500
International Cabletel, Inc.,
Sr. Disc. Notes, Zero Coupon (until 4/15/00)
B3 12.75 4/15/05 25,950
19,981,500
Sr. Disc. Notes, Zero Coupon (until 2/1/01)
B3 11.50 2/01/06 15,500
10,772,500
Kablemedia Holdings, Sr. Disc. Notes, Zero Coupon
(until 8/1/01)
B3 13.625 8/01/06 17,000
10,370,000
Lenfest Communications, Inc., Sr. Notes
Ba3 8.375 11/01/05 50,000
49,250,000
Rogers Cablesystems, Inc.,
Sr. Sec'd. Notes
Ba3 10.00 3/15/05 61,075
65,961,000
Sr. Sec'd. Deb.
Ba3 10.00 12/01/07 12,000
12,840,000
Sr. Sec'd. Deb.
Ba3 10.125 9/01/12 24,575
26,049,500
Rogers Cantel, Inc., Deb.
Ba3 9.375 6/01/08 44,500
46,947,500
- --------------
359,985,900
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments
as of June 30, 1997 (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description
Rating Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Casinos--3.2%
Empress River Casino Finance Corp., Sr. Notes
Ba3 10.75% 4/01/02 $ 16,000 $
17,040,000
Grand Casino, Inc., First Mtge. Notes
Ba3 10.125 12/01/03 47,200
49,088,000
Horseshoe Gaming LLC., Sr. Sub. Notes
B3 9.375 6/15/07 10,000
10,050,000
Majestic Star Casino LLC., Sr. Notes
B(a) 12.75 5/15/03 6,000
6,600,000
Trump Atlantic City Assocs., First Mtge. Notes
B1 11.25 5/01/06 53,250
52,051,875
- --------------
134,829,875
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Chemicals--2.5%
ISP Holdings, Inc.,
Sr. Notes
Ba3 9.75 2/15/02 29,081
31,189,373
Sr. Notes
Ba3 9.00 10/15/03 26,250
27,037,500
Sterling Chemical Holdings, Inc.,
Sr. Sub. Notes
B3 11.75 8/15/06 10,000
10,800,000
Sr. Disc. Notes, Zero Coupon (until 8/15/01)
Caa 13.50 8/15/08 15,450(d)
10,197,000
Terra Industries, Inc., Sr. Notes
Ba3 10.50 6/15/05 24,100
26,148,500
- --------------
105,372,373
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Computer Services--1.4%
Unisys Corp., Sr. Notes
B1 11.75 10/15/04 33,400
36,489,500
Viasystems, Inc., Sr. Sub. Notes
B3 9.75 6/01/07 20,000
20,250,000
Wavetek Corp., Sr. Sub. Notes
B3 10.125 6/15/07 4,000
4,080,000
- --------------
60,819,500
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Consumer Products--1.3%
Consumers Int'l., Inc., Sr. Sec'd. Notes
Ba3 10.25 4/01/05 21,600
23,166,000
Lifestyle Furnishings, Inc., Sr. Sub. Notes
B1 10.875 8/01/06 27,500
30,387,500
- --------------
53,553,500
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Drugs & Health Care--7.4%
Fresenius Med Care Capital Trust
Ba3 9.00 12/01/06 55,290
56,119,350
Imed Corp., Sr. Sub. Notes
B3 9.75 12/01/06 24,475
25,209,250
Integrated Health Services, Inc.,
Sr. Sub. Notes
B1 10.25 4/30/06 37,500
40,031,250
Sr. Sub. Notes
B1 9.50 9/15/07 26,000
26,585,000
Magellan Health Services, Inc., Sr. Sub. Notes
B2 11.25 4/15/04 37,350
41,645,250
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 5
<PAGE>
Portfolio of Investments
as of June 30, 1997 (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description
Rating Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Drugs & Health Care (cont'd.)
Tenet Healthcare Corp.,
Sr. Sub. Notes
Ba3 10.125% 3/01/05 $ 94,000 $
102,695,000
Sr. Sub. Notes
Ba3 8.625 1/15/07 23,500
23,970,000
- --------------
316,255,100
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Energy--10.1%
AES Corp., Sr. Sub. Notes
Ba1 10.25 7/15/06 43,000
46,762,500
Benton Oil & Gas Co., Sr. Notes
B2 11.625 5/01/03 11,300
12,444,125
Cal Energy Co., Inc., Sr. Notes
Ba2 9.50 9/15/06 13,000
13,850,590
California Energy Co., Inc.,
Sr. Notes
Ba2 9.875 6/30/03 7,100
7,555,607
Disc. Notes, Zero Coupon (until 1/15/97)
Ba2 10.25 1/15/04 59,500
63,974,400
Chesapeake Energy Corp., Sr. Notes
Ba2 8.50 3/15/12 11,500
10,810,000
Cliffs Drilling Co., Sr. Notes
B1 10.25 5/15/03 8,800
9,372,000
Coda Energy, Inc., Sr. Notes
B3 10.50 4/01/06 10,000
10,500,000
DI Industies, Inc., Sr. Notes
B1 8.875 7/01/07 9,750
9,603,750
Forcenergy, Inc.,
Sr. Sub. Notes
B2 9.50 11/01/06 10,000
10,250,000
Sr. Sub. Notes
B2 8.50 2/15/07 16,200
15,795,000
Gulf Canada Resources Ltd.,
Sr. Sub. Deb.
Ba2 9.25 1/15/04 29,730
31,142,175
Sr. Sub. Notes
Ba2 9.625 7/01/05 31,720
34,099,000
McDermott J. Ray, Sr. Sub. Notes
B1 9.375 7/15/06 30,100
30,551,500
Parker Drilling Co., Sr. Notes
B1 9.75 11/15/06 13,600
14,246,000
Plains Resources, Inc., Sr. Sub. Notes
B2 10.25 3/15/06 11,000
11,660,000
Pogo Producing Co., Sr. Sub. Notes
B1 8.75 5/15/07 15,600
15,678,000
Pride Petroleum Services, Inc., Sub. Deb. Conv.
Ba3 9.375 5/01/07 10,075
10,528,375
Synder Oil Corp., Sr. Sub. Notes
B2 8.75 6/15/07 16,300
16,340,750
Transamerican Energy Corp.,
Sr. Sec'd. Disc. Notes
B3 13.00 6/15/02 30,000
21,600,000
Sr. Sec'd. Notes
B3 11.50 6/15/02 7,800
7,566,000
Vintage Petroleum, Inc.,
Sr. Sub. Notes
B1 9.00 12/15/05 13,750
14,025,000
Sr. Sub. Notes
B1 8.625 2/01/09 12,435
12,372,825
- --------------
430,727,597
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Financial Services--2.1%
Americredit Corp., Sr. Notes
Ba2 9.25 2/01/04 19,100
18,574,750
First Nationwide Holdings, Inc.,
Sr. Notes
B3 12.50 4/15/03 26,750
29,826,250
Sr. Sub. Notes
Ba3 10.625 10/01/03 16,000
17,520,000
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 6
<PAGE>
Portfolio of Investments
as of June 30, 1997 (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description
Rating Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Financial Services (cont'd.)
Navistar Financial Corp., Sr. Sub. Notes
B1 9.00% 6/01/02 $ 11,750 $
12,014,375
Williams Scotsman, Inc., Sr. Notes
B3 9.875 6/01/07 10,000
10,100,000
- --------------
88,035,375
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Food & Beverage--2.0%
Canandaigua Wine, Inc., Sr. Sub. Notes
B1 8.75 12/15/03 14,750
14,786,875
Curtice Burns Foods, Inc., Sr. Sub. Notes
B3 12.25 2/01/05 21,080
23,267,050
Fresh Del Monte Produce, N.V., Sr. Notes
Caa 10.00 5/01/03 32,698
33,760,685
PSF Holdings, LLC., Sr. Sec'd. Notes, PIK
(cost $11,408,403; purchased 5/20/94 and 5/8/97)
NR 11.00 9/17/03 11,050(b)
11,879,277
- --------------
83,693,887
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Industrials--0.2%
Amphenol Corp., Sr. Sub. Notes
B2 9.875 5/15/07 10,475
10,736,875
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Leisure & Tourism--5.1%
Hedstrom Corp., Sr. Sub. Notes
B3 10.00 6/01/07 9,400
9,729,000
Hedstrom Holdings, Inc., Sr. Disc. Notes
Caa 12.00 6/01/09 3,400
2,023,000
HMC Acquisition Properties, Inc., Sr. Notes
Ba3 9.00 12/15/07 50,260
51,076,725
HMH Properties, Inc., Sr. Notes
Ba3 9.50 5/15/05 90,500
94,120,000
John Q Hammons Hotels,
First Mtge. Notes
B1 8.875 2/15/04 34,365
34,708,650
First Mtge. Notes
B1 9.75 10/01/05 13,750
14,420,312
KSL Recreation Group, Inc., Sr. Sub. Notes
B3 10.25 5/01/07 13,400
13,936,000
- --------------
220,013,687
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Miscellaneous Services--1.2%
Coinstar, Inc., Sr. Sub. Notes, Zero Coupon (until
10/1/99)
(cost $6,897,696; purchased 10/17/96)
NR 13.00 10/01/06 9,300(b)(d)
6,417,000
Continental Global Group, Inc., Sr. Notes
B2 11.00 4/01/07 10,000
10,500,000
Kindercare Learning Center, Inc., Sr. Sub. Notes
B3 9.50 2/15/09 14,725
14,320,063
United Stationer Supply Co., Sr. Sub. Notes
B3 12.75 5/01/05 18,000
20,160,000
- --------------
51,397,063
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 7
<PAGE>
Portfolio of Investments
as of June 30, 1997 (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description
Rating Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Paper & Forest Products--2.6%
Container Corp., Sr. Notes
B1 11.25% 5/01/04 $ 28,500 $
30,780,000
Gaylord Container Corp.,
Sr. Sub. Disc. Notes
Caa 12.75 5/15/05 22,090
24,188,550
Sr. Sub. Notes
B3 9.75 6/15/07 14,000
13,965,000
Pacific Lumber Co., Sr. Notes
B3 10.50 3/01/03 30,653
31,572,590
Stone Container Corp., Sr. Sub. Notes
B3 12.25 4/01/02 10,250
10,455,000
- --------------
110,961,140
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Plastic Products--0.5%
Applied Extrusion Technology, Inc., Sr. Notes
B2 11.50 4/01/02 19,800
20,790,000
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Retail--2.5%
Brylane L.P., Sr. Sub. Notes
B1 10.00 9/01/03 10,000
10,700,000
Cole National Group, Inc., Sr. Sub. Notes (cost
$24,486,000; purchased on various dates: 11/13/96
through 5/28/97)
B2 9.875 12/31/06 24,200(b)
25,349,500
French Fragrances, Inc., Sr. Notes
B2 10.375 5/15/07 12,530
13,031,200
Leslies Poolmart, Inc., Sr. Notes
B2 10.375 7/15/04 5,600
5,726,000
Specialty Retailers, Inc.,
Sr. Notes
Ba3 8.50 7/15/05 33,050
33,050,000
Sr. Sub. Notes
B2 9.00 7/15/07 3,300
3,300,000
Syratech Corp., Sr. Notes
B1 11.00 4/15/07 15,065
16,006,562
- --------------
107,163,262
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Steel & Metals--3.2%
AK Steel Corp.,
Sr. Notes
Ba2 10.75 4/01/04 7,000
7,525,000
Sr. Notes
Ba2 9.125 12/15/06 50,000
51,000,000
CSN Iron S.A., Gtd. Notes
B1 9.125 6/01/07 7,200
7,011,000
International Wire Group, Inc., Sr. Sub. Notes
B3 11.75 6/01/05 16,500
17,985,000
Silgan Holdings, Inc., Sr. Sub. Deb.
B1 9.00 6/01/09 17,000
17,170,000
WCI Steel, Inc., Sr. Sec'd. Notes
B2 10.00 12/01/04 34,000
35,275,000
- --------------
135,966,000
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Supermarkets--1.2%
Pueblo Xtra Int'l., Inc.,
Sr. Notes
B3 9.50 8/01/03 19,780
19,186,600
Randalls Food Mkts., Inc., Sr. Sub. Notes
(cost $13,877,343; purchased 7/24/97)
NR 9.375 7/01/07 13,900(b)
13,813,125
Shoppers Food Whse. Corp., Sr. Notes
B1 9.75 6/15/04 11,000
11,013,750
Southland Corp., Sr. Sub. Deb.
B1 12.00 6/15/09 10,000
10,025,000
- --------------
54,038,475
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 8
<PAGE>
Portfolio of Investments
as of June 30, 1997 (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description
Rating Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Telecommunications--12.6%
Brooks Fiber Properties, Inc.,
Sr. Disc. Notes
NR 11.875% 11/01/06 $ 10,000 $
6,500,000
Sr. Notes
NR 10.00 6/01/07 10,000
10,100,000
CCPR Services, Inc., Sr. Sub. Notes
B2 10.00 2/01/07 10,000
9,825,000
Cellnet Data Systems, Inc., Sr. Disc. Notes,
Zero Coupon (until 6/15/00)
(cost $18,200,141; purchased 6/15/95 and 11/17/95)
NR 13.00 6/15/05 27,000(b)
18,495,000
Cencall Communications Corp., Sr. Disc. Notes,
Zero Coupon (until 1/15/99)
B3 10.125 1/15/04 51,330
40,550,700
Centennial Cellular Corp., Sr. Notes
B1 10.125 5/15/05 11,945
12,422,800
Clearnet Communications, Inc., Sr. Disc. Notes,
Zero Coupon (until 12/15/00)
B3 14.75 12/15/05 20,150
13,349,375
Communication Cellular, S.A., Sr. Def'd. Bonds,
Zero Coupon (until 11/15/00)
B3 13.125 11/15/03 20,000
14,200,000
Dial Call Communications, Inc., Sr. Disc. Notes,
Zero Coupon (until 4/15/99)
B3 12.25 4/15/04 13,000
10,725,000
Geotek Communications, Inc., Sr. Conv. Notes,
(cost $12,000,000; purchased 3/5/96)
Caa 12.00 2/15/01 12,000(b)
11,040,000
Globalstar Telecommunications L.P.,
Sr. Notes
B3 11.375 2/15/04 10,800(d)
10,800,000
Sr. Notes
B3 11.25 6/15/04 10,700
9,951,000
GST Telecommunications, Inc.,
Conv. Sr. Disc. Notes, Zero Coupon (until
12/15/00)
NR 13.875 12/15/05 2,262
1,538,160
Sr. Sec'd. Notes
NR 13.25 5/01/07 10,000
10,600,000
GST USA, Inc., Sr. Disc. Notes, Zero Coupon (until
12/15/00)
NR 13.875 12/15/05 14,096
8,739,520
ICG Holdings, Inc., Sr. Disc. Notes, Zero Coupon
(until 9/15/00)
NR 13.50 9/15/05 15,000
10,950,000
Impsat Corp., Sr. Notes
B2 12.125 7/15/03 16,000
17,160,000
Intercel, Inc., Sr. Notes
B2 11.125 6/01/07 6,800
6,868,000
Intermedia Cap. Partners L.P., Sr. Notes
B2 11.25 8/01/06 30,250
33,123,750
Intermedia Communications of Florida,
Sr. Notes
B3 13.50 6/01/05 11,250
13,753,125
Sr. Disc. Notes, Zero Coupon (until 5/15/01)
B3 12.50 5/15/06 20,000
14,400,000
International Wireless Communications, Inc., Sr.
Disc. Notes
NR Zero 8/15/01 22,000(d)
10,835,000
Jacor Communications, Inc.,
Sr. Sub. Notes
B2 9.75 12/15/06 37,050
38,532,000
Sr. Sub. Notes
B2 8.75 6/15/07 10,000
9,850,000
McLeod, Inc., Sr. Disc. Notes, Zero Coupon (until
3/1/02)
B3 10.50 3/01/07 20,000
12,750,000
Nextel Communications, Inc., Sr. Disc. Notes,
Zero Coupon (until 8/15/99)
B3 9.75 8/15/04 29,000
22,185,000
PTC Int'l. Fin. B.V., Sr. Sub. Disc. Notes, Zero
Coupon
(until 7/1/02) (cost $11,196,549; purchased
7/24/97)
NR 10.75 7/01/07 18,900 (b)
11,458,125
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 9
<PAGE>
Portfolio of Investments
as of June 30, 1997 (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description
Rating Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Telecommunications (cont'd.)
Pagemart Nationwide, Inc., Sr. Disc. Notes,
Zero Coupon (until 2/1/00)
NR 15.00% 2/01/05 $ 23,000 $
17,135,000
Pagemart, Inc., Sr. Disc. Notes, Zero Coupon (until
11/1/98)
NR 12.25 11/01/03 16,525
14,294,125
PriCellular Wireless Corp.,
Sr. Disc. Notes, Zero Coupon (until 11/15/97)
B3 14.00 11/15/01 11,270
11,918,025
Sr. Disc. Notes, Zero Coupon (until 10/1/98)
B3 12.25 10/01/03 13,600
12,852,000
Teleport Communications, Sr. Notes
B1 9.875 7/01/06 10,400
11,076,000
Telesystem Int'l. Wireless, Inc., Sr. Disc. Notes,
Zero Coupon
(until 6/30/02) (cost $7,221,840; purchased
6/24/97)
NR 13.25 6/30/07 13,700(b)
7,261,000
UNIFI Communications, Inc., Sr. Notes
NR 14.00 3/01/04 20,200
19,695,000
USA Mobil Communications, Inc.,
Sr. Notes
B2 9.50 2/01/04 8,350
7,849,000
Sr. Notes
B2 14.00 11/01/04 7,000
7,700,000
Winstar Communications, Inc.,
Conv. Sr. Disc. Notes, Zero Coupon (until
10/15/00)
NR 14.00 10/15/05 17,550
10,793,250
Sr. Disc. Notes, Zero Coupon (until 10/15/00)
NR 14.00 10/15/05 50,100
28,557,000
- --------------
539,831,955
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Textiles--0.5%
Polysindo Int'l. Finance Co., Notes
Ba3 11.375 6/15/06 18,050
19,877,563
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Transportation/Trucking/Shipping--1.7%
Ameritruck Distribution Corp., Sr. Sub. Notes
B3 12.25 11/15/05 9,900
10,345,500
Coach USA, Inc., Sr. Sub. Notes
B1 9.375 7/01/07 5,000
4,950,000
Greater Beijing First Expwy.,
Sr. Notes
Ba1 9.25 6/15/04 2,500
2,537,500
Sr. Notes
Ba1 9.50 6/15/07 6,000
6,105,000
Greyhound Lines, Inc., Sr. Notes
B3 11.50 4/15/07 15,500
16,430,000
TFM S.A. De CV,
Sr. Notes
B2 10.25 6/15/07 5,400
5,508,000
Sr. Disc. Deb.
B2 11.75 6/15/09 18,000
10,440,000
Western Star Trucks Holdings Ltd., Sr. Notes
Ba2 8.75 5/01/07 14,500
14,862,500
- --------------
71,178,500
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Waste Management--1.4%
Allied Waste Industries, Inc.,
Sr. Sub. Notes
B3 10.25 12/01/06 35,000
37,275,000
Sr. Disc. Notes
Caa 11.30 6/01/07 38,000
23,370,000
- --------------
60,645,000
- --------------
Total bonds (cost $3,619,374,397)
3,768,360,505
- --------------
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 10
<PAGE>
Portfolio of Investments
as of June 30, 1997 (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note
1)
Warrants
<S> <C> <C>
- ------------------------------------------------------------
PREFERRED STOCKS--2.4%
Cablevision Systems Corp.,
$11.125, PIK 3,632 $
36,501,600
$11.125, PIK 33,315
3,348,115
$11.75, PIK 114,314
11,831,495
California Fed. Corp., $9.125 1,822,245
47,036,699
Von Hoffman Corp., $13.50 160,000
4,576,000
----------
- ----
Total preferred stocks
(cost $96,512,221)
103,293,909
----------
- ----
- ------------------------------------------------------------
COMMON STOCKS--0.4%
Alarmguard Holdings, Inc. 105,113(c)
959,156
Cellnet Data Systems, Inc. 216,000(c)
2,686,500
Dr Pepper Bottling Co., Cl. A 72,580(c)
1,233,860
EnviroSource, Inc. 428,333(c)
856,666
Gaylord Container Corp., Cl. A 324,735(c)
2,496,400
Hedstrom Holdings, Inc. 206,223(c)
0
Metromedia Corp. 69,374(c)
880,183
Pagemart Nationwide, Inc. 71,750(c)
448,437
Peachtree Cable Assn., Ltd. 31,559(c)
299,811
PM Holdings Corp. 3,679(c)
1,214,070
Rite Aid Corp. 62,985
3,141,377
U.S. West Communications Group 18,202
685,988
U.S. West Media Group 20,832(c)
421,848
Walter Industries, Inc. 7,641(c)
127,987
----------
- ----
Total common stocks
(cost $11,524,500)
15,452,283
- ------------------------------------------------------------
COMMON TRUST UNITS(c)--0.6% Units
PSF Holdings, LLC,
(cost $32,569,430;
purchased 5/20/94) 951,717 (b)
28,075,651
----------
- ----
<CAPTION>
Value
Description Warrants (Note
1)
<S> <C> <C>
- ------------------------------------------------------------
WARRANTS(c)--0.3%
American Telecasting, Inc.,
expiring 6/15/99 41,000 $
41,000
Cellular Communications Int'l.,
Inc.,
expiring 8/15/03 22,250
333,750
Clearnet Communications, Inc.,
expiring 9/15/05 66,495
332,475
Coinstar, Inc.,
expiring 10/01/06 9,300
651,000
Comcel, expiring 11/15/03 20,000
1,100,000
Foamex JPS Automotive L.P.,
expiring 7/1/99 20,250
506,250
Gaylord Container Corp.,
expiring 11/1/02 417,518
3,314,049
Globalstar Telecommunications
L.P.,
expiring 2/15/04 10,800
0
Heartland Wireless
Communications, Inc., expiring
12/31/00 39,000
39,000
Intelcom Group, Inc.,
expiring 9/15/05 127,809
1,565,660
Intermedia Communications of
Florida, expiring 6/1/00
(cost $0; purchased 5/25/95) 11,250(b)
450,000
International Wireless
Communications Holdings, Inc.,
expiring 8/15/01 22,000
1,100,000
Nextel Communications, Inc.,
expiring 12/15/98 14,273
143
expiring 4/25/99 7,000
70
President Riverboat Casinos,
Inc.,
expiring 9/30/99 44,150
2,208
Sterling Chemical Holdings, Inc.,
expiring 8/15/08 5,450
190,750
UNIFI Communications, Inc.,
expiring 3/1/07 20,200
0
United Int'l. Holdings, Inc.,
expiring 11/15/99 44,500
333,750
----------
- ----
Total warrants (cost $220,009)
9,960,105
----------
- ----
Total long-term investments
(cost $3,760,200,557)
3,925,142,453
----------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 11
<PAGE>
Portfolio of Investments
as of June 30, 1997 (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Interest Maturity Amount Value
Description
Rate Date (000) (Note 1)
<S>
<C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
SHORT-TERM INVESTMENTS--5.6%
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Commercial Paper
Associates Corp. of North America
6.19 % 7/01/97 $ 17,623 $ 17,623,000
Conagra, Inc.
5.60 7/01/97 1,968 1,968,000
Conagra, Inc.
6.60 7/01/97 50,000 50,000,000
Textron Financial Corp.
5.80 7/08/97 60,000 59,932,333
Textron Financial Corp.
5.78 7/17/97 13,000 12,966,605
UBS Finance (Delaware), Inc.
6.20 7/01/97 94,599 94,599,000
- --------------
Total short-term investments (cost $237,088,938)
237,088,938
- --------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Total Investments--97.6%
(cost $3,997,289,495; Note 4)
4,162,231,391
Other assets in excess of liabilities--2.4%
104,426,012
- --------------
Net Assets--100%
$4,266,657,403
- --------------
- --------------
</TABLE>
- ---------------
(a) Standard & Poor's Rating.
(b) Indicates a restricted security; the aggregate cost of
such securities is
$137,857,402. The aggregate value $134,238,678 is
approximately 3.1% of net
assets.
(c) Non-income producing securities.
(d) Consists of more than one class of securities traded
together as a unit;
generally bonds with attached stock or warrants.
NR--Not rated by Moody's or Standard & Poor's.
PIK--Payment in kind securities.
L.P.--Limited Partnership.
The Fund's current Prospectus contains a description of
Moody's and Standard &
Poor's ratings.
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 12
<PAGE>
Statement of Assets and Liabilities
(Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
Assets
June 30, 1997
<S>
<C>
Investments, at value (cost
$3,997,289,495).............................................
.................... $4,162,231,391
Cash........................................................
................................................
3,193,855
Interest
receivable..................................................
....................................... 62,900,467
Receivable for investments
sold........................................................
..................... 60,835,024
Receivable for Fund shares
sold........................................................
..................... 8,476,688
Deferred expenses and other
assets......................................................
.................... 128,935
- --------------
Total
assets......................................................
....................................... 4,297,766,360
- --------------
Liabilities
Payable for investments
purchased...................................................
........................ 11,196,549
Dividends
payable.....................................................
...................................... 8,602,093
Payable for Fund shares
reacquired..................................................
........................ 7,039,442
Due to
Distributor.................................................
.........................................
1,828,007
Due to
Manager.....................................................
.........................................
1,449,542
Accrued
expenses....................................................
........................................ 993,324
- --------------
Total
liabilities.................................................
....................................... 31,108,957
- --------------
Net
Assets......................................................
............................................
$4,266,657,403
- --------------
- --------------
Net assets were comprised of:
Common stock, at
par.........................................................
............................ $ 5,041,793
Paid-in capital in excess of
par.........................................................
................ 4,753,283,741
- --------------
4,758,325,534
Distributions in excess of net investment
income......................................................
... (4,863,001)
Accumulated net realized loss on
investments.................................................
............ (651,747,026)
Net unrealized appreciation on
investments.................................................
.............. 164,941,896
- --------------
Net assets, June 30,
1997........................................................
........................... $4,266,657,403
- --------------
- --------------
Class A:
Net asset value and redemption price per share
($1,622,777,281 / 191,567,730 shares of common stock
issued and outstanding)..........................
$8.47
Maximum sales charge (4.00% of offering
price)......................................................
..... .35
Maximum offering price to
public......................................................
................... $8.82
Class B:
Net asset value, offering price and redemption price per
share
($2,562,199,991 / 302,962,817 shares of common stock
issued and outstanding)..........................
$8.46
Class C:
Net asset value, offering price and redemption price per
share
($45,171,950 / 5,341,342 shares of common stock issued
and outstanding)...............................
$8.46
Class Z:
Net asset value, offering price and redemption price per
share
($36,508,181 / 4,307,410 shares of common stock issued
and outstanding)...............................
$8.48
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 13
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
June 30,
Net Investment Income 1997
<S> <C>
Income
Interest...................................
$196,399,712
Dividends..................................
1,851,333
-----------
- -
Total Income............................
198,251,045
-----------
- -
Expenses
Distribution fee--Class A..................
1,171,840
Distribution fee--Class B..................
9,535,024
Distribution fee--Class C..................
147,699
Management Fee.............................
8,551,017
Transfer agent's fees and expenses.........
2,225,000
Custodian's fees and expenses..............
163,000
Registration fees..........................
63,000
Reports to shareholders....................
59,000
Insurance expense..........................
33,000
Audit fee..................................
24,000
Directors' fees and expenses...............
19,000
Legal fees and expenses....................
18,500
Miscellaneous..............................
16,108
-----------
- -
Total expenses..........................
22,026,188
-----------
- -
Net investment income.........................
176,224,857
-----------
- -
Realized and Unrealized
Gain on Investments
Net realized gain on investment
transactions...............................
42,853,721
Net change in unrealized appreciation of
investments................................
9,302,524
-----------
- -
Net gain on investments.......................
52,156,245
-----------
- -
Net Increase in Net Assets
Resulting from Operations.....................
$228,381,102
-----------
- -
-----------
- -
</TABLE>
PRUDENTIAL HIGH YIELD FUND, INC.
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year
Ended
Increase (Decrease) June 30, December
31,
in Net Assets 1997 1996
<S> <C> <C>
Operations
Net investment income...... $ 176,224,857 $
360,853,565
Net realized gain on
investment
transactions............ 42,853,721
33,923,042
Net change in unrealized
appreciation of
investments............. 9,302,524
75,350,872
-------------- ----------
- -------
Net increase in net assets
resulting from
operations.............. 228,381,102
470,127,479
-------------- ----------
- -------
Dividends and distributions
(Note 1)
Dividends from net
investment income
Class A................. (68,375,245)
(127,419,210)
Class B................. (104,677,565)
(228,744,279)
Class C................. (1,762,249)
(2,463,825)
Class Z................. (1,409,798)
(2,226,251)
-------------- ----------
- -------
(176,224,857)
(360,853,565)
-------------- ----------
- -------
Dividends in excess of net
investment income
Class A................. (3,482,480)
(3,542,829)
Class B................. (5,331,462)
(6,360,123)
Class C................. (89,755)
(68,506)
Class Z................. (71,768)
(61,900)
-------------- ----------
- -------
(8,975,465)
(10,033,358)
-------------- ----------
- -------
Fund share transactions (Net
of
share conversions) (Note 5)
Net proceeds from shares
sold.................... 1,355,641,680
2,157,396,910
Net asset value of shares
issued in reinvestment
of dividends and
distributions........... 87,304,764
181,172,994
Cost of shares
reacquired.............. (1,455,227,372)
(2,293,331,143)
-------------- ----------
- -------
Net increase in net assets
from Fund share
transactions............ (12,280,928)
45,238,761
-------------- ----------
- -------
Total increase................ 30,899,852
144,479,317
Net Assets
Beginning of period........... 4,235,757,551
4,091,278,234
-------------- ----------
- -------
End of period................. $4,266,657,403 $
4,235,757,551
-------------- ----------
- -------
-------------- ----------
- -------
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 14
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
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 Policies
The following is a summary of significant accounting
policies 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
bid price or the mean between the bid and asked prices, if
available, 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 hold up to 15% of its net assets in illiquid
securities, including
those which are restricted as to disposition under
securities law ('restricted
securities'). Certain issues of restricted securities held
by the Fund at June
30, 1997 include registration rights under which the Fund
may demand
registration by the issuer. Restricted securities, sometimes
referred to as
private placements, are valued pursuant to the valuation
procedures noted above.
Securities Transactions and Net 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. Expenses are recorded on the
accrual basis which may
require the use of certain estimates by management.
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.
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
- ------------------------------------------------------------
- --------------------
-----
15
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
decrease distributions in excess of net investment income
and increase
accumulated net realized loss on investments by $5,146,864.
This was primarily
due to the sale of securities purchased with market
discounts for the six months
ended June 30, 1997. 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
Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement PIMF has
responsibility for all
investment advisory services and supervises the subadviser's
performance of such
services. PIFM 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. PIFM 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 PIFM 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 a distribution agreement with Prudential
Securities Incorporated
('PSI'), which acts as the distributor of the Class A, B, C
and Z shares of the
Fund. The Fund compensates PSI 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 for Class A, B and C shares are accrued
daily and payable
monthly. No distribution or service fees are paid to PSI as
distributor of the
Class Z shares of the Fund.
Pursuant to the Class A, B and C Plans, the Fund compensates
PSI with respect to
Class A, B and C shares, 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 six months ended June
30, 1997.
PSI has advised the Fund that it has received approximately
$495,500 in
front-end sales charges resulting from sales of Class A
shares during the six
months ended June 30, 1997. From these fees, PSI paid such
sales charges to
Pruco Securities Corporation, an affiliated broker-dealer,
which in turn paid
commissions to salespersons and incurred other distribution
costs.
PSI has advised the Fund that for the six months ended June
30, 1997, it
received approximately $2,186,400 and $11,000 in contingent
deferred sales
charges imposed upon certain redemptions by Class B and
Class C shareholders,
respectively.
PSI, PIFM and PIC are indirect, wholly-owned subsidiaries of
The Prudential
Insurance Company of America.
The Fund, along with other affiliated registered investment
companies (the
'Funds'), entered into a credit agreement (the 'Agreement')
on December 31, 1996
with Deutsche Bank. The maximum commitment under the
Agreement is $200,000,000.
The Agreement expires on December 30, 1997. Interest on any
such borrowings
outstanding will be at market rates. The purposes of the
Agreement is to serve
as an alternative source of funding for capital share
redemptions. The Fund has
not borrowed any amounts pursuant to the Agreement as of
June 30, 1997. The
Funds pay a commitment fee at an annual rate of .055 of 1%
on the unused portion
of the credit facility. The commitment fee is accrued and
paid quarterly on a
pro-rata basis by the Funds.
- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC, a wholly-owned
subsidiary of PIFM, serves
as the Fund's transfer agent and during the six months ended
June 30, 1997, the
Fund incurred fees of approximately $1,782,000 for the
services of PMFS. As of
June 30, 1997, $297,800 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 Securities
Purchases and sales of investment securities, other than
short-term investments,
for the six months ended June 30, 1997 were $2,060,168,884
and $2,196,954,588,
respectively.
The federal income tax basis of the Fund's investments,
including short-term
investments, as of June 30, 1997 was $3,997,873,796;
accordingly, net unrealized
appreciation for federal income tax purposes was
$164,357,595 (gross unrealized
appreciation--$193,484,486; gross unrealized depreciation--
$29,126,891).
For federal income tax purposes, the Fund has a capital loss
carryforward as of
December 31, 1996 of approximately $673,926,900 of which
$323,340,600 expires in
1998, $77,895,200 expires in 1999, $110,441,500
- ------------------------------------------------------------
- --------------------
-----
16
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
expires in 2000, $162,249,600 expires in 2003. 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.
For federal income tax purposes, the Fund will elect to
treat net capital losses
of approximately $14,134,100 incurred in the two month
period ended December 31,
1996 as having been incurred in the current fiscal year.
- ------------------------------------------------------------
Note 5. Capital
The Fund offers Class A, Class B, Class C and Class Z
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. A special exchange privilege is
also available for
shareholders who qualify to purchase Class A shares at net
asset value. Class Z
shares are not subject to any sales or redemption charge and
are offered
exclusively for sale to a limited group of investors.
The Fund has 3 billion shares of $.01 par value common stock
authorized; equally
divided into four classes, designated Class A, Class B,
Class C and Class Z
shares.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ------------------------------ ------------ -----------
- ----
<S> <C> <C>
Six months ended June 30,
1997:
Shares sold................... 90,488,813 $
760,427,951
Shares issued in reinvestment
of dividends and
distributions............... 4,444,243
37,269,232
Shares reacquired............. (102,732,055)
(864,899,057)
------------ -----------
- ----
Net decrease in shares
outstanding before
conversions................. (7,798,999)
(67,201,874)
Shares issued upon conversion
from Class B................ 12,888,650
109,030,707
------------ -----------
- ----
Net increase in shares
outstanding................. 5,089,651 $
41,828,833
------------ -----------
- ----
------------ -----------
- ----
Year ended December 31, 1996:
Shares sold................... 131,810,870 $
1,086,630,794
Shares issued in reinvestment
of dividends and
distributions............... 8,520,554
69,971,317
Shares reacquired............. (156,945,056)
(1,293,344,935)
------------ -----------
- ----
<CAPTION>
Class A Shares Amount
- ------------------------------ ------------ -----------
- ----
<S> <C> <C>
Net decrease in shares
outstanding before
conversions................. (16,613,632)
(136,742,824)
Shares issued upon conversion
from Class B................ 39,887,682
327,279,932
------------ -----------
- ----
Net increase in shares
outstanding................. 23,274,050 $
190,537,108
------------ -----------
- ----
------------ -----------
- ----
<CAPTION>
Class B
- ------------------------------
Six months ended June 30,
1997:
Shares sold................... 64,535,523 $
540,132,292
Shares issued in reinvestment
of dividends and
distributions............... 5,695,153
47,672,490
Shares reacquired............. (64,277,648)
(538,678,176)
------------ -----------
- ----
Net increase in shares
outstanding before
conversion.................. 5,953,028
49,126,606
Shares reacquired upon
conversion into Class A..... (12,919,179)
(109,030,707)
------------ -----------
- ----
Net decrease in shares
outstanding................. (6,966,151) $
(59,904,101)
------------ -----------
- ----
------------ -----------
- ----
Year ended December 31, 1996:
Shares sold................... 115,557,562 $
947,645,600
Shares issued in reinvestment
of dividends and
distributions............... 13,114,875
107,516,476
Shares reacquired............. (112,666,220)
(923,331,159)
------------ -----------
- ----
Net increase in shares
outstanding before
conversion.................. 16,006,217
131,830,917
Shares reacquired upon
conversion into Class A..... (39,936,363)
(327,279,932)
------------ -----------
- ----
Net decrease in shares
outstanding................. (23,930,146) $
(195,449,015)
------------ -----------
- ----
------------ -----------
- ----
<CAPTION>
Class C
- ------------------------------
Six months ended June 30,
1997:
Shares sold................... 3,638,332 $
30,544,492
Shares issued in reinvestment
of dividends and
distributions............... 108,903
911,777
Shares reacquired............. (3,583,403)
(30,066,261)
------------ -----------
- ----
Net increase in shares
outstanding................. 163,832 $
1,390,008
------------ -----------
- ----
------------ -----------
- ----
Year ended December 31, 1996:
Shares sold................... 8,109,246 $
66,598,614
Shares issued in reinvestment
of dividends and
distributions............... 178,716
1,465,941
Shares reacquired............. (6,047,207)
(49,472,410)
------------ -----------
- ----
Net increase in shares
outstanding................. 2,240,755 $
18,592,145
------------ -----------
- ----
------------ -----------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
17
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class Z Shares Amount
- ------------------------------ ------------ -----------
- ----
<S> <C> <C>
Six months ended June 30,
1997:
Shares sold................... 2,931,539 $
24,536,945
Shares issued in reinvestment
of dividends and
distributions............... 172,961
1,451,265
Shares reacquired............. (2,579,735)
(21,583,878)
------------ -----------
- ----
Net increase in shares
outstanding................. 524,765 $
4,404,332
------------ -----------
- ----
------------ -----------
- ----
March 1, 1996(a) through
December 31, 1996:
Shares sold................... 6,826,290 $
56,521,902
Shares issued in reinvestment
of dividends and
distributions............... 270,685
2,219,260
Shares reacquired............. (3,314,330)
(27,182,639)
------------ -----------
- ----
Net increase in shares
outstanding................. 3,782,645 $
31,558,523
------------ -----------
- ----
------------ -----------
- ----
</TABLE>
- ---------------
(a) Commencement of offering of Class Z shares.
- ------------------------------------------------------------
- --------------------
-----
18
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class A
-
- ------------------------------------------------------------
- -----
Six Months
Ended Year Ended December 31,
June 30, ----------------------------------------------
- -----
1997 1996 1995 1994
1993
-
- --------- ---------- ---------- -------- ---
- -----
<S>
<C> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $
8.39 $ 8.19 $ 7.68 $ 8.70 $ 8.19
-
- --------- ---------- ---------- -------- ---
- -----
Income from investment operations
Net investment income..................................
.36 .75 .81 .80 .84
Net realized and unrealized gain (loss) on
investments.........................................
.10 .22 .53 (1.00) .52
-
- --------- ---------- ---------- -------- ---
- -----
Total from investment operations....................
.46 .97 1.34 (.20) 1.36
-
- --------- ---------- ---------- -------- ---
- -----
Less distributions
Dividends from net investment income...................
(.36) (.75) (.81) (.80)
(.84)
Distributions in excess of net investment income.......
(.02) (.02) (.02) (.02)
(.01)
Distributions from paid-in capital in excess of par....
- -- -- -- -- --
-
- --------- ---------- ---------- -------- ---
- -----
Total distributions.................................
(.38) (.77) (.83) (.82)
(.85)
-
- --------- ---------- ---------- -------- ---
- -----
Net asset value, end of period......................... $
8.47 $ 8.39 $ 8.19 $ 7.68 $ 8.70
-
- --------- ---------- ---------- -------- ---
- -----
-
- --------- ---------- ---------- -------- ---
- -----
TOTAL RETURN(a)........................................
5.45% 12.60% 18.17% (2.35)%
17.32%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................
$1,622,777 $1,564,429 $1,336,354 $161,435
$171,364
Average net assets (000)...............................
$1,575,401 $1,385,143 $1,056,555 $165,517
$149,190
Ratios to average net assets:
Expenses, including distribution fees...............
.68%(b) .72% .75% .78% .76%
Expenses, excluding distribution fees...............
.53%(b) .57% .60% .63% .61%
Net investment income...............................
8.80%(b) 9.20% 10.13% 9.86%
9.93%
For Classes A, B, C and Z shares:
Portfolio turnover rate.............................
50% 89% 78% 74% 85%
<CAPTION>
<S>
<C>
1992
---
- -----
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $
7.88
---
- -----
Income from investment operations
Net investment income..................................
.90
Net realized and unrealized gain (loss) on
investments.........................................
.32
---
- -----
Total from investment operations....................
1.22
---
- -----
Less distributions
Dividends from net investment income...................
(.90)
Distributions in excess of net investment income.......
- --
Distributions from paid-in capital in excess of par....
(.01)
---
- -----
Total distributions.................................
(.91)
---
- -----
Net asset value, end of period......................... $
8.19
---
- -----
---
- -----
TOTAL RETURN(a)........................................
15.97
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................
$106,188
Average net assets (000)............................... $
81,129
Ratios to average net assets:
Expenses, including distribution fees...............
.85%
Expenses, excluding distribution fees...............
.70%
Net investment income...............................
10.96%
For Classes A, B, C and Z shares:
Portfolio turnover rate.............................
68%
</TABLE>
- ---------------
(a) 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.
(b) Annualized.
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 19
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class B
-
- ------------------------------------------------------------
- ----------
Six Months
Ended Year Ended December 31,
June 30, ---------------------------------------------
- ----------
1997 1996 1995 1994
1993
-
- --------- ---------- ---------- ----------
- ----------
<S>
<C> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $
8.38 $ 8.18 $ 7.67 $ 8.69 $
8.19
-
- --------- ---------- ---------- ----------
- ----------
Income from investment operations
Net investment income..................................
.34 .71 .76 .76
.79
Net realized and unrealized gain (loss) on
investments.........................................
.10 .22 .53 (1.00)
.51
-
- --------- ---------- ---------- ----------
- ----------
Total from investment operations....................
.44 .93 1.29 (.24)
1.30
-
- --------- ---------- ---------- ----------
- ----------
Less distributions
Dividends from net investment income...................
(.34) (.71) (.76) (.76)
(.79)
Distributions in excess of net investment income.......
(.02) (.02) (.02) (.02)
(.01)
Distributions from paid-in capital in excess of par....
- -- -- -- --
- --
-
- --------- ---------- ---------- ----------
- ----------
Total distributions.................................
(.36) (.73) (.78) (.78)
(.80)
-
- --------- ---------- ---------- ----------
- ----------
Net asset value, end of period......................... $
8.46 $ 8.38 $ 8.18 $ 7.67 $
8.69
-
- --------- ---------- ---------- ----------
- ----------
-
- --------- ---------- ---------- ----------
- ----------
TOTAL RETURN(a)........................................
5.18% 11.97% 17.49% (2.92)%
16.54%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................
$2,562,200 $2,596,207 $2,730,903 $3,311,323
$3,745,985
Average net assets (000)...............................
$2,563,745 $2,652,883 $2,725,385 $3,566,709
$3,389,439
Ratios to average net assets:
Expenses, including distribution fees...............
1.28%(b) 1.32% 1.35% 1.38%
1.36%
Expenses, excluding distribution fees...............
.53%(b) .57% .60% .63%
.61%
Net investment income...............................
8.21%(b) 8.62% 9.56% 9.28%
9.35%
<CAPTION>
<S>
<C>
1992
---
- -------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...................
7.88
---
- -------
Income from investment operations
Net investment income..................................
.85
Net realized and unrealized gain (loss) on
investments.........................................
.32
---
- -------
Total from investment operations....................
1.17
---
- -------
Less distributions
Dividends from net investment income...................
(.85)
Distributions in excess of net investment income.......
- --
Distributions from paid-in capital in excess of par....
(.01)
---
- -------
Total distributions.................................
(.86)
---
- -------
Net asset value, end of period......................... $
8.19
---
- -------
---
- -------
TOTAL RETURN(a)........................................
15.30%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................
$2,887,698
Average net assets (000)...............................
$2,582,922
Ratios to average net assets:
Expenses, including distribution fees...............
1.45%
Expenses, excluding distribution fees...............
.70%
Net investment income...............................
10.29%
</TABLE>
- ---------------
(a) 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.
(b) Annualized.
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 20
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL
HIGH YIELD FUND, INC.
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<TABLE>
<CAPTION>
Class C
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- --
August 1,
Six Months 1994(c)
Ended Year Ended December 31, Through
June 30, ----------------------------- December
31,
1997 1996 1995 1994
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<S>
<C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...................
$ 8.38 $ 8.18 $ 7.67 $ 8.05
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Income from investment operations
Net investment income..................................
.34 .71 .76 .32
Net realized and unrealized gain (loss) on
investments.........................................
.10 .22 .53 (.37)
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Total from investment operations....................
.44 .93 1.29 (.05)
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Less distributions
Dividends from net investment income...................
(.34) (.71) (.76) (.32)
Distributions in excess of net investment income.......
(.02) (.02) (.02) (.01)
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Total distributions.................................
(.36) (.73) (.78) (.33)
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Net asset value, end of period.........................
$ 8.46 $ 8.38 $ 8.18 $ 7.67
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TOTAL RETURN(a)........................................
5.18% 11.97% 17.49% (0.79)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................
$ 45,172 $ 43,374 $ 24,021 $4,860
Average net assets (000)...............................
$ 39,713 $ 28,647 $ 12,063 $2,840
Ratios to average net assets:
Expenses, including distribution fees...............
1.28%(b) 1.32% 1.35% 1.48%(b)
Expenses, excluding distribution fees...............
.53%(b) .57% .60% .73%(b)
Net investment income...............................
8.22%(b) 8.60% 9.49% 9.80%(b)
<CAPTION>
Class Z
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Six Months March 1, 1996(d)
Ended Through
June 30, December 31,
1997 1996
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<S>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $
8.39 $ 8.34
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Income from investment operations
Net investment income..................................
.37 .63
Net realized and unrealized gain (loss) on
investments.........................................
.11 .07
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Total from investment operations....................
.48 .70
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Less distributions
Dividends from net investment income...................
(.37) (.63)
Distributions in excess of net investment income.......
(.02) (.02)
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Total distributions.................................
(.39) (.65)
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Net asset value, end of period......................... $
8.48 $ 8.39
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TOTAL RETURN(a)........................................
5.65% 8.77%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $
36,508 $ 31,748
Average net assets (000)............................... $
33,645 $ 28,978
Ratios to average net assets:
Expenses, including distribution fees...............
.53%(b) .57%(b)
Expenses, excluding distribution fees...............
.53%(b) .57%(b)
Net investment income...............................
8.97%(b) 9.31%(b)
</TABLE>
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(a) 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.
(b) Annualized.
(c) Commencement of offering of Class C shares.
(d) Commencement of offering of Class Z shares.
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See Notes to Financial Statements. 21
<PAGE>
Getting The Most From
Your Prudential Mutual Fund.
Some mutual fund shareholders won't ever read this -- they
don't read annual
and semi-annual reports. It's quite understandable. These
annual and semi-
annual reports are prepared to comply with Federal
regulations. They are often
written in language that is difficult to understand. So when
most people run
into those particularly daunting sections of these reports,
they don't read
them.
We think that's a mistake.
At Prudential Mutual Funds, we've made some changes to our
report to make it
easier to understand and more pleasant to read, in hopes
you'll find it
profitable to spend a few minutes familiarizing yourself
with your investment.
Here's what you'll find in the report:
At A Glance
Since an investment's performance is often a shareholder's
primary concern, we
present performance information in two different formats.
You'll find it first
on the "At A Glance" page where we compare the Fund and the
comparable average
calculated by Lipper Analytical Services, a nationally
recognized mutual fund
rating agency. We report both the cumulative total returns
and the average
annual total returns. The cumulative total return is the
total amount of
income and appreciation the Fund has achieved in various
time periods. The
average annual total return is an annualized representation
of the Fund's
performance -- it generally smoothes out returns and gives
you an idea how
much the Fund has earned in an average year, for a given
time period. Under
the performance box, you'll see legends that explain the
performance
information, whether fees and sales charges have been
included in returns, and
the inception dates for the Fund's share classes.
See the performance comparison charts at the back of the
report for more
performance information. And keep in mind that past
performance is not
indicative of future results.
Portfolio Manager's Report
The portfolio manager who invests your money for you reports
on successful --
and not-so-successful -- strategies in this section of your
report. Look for
recent purchases and sales here, as well as information
about the sectors the
portfolio manager favors and any changes that are on the
drawing board.
Portfolio Of Investments
This is where the report begins to look technical, but it's
really just a
listing of each security held at the end of the reporting
period, along with
valuations and other information. Please note that sometimes
we discuss a
security in the Portfolio Manager's Report that doesn't
appear in this listing
because it was sold before the close of the reporting
period.
Statement Of Assets And Liabilities
The balance sheet shows the assets (the value of the Fund's
holdings),
liabilities (how much the Fund owes) and net assets (the
Fund's equity, or
holdings after the Fund pays its debts) as of the end of the
reporting period.
It also shows how we calculate the net asset value per share
for each class of
shares. The net asset value is reduced by payment of your
dividend, capital
gain, or other distribution, but remember that the money or
new shares are
being paid or issued to you. The net asset value fluctuates
daily along with
the value of every security in the portfolio.
Statement Of Operations
This is the income statement, which details income (mostly
interest and
dividends earned) and expenses (including what you pay us to
manage your
money). You'll also see capital gains here -- both realized
and unrealized.
Statement Of Changes In Net Assets
This schedule shows how income and expenses translate into
changes in net
assets. The Fund is required to pay out the bulk of its
income to shareholders
every year, and this statement shows you how we do it --
through dividends
and distributions -- and how that affects the net assets.
This statement also
shows how money from investors flowed into and out of the
Fund.
Notes To Financial Statements
This is the kind of technical material that can intimidate
readers, but it
does contain useful information. The Notes provide a brief
history and
explanation of your Fund's objectives. In addition, they
also outline how
Prudential Mutual Funds prices securities. The Notes also
explain who manages
and distributes the Fund's shares, and more importantly, how
much they are
paid for doing so. Finally, the Notes explain how many
shares are outstanding
and the number issued and redeemed over the period.
Financial Highlights
This information contains many elements from prior pages,
but on a per share
basis. It is designed to help you understand how the Fund
performed and to
compare this year's performance and expenses to those of
prior years.
Independent Auditor's Report
Once a year, an outside auditor looks over our books and
certifies that the
information is fairly presented and complies with generally
accepted
accounting principles.
Tax Information
This is information which we report annually about how much
of your total
return is taxable. Should you have any questions, you may
want to consult a
tax advisor.
Performance Comparison
These charts are included in the annual report and are
required by the
Securities Exchange Commission. Performance is presented
here as a hypothetical
$10,000 investment in the Fund since its inception or for 10
years (whichever
is shorter). To help you put that return in context, we are
required to include
the performance of an unmanaged, broad based securities
index, as well. The
index does not reflect the cost of buying the securities it
contains or the
cost of managing a mutual fund. Of course, the index
holdings do not mirror
those of the fund -- the index is a broadly based reference
point commonly
used by investors to measure how well they are doing. A
definition of the
selected index is also provided. Investors generally cannot
invest directly
in an index.
<PAGE>
Getting The Most From
Your Prudential Mutual Fund.
When you invest through Prudential Mutual Funds, you receive
financial advice
through a Prudential Securities financial advisor or
Prudential/Pruco
Securities registered representative. Your advisor or
representative can
provide you with the following services:
There's No Reward Without Risk; But Is This Risk Worth It?
Your financial advisor or registered representative can help
you match the
reward you seek with the risk you can tolerate. And risk can
be difficult to
gauge -- sometimes even the simplest investments bear
surprising risks. The
educated investor knows that markets seldom move in just one
direction -- there
are times when a market sector or asset class will lose
value or provide little
in the way of total return. Managing your own expectations
is easier with help
from someone who understands the markets and who knows you!
Keeping Up With The Joneses.
A financial advisor or registered representative can help
you wade through the
numerous mutual funds available to find the ones that fit
your own individual
investment profile and risk tolerance. While the newspapers
and popular
magazines are full of advice about investing, they are aimed
at generic groups
of people or representative individuals, not at you
personally. Your financial
advisor or registered representative will review your
investment objectives
with you. This means you can make financial decisions based
on the assets and
liabilities in your current portfolio and your risk
tolerance -- not just based
on the current investment fad.
Buy Low, Sell High.
Buying at the top of a market cycle and selling at the
bottom are among the
most common investor mistakes. But sometimes it's difficult
to hold on to an
investment when it's losing value every month. Your
financial advisor or
registered representative can answer questions when you're
confused or worried
about your investment, and remind you that you're investing
for the long haul.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Directors
Edward D. Beach
Eugene C. Dorsey
Delayne Dedrick Gold
Robert F. Gunia
Harry A. Jacobs, Jr.
Donald D. Lennox
Mendel A. Melzer
Thomas T. Mooney
Thomas H. O'Brien
Richard A. Redeker
Nancy H. Teeters
Louis A. Weil, III
Officers
Richard A. Redeker, President
Susan C. Cote, Vice President
Thomas A. Early, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Deborah A. Docs, Assistant Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributor
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 LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Shereff, Friedman, Hoffman & Goodman LLP
919 Third Avenue
New York, NY 10022
The views expressed in this report and information about the
Fund's portfolio
holdings are for the period covered by this report and are
subject to change
thereafter.
The accompanying financial statements as of June 30, 1997
were not audited
and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to
prospective investors
unless preceded or accompanied by a current prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
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