<PAGE>
(ICON)
Prudential
High Yield
Fund, Inc.
SEMI
ANNUAL
REPORT
June 30, 1999
(LOGO)
<PAGE>
A Message from the Fund's President August 20, 1999
(PHOTO)
Dear Shareholder,
Prudential High Yield Fund posted positive returns for the
six-month period that ended on June 30, 1999. However, the
Fund's returns lagged its benchmark, the Lipper High Current
Yield Fund Average, because of its modest exposure to
lower-rated, high-yield bonds as well as some underperformance
in a couple of its telecommunications bonds. The following
report takes a closer look at bond market events that took
place during the six-month reporting period, and explains
how Prudential High Yield Fund was positioned accordingly.
Our integrated and expanded team
I would like to take this opportunity to tell you about some
changes we've made to our Fixed Income Group. Earlier in the
year, we combined our fixed-income areas into one integrated
group that will manage money for Prudential's retail and
institutional investors, as well as its policyholders.
This integrated group now manages approximately $145
billion in assets, making it one of the three largest
fixed-income money managers in the country. The expanded
depth, breadth and scale of our investment team also allow us
to tap the best talent and share investment ideas, proprietary
research, and analytical tools. The group is co-headed by
Senior Managing Directors Jim Sullivan, who is responsible
for portfolio management and credit research, and Jack Gaston,
who is in charge of risk management and quantitative research.
To utilize these integrated resources more effectively, Mr.
Sullivan recently organized the group into teams, each
specializing in a different sector of the fixed-income
market. The High Yield Sector team will now be responsible
for the day-to-day management of your Prudential High Yield
Fund. Many of the investment professionals who supported the
management of the Fund in the past are part of this new team
that will work together to share their knowledge and strive
to enhance performance.
Thank you for your continued confidence in Prudential mutual
funds. I firmly believe that the group's combined resources
and our new team approach will make us a powerhouse in the
world of fixed-income investing across all sectors.
Sincerely,
John R. Strangfeld
President and Chief Investment Officer
Prudential High Yield Fund, Inc.
<PAGE>
Performance Review
<TABLE>
Cumulative Total Returns1 As of 6/30/99
<CAPTION>
Six One Five Ten Since
Months Year Years Years Inception2
<S> <C> <C> <C> <C> <C>
Class A 2.55% -1.43% 53.15% N/A 149.15%
Class B 2.31 -1.97 48.74 122.59% 547.50
Class C 2.31 -1.97 N/A N/A 48.59
Class Z 2.81 -1.22 N/A N/A 26.32
Lipper High Current
Yield Fund Avg.3 3.56 -1.45 50.80 143.20 ***
</TABLE>
<TABLE>
Average Annual Total Returns1 As of 6/30/99
<CAPTION>
One Five Ten Since
Year Years Years Inception2
<S> <C> <C> <C> <C>
Class A -5.37% 8.01% N/A 9.68%
Class B -6.97 8.12 8.33% 9.66
Class C -3.95 N/A N/A 8.18
Class Z -1.22 N/A N/A 7.27
</TABLE>
<TABLE>
Distributions and Yields As of 6/30/99
<CAPTION>
Total Distributions 30-Day
Paid for Six Mos. SEC Yield
<S> <C> <C>
Class A $0.38 9.49%
Class B $0.36 9.37%
Class C $0.36 9.28%
Class Z $0.39 10.14%
</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 Investments Fund Management LLC and
Lipper, Inc. The cumulative total returns do not take into
account sales charges. The average annual total returns do
take into account applicable sales charges. The Fund charges
a maximum front-end sales charge of 4% for Class A shares.
Class B shares are subject to a declining contingent deferred
sales charge (CDSC) of 5%, 4%, 3%, 2%, 1%, and 1% for six
years. Class B shares will automatically convert to Class
A shares, on a quarterly basis, approximately seven years
after purchase. Class C shares are subject to a front-end
sales charge of 1% and a CDSC of 1% for 18 months. Class C
shares bought before November 2, 1998, have a 1% CDSC if
sold within one year. Class Z shares are not subject to a
sales charge or distribution and service (12b-1) fees.
2 Inception dates: Class A, 1/22/90; Class B, 3/29/79;
Class C, 8/1/94; and Class Z, 3/1/96.
3 Lipper average returns are for all funds in each share
class for the six-month, one-, five-, and ten-year periods
in the High Current Yield Fund category.
***Lipper Since Inception returns are 164.14% for Class A,
655.75% for Class B, 51.12% for Class C, and 26.80% for
Class Z, based on all funds in each share class.
Inflation fears pressured bond markets
The U.S. economy expanded rapidly during the first three
months of 1999, then slowed to a still respectable pace of
growth in the second quarter. Such economic vigor might
ignite higher inflation, which if left unchecked, could
eventually pose a serious threat to the economic expansion.
This concern led the Federal Reserve to increase the Federal
funds rate--the rate U.S. banks charge each other for overnight
loans--by a quarter of a percentage point to 5.00% on June 30,
1999. Boosting this key rate raised the cost of borrowing,
which in time, could help curb economic growth and avoid
spiraling inflation. In preparation for this change in
monetary policy, investors drove yields of some bonds
higher (and their prices lower). This trend caused junk
bonds to erase some of their early price increases,
particularly during May and June.
Junk bonds post best return among U.S. debt markets
Amid these difficult market conditions, high-yield bonds
performed better than other U.S. debt markets for the six
months, based on Lehman Brothers indexes. This difference
in performance largely reflects the fact that high-yield
bonds--particularly lower-quality ones such as those rated
CCC--tend to be less affected than most other fixed-income
securities by changes in the level of interest rates. Junk
bonds, however, are very responsive to changes in the
fortunes of their issuers. In fact, the junk bond default
rate climbed over the past six months as some companies
were no longer able to make timely interest and principal
payments on their bonds.
Buying opportunities emerged as bond markets sold off
We took steps to improve the Fund's credit-quality exposure
and made modest shifts in its industry weightings. The BB
rating is the highest ratings category for junk bonds.
However, given their relative interest-rate sensitivity,
prices of these bonds declined the most among high-yield
bonds as U.S. debt markets sold off. We took advan-
<PAGE>
age of this fact by going bargain-hunting, which increased
the Fund's holdings of BB-rated bonds from 19% of its total
investments as of December 31, 1998 to 21% as of June 30,
1999. Bonds rated single-B, the second highest junk bond
ratings category, fell from 60% to 56%. Lower-quality
CCC-rated bonds stood at 7% at the end of June. CCC-rated
debt securities were among the best performing credit-quality
sector of the high-yield market for the six-month period,
based on the Lehman Brothers U.S. Corporate High Yield
Index. However, we limit the Fund's exposure to these
bonds because they are considered to carry substantial
credit risk. Had we added more of them, the Fund's
returns would have probably been higher, but at the
cost of heightening its credit risk profile.
Sell-off in telecommunications bonds hurt the Fund
As for industry weightings, we decreased healthcare bonds
from 7% of the Fund's total investments as of December 31,
1998 to 5% as of June 30, 1999, out of concern that
regulatory changes in the United States might hurt that
industry's profitability. By contrast, telecommunications
bonds comprised 17% of the Fund's total investments at the
end of June--its largest exposure. Prices of some of our
telecommunications bonds tumbled, hurting the Fund's
performance. Nevertheless, we still favor the industry
because of its solid potential for earnings growth and
the likelihood that more telecommunications companies
will become takeover targets.
We maintained a modest exposure to emerging market debt
securities that included bonds of South Korea's Pohang
Iron & Steel Co, Ltd. (Posco). Posco's bonds rallied,
helped by Standard & Poor's move to upgrade the company's
long-term foreign currency rating from BB to BBB-minus,
the lowest investment-grade rating. S&P cited several
factors, including Posco's satisfactory financial
performance, despite a severe economic recession
in South Korea.
Five Largest Issuers
Expressed as a percentage of net assets as of 6/30/99
Rogers Cablesystems, Inc. 2.2%
CSC Holdings, Inc. 2.1
AES Corp. 1.8
Nextel Communications Inc. 1.6
California Fed. Corp. 1.2
Portfolio Composition
Expressed as a percentage of total investments* as of 6/30/99
BBB 1%
BB 21
B 56
CCC 7
Not Rated 7
Equity & Other 5
Cash & Equivalents 3
*Excludes cash received as a result of securities on loan
Investment Goals and Style
The Fund's primary investment objective is to maximize current
income through investment in a diversified portfolio of
high-yield, fixed-income securities. As a secondary
investment objective, the Fund seeks capital appreciation.
The Fund invests primarily in corporate bonds rated BB or
lower by independent rating agencies. Bonds rated BB or
lower are below investment grade and are commonly known
as junk bonds. As a result, they 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 objectives.
1
<PAGE>
Review Cont'd.
Looking Ahead
We expect high-yield bonds to perform well on a relative basis
Although the robust U.S. economy helped to ignite the bond
market sell-off, we believe continued solid economic growth
is ultimately positive for the earnings outlook of companies
that issue high-yield bonds. If the economic expansion remains
on track and interest rates move neither sharply higher nor
lower, we believe high-yield bonds could continue to be among
the best performing fixed-income markets in the United States.
High-yield bonds still represent a good investment opportunity
for investors looking to diversify their portfolios with
securities that have a low correlation to trends in other
debt and equity markets.
2
<PAGE>
Portfolio of Investments as of
June 30, 1999 (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--95.6%
CORPORATE BONDS--89.8%
- ------------------------------------------------------------------------------------------------------------------------------
Aerospace--1.0%
BE Aerospace, Inc., Sr. Sub. Notes B1 9.50% 11/01/08 $ 6,000 (g) $ 6,120,000
Compass Aerospace Corp., Sr. Sub. Notes B3 10.125 4/15/05 5,500 4,950,000
Sequa Corp., Sr. Sub. Notes B1 9.375 12/15/03 29,615 30,355,375
--------------
41,425,375
- ------------------------------------------------------------------------------------------------------------------------------
Automotive Parts--2.6%
Foamex JPS Automotive LLC., Sr. Notes B1 11.125 6/15/01 18,700 19,751,875
Hayes Lemmerz Int'l., Inc.,
Sr. Sub. Notes B2 11.00 7/15/06 32,000 34,720,000
Sr. Sub. Notes B2 9.125 7/15/07 4,875 4,894,688
Lear Corp.,
Sr. Notes Ba1 7.96 5/15/05 4,900 4,740,750
Sr. Notes Ba1 8.11 5/15/09 12,350 (g) 11,825,125
Paragon Corporate Holdings, Inc., Sr. Notes B3 9.625 4/01/08 7,500 4,350,000
Standyne Automotive Corp., Sr. Sub. Notes Caa1 10.25 12/15/07 10,550 9,073,000
Venture Holdings, Sr. Notes B2 9.50 7/01/05 15,150 14,506,125
--------------
103,861,563
- ------------------------------------------------------------------------------------------------------------------------------
Broadcasting & Other Media--5.9%
American Lawyer Media, Inc.,
Sr. Disc. Notes, Zero Coupon (until 12/15/02) B3 12.25 12/15/08 10,500 6,903,750
Sr. Sub. Notes B1 9.75 12/15/07 8,350 8,350,000
AMSC Acquisition, Inc., Sr. Notes NR 12.25 4/01/08 10,000 8,100,000
Capstar Radio Broadcasting,
Sr. Disc. Notes, Zero Coupon (until 2/1/02) B-(a) 12.75 2/01/09 16,675 14,090,375
Sr. Sub. Notes B2 9.25 7/01/07 12,000 12,405,000
Chancellor Media Corp.,
Sr. Notes Ba2 8.00 11/01/08 9,000 8,842,500
Sr. Sub. Notes B1 9.00 10/01/08 10,775 10,909,687
Garden State Newspapers, Inc.,
Sr. Sub. Notes B1 8.75 10/01/09 600 573,000
Sr. Sub. Notes B1 8.625 7/01/11 6,500 (g) 6,077,500
Globo Communicacoes, Sr. Notes (Brazil) B2 10.50 12/20/06 6,000 (i) 4,290,000
Grupo Televisa S.A., Sr. Disc. Notes (Mexico), Zero
Coupon
(until 5/15/01) Ba2 13.25 5/15/08 9,000 (i) 7,290,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments as of
June 30, 1999 (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>
- ------------------------------------------------------------------------------------------------------------------------------
Broadcasting & Other Media (cont'd.)
Lamar Advertising Co., Sr. Sub. Notes B1 9.625% 12/01/06 $ 8,500 $ 8,691,250
Liberty Group Publishing, Inc.,
Sr. Disc. Deb., Zero Coupon (until 2/1/03) Caa1 11.625 2/01/09 12,150 6,561,000
Sr. Sub. Notes B3 9.375 2/01/08 8,050 7,567,000
Lin Holdings Corp., Sr. Disc. Notes, Zero Coupon (until
3/1/03) B3 10.00 3/01/08 17,400 11,614,500
Mail-Well I Corp., Sr. Sub. Notes B1 8.75 12/15/08 8,000 7,720,000
Production Resource LLC., Sr. Sub. Notes Caa2 11.50 1/15/08 15,000 15,000,000
SFX Entertainment Inc.,
Sr. Sub. Notes B3 10.75 5/15/06 21,588 23,476,950
Sr. Sub. Notes B3 9.125 2/01/08 24,000 23,520,000
Shop At Home, Inc., Sr. Sec'd. Notes B1 11.00 4/01/05 2,900 2,900,000
Spectrasite Holdings, Inc., Sr. Disc. Notes, Zero Coupon
(until 4/15/04) NR 11.25 4/15/09 5,500 (g) 3,121,250
Sun Media Corp., Sr. Sub. Notes (Canada) B2 9.50 5/15/07 9,522 (i) 9,855,270
Transwestern Publishing Co., Sr. Sub. Notes B2 9.625 11/15/07 5,250 5,092,500
World Color Press, Inc.,
Sr. Sub. Notes B1 8.375 11/15/08 4,750 4,643,125
Sr. Sub. Notes BB-(a) 7.75 2/15/09 13,500 12,555,000
Young America Corp., Sr. Sub. Notes Caa1 11.625 2/15/06 9,400 6,768,000
--------------
236,917,657
- ------------------------------------------------------------------------------------------------------------------------------
Building & Related Industries--3.7%
Ainsworth Lumber Ltd., Sr. Notes B3 12.50 7/15/07 15,000 16,762,500
American Builders, Sr. Sub. Notes B3 10.625 5/15/07 5,000 4,700,000
Beazer Homes USA, Inc., Sr. Notes B1 8.875 4/01/08 6,000 5,700,000
Building Materials Corp., Sr. Notes Ba3 8.00 12/01/08 8,000 7,460,000
Congoleum Corp., Sr. Notes B1 8.625 8/01/08 6,000 5,700,000
D.R. Horton, Inc.,
Sr. Notes Ba1 8.375 6/15/04 10,170 10,093,725
Sr. Notes Ba1 8.00 2/01/09 8,850 8,363,250
Del Webb Corp., Sr. Sub. Deb. B2 9.375 5/01/09 7,750 (g) 7,343,125
Falcon Building Prod., Inc.,
Sr. Sub. Disc. Notes, Zero Coupon (until 6/15/02) B3 10.50 6/15/07 7,850 5,259,500
Sr. Sub. Notes B3 9.50 6/15/07 15,150 14,373,563
Falcon Holdings Group, L.P.,
Sr. Disc. Notes, Zero Coupon (until 4/15/03) B2 9.285 4/15/10 13,500 9,382,500
Sr. Notes B2 8.375 4/15/10 5,000 4,975,000
Kaufman & Broad Home Corp., Sr. Sub. Notes Ba3 9.625 11/15/06 27,750 (g) 28,790,625
Kevco, Inc., Sr. Sub. Notes Caa2 10.375 12/01/07 11,000 7,645,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as of
June 30, 1999 (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 (cont'd.)
Nortek, Inc.,
Sr. Notes B1 9.25% 3/15/07 $ 11,405 $ 11,462,025
Sr. Notes B1 9.125 9/01/07 1,750 1,750,000
--------------
149,760,813
- ------------------------------------------------------------------------------------------------------------------------------
Cable--9.2%
Adelphia Communications Corp.,
Sr. Notes B1 8.125 7/15/03 3,120 3,042,000
Sr. Notes B+(a) 9.50 2/15/04 342 353,766
Sr. Notes B1 10.50 7/15/04 11,300 12,062,750
Sr. Notes B1 7.75 1/15/09 630 582,750
Sr. Notes B1 7.875 5/01/09 8,000 7,420,000
Cablevision S.A., Notes (Argentina) Ba3 13.75 5/01/09 8,500 (i) 7,650,000
Charter Communications Holdings LLC.,
Sr. Disc. Notes, Zero Coupon (until 4/1/04) B2 9.92 4/01/11 27,400 16,851,000
Sr. Notes B2 8.625 4/01/09 20,250 19,364,062
Coaxial Communications, Inc., Sr. Notes B3 10.00 8/15/06 5,750 5,865,000
Comcast UK Cable Corp., Sr. Disc. Deb., Zero Coupon
(until 11/15/00) B2 11.20 11/15/07 19,900 17,910,000
CSC Holdings, Inc., Sr. Sub. Notes B1 9.25 11/01/05 13,650 14,264,250
Diamond Cable Co. (United Kingdom),
Sr. Disc. Notes B3 13.25 9/30/04 8,660 (i) 8,854,850
Sr. Disc. Notes, Zero Coupon (until 12/15/00) B3 11.75 12/15/05 9,275 (i) 8,277,938
Diva Systems Corp., Sr. Disc. Notes, Zero Coupon (until
3/1/03) NR 12.625 3/01/08 15,900 4,611,000
International Cabletel, Inc., Sr. Disc. Notes, Zero
Coupon
(until 4/15/00) B3 12.75 4/15/05 19,450 (g) 18,380,250
Mediacom LLC./Capital Corp., Sr. Notes B2 7.875 2/15/11 11,250 10,068,750
Multicanal S.A., Notes (Argentina) Ba3 13.125 4/15/09 5,750 (i) 5,232,500
NTL, Inc.,
Sr. Notes, Zero Coupon (until 10/1/03) B3 12.375 10/01/08 5,750 (g) 3,809,375
Sr. Notes, Zero Coupon (until 4/1/03) B3 9.75 4/01/08 25,500 (g) 17,085,000
Rogers Cablesystems, Inc. (Canada),
Sr. Sec'd. Deb. Ba3 10.00 12/01/07 10,500 (i) 11,287,500
Sr. Sec'd. Deb. Ba3 10.125 9/01/12 24,575 (i) 26,295,250
Sr. Sec'd. Notes Ba3 10.00 3/15/05 49,000 (i) 52,430,000
Rogers Cantel, Inc. (Canada),
Deb. Ba3 9.375 6/01/08 38,400 (i) 39,744,000
Sr. Sub. Notes B2 8.80 10/01/07 4,750 (i) 4,750,000
Telewest plc, Sr. Disc. Deb. (United Kingdom), Zero
Coupon
(until 10/1/00) B1 11.00 10/01/07 500 (i) 445,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5
<PAGE>
Portfolio of Investments as of
June 30, 1999 (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>
- ------------------------------------------------------------------------------------------------------------------------------
Cable (cont'd.)
Telewest Communications plc, Sr. Disc. Notes, Zero Coupon
(until 4/15/04) B1 9.25% 4/15/09 $ 9,350 $ 6,264,500
TVN Entertainment Corp., Sr. Notes NR 14.00 8/01/08 15,000 (d) 12,450,000
United Int'l. Holdings, Inc., Sr. Disc. Notes, Zero
Coupon
(until 2/15/03) B3 10.75 2/15/08 56,500 37,007,500
--------------
372,358,991
- ------------------------------------------------------------------------------------------------------------------------------
Capital Goods--1.3%
Allied Waste North America, Inc.,
Sr. Notes Ba2 7.625 1/01/06 9,000 8,415,000
Sr. Notes Ba2 7.875 1/01/09 25,500 (g) 23,523,750
Applied Power, Inc., Sr. Sub. Notes B1 8.75 4/01/09 8,500 8,245,000
Continental Global Group, Inc., Sr. Notes B2 11.00 4/01/07 10,000 8,350,000
Neenah Corp., Sr. Sub. Notes B3 11.125 5/01/07 1,500 1,477,500
Newcor, Inc., Sr. Sub. Notes B3 9.875 3/01/08 2,170 1,909,600
Thermadyne Holdings, Sr. Disc. Notes, Zero Coupon (until
6/1/03) Caa1 12.50 6/01/08 2,000 970,000
--------------
52,890,850
- ------------------------------------------------------------------------------------------------------------------------------
Casinos--2.8%
Aladdin Gaming, Sr. Disc. Notes, Zero Coupon (until
3/1/03) Caa2 13.50 3/01/10 19,000 8,170,000
Alliance Gaming Corp., Sr. Sub. Notes B3 10.00 8/01/07 4,350 3,045,000
Aztar Corp., Sr. Sub. Notes B1 8.875 5/15/07 3,500 3,360,000
Casino Magic Corp., First Mtge. Notes B1 13.00 8/15/03 1,250 1,437,500
Fitzgeralds Gaming Corp., Sr. Notes Caa3 12.25 12/15/04 14,000 (e) 7,700,000
Harrahs Operating, Inc., Gtd. Sr. Sub. Notes Ba2 7.875 12/15/05 12,250 (g) 11,943,750
Horseshoe Gaming LLC.,
Sr. Sub. Notes B3 9.375 6/15/07 7,100 7,242,000
Sr. Sub. Notes B2 8.625 5/15/09 13,450 (g) 13,012,875
Isle of Capri Casinos, Inc., Sr. Sub. Notes B3 8.75 4/15/09 8,400 (g) 7,896,000
MGM Grand, Inc., Sr. Notes Ba1 6.875 2/06/08 7,550 6,795,000
Mohegan Tribal Gaming Auth.,
Sr. Notes Ba2 8.125 1/01/06 4,000 3,940,000
Sr. Sub. Notes Ba3 8.75 1/01/09 5,125 5,112,188
Trump Atlantic City Assocs.,
First Mtge. Notes B2 11.25 5/01/06 26,600 (g) 23,807,000
First Mtge. Notes, Ser. B B2 11.25 5/01/06 5,000 4,475,000
Trumps Castle Funding, Inc., First Mtge. Notes Caa 11.75 11/15/03 3,800 3,230,000
--------------
111,166,313
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6
<PAGE>
Portfolio of Investments as of
June 30, 1999 (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>
- ------------------------------------------------------------------------------------------------------------------------------
Chemicals--3.3%
Huntsman ICI Chemicals LLC.,
Sr. Sub. Notes B2 9.50% 7/01/07 $ 19,000 $ 18,002,500
Sr. Sub. Notes B2 10.125 7/01/09 17,125 (g) 17,274,844
Lyondell Chemical Co.,
Sr. Sec'd. Notes Ba3 9.625 5/01/07 5,750 (g) 5,879,375
Sr. Sec'd. Notes Ba3 9.875 5/01/07 28,500 (g) 28,998,750
Sr. Sub. Notes B2 10.875 5/01/09 3,750 (g) 3,871,875
Polymer Group, Inc., Sr. Sub. Notes B2 8.75 3/01/08 13,000 12,317,500
Sterling Chemical Holdings, Inc.,
Sr. Disc. Notes, Zero Coupon (until 8/15/01) Caa1 13.50 8/15/08 8,810 (g) 2,907,300
Sr. Sub. Notes B3 11.75 8/15/06 6,000 (g) 4,590,000
Terra Industries, Inc., Sr. Notes Ba3 10.50 6/15/05 20,600 (g) 20,394,000
ZSC Specialty Chemical plc, Sr. Notes B2 11.00 7/01/09 17,335 (g) 17,465,012
--------------
131,701,156
- ------------------------------------------------------------------------------------------------------------------------------
Computer Services--0.8%
Rhythms Netconnections, Inc., Sr. Notes CCC+(a) 12.75 4/15/09 7,500 7,012,500
Viasystems, Inc., Sr. Sub. Notes Caa1 9.75 6/01/07 26,750 23,406,250
--------------
30,418,750
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Products--3.1%
Borden, Inc.,
Notes Ba1 9.20 3/15/21 13,500 12,783,285
Sr. Notes B1 9.50 5/01/05 3,175 3,111,500
Consumers Int'l., Inc., Sr. Sec'd. Notes Ba3 10.25 4/01/05 19,100 19,434,250
Corning Consumer Prod. Co., Sr. Sub. Notes B3 9.625 5/01/08 16,000 13,880,000
Desa Int'l., Inc., Sr. Sub. Notes Caa1 9.875 12/15/07 11,500 8,510,000
Holmes Prod. Corp., Sr. Sub. Notes B3 9.875 11/15/07 9,825 (g) 9,579,375
Iron Mountain, Inc., Sr. Sub. Notes B2 8.25 7/01/11 7,400 7,030,000
Pierce Leahy Command Co., Sr. Notes B3 8.125 5/15/08 4,250 4,005,625
Revlon Consumer Prod. Corp.,
Sr. Notes B2 9.00 11/01/06 14,150 (g) 14,008,500
Sr. Sub. Notes B3 8.625 2/01/08 8,000 7,560,000
Sealy Mattress Co., Sr. Sub. Disc. Notes, Zero Coupon
(until 12/15/02) NR 10.875 12/15/07 10,000 6,500,000
Waste Systems Int'l, Inc., Sr. Sub. Notes Caa1 11.50 1/15/06 11,000 10,972,500
Windmere Durable Holdings, Inc., Sr. Notes B3 10.00 7/31/08 7,000 6,650,000
--------------
124,025,035
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7
<PAGE>
Portfolio of Investments as of
June 30, 1999 (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--4.9%
Columbia/HCA Healthcare Corp., Deb. Ba2 7.50% 11/15/95 $ 3,630 $ 2,767,149
Dade Int'l., Inc., Sr. Sub. Notes B2 11.125 5/01/06 40,510 42,535,500
Express Scripts, Inc., Sr. Notes Ba2 9.625 6/15/09 5,500 5,555,000
Fresenius Med. Care Capital Trust, Gtd. Notes NR 9.00 12/01/06 37,365 36,991,350
Grahm Field Health Prod., Inc., Sr. Sub. Notes Caa1 9.75 8/15/07 11,890 8,144,650
Harborside Healthcare Corp., Sr. Sub. Disc. Notes, Zero
Coupon
(until 8/1/03) B3 11.00 8/01/08 11,750 4,465,000
ICN Pharmaceuticals, Inc., Sr. Notes Ba3 8.75 11/15/08 13,000 12,805,000
Integrated Health Svcs., Inc., Sr. Sub. Notes B2 10.25 4/30/06 21,600 16,416,000
Lifepoint Hospitals Holdings, Inc., Sr. Sub. Notes B3 10.75 5/15/09 3,425 (g) 3,484,937
Magellan Health Svcs., Inc., Sr. Sub. Notes Caa1 9.00 2/15/08 37,000 31,820,000
Mariner Post Acute Network, Inc.,
Sr. Sub. Disc. Notes, Zero Coupon (until 11/1/02) B3 10.50 11/01/07 15,600 1,872,000
Sr. Sub. Notes B3 9.50 11/01/07 3,000 570,000
Mediq, Inc., Gtd. Notes B3 11.00 6/01/08 1,800 1,404,000
Tenet Healthcare Corp., Sr. Sub. Notes Ba3 8.625 1/15/07 23,500 (g) 22,912,500
Triad Hospitals Holdings, Inc., Sr. Sub. Notes B3 11.00 5/15/09 5,090 5,166,350
--------------
196,909,436
- ------------------------------------------------------------------------------------------------------------------------------
Energy--9.6%
AES Corp.,
Sr. Notes Ba1 9.50 6/01/09 16,650 17,107,875
Sr. Sub. Exch. Ba1 8.375 8/15/07 10,000 (g) 9,375,000
Sr. Sub. Notes Ba1 10.25 7/15/06 26,000 26,650,000
Sr. Sub. Notes Ba1 8.50 11/01/07 20,000 18,800,000
Anker Coal Group, Inc., Sr. Notes Ca 9.75 10/01/07 10,750 4,837,500
Benton Oil & Gas Co., Sr. Notes B3 11.625 5/01/03 11,300 8,249,000
Calpine Corp.,
Sr. Notes Ba2 7.875 4/01/08 1,050 1,008,000
Sr. Notes Ba2 7.75 4/15/09 5,000 4,737,500
Chesapeake Energy Corp., Sr. Notes B3 9.625 5/01/05 14,300 13,370,500
Chiles Offshore Corp. LLC., Sr. Notes B3 10.00 5/01/08 5,000 4,000,000
Cliffs Drilling Co., Sr. Notes Ba2 10.25 5/15/03 12,800 12,396,000
CMS Energy Corp.,
Sr. Notes Ba3 8.375 7/01/03 5,000 (g) 4,950,000
Sr. Notes Ba3 7.50 1/15/09 5,550 (g) 5,106,000
DI Industies, Inc., Sr. Notes B1 8.875 7/01/07 13,250 11,726,250
Gothic Prod. Corp., Sr. Sec'd Notes B3 11.125 5/01/05 9,500 8,455,000
Grey Wolf, Inc., Sr. Notes B1 8.875 7/01/07 3,450 3,053,250
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 8
<PAGE>
Portfolio of Investments as of
June 30, 1999 (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>
- ------------------------------------------------------------------------------------------------------------------------------
Energy (cont'd.)
Gulf Canada Resources Ltd.,
Sr. Sub. Deb. Ba2 9.25% 1/15/04 $ 5,000 (g) $ 5,049,750
Sr. Sub. Deb. Ba2 9.625 7/01/05 5,000 5,100,000
Houston Expl. Co., Sr. Sub. Notes B2 8.625 1/01/08 7,000 6,755,000
Key Energy Group, Inc., Sr. Sub. Notes NR 5.00 9/15/04 4,000 2,540,000
Leviathon Gas Pipeline/Finance Corp., Sr. Sub. Notes B2 10.375 6/01/09 3,400 (g) 3,502,000
Nuevo Energy Co., Sr. Sub. Notes B1 9.50 4/15/06 4,000 (g) 4,000,000
Ocean Rig, Gtd. Sr. Sec'd. Notes B3 10.25 6/01/08 16,000 (g) 12,800,000
P & L Coal Holdings Corp.,
Sr. Notes Ba3 8.875 5/15/08 21,900 21,954,750
Sr. Sub. Notes B2 9.625 5/15/08 12,250 12,188,750
Parker Drilling Co., Sr. Notes B1 9.75 11/15/06 14,500 (g) 13,485,000
Plains Resources, Inc., Sr. Sub. Notes B2 10.25 3/15/06 11,000 11,110,000
Pogo Producing Co., Sr. Sub. Notes B2 8.75 5/15/07 15,600 14,820,000
Pride Int'l, Inc., Sr. Notes Ba3 10.00 6/01/09 6,500 (g) 6,613,750
RBF Finance, Sr. Sec'd. Notes Ba3 11.375 3/15/09 10,000 10,350,000
R & B Falcon Corp.,
Sr. Notes Ba3 12.25 3/15/06 7,290 7,545,150
Sr. Notes Ba3 9.50 12/15/08 12,330 11,528,550
Snyder Oil Corp., Sr. Sub. Notes B2 8.75 6/15/07 11,000 10,890,000
Tesoro Petroleum Corp., Sr. Sub. Notes B1 9.00 7/01/08 16,000 15,680,000
Universal Compression Holdings,
Sr. Disc. Notes, Zero Coupon (until 2/15/03) B2 9.875 2/15/08 22,850 14,167,000
Sr. Disc. Notes, Zero Coupon (until 2/15/03) B3 11.375 2/15/09 7,300 4,380,000
Veritas DGC, Inc., Sr. Notes Ba3 9.75 10/15/03 6,300 6,457,500
Vintage Petroleum, Inc.,
Sr. Sub. Notes B1 9.00 12/15/05 10,000 9,900,000
Sr. Sub. Notes B1 8.625 2/01/09 16,185 (g) 15,739,912
York Power Funding, Sr. Sec'd. Notes (Cayman Islands) NR 12.00 10/30/07 10,000 (i) 10,000,000
--------------
390,378,987
- ------------------------------------------------------------------------------------------------------------------------------
Financial Services--1.1%
Americredit Corp., Gtd. Sr. Sub. Notes Ba1 9.25 2/01/04 14,450 (g) 14,630,625
Sr. Notes Ba1 9.875 4/15/06 5,500 5,651,250
Amresco Mtg., Inc., Sr. Sub. Notes (cost $4,900,000;
purchased 2/24/98) Caa3 9.875 3/15/05 4,900 (b) 3,675,000
Delta Financial Corp., Sr. Notes B3 9.50 8/01/04 10,450 (g) 8,987,000
Fugi JGB Investment LLC., Pref'd. Notes Ba1 9.87 12/31/49 8,250 7,239,375
Nationwide, Inc., Sr. Notes B3 10.25 1/15/08 4,715 3,300,500
--------------
43,483,750
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 9
<PAGE>
Portfolio of Investments as of
June 30, 1999 (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>
- ------------------------------------------------------------------------------------------------------------------------------
Food & Beverage--2.7%
Advantica Restaurant Group, Inc., Sr. Notes B2 11.25% 1/15/08 $ 10,375 (g) $ 9,960,000
Ameriserve Food Dist., Inc.,
Sr. Notes B1 8.875 10/15/06 7,700 7,007,000
Sr. Sub. Notes B3 10.125 7/15/07 21,045 17,677,800
Carrols Corp., Sr. Sub. Notes B2 9.50 12/01/08 13,900 13,170,250
CKE Restaurants, Inc., Gtd. Notes B1 9.125 5/01/09 8,500 7,947,500
Cott Corp., Sr. Notes B1 8.50 5/01/07 4,500 4,230,000
Fresh Foods, Inc., Sr. Sub. Notes B3 10.75 6/01/06 9,200 9,200,000
Grupo Azucarero S.A., Sr. Notes (Mexico) Caa2 11.50 1/15/05 7,250 (i) 3,262,500
Packaged Ice, Inc., Sr. Notes B3 9.75 2/01/05 8,500 8,330,000
PSF Holdings LLC., Sr. Sec'd. Notes (cost $11,658,267;
purchased 5/20/94 through 3/15/99) NR 11.00 9/17/03 11,658 (b) 12,357,763
Purina Mills, Inc., Sr. Sub. Notes Caa1 9.00 3/15/10 19,500 15,015,000
--------------
108,157,813
- ------------------------------------------------------------------------------------------------------------------------------
Industrials--1.2%
Anchor Lamina, Inc., Sr. Sub. Notes B3 9.875 2/01/08 10,750 9,890,000
Eagle-Picher Industries, Inc., Sr. Sub. Notes B3 9.375 3/01/08 11,000 (g) 10,450,000
Great Lakes Carbon Corp.,
Sr. Disc. Deb., Zero Coupon (until 5/15/03) Caa1 13.125 5/15/09 7,200 3,888,000
Sr. Sub. Notes B3 10.25 5/15/08 5,000 4,925,000
Thermadyne Mfg., Sr. Sub. Notes B3 9.875 6/01/08 9,000 8,010,000
Trench Electric S.A., Gtd. Sr. Sub. Notes (Netherlands) B3 10.25 12/15/07 10,000 (i) 9,300,000
Westinghouse Air Brake Co., Sr. Notes Ba3 9.375 6/15/05 2,500 2,537,500
--------------
49,000,500
- ------------------------------------------------------------------------------------------------------------------------------
Leisure & Tourism--4.7%
AMC Entertainment, Inc., Sr. Sub. Notes B3 9.50 2/01/11 8,750 (g) 8,246,875
Ballys Total Fitness Holdings Corp.,
Sr. Sub. Notes NR 9.875 10/15/07 1,000 970,000
Sr. Sub. Notes, Ser. C NR 9.875 10/15/07 21,000 20,370,000
Carmike Cinemas, Inc., Sr. Sub. Notes B2 9.375 2/01/09 4,250 (g) 4,122,500
Extended Stay America, Inc., Sr. Sub. Notes B2 9.15 3/15/08 13,550 12,669,250
Felcor Suites L.P., Gtd. Sr. Notes Ba1 7.375 10/01/04 17,435 16,127,375
Hedstrom Holdings, Inc.,
Sr. Disc. Notes, Zero Coupon (until 6/1/02) Caa1 12.00 6/01/09 3,400 1,496,000
Sr. Sub. Notes B3 10.00 6/01/07 9,400 8,272,000
Hilton Hotels Corp., Sr. Notes Baa2 7.50 12/15/17 17,500 (g) 16,537,500
HMH Properties, Inc.,
Sr. Notes Ba2 7.875 8/01/08 21,375 19,665,000
Sr. Notes Ba2 8.45 12/01/08 3,500 3,325,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 10
<PAGE>
Portfolio of Investments as of
June 30, 1999 (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>
- ------------------------------------------------------------------------------------------------------------------------------
Leisure & Tourism (cont'd.)
Hollywood Park, Inc., Gtd. Notes B2 9.25% 2/15/07 $ 18,800 (g) $ 18,565,000
Host Marriott Travel Plazas, Inc., Sr. Notes Ba3 9.50 5/15/05 1,700 1,700,000
Imax Corp., Sr. Notes Ba2 7.875 12/01/05 6,000 5,655,000
ITT Corp., Notes Ba1 6.75 11/15/03 2,935 2,752,678
Premier Cruise Ltd., Sr. Notes Caa2 11.00 3/15/08 13,000 (e) 3,250,000
Premier Parks, Inc.,
Sr. Disc. Notes, Zero Coupon (until 4/1/03) B3 10.00 4/01/08 12,250 (g) 7,962,500
Sr. Notes B3 9.75 6/15/07 3,075 (g) 3,105,750
PX Escrow Corp., Sr. Sub. Disc. Notes, Zero Coupon (until
2/1/02) B3 9.625 2/01/06 13,400 8,174,000
Six Flags Entertainment Corp., Gtd. Sr. Notes B3 8.875 4/01/06 7,300 7,263,500
Town Sports Int'l., Inc., Sr. Notes B2 9.75 10/15/04 10,900 10,409,500
Vail Resorts, Inc., Sr. Sub. Notes B1 8.75 5/15/09 9,750 9,481,875
--------------
190,121,303
- ------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Services--1.4%
Ball Corp., Sr. Sub. Notes B1 8.25 8/01/08 1,500 1,470,000
Coinstar, Inc., Sr. Disc. Notes, Zero Coupon (until
10/1/99) NR 13.00 10/01/06 11,050 11,271,000
Color Spot Nurseries, Sr. Sub. Notes Caa2 10.50 12/15/07 8,000 6,800,000
Kindercare Learning Center, Inc., Sr. Sub. Notes B3 9.50 2/15/09 14,625 13,857,188
La. Petite Academy, Inc., Sr. Notes B3 10.00 5/15/08 6,500 (g) 6,191,250
Scotts Co., Sr. Sub. Notes B2 8.625 1/15/09 4,250 4,196,875
SF Holdings Group, Inc., Sr. Disc. Notes, Zero Coupon
(until 3/15/03) Caa2 12.75 3/15/08 16,500 5,445,000
United Stationer Supply Co., Sr. Sub. Notes B1 12.75 5/01/05 8,600 9,417,000
--------------
58,648,313
- ------------------------------------------------------------------------------------------------------------------------------
Paper & Forest Products--1.7%
Consolidated Contaniner Co. LLC, Sr. Sub. Notes B2 10.125 7/15/09 4,270 4,334,050
Graham Packaging Holdings Co.,
Sr. Disc. Notes, Zero Coupon (until 1/15/03) Caa1 10.75 1/15/09 15,925 10,669,750
Sr. Sub. Notes B3 8.75 1/15/08 7,150 (g) 6,864,000
Indah Kiat Fin Mauritius Ltd., Gtd. Sr. Notes (Indonesia) Caa1 10.00 7/01/07 10,000 (i) 6,200,000
Millar Western Prod. Ltd., Sr. Notes B3 9.875 5/15/08 10,000 9,675,000
Packaging Corp. of America, Sr. Sub. Notes B3 9.625 4/01/09 8,750 (g) 8,881,250
Repap New Brunswick, Inc., Sr. Sec'd. Notes Caa1 10.625 4/15/05 5,750 4,398,750
Stone Container Corp.,
Sr. Notes B2 12.58 8/01/16 200 212,000
Sr. Sub. Deb. B3 12.25 4/01/02 5,000 5,012,500
Tekni Plex, Inc., Sr. Sub. Notes B3 9.25 3/01/08 14,550 14,113,500
--------------
70,360,800
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 11
<PAGE>
Portfolio of Investments as of
June 30, 1999 (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>
- ------------------------------------------------------------------------------------------------------------------------------
Real Estate--0.5%
CB Richards Ellis Svcs., Inc., Sr. Sub. Notes Ba3 8.875% 6/01/06 $ 8,800 $ 8,492,000
Saul B F Real Estate Investment Trust, Sr. Sec'd. Notes B-(a) 9.75 4/01/08 13,000 12,090,000
--------------
20,582,000
- ------------------------------------------------------------------------------------------------------------------------------
Retail--2.1%
Big 5 Corp., Sr. Notes B2 10.875 11/15/07 14,900 15,049,000
Big 5 Holdings Corp., Sr. Disc. Notes, Zero Coupon (until
11/30/02) NR 13.45 11/30/08 10,000 5,100,000
Burlington Industries, Inc.,
Deb. Ba1 7.25 8/01/27 4,750 4,203,750
Notes Ba1 7.25 9/15/05 5,250 (g) 4,698,750
Cluett American Corp., Sr. Sub. Notes B3 10.125 5/15/08 8,250 6,187,500
Duane Reade, Inc., Sr. Sub. Notes B3 9.25 2/15/08 4,480 4,648,000
Franks Nursery & Crafts, Inc., Sr. Sub. Notes B3 10.25 3/01/08 15,400 15,169,000
French Fragrances, Inc.,
Sr. Notes, Ser. B B2 10.375 5/15/07 15,030 (g) 15,180,300
Sr. Notes, Ser. D B2 10.375 5/15/07 3,550 3,585,500
Just For Feet, Inc., Sr. Sub. Notes B1 11.00 5/01/09 12,500 (g) 8,125,000
Phar-Mor, Inc., Sr. Notes B3 11.72 9/11/02 2,211 2,255,220
Steel Heddle Manufacturing Co., Sr. Sub. Notes Caa1 10.625 6/01/08 4,500 2,520,000
--------------
86,722,020
- ------------------------------------------------------------------------------------------------------------------------------
Steel & Metals--3.8%
AK Steel Corp.,
Sr. Notes Ba2 9.125 12/15/06 10,700 10,967,500
Sr. Notes Ba2 7.875 2/15/09 12,250 (g) 11,882,500
Doe Run Res. Corp., Sr. Notes B3 11.25 3/15/05 7,000 6,300,000
Great Central Mines Ltd., Sr. Notes Ba2 8.875 4/01/08 10,000 9,525,000
International Wire Group, Inc., Sr. Sub. Notes B3 11.75 6/01/05 18,500 (g) 19,332,500
Kaiser Aluminum & Chemical Corp., Sr. Sub. Notes B3 12.75 2/01/03 12,650 (g) 12,776,500
Lukens, Inc.,
Sr. Notes Ba3 7.625 8/01/04 3,500 3,413,865
Sr. Notes Ba3 6.50 2/01/06 5,000 4,275,000
National Steel Corp., Gtd. Sec'd. First Mtge. Ba3 9.875 3/01/09 3,750 3,815,625
Renco Steel Holdings, Inc., Sr. Sec'd. Notes Caa2 10.875 2/01/05 7,450 6,444,250
Russel Metals, Inc., Sr. Notes B1 10.00 6/01/09 4,750 4,750,000
Silgan Holdings, Inc., Sr. Sub. Deb. B1 9.00 6/01/09 12,000 11,880,000
WCI Steel, Inc., Sr. Sec'd. Notes B2 10.00 12/01/04 24,850 (g) 25,284,875
Wheeling Pittsburgh Corp., Sr. Notes B2 9.25 11/15/07 11,000 (g) 10,395,000
WHX Corp., Sr. Notes B3 10.50 4/15/05 14,750 14,012,500
--------------
155,055,115
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 12
<PAGE>
Portfolio of Investments as of
June 30, 1999 (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>
- ------------------------------------------------------------------------------------------------------------------------------
Supermarkets--1.1%
Pantry, Inc., Sr. Sub. Notes B3 10.25% 10/15/07 $ 20,250 $ 20,351,250
Pathmark Stores, Inc., Sr. Sub. Notes Caa1 9.625 5/01/03 8,348 8,514,960
Southland Corp., Sr. Sub. Deb. Ba3 5.00 12/15/03 19,500 16,867,500
--------------
45,733,710
- ------------------------------------------------------------------------------------------------------------------------------
Technology--1.3%
Details Holding Corp., Sr. Disc. Notes, Zero Coupon
(until 11/15/02) Caa1 12.50 11/15/07 16,200 (g) 8,019,000
Details, Inc., Sr. Sub. Notes B3 10.00 11/15/05 11,375 10,550,313
DII Group, Inc., Sr. Sub. Notes B1 8.50 9/15/07 11,500 11,212,500
MCMS, Inc., Sr. Sub. Notes B3 9.75 3/01/08 14,000 7,840,000
Pioneer-Standard Electronics, Inc., Sr. Notes Baa3 8.50 8/01/06 6,000 5,724,420
Zilog, Inc., Sr. Sec'd. Notes B2 9.50 3/01/05 10,525 9,314,625
--------------
52,660,858
- ------------------------------------------------------------------------------------------------------------------------------
Telecommunications--17.2%
21st Century Telecom Group, Inc., Sr. Disc. Notes, Zero
Coupon
(until 2/15/03) Caa2 12.25 2/15/08 11,500 4,945,000
Allegiance Telecom, Inc.,
Sr. Disc. Notes, Zero Coupon (until 2/15/03) NR 11.75 2/15/08 12,700 7,747,000
Sr. Notes NR 12.875 5/15/08 9,500 10,117,500
Anacomp, Inc., Sr. Sub. Notes B3 10.875 4/01/04 12,000 12,480,000
Arch Escrow Corp., Sr. Notes B3 13.75 4/15/08 8,500 7,480,000
Barak ITC Int'l. Telecom, Sr. Disc. Notes (Israel), Zero
Coupon
(until 11/15/02) B3 12.50 11/15/07 36,500 (i) 20,440,000
Bestel S.A. De CV, Sr. Disc. Notes (Mexico), Zero Coupon
(until 5/15/01) NR 12.75 5/15/05 11,000 (i) 7,040,000
Birch Telecom, Inc., Sr. Notes NR 14.00 6/15/08 5,000 4,775,000
Bresnan Communications Group, Sr. Disc. Notes, Zero
Coupon
(until 2/1/04) B2 9.25 2/01/09 3,250 2,120,625
Call-Net Enterprises, Inc., Sr. Disc. Notes, Zero Coupon
(until 8/15/03) B1 8.94 8/15/08 14,250 7,837,500
Caprock Communications Corp., Sr. Notes B3 12.00 7/15/08 5,000 5,125,000
Cellnet Data Systems, Inc., Sr. Disc. Notes, Zero Coupon
(until 10/1/02) (cost $14,757,683; purchased 9/24/97
and 10/13/97) NR 14.00 10/01/07 22,750 (b) 9,555,000
Centennial Cellular Operating Co., Sr. Sub. Notes Caa1 10.75 12/15/08 2,475 2,549,250
Communication Cellular, S.A., Sr. Def'd. Bonds
(Columbia),
Zero Coupon (until 9/29/00) B3 14.125 3/01/05 34,750 (i) 17,375,000
Covad Communications Group, Inc., Sr. Notes B3 12.50 2/15/09 7,500 7,218,750
Dialog Corp., Sr. Sub. Notes (United Kingdom) B3 11.00 11/15/07 18,000 (i) 16,290,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13
<PAGE>
Portfolio of Investments as of
June 30, 1999 (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.)
DTI Holdings, Inc., Sr. Disc. Notes, Zero Coupon (until
3/1/03) NR 12.50% 3/01/08 $ 7,250 $ 2,646,250
Econophone, Inc., Sr. Disc. Notes, Zero Coupon (until
2/15/03) NR 11.00 2/15/08 16,000 8,800,000
Firstworld Communications, Inc., Sr. Notes, Zero Coupon
(until 4/15/03) NR 13.00 4/15/08 16,750 9,547,500
Focal Communications Corp., Sr. Disc. Notes, Zero Coupon
(until 2/15/03) NR 12.125 2/15/08 8,000 4,480,000
Geotek Communications, Inc., Sr. Conv. Notes, PIK Caa2 12.00 2/15/01 12,000 (e) 1,200
Global Crossings Holdings Ltd., Gtd. Notes Ba2 9.625 5/15/08 8,125 8,775,000
Globix Corp., Sr. Notes NR 13.00 5/01/05 8,500 8,075,000
Grupo Iusacell S.A. De CV, Sr. Notes (Mexico) B2 10.00 7/15/04 8,000 (i) 7,180,000
GST Equipment, Inc., Sr. Sec'd. Notes NR 13.25 5/01/07 10,000 10,600,000
GST Network Funding, Inc., Sr. Disc. Notes, Zero Coupon
(until 5/1/03) NR 10.50 5/01/08 4,500 2,520,000
GST Telecommunications, Inc.,
Conv. Sr. Disc. Notes, Zero Coupon (until 12/15/00) NR 13.875 12/15/05 2,262 2,714,400
Sr. Sub. Notes NR 12.75 11/15/07 8,200 8,528,000
GST USA, Inc., Sr. Disc. Notes, Zero Coupon (until
12/15/00) NR 13.875 12/15/05 17,096 13,933,240
Hyperion Telecommunications, Inc., Sr. Sec. Notes B3 12.25 9/01/04 2,300 2,415,000
ICG Holdings, Inc.,
Sr. Disc. Notes, Zero Coupon (until 9/15/00) B3 13.50 9/15/05 2,750 2,420,000
Sr. Disc. Notes, Zero Coupon (until 3/15/02) B3 11.625 3/15/07 5,000 (g) 3,450,000
Sr. Disc. Notes, Zero Coupon (until 5/1/03) B3 9.875 5/01/08 14,500 8,482,500
ICO Global Communications, Sr. Notes Caa2 15.00 8/01/05 5,575 2,285,750
Impsat Corp.,
Sr. Notes B1 12.125 7/15/03 13,500 12,150,000
Sr. Notes B+(a) 12.375 6/15/08 12,000 9,840,000
Intermedia Cap. Partners, L.P., Sr. Notes B2 11.25 8/01/06 30,250 33,426,250
Intermedia Communications of Florida,
Sr. Disc. Notes, Zero Coupon (until 5/15/01) B2 12.50 5/15/06 22,500 (g) 18,450,000
Sr. Disc. Notes, Zero Coupon (until 7/15/02) B2 11.25 7/15/07 17,750 (g) 12,602,500
International Wireless Communications, Inc., Sr. Disc.
Notes,
(cost $5,398,604; purchased 8/9/96 and 9/13/96) NR Zero 8/15/01 8,000 (b)(d) 480,000
IPC Information Systems, Inc., Sr. Disc. Notes, Zero
Coupon
(until 11/1/01) B3 10.875 5/01/08 16,000 11,520,000
Iridium Cap. Corp., Sr. Notes Caa3 11.25 7/15/05 1,260 245,700
Jacor Communications Co., Sr. Sub. Notes B2 8.75 6/15/07 2,000 2,125,000
Jordan Telecommunication Prod., Sr. Sub. Notes B3 9.875 8/01/07 10,750 10,642,500
Level 3 Communications, Inc., Sr. Disc. Notes, Zero
Coupon
(until 12/1/03) B3 10.50 12/01/08 14,800 9,176,000
Long Distance Int'l, Inc., Sr. Notes NR 12.25 4/15/08 6,500 (d) 4,225,000
Mastec, Inc., Sr. Sub. Notes Ba3 7.75 2/01/08 19,500 18,330,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 14
<PAGE>
Portfolio of Investments as of
June 30, 1999 (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.)
McLeodUSA, Inc.,
Sr. Notes B2 9.25% 7/15/07 $ 10,000 (g) $ 9,925,000
Sr. Notes B2 8.125 2/15/09 7,500 6,993,750
Metronet Communications Corp., Sr. Disc. Notes, Zero
Coupon
(until 6/15/03) B3 9.95 6/15/08 14,000 10,360,000
Microcell Telecommunications, Sr. Disc. Notes, Zero
Coupon (until 6/1/04) B3 12.00 6/01/09 6,250 3,515,625
Netia Holdings BV (Poland),
Gtd. Sr. Disc. Notes B3 13.125 6/15/09 1,000 (i) 1,010,000
Gtd. Sr. Disc. Notes, Zero Coupon (until 11/1/01) B3 11.25 11/01/07 12,500 (g)(i) 7,750,000
Gtd. Sr. Notes B3 10.25 11/01/07 9,150 (i) 7,960,500
Nextel Communications Corp., Sr. Disc. Notes B2 10.125 1/15/04 2,750 2,791,250
Nextel Communications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 8/15/99) B2 9.75 8/15/04 18,900 (g) 19,183,500
Sr. Disc. Notes, Zero Coupon (until 9/15/02) B2 10.65 9/15/07 3,000 (g) 2,175,000
Sr. Disc. Notes, Zero Coupon (until 10/31/02) B2 9.75 10/31/07 33,000 (g) 23,017,500
Sr. Disc. Notes, Zero Coupon (until 2/15/03) B2 9.95 2/15/08 29,025 (g) 19,664,437
Sr. Disc. Notes, Zero Coupon (until 2/1/04) B3 14.00 2/01/09 18,000 10,125,000
Nextel International, Inc., Sr. Disc. Notes, Zero Coupon
(until 4/15/03) Caa1 12.125 4/15/08 3,000 1,500,000
Northeast Optic Network, Inc., Sr. Notes NR 12.75 8/15/08 7,500 7,725,000
Omnipoint Corp., Sr. Notes B3 11.625 8/15/06 5,300 (g) 5,353,000
Pagemart Nationwide, Inc., Sr. Disc. Notes, Zero Coupon
(until 2/1/00) B3 15.00 2/01/05 23,000 19,435,000
Pagemart Wireless, Inc., Sr. Disc. Notes, Zero Coupon
(until 2/1/03) NR 11.25 2/01/08 36,000 12,780,000
Price Communications Wireless,
Sr. Sec'd. Notes Ba3 9.125 12/15/06 13,000 13,260,000
Sr. Sub. Notes B3 11.75 7/15/07 12,500 13,687,500
PTC Int'l. Fin. BV, Gtd. Sr. Sub. Disc. Notes (Poland),
Zero Coupon (until 7/1/02) B3 10.75 7/01/07 13,250 (i) 9,672,500
Qwest Communications Int'l. Inc., Sr. Notes Ba1 7.50 11/01/08 3,500 3,395,000
RSL Communications,
Sr. Notes B3 12.25 11/15/06 3,500 3,657,500
Sr. Notes B-(a) 12.00 11/01/08 5,750 (g) 6,008,750
Rural Cellular Corp., Sr. Sub. Notes B3 9.625 5/15/08 11,000 11,055,000
Splitrock Services, Inc., Sr. Notes NR 11.75 7/15/08 8,000 7,480,000
Star Choice Communications, Sr. Sec'd. Notes B3 13.00 12/15/05 5,000 5,200,000
Time Warner Telecom LLC., Sr. Notes B2 9.75 7/15/08 8,900 9,122,500
Tritel PCS, Inc., Sr. Disc. Notes, Zero Coupon (until
5/15/04) B3 12.75 5/15/09 18,000 (g) 9,810,000
US Exchange LLC., Sr. Notes NR 15.00 7/01/08 7,000 7,210,000
Versatel Telecom BV, Sr. Notes (Netherlands) NR 13.25 5/15/08 9,000 (i) 9,270,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 15
<PAGE>
Portfolio of Investments as of
June 30, 1999 (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.)
Viatel, Inc.,
Sr. Disc. Notes, Zero Coupon (until 4/15/03) Caa1 12.50% 4/15/08 $ 8,400 $ 5,124,000
Sr. Notes Caa1 11.25 4/15/08 5,050 5,050,000
WamNet, Inc., Sr. Disc. Notes, Zero Coupon (until 3/1/02) NR 13.25 3/01/05 6,000 3,660,000
Worldwide Fiber, Inc., Sr. Notes B3 12.50 12/15/05 10,000 10,050,000
--------------
697,139,727
- ------------------------------------------------------------------------------------------------------------------------------
Textiles--0.8%
Foamex L.P., Sr. Sub. Notes Caa2 9.875 6/15/07 12,550 (d) 10,667,500
Phillips Van Heusen Corp., Sr. Sub. Notes B1 9.50 5/01/08 8,050 (g) 7,969,500
Worldtex, Inc., Sr. Notes B1 9.625 12/15/07 15,000 (g) 13,125,000
--------------
31,762,000
- ------------------------------------------------------------------------------------------------------------------------------
Transportation/Trucking/Shipping--2.0%
American Commercial Lines, Sr. Notes B1 10.25 6/30/08 17,000 17,170,000
Autopistas Del Sol S.A., Sr. Notes (Argentina) BB-(a) 10.25 8/01/09 3,500 (i) 2,660,000
Continental Airlines, Inc., Sr. Notes Ba2 8.00 12/15/05 5,250 5,011,335
Ermis Maritime Holdings Ltd., First Mtge. Notes Ca 12.50 3/15/06 982 274,904
Holt Group, Inc., Sr. Notes Caa1 9.75 1/15/06 8,320 5,574,400
Kitty Hawk, Inc., Gtd. Notes B1 9.95 11/15/04 22,505 22,054,900
MRS Logistica S.A., Sr. Notes (Brazil) B(a) 10.625 8/15/05 10,000 (i) 6,100,000
Stena Line AB (Sweden),
Sr. Notes Ba2 8.75 6/15/07 7,000 (i) 6,422,500
Sr. Notes B1 10.625 6/01/08 11,500 (i) 8,653,750
USAir, Inc., Pass-through Certs. Ba2 10.375 3/01/13 7,030 7,462,345
--------------
81,384,134
--------------
Total corporate bonds (cost $3,913,011,543) 3,632,626,969
--------------
- ------------------------------------------------------------------------------------------------------------------------------
SOVEREIGN BONDS--0.2%
Republic of Brazil (cost $6,934,900) 11.625% 4/15/04 $ 7,000 (i) $ 6,580,000
--------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 16
<PAGE>
Portfolio of Investments as of
June 30, 1999 (Unaudited) PRUDENTIAL HIGH YIELD FUND, INC.
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 1)
<S> <C> <C>
- ------------------------------------------------------------
PREFERRED STOCKS--4.8%
Adelphia Communications Corp.,
$13.00 74,000 $ 8,066,000
California Fed. Corp., $9.125 1,822 47,720,041
Chesapeake Energy Corp., $7.00 110,000 2,681,250
Concentric Network Corp., $13.50 1 205
CSC Holdings, Inc.,
Ser. 1995K-1, $11.125 140,118 15,272,825
Ser. 1995K-2, $11.125 3,632 39,588,800
Ser. 1995K-4, $11.75 144,101 15,634,978
Eagle Picher Holdings, Inc., 1,530
$11.75 7,726,500
Global Crossing Holdings Ltd., 10,000
$5.22 1,045,000
GPA Group Plc, Conv., 7.00% 13,200 6,600,000
Harborside Healthcare Corp., 2,762
$13.50 1,187,799
Intermedia Communications of
Florida, $7.00 280,000 6,055,000
Packaging Corp. of America, 45,000
12.375% 4,770,000
Paxon Communications Corp., Jr.,
$13.25 1,580 14,220,405
Primedia, Inc., $8.625 117,000 10,647,000
R & B Falcon Corp., 13.875% 4,500 4,590,000
Rural Cellular Corp., $11.375 99 99,485
Texas Utilities Co., $9.25 95,000 5,225,000
Viasystems Group, Inc., 8.00% 172,303 2,283,012
--------------
Total preferred stocks
(cost $182,498,639) 193,413,300
--------------
COMMON STOCKS(c)--0.2%
Dr Pepper Bottling Holdings, 72,580
Inc., Cl. B $ 2,177,400
Envirosource, Inc. 61,190 130,029
Gaylord Container Corp., Cl. A 77,735 617,022
Hedstrom Holdings, Inc. 206,223 206,223
Intermedia Communications of 16,549
Florida 496,470
Nextel Communications, Inc. 16,527 829,449
Northeast Optic Network, Inc. 80,000 1,205,000
Pagemart Nationwide, Inc. 71,750 358,750
Peachtree Cable Assn., Ltd. 31,559 285,924
SF Holdings Group, Inc. 33,000 41,250
United Int'l. Holdings, Inc., Cl.
A 1 34
Viatel, Inc. 54,894 3,080,926
--------------
Total common stocks
(cost $7,429,491) 9,428,477
--------------
- ------------------------------------------------------------
COMMON TRUST UNITS--(c)0.3% Units
PSF Holdings, LLC (cost
$15,959,021; purchased 5/20/94) 951,717 (b)(f) 10,468,887
--------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 17
<PAGE>
Portfolio of Investments as of
June 30, 1999 (Unaudited) PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expiration Value
Date Warrants (Note 1)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
WARRANTS(c)--0.3%
- ------------------------------------------------------------------------------------------------------------------------------
Aladdin Gaming 1/03/10 220,000 $ 2,200
Allegiance Telecom, Inc. 2/15/08 14,200 639,000
American Banknote Corp. 12/1/07 3,750 38
American Mobile Satellite Corp. 4/1/08 10,000 400,000
Bell Technology Group Ltd. 5/1/05 8,500 72,250
Bestel S.A. De CV 5/15/05 11,000 22,000
Birch Telecom, Inc. 6/15/08 5,000 25,000
Cellnet Data Systems, Inc. 9/15/07 44,455 222,275
Clearnet Communications, Inc. 9/15/05 66,495 332,475
Comcel 11/15/03 29,000 1,450,000
Diva Systems Corp. 1/03/08 47,700 620,100
DTI Holdings, Inc. 3/1/08 36,250 362
Firstworld Communications, Inc. 4/15/08 16,750 837,500
Foamex JPS Automotive LLC. 7/1/99 20,250(d) 101,250
Gaylord Container Corp. 11/1/02 417,518 3,340,144
ICO Global Communications 8/1/05 9,075 0
Intelcom Group, Inc. 9/15/05 127,809 1,278,090
Intermedia Communications of Florida 6/1/00 11,250 731,250
International Wireless Communications, Inc. 8/15/01 8,000(d) 0
Long Distance Int'l., Inc. 4/15/08 6,500(d) 0
President Riverboat Casinos, Inc. 9/30/99 44,150 0
Price Communications Wireless 8/1/07 17,200 1,530,800
Primus Telecommunications Group 8/1/04 12,250 245,000
Splitrock Svcs., Inc. 7/15/08 8,000 560,000
Star Choice Communications 12/15/05 115,800 422,670
Sterling Chemical Holdings, Inc. 8/15/08 5,450 81,750
TVN Entertainment Corp. 8/1/08 15,000(d) 0
USN Communications, Inc. 10/15/06 92,500 5,550
Versatel Telecom BV 5/15/08 9,000 450,000
WamNet, Inc. 3/1/05 22,500 511,875
Waste Systems Int'l, Inc. 1/15/06 165,000 108,900
--------------
Total warrants (cost $753,759) 13,990,479
--------------
Total long-term investments (cost $4,126,587,353) 3,866,508,112
--------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 18
<PAGE>
Portfolio of Investments as of
June 30, 1999 (Unaudited) PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Interest Maturity Amount Value
Rate Date (000) (Note 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--7.9%
- ---------------------------------------------------------------------------------------------------------------------------------
Conagra, Inc., commercial paper 6.050% 7/01/99 $ 15,000(h) $ 15,000,000
Conagra, Inc., commercial paper 6.150 7/01/99 8,710 8,710,000
Conagra, Inc., commercial paper 6.220 7/01/99 25,000(h) 25,000,000
Conoco, Inc., commercial paper 6.150 7/01/99 28,000 28,000,000
Conseco, Inc., commercial paper 5.215 7/06/99 19,986(h) 19,985,555
Dayton Hudson Corp., commercial paper 5.200 7/12/99 14,976(h) 14,976,258
Deutsche Bank, time deposit 5.125 7/01/99 14,611(h) 14,611,000
Federated Dept. Stores, commercial paper 5.082 7/12/99 4,992(h) 4,992,285
Federated Dept. Stores, commercial paper 5.263 7/09/99 9,988(h) 9,988,333
Federated Dept. Stores, commercial paper 6.150 7/01/99 15,000(h) 15,000,000
MCI Worldcom, Inc., money market instrument 5.060 7/09/99 9,989(h) 9,988,778
MCI Worldcom, Inc., money market instrument 5.250 7/22/99 23,927(h) 23,926,500
MCI Worldcom, Inc., money market instrument 6.150 7/01/99 13,739 13,739,000
PSE&G Fuel Corp., commercial paper 5.550 7/21/99 3,569(h) 3,568,961
Raytheon Co., commercial paper 5.212 7/02/99 9,999(h) 9,998,556
Raytheon Co., commercial paper 5.276 7/23/99 27,910(h) 27,910,167
Rohm & Haas Co., commercial paper 5.450 7/29/99 16,928(h) 16,927,939
Rohm & Haas Co., commercial paper 5.750 7/06/99 8,850 8,842,932
Rohm & Haas Co., commercial paper 6.300 7/01/99 9,150 9,150,000
Textron Financial, commercial paper 6.000 7/01/99 40,024 40,024,000
--------------
Total short-term investments (cost $320,340,264) 320,340,264
- ------------------------------------------------------------------------------------------------------------------------------
Total Investments--103.5%
(cost $4,446,927,617; Note 4) 4,186,848,376
Liabilities in excess of other assets--(3.5)% (143,480,945)
--------------
Net Assets--100% $4,043,367,431
--------------
--------------
</TABLE>
(a) Standard & Poor's Rating.
(b) Indicates a restricted security; the aggregate cost of such securities is
$52,673,575. The aggregate value $36,536,650 is approximately 0.9% of net
assets.
(c) Non-income producing securities.
(d) Consists of more than one class of securities traded together as a unit;
generally bonds with attached stock or warrants.
(e) Represents issuer in default on interest payments, non-income producing
security.
(f) Fair valued security.
(g) Portion of securities on loan, see Note 4.
(h) Represents security, or portion thereof, purchased with cash collateral
received for securities on loan.
(i) US$--Denominated foreign bonds.
NR--Not rated by Moody's or Standard & Poor's.
PIK--Payment in kind securities.
L.P.--Limited Partnership.
LLC.--Limited Liability Company.
The Fund's current Prospectus contains a description of Moody's and Standard &
Poor's ratings.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 19
<PAGE>
Statement of Assets and Liabilities
(Unaudited) PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets June 30, 1999
<S> <C>
Investments, at value (cost $4,446,927,617)................................................................. $4,186,848,376
Interest receivable......................................................................................... 72,298,633
Receivable for investments sold............................................................................. 24,259,880
Receivable for Fund shares sold............................................................................. 5,171,078
Receivable for securities lending........................................................................... 1,555,583
Deferred expenses and other assets.......................................................................... 50,301
--------------
Total assets............................................................................................. 4,290,183,851
--------------
Liabilities
Bank overdraft.............................................................................................. 200,001
Payable to broker for collateral for securities on loan..................................................... 211,874,333
Payable for investments purchased........................................................................... 10,364,673
Dividends payable........................................................................................... 9,664,157
Payable for Fund shares reacquired.......................................................................... 9,507,605
Distribution fee payable.................................................................................... 1,766,257
Securities lending rebate payable........................................................................... 1,374,108
Management fee payable...................................................................................... 1,373,125
Accrued expenses............................................................................................ 692,161
--------------
Total liabilities........................................................................................ 246,816,420
--------------
Net Assets.................................................................................................. $4,043,367,431
--------------
--------------
Net assets were comprised of:
Common stock, at par..................................................................................... $ 5,242,020
Paid-in capital in excess of par......................................................................... 4,746,831,897
--------------
4,752,073,917
Distributions in excess of net investment income......................................................... (9,059,574)
Accumulated net realized loss on investments............................................................. (439,567,671)
Net unrealized depreciation on investments............................................................... (260,079,241)
--------------
Net assets, June 30, 1999................................................................................... $4,043,367,431
--------------
--------------
Class A:
Net asset value and redemption price per share
($1,727,543,239 / 223,649,808 shares of common stock issued and outstanding).......................... $7.72
Sales charge (4.00% of offering price)................................................................... .32
Maximum offering price to public......................................................................... $8.04
Class B:
Net asset value, offering price and redemption price per share
($2,155,665,337 / 279,791,462 shares of common stock issued and outstanding).......................... $7.70
Class C:
Net asset value and redemption price per share
($97,787,486 / 12,691,963 shares of common stock issued and outstanding).............................. $7.70
Sales charge (1.00% of offering price)................................................................... .08
Offering price to public................................................................................. $7.78
Class Z:
Net asset value, offering price and redemption price per share
($62,371,369 / 8,068,778 shares of common stock issued and outstanding)............................... $7.73
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 20
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
June 30,
Net Investment Income 1999
<S> <C>
Income
Interest................................... $201,434,001
Dividends.................................. 7,820,948
Income from securities loaned, net......... 786,614
------------
Total Income............................ 210,041,563
------------
Expenses
Distribution fee--Class A.................. 2,166,203
Distribution fee--Class B.................. 8,723,224
Distribution fee--Class C.................. 345,438
Management fee............................. 8,616,181
Transfer agent's fees and expenses......... 2,033,000
Custodian's fees and expenses.............. 192,000
Reports to shareholders.................... 165,000
Registration fees.......................... 66,000
Insurance expense.......................... 44,000
Legal fees and expenses.................... 37,000
Audit fee and expenses..................... 24,000
Directors' fees and expenses............... 17,000
Miscellaneous.............................. 4,942
------------
Total expenses.......................... 22,433,988
------------
Net investment income......................... 187,607,575
------------
Realized and Unrealized
Loss on Investments
Net realized loss on investment
transactions............................... (67,303,322)
Net change in unrealized depreciation of
investments................................ (343,147)
------------
Net loss on investments....................... (67,646,469)
------------
Net Increase in Net Assets
Resulting from Operations..................... $119,961,106
------------
------------
</TABLE>
PRUDENTIAL HIGH YIELD FUND, INC.
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase in June 30, December 31,
Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income..... $ 187,607,575 $ 380,890,729
Net realized gain (loss)
on investment
transactions........... (67,303,322) 36,353,107
Net change in unrealized
depreciation of
investments............ (343,147) (422,696,898)
--------------- ---------------
Net increase (decrease) in
net assets resulting
from operations........ 119,961,106 (5,453,062)
--------------- ---------------
Dividends and distributions (Note 1)
Dividends from net
investment income
Class A................ (79,374,889) (154,810,882)
Class B................ (101,216,163) (215,059,672)
Class C................ (4,014,802) (5,714,430)
Class Z................ (3,001,721) (5,305,745)
--------------- ---------------
(187,607,575) (380,890,729)
--------------- ---------------
Dividends in excess of net
investment income
Class A................ (4,399,824) (3,143,618)
Class B................ (5,610,506) (4,367,041)
Class C................ (222,544) (116,038)
Class Z................ (166,388) (107,739)
--------------- ---------------
(10,399,262) (7,734,436)
--------------- ---------------
Fund share transactions (Net
of share conversions)
(Note 5)
Net proceeds from shares
sold................... 1,441,554,424 2,963,551,012
Net asset value of shares
issued in reinvestment
of dividends and
distributions.......... 94,701,201 194,305,581
Cost of shares
reacquired............. (1,622,994,698) (3,024,094,927)
--------------- ---------------
Net increase (decrease) in
net assets from Fund
share transactions..... (86,739,073) 133,761,666
--------------- ---------------
Total decrease............... (164,784,804) (260,316,561)
Net Assets
Beginning of period.......... 4,208,152,235 4,468,468,796
--------------- ---------------
End of period(a)............. $ 4,043,367,431 $ 4,208,152,235
--------------- ---------------
--------------- ---------------
- ---------------
(a) Includes undistributed
net investment income
of:...................... $ -- $ 349,779
--------------- ---------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 21
<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, 1999 include registration rights under which the Fund may demand
registration by the issuer, of which the Fund may bear the cost of such
registration. 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.
Securities Lending: The Fund may lend securities to broker-dealers. The loans
are secured by collateral at least equal at all times to the market value of the
securities loaned. Loans are subject to termination at the option of the
borrower or the Fund. Upon termination of the loan, the borrower will return to
the lender securities identical to the loaned securities. The Fund may bear the
risk of delay in recovery of, or even loss of rights in, the securities loaned
should the borrower of the securities fail
- --------------------------------------------------------------------------------
22
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
financially. The Fund receives compensation, net of any rebate, for lending its
securities in the form of fees or it retains a portion of interest on the
investment of any cash received as collateral. The Fund also continues to
receive interest, on the securities loaned and any gain or loss in the market
price of the securities loaned that may occur during the term of the loan will
be for the account of the Fund. Prudential Securities Incorporated ('PSI') is
the securities lending agent for the Fund. For the six months ended June 30,
1999, PSI has been compensated approximately $259,600.
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 decrease distributions in excess of net
investment income and increase accumulated net realized loss on investments by
$989,909. This was primarily due to the sale of securities purchased with market
discount for the six months ended June 30, 1999. Net investment income, net
realized losses 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 Investment Management
Services LLC ('PIMS'), which acts as the distributor of the Class A, B, C and Z
shares of the Fund. The Fund compensates PIMS for distributing and servicing the
Fund's Class A, B and C shares, pursuant to plans of distribution (the 'Class A,
B and C Plans'), regardless of expenses actually incurred by PIMS. The
distribution fees are accrued daily and payable monthly. No distribution or
service fees are paid to PIMS as distributor of the Class Z shares of the Fund.
Pursuant to the Class A, B and C Plans, the Fund compensates PIMS 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
.25 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, 1999.
PIMS has advised the Fund that it has received approximately $560,100 and
$240,100 in front-end sales charges resulting from sales of Class A and Class C
shares, respectively, during the six months ended June 30, 1999. From these
fees, PIMS paid such sales charges to Pruco Securities Corporation, an
affiliated broker-dealer, which in turn paid commissions to salespersons and
incurred other distribution costs.
PIMS has advised the Fund that for the six months ended June 30, 1998, it
received approximately $2,016,200 and $27,900 in contingent deferred sales
charges imposed upon certain redemptions by Class B and Class C shareholders,
respectively.
PIMS, PIFM and PIC are indirect, wholly owned subsidiaries of The Prudential
Insurance Company of America.
As of March 11, 1999, the Fund, along with other affiliated registered
investment companies (the 'Funds'), entered into a syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment under the SCA is $1
billion. The Funds pay a commitment fee at an annual rate of .065 of 1% on the
unused portion of the credit facility, which is accrued and paid quarterly on a
pro rata basis by the Funds. The SCA expires on March 9, 2000. Prior to March
11, 1999, the Funds had a credit agreement with a maximum commitment of
$200,000,000. The commitment fee was .055 of 1% on the unused portion of the
credit facility. The Fund did not borrow any amounts pursuant to either
agreement during the six months ended June 30, 1999. The purpose of the
agreements is to serve as an alternative source of funding for capital share
redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC, ('PMFS'), a wholly owned subsidiary of
PIFM, serves as the Fund's transfer agent and during the six months ended June
30, 1999, the Fund incurred fees of approximately $1,862,700 for the services of
PMFS. As of June 30, 1999, $307,400 of such fees were due to PMFS. Transfer
agent fees and expenses in the
- --------------------------------------------------------------------------------
23
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
Statement of Operations include certain out-of-pocket expenses paid to
nonaffiliates.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the six months ended June 30, 1999 were $1,276,292,089 and $1,446,262,101,
respectively.
The federal income tax basis of the Fund's investments, including short-term
investments, as of June 30, 1999 was $4,447,714,107; accordingly, net unrealized
depreciation for federal income tax purposes was $260,865,731 (gross unrealized
appreciation--$83,551,268; gross unrealized depreciation--$344,416,999).
For federal income tax purposes, the Fund has a capital loss carryforward as of
December 31, 1998 of approximately $350,586,300 of which $77,895,200 expires in
1999, $110,441,500 expires in 2000, $162,249,600 expires in 2003. In addition,
the Fund has elected to treat net capital losses of approximately $20,477,600
incurred in the two month period ended December 31, 1998 as being incurred in
the current fiscal year. 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.
As of June 30, 1999, the Fund has securities on loan with an aggregate market
value of $205,250,551. The Fund received $211,874,333 in cash, as collateral for
securities on loan with which it purchased highly liquid short-term investments
in accordance with the Fund's securities lending procedures.
- ------------------------------------------------------------
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 front-end
sales charge of 1% and a contingent deferred sales charge of 1% during the first
18 months. 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,
1999:
Shares sold................... 125,768,349 $ 993,702,312
Shares issued in reinvestment
of
dividends and
distributions............... 5,484,228 43,232,078
Shares reacquired............. (127,890,802) (1,013,761,293)
------------ ---------------
Net increase in shares
outstanding before
conversions................. 3,361,775 23,173,097
Shares issued upon conversion
from Class B................ 7,307,539 56,788,141
------------ ---------------
Net increase in shares
outstanding................. 10,669,314 $ 79,961,238
------------ ---------------
------------ ---------------
Year ended December 31, 1998:
Shares sold................... 220,216,713 $ 1,859,190,071
Shares issued in reinvestment
of
dividends and
distributions............... 10,259,255 85,370,263
Shares reacquired............. (227,838,947) (1,934,064,082)
------------ ---------------
Net increase in shares
outstanding before
conversions................. 2,637,021 10,496,252
Shares issued upon conversion
from Class B................ 10,263,006 85,283,803
------------ ---------------
Net increase in shares
outstanding................. 12,900,027 $ 95,780,055
------------ ---------------
------------ ---------------
<CAPTION>
Class B
- ------------------------------
<S> <C> <C>
Six months ended June 30,
1999:
Shares sold................... 46,551,660 $ 366,353,307
Shares issued in reinvestment
of
dividends and
distributions............... 5,912,616 46,504,246
Shares reacquired............. (68,466,450) (537,298,176)
------------ ---------------
Net decrease in shares
outstanding before
conversion.................. (16,002,174) (124,440,623)
Shares reacquired upon
conversion into Class A..... (7,326,394) (56,788,141)
------------ ---------------
Net decrease in shares
outstanding................. (23,328,568) $ (181,228,764)
------------ ---------------
------------ ---------------
Year ended December 31, 1998:
Shares sold................... 112,375,736 $ 940,884,702
Shares issued in reinvestment
of
dividends and
distributions............... 12,097,288 100,594,225
Shares reacquired............. (116,993,243) (981,481,666)
------------ ---------------
Net increase in shares
outstanding before
conversion.................. 7,479,781 59,997,261
Shares reacquired upon
conversion into Class A..... (10,287,840) (85,283,803)
------------ ---------------
Net decrease in shares
outstanding................. (2,808,059) $ (25,286,542)
------------ ---------------
------------ ---------------
</TABLE>
- --------------------------------------------------------------------------------
24
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C Shares Amount
- ------------------------------ ------------ ---------------
<S> <C> <C>
Six months ended June 30,
1999:
Shares sold................... 4,997,289 $ 39,339,939
Shares issued in reinvestment
of
dividends and
distributions............... 288,316 2,267,016
Shares reacquired............. (3,243,942) (25,539,242)
------------ ---------------
Net increase in shares
outstanding................. 2,041,663 $ 16,067,713
------------ ---------------
------------ ---------------
Year ended December 31, 1998:
Shares sold................... 8,376,997 $ 68,914,249
Shares issued in reinvestment
of
dividends and
distributions............... 409,580 3,387,514
Shares reacquired............. (4,610,242) (38,222,404)
------------ ---------------
Net increase in shares
outstanding................. 4,176,335 $ 34,079,359
------------ ---------------
------------ ---------------
<CAPTION>
Class Z
- ------------------------------
<S> <C> <C>
Six months ended June 30,
1999:
Shares sold................... 5,344,311 $ 42,158,866
Shares issued in reinvestment
of
dividends and
distributions............... 342,161 2,697,861
Shares reacquired............. (5,872,308) (46,395,987)
------------ ---------------
Net decrease in shares
outstanding................. (185,836) $ (1,539,260)
------------ ---------------
------------ ---------------
Year ended December 31, 1998:
Shares sold................... 11,385,751 $ 94,561,990
Shares issued in reinvestment
of
dividends and
distributions............... 596,770 4,953,579
Shares reacquired............. (8,538,564) (70,326,775)
------------ ---------------
Net increase in shares
outstanding................. 3,443,957 $ 29,188,794
------------ ---------------
------------ ---------------
</TABLE>
- --------------------------------------------------------------------------------
25
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------
Six Months
Ended Year Ended December 31,
June 30, -------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 7.88 $ 8.65 $ 8.39 $ 8.19 $ 7.68
---------- ---------- ---------- ---------- ----------
Income from investment operations
Net investment income.................................. .36 .76 .73 .75 .81
Net realized and unrealized gain (loss) on
investments......................................... (.14) (.76) .30 .22 .53
---------- ---------- ---------- ---------- ----------
Total from investment operations.................... .22 -- 1.03 .97 1.34
---------- ---------- ---------- ---------- ----------
Less distributions
Dividends from net investment income................... (.36) (.76) (.73) (.75) (.81)
Distributions in excess of net investment income....... (.02) (.01) (.04) (.02) (.02)
---------- ---------- ---------- ---------- ----------
Total distributions................................. (.38) (.77) (.77) (.77) (.83)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period......................... $ 7.72 $ 7.88 $ 8.65 $ 8.39 $ 8.19
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
TOTAL RETURN(a)........................................ 2.55% (0.13)% 12.81% 12.60% 18.17%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $1,727,543 $1,677,605 $1,730,473 $1,564,429 $1,336,354
Average net assets (000)............................... $1,747,324 $1,712,531 $1,635,480 $1,385,143 $1,056,555
Ratios to average net assets:
Expenses, including distribution fees............... .78%(b) .67% .69% .72% .75%
Expenses, excluding distribution fees............... .53%(b) .52% .54% .57% .60%
Net investment income............................... 9.19%(b) 9.04% 8.59% 9.20% 10.13%
For Classes A, B, C and Z shares:
Portfolio turnover rate............................. 32% 103% 113% 89% 78%
<CAPTION>
1994
--------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 8.70
--------
Income from investment operations
Net investment income.................................. .80
Net realized and unrealized gain (loss) on
investments......................................... (1.00)
--------
Total from investment operations.................... (.20)
--------
Less distributions
Dividends from net investment income................... (.80)
Distributions in excess of net investment income....... (.02)
--------
Total distributions................................. (.82)
--------
Net asset value, end of period......................... $ 7.68
--------
--------
TOTAL RETURN(a)........................................ (2.35)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $161,435
Average net assets (000)............................... $165,517
Ratios to average net assets:
Expenses, including distribution fees............... .78%
Expenses, excluding distribution fees............... .63%
Net investment income............................... 9.86%
For Classes A, B, C and Z shares:
Portfolio turnover rate............................. 74%
</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. 26
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
----------------------------------------------------------------------
Six Months
Ended Year Ended December 31,
June 30, -------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 7.86 $ 8.63 $ 8.38 $ 8.18 $ 7.67
---------- ---------- ---------- ---------- ----------
Income from investment operations
Net investment income.................................. .34 .71 .68 .71 .76
Net realized and unrealized gain (loss) on
investments......................................... (.14) (.76) .29 .22 .53
---------- ---------- ---------- ---------- ----------
Total from investment operations.................... .20 (.05) .97 .93 1.29
---------- ---------- ---------- ---------- ----------
Less distributions
Dividends from net investment income................... (.34) (.71) (.68) (.71) (.76)
Distributions in excess of net investment income....... (.02) (.01) (.04) (.02) (.02)
---------- ---------- ---------- ---------- ----------
Total distributions................................. (.36) (.72) (.72) (.73) (.78)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period......................... $ 7.70 $ 7.86 $ 8.63 $ 8.38 $ 8.18
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
TOTAL RETURN(a)........................................ 2.31% (.70)% 12.07% 11.97% 17.49%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $2,155,665 $2,381,793 $2,640,491 $2,596,207 $2,730,903
Average net assets (000)............................... $2,345,471 $2,557,252 $2,589,122 $2,652,883 $2,725,385
Ratios to average net assets:
Expenses, including distribution fees............... 1.28%(b) 1.27% 1.29% 1.32% 1.35%
Expenses, excluding distribution fees............... .53%(b) .52% .54% .57% .60%
Net investment income............................... 8.68%(b) 8.41% 7.99% 8.62% 9.56%
<CAPTION>
1994
----------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 8.69
----------
Income from investment operations
Net investment income.................................. .76
Net realized and unrealized gain (loss) on
investments......................................... (1.00)
----------
Total from investment operations.................... (.24)
----------
Less distributions
Dividends from net investment income................... (.76)
Distributions in excess of net investment income....... (.02)
----------
Total distributions................................. (.78)
----------
Net asset value, end of period......................... $ 7.67
----------
----------
TOTAL RETURN(a)........................................ (2.92)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $3,311,323
Average net assets (000)............................... $3,566,709
Ratios to average net assets:
Expenses, including distribution fees............... 1.38%
Expenses, excluding distribution fees............... .63%
Net investment income............................... 9.28%
</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. 27
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
----------------------------------------------------------
Six Months
Ended Year Ended December 31,
June 30, -------------------------------------------
1999 1998 1997 1996 1995
---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 7.86 $ 8.63 $ 8.38 $ 8.18 $ 7.67
---------- ------- ------- ------- -------
Income from investment operations
Net investment income.................................. .34 .71 .68 .71 .76
Net realized and unrealized gain (loss) on
investments......................................... (.14) (.76) .29 .22 .53
---------- ------- ------- ------- -------
Total from investment operations.................... .20 (.05) .97 .93 1.29
---------- ------- ------- ------- -------
Less distributions
Dividends from net investment income................... (.34) (.71) (.68) (.71) (.76)
Distributions in excess of net investment income....... (.02) (.01) (.04) (.02) (.02)
---------- ------- ------- ------- -------
Total distributions................................. (.36) (.72) (.72) (.73) (.78)
---------- ------- ------- ------- -------
Net asset value, end of period......................... $ 7.70 $ 7.86 $ 8.63 $ 8.38 $ 8.18
---------- ------- ------- ------- -------
---------- ------- ------- ------- -------
TOTAL RETURN(a)........................................ 2.31% (0.70)% 12.07% 11.97% 17.49%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $ 97,787 $83,687 $55,879 $43,374 $24,021
Average net assets (000)............................... $ 92,880 $67,296 $45,032 $28,647 $12,063
Ratios to average net assets:
Expenses, including distribution fees............... 1.28%(b) 1.27% 1.29% 1.32% 1.35%
Expenses, excluding distribution fees............... .53%(b) .52% .54% .57% .60%
Net investment income............................... 8.70%(b) 8.49% 7.99% 8.60% 9.49%
<CAPTION>
August 1,
1994(c)
Through
December 31,
1994
------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 8.05
------
Income from investment operations
Net investment income.................................. .32
Net realized and unrealized gain (loss) on
investments......................................... (.37)
------
Total from investment operations.................... (.05)
------
Less distributions
Dividends from net investment income................... (.32)
Distributions in excess of net investment income....... (.01)
------
Total distributions................................. (.33)
------
Net asset value, end of period......................... $ 7.67
------
------
TOTAL RETURN(a)........................................ (0.79)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $ 4,860
Average net assets (000)............................... $ 2,840
Ratios to average net assets:
Expenses, including distribution fees............... 1.48%(b)
Expenses, excluding distribution fees............... .73%(b)
Net investment income............................... 9.80%(b)
</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.
(c) Commencement of offering of Class C shares.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 28
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class Z
---------------------------------------------------
March 1,
Six Months Year Ended December 1996(c)
Ended 31, Through
June 30, ------------------- December 31,
1999 1998 1997 1996
---------- ------- ------- ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 7.88 $ 8.65 $ 8.39 $ 8.34
---------- ------- ------- ------
Income from investment operations
Net investment income.................................. .37 .76 .74 .63
Net realized and unrealized gain (loss) on
investments......................................... (.13) (.75) .30 .07
---------- ------- ------- ------
Total from investment operations.................... .24 .01 1.04 .70
---------- ------- ------- ------
Less distributions
Dividends from net investment income................... (.37) (.76) (.74) (.63)
Distributions in excess of net investment income....... (.02) (.02) (.04) (.02)
---------- ------- ------- ------
Total distributions................................. (.39) (.78) (.78) (.65)
---------- ------- ------- ------
Net asset value, end of period......................... $ 7.73 $ 7.88 $ 8.65 $ 8.39
---------- ------- ------- ------
---------- ------- ------- ------
TOTAL RETURN(a)........................................ 2.81% 0.00% 12.96% 8.77%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $ 62,371 $65,068 $41,625 $ 31,748
Average net assets (000)............................... $ 64,374 $57,453 $35,808 $ 28,978
Ratios to average net assets:
Expenses, including distribution fees............... .53%(b) .52% .54% 57%(b)
Expenses, excluding distribution fees............... .53%(b) .52% .54% .57%(b)
Net investment income............................... 9.43%(b) 9.23% 8.74% 9.31%(b)
</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.
(c) Commencement of offering of Class Z shares.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 29
<PAGE>
Getting the Most from Your Prudential Mutual Fund
Some mutual fund shareholders won't ever read this--they
don't read annual and semiannual reports. It's quite
understandable. These annual and semi-annual reports
are prepared to comply with federal regulations, and
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. We hope you'll find it profitable to
spend a few minutes familiarizing yourself with your
investment. Here's what you'll find in the report:
Performance 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 "Performance
at a Glance" page where we compare the Fund and the comparable
average calculated by Lipper, Inc., 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 gives you an idea of 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. Please 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 appear 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.
<PAGE>
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 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 adviser.
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 broad-based reference point commonly used
by investors to measure how well they are doing. A
definition of the selected index is also provided.
Investors cannot invest directly in an index.
<PAGE>
Getting the Most from Your Prudential Mutual Fund
How many times have you read these reports--or other financial
materials-- and stumbled across a word that you don't understand?
Many shareholders have run into the same problem. We'd like to
help. So we'll use this space from time to time to explain some
of the words you might have read, but not understood. And if you
have a favorite word that no one can explain to your satisfaction,
please write to us.
Basis Point: 1/100th of 1%. For example, one-half of one percent
is 50 basis points.
Collateralized Mortgage Obligations (CMOs): Mortgage-backed
bonds that separate mortgage pools into different maturity
classes, called tranches. These instruments are sensitive
to changes in interest rates and homeowner refinancing
activity. They are subject to prepayment and maturity
extension risk.
Derivatives: Securities that derive their value from
other securities. The rate of return of these financial
instruments rises and falls--sometimes very suddenly--
in response to changes in some specific interest rate,
currency, stock, or other variable.
Discount Rate: The interest rate charged by the Federal
Reserve on loans to member banks.
Federal Funds Rate: The interest rate charged by one
bank to another on overnight loans.
Futures Contract: An agreement to purchase or sell a
specific amount of a commodity or financial instrument
at a set price at a specified date in the future.
Leverage: The use of borrowed assets to enhance return.
The expectation is that the interest rate charged on
borrowed funds will be lower than the return on the
investment. While leverage can increase profits, it
can also magnify losses.
Liquidity: The ease with which a financial instrument
(or product) can be bought or sold (converted into cash)
in the financial markets.
Price/Earnings Ratio: The price of a share of stock divided
by the earnings per share for a 12-month period.
Option: An agreement to purchase or sell something, such
as shares of stock, by a certain time for a specified
price. An option need not be exercised.
Spread: The difference between two values; often used
to describe the difference between "bid" and "asked"
prices of a security, or between the yields of two
similar maturity bonds.
Yankee Bond: A bond sold by a foreign company or government
in the U.S. market and denominated in U.S. dollars.
<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
Thomas T. Mooney
Thomas H. O'Brien
John R. Strangfeld
Nancy H. Teeters
Louis A. Weil, III
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Deborah A. Docs, 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 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
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
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Swidler Berlin Shereff Friedman, 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,
1999, 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 BULK RATE
Gateway Center Three U.S. POSTAGE
100 Mulberry Street PAID
Newark, NJ 07102-4077 Permit 6807
New York, NY
(800) 225-1852
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