<PAGE>
(LOGO)
Annual Report
December 31, 1999
Prudential
High Yield Fund, Inc.
(LOGO)
<PAGE>
A Message from the Fund's President February 3, 2000
(PHOTO)
Dear Shareholder,
Prudential High Yield Fund's Class A shares provided a 3.38% return
for 1999 that lagged the 4.53% return on the Lipper High Current
Yield Fund Average but beat the 2.39% return on the Lehman Brothers
High Yield Bond Index.
The Fund trailed its benchmark Lipper Average in 1999 primarily
because it had only a modest exposure to common stock and emerging
market bonds. Having a larger common stock position would not
have helped the Fund achieve its major investment objective,
which is to maximize current income. Furthermore, while some
sectors of the U.S. stock market posted spectacular returns
in 1999, keep in mind that stock prices are much more volatile
than bond prices and can hurt as well as enhance a portfolio's
performance.
As for emerging market bonds, a resurgence in global economic
activity boosted investors' confidence in these debt securities.
Lehman Brothers indexes showed they performed better than all
other bond markets in 1999 but finished in last place in 1998.
This volatile performance is characteristic of emerging market
bonds, and is the chief reason that the Fund's exposure to
these debt securities remains very limited.
The low absolute returns provided by the Fund, its Lipper
Average, and the Lehman High Yield Index were a reflection
of the bearish conditions in U.S. bond markets during 1999.
The Federal Reserve repeatedly increased a key short-term
interest rate to rein in U.S. economic growth and avoid
higher inflation. The changes in monetary policy
caused investors to require higher yields on U.S.
bonds, which caused bond prices to fall.
The following report takes a closer look at developments
in the high-yield bond market, and explains how the Fund
was positioned accordingly.
Sincerely,
John R. Strangfeld
President
Prudential High Yield Fund, Inc.
<PAGE>
Performance Review
(PHOTO) (PHOTO)
Team portfolio managers Casey Walsh (High
Yield [Sector] Team Leader) and George Edwards
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.
U.S. bond markets wracked by tough times in 1999
Fixed-income markets in the United States sold off
sharply in 1999, battered by the threat of mounting
inflationary pressures. In its ninth year of expansion,
the U.S. economy grew so rapidly that many investors
feared it would cause a build-up in inflation. Higher
inflation particularly hurts those on fixed incomes
whose buying power declines if their incomes are not
adjusted for the rise in prices. Investors also
dislike rising inflation because it erodes the value
of bonds' fixed interest payments.
As it turned out, inflation remained relatively subdued in
the United States during 1999, but there were valid reasons
to fear that price pressures would accelerate. The price
of crude oil more than doubled in 1999, and the lowest
U.S. unemployment rate in 30 years led to fears that
employers would have to pay higher wages to attract
and keep workers. In order to curb economic growth and keep
inflation in check, the Federal Reserve raised the
federal funds rate (what banks charge each other for
overnight loans) by a quarter of a percentage point
in June, August, and November 1999, which pushed it
to 5.50%. Increasing this rate can slow
economic growth by driving borrowing costs higher
for consumers and businesses. To keep pace with
these changes in U.S. monetary policy, investors
required higher yields (and lower prices) on U.S.
bonds, including "junk bonds". The low absolute
returns of the Fund and its Lipper Average reflected
this negative trend.
Fund hurt by low exposure to emerging market bonds
Although brisk economic growth hurt U.S. fixed-income
markets, a pickup in global economic activity benefited
emerging market bonds in 1999. Investors felt more
confident about owning these risky debt securities
as the world economy began to recover in 1999 from a
global finan-
Dividend Adjustment
Effective with the March distribution (payable 3/21/00),
shareholders of the Prudential High Yield Fund will see
their monthly dividend reduced by $0.005 per share (Class
A, B, C, and Z). This change reflects the general trend
toward lower interest rates (prior to the
recent spike in rates). The Fund has continued to
emphasize solid, single B-rated holdings in large,
liquid companies, and the High Yield Sector team
has refused to chase yield by having a large
exposure to the lowest rated high-yield bonds.
<PAGE>
cial crisis that occurred in 1997 and 1998.
As a result, the Lehman Brothers Emerging Market Index
returned a stellar 23.07% in 1999. Prudential High Yield
Fund held only 2.4% of its total investments in emerging
market bonds as of December 31, 1999. We typically limit
exposure because returns on emerging market bonds have
historically been very volatile due to the social,
political, and currency risks. Unfortunately in 1999,
the Fund's small position in this market was a key
reason its annual returns lagged its benchmark Lipper
Average.
More common stock would
have boosted Fund returns
The Fund's returns would have been more competitive had
we selectively increased its exposure to common stocks.
1999 saw a record level of stock issuance by high-yield
companies led by the telecommunications, cable, and
technology sectors. High-yield equity securities of
these three industries posted spectacular returns.
But the Fund reaped scant benefit from this rally
because common stocks accounted for only 1.1% of
its total investments at the end of 1999. We
chose not to emphasize common stocks because a
larger exposure to noninterest-bearing securities
would not help the Fund provide high current income,
which is its primary investment objective.
<TABLE>
Performance at a Glance
<CAPTION>
Cumulative Total Returns1 As of 12/31/99
One Five Ten Since
Year Years Years Inception2
<S> <C> <C> <C> <C>
Class A 3.38% 54.98% N/A 151.17%
Class B 2.86 50.57 137.50% 550.96
Class C 2.86 50.57 N/A 49.39
Class Z 3.79 N/A N/A 27.53
Lipper High Current Yield Fund Avg.3 4.53 53.09 161.34 ***
</TABLE>
<TABLE>
Average Annual Total Returns1 As of 12/31/99
<CAPTION>
One Five Ten Since
Year Years Years Inception2
<S> <C> <C> <C> <C>
Class A -0.76% 8.27% N/A 9.26%
Class B -2.14 8.39 9.04% 9.44
Class C 0.83 8.31 N/A 7.49
Class Z 3.79 N/A N/A 6.55
</TABLE>
<TABLE>
Distributions and Yields As of 12/31/99
<CAPTION>
Total
Distributions 30-Day
Paid for 12 Mos. SEC Yield
<S> <C> <C>
Class A $0.76 9.91%
Class B $0.72 9.62
Class C $0.72 9.73
Class Z $0.78 10.56
</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 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 one-, five-, and ten-year
periods in the High Current Yield Fund category. The Lipper
average is unmanaged. High Current Yield funds aim
at high (relative) current yield from fixed-income
securities, have no quality or maturity restrictions,
and tend to invest in lower-grade debt issues.
*** Lipper Since Inception returns are 168.23% for
Class A, 661.21% for Class B, 52.08% for Class C,
and 27.49% for Class Z, based on all funds in each
share class.
1
<PAGE>
Review Cont'd.
The Fund beat the Lehman High Yield Index
Despite the difficult conditions that persisted in
U.S. bond markets, the Fund still beat the Lehman
Brothers U.S. Corporate High Yield Index, which provided
a 2.39% return in 1999. (This return was the highest of
all U.S. fixed-income markets in 1999.) The Fund benefited
from having a larger exposure to telecommunications bonds
relative to the Index. Although some of the Fund's
telecommunications bonds had traded in a volatile
fashion earlier in the year, the sector, as a whole,
performed well in 1999. We particularly favored bonds of
wireless companies because there is a high likelihood
of consolidation in that industry. We also favored
wireline companies that have larger capitalizations.
The telecommunications industry overall continues to
offer solid potential for earnings growth as well as
potential for positive event risk, such as acquisitions
or business combinations. We increased telecommunications
bonds to 22.6% of the Fund's total investments as of
December 31, 1999, from 17.0% a year earlier by purchasing newly
issued bonds of companies such as Nextel, Voicestream,
and Global Telesystems.
We also focused on adding larger bond issues to the
Fund throughout the year. They are more liquid, or easier
to buy and sell, than smaller bond issues. During the
global financial crisis of 1997 and 1998, many cautious
investors flocked to the most liquid of all bonds--recently
issued U.S. Treasury securities. Even though the world
economy began recovering from the global financial crisis
in 1999, there remained a strong preference for the most
liquid "junk bonds" among buyers of high-yield debt securities.
Meanwhile, we cut back on healthcare bonds, which
stood at 5.3% of the Fund's total investments as of
December 31, 1999--down from 7.0% a year earlier. We
worried that regulatory changes in the United States
could hurt the healthcare industry's profitability.
Within the "junk bond" market, healthcare was one of
the poorest performing sectors in 1999.
Five Largest Issuers
Expressed as a percentage of net assets as of 12/31/99
Nextel Communications, Inc. 2.6%
CSC Holdings, Inc. 2.2
AES Corp. 1.9
Allied Waste North America, Inc. 1.8
Intermedia Communications, Inc. 1.1
Portfolio Composition
Expressed as a percentage of total investments* as of 12/31/99
Baa 1.1%
Ba 17.3
B 61.6
Caa or lower 6.9
Not Rated 4.8
Equities & Other 6.4
Cash & Equivalents 1.9
* Excludes cash received as a result of securities on loan
Looking Ahead
The Fund continues to focus on large, liquid issues
of high-yield bonds. Their prices tend to be more
stable during turbulent periods in the financial
markets, and these bonds offer attractive yields
relative to the yields on comparable U.S. Treasury
securities. In addition, the Fund is rebuilding
its exposure to bonds of energy and paper companies
whose earnings prospects appear promising in the near term.
2
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--96.7%
CORPORATE BONDS--90.3%
- ------------------------------------------------------------------------------------------------------------------------------
Aerospace--0.2%
BE Aerospace, Inc.,
Sr. Sub. Notes B1 8.00% 3/01/08 $ 2,500 $ 2,156,250
Sr. Sub. Notes B1 9.50 11/01/08 3,500 3,272,500
Compass Aerospace Corp., Sr. Sub. Notes B3 10.125 4/15/05 3,250 1,787,500
--------------
7,216,250
- ------------------------------------------------------------------------------------------------------------------------------
Automotive Parts--2.8%
Foamex JPS Automotive LLC., Sr. Notes B1 11.125 6/15/01 18,405 18,312,975
Hayes Wheels Int'l., Inc.,
Sr. Sub. Notes B2 11.00 7/15/06 32,000 33,440,000
Sr. Sub. Notes B2 9.125 7/15/07 3,000 2,902,500
Sr. Sub. Notes B3 9.125 7/15/07 1,875 1,804,687
Lear Corp.,
Sr. Notes Ba1 7.96 5/15/05 4,900 4,753,000
Sr. Notes Ba1 8.11 5/15/09 12,350 11,856,000
Paragon Corporate Holdings, Inc., Sr. Notes B3 9.625 4/01/08 7,500 2,250,000
Standyne Automotive Corp., Sr. Sub. Notes B(a) 10.25 12/15/07 10,550 8,545,500
Tenneco Automotive, Inc., Sr. Sub. Notes B2 11.625 10/15/09 9,860 10,007,900
Venture Holdings, Sr. Notes B2 9.50 7/01/05 15,150 13,786,500
--------------
107,659,062
- ------------------------------------------------------------------------------------------------------------------------------
Broadcasting & Other Media--4.7%
American Lawyer Media, Inc.,
Sr. Disc. Notes, Zero Coupon (until 12/15/02) CCC+(a) 12.25 12/15/08 10,500 7,271,250
Sr. Sub. Notes B1 9.75 12/15/07 3,700 3,598,250
AMSC Acquisition, Inc., Sr. Notes NR 12.25 4/01/08 10,000 8,200,000
Capstar Radio Broadcasting,
Sr. Disc. Notes, Zero Coupon (until 2/1/02) B2 12.75 2/01/09 16,675 14,903,281
Sr. Sub. Notes B2 9.25 7/01/07 12,000 12,210,000
Chancellor Media Corp., Sr. Sub. Notes B1 9.00 10/01/08 4,275 4,446,000
Garden State Newspapers, Inc., Sr. Sub. Notes B1 8.75 10/01/09 600 558,000
Globo Communicacoes, Sr. Notes (Brazil) B2 10.50 12/20/06 6,000(i) 4,980,000
Grupo Televisa S.A., Sr. Disc. Notes (Mexico),
Zero Coupon (until 5/15/01) Ba2 13.25 5/15/08 4,705(g)(i) 4,293,313
Lamar Advertising Co., Sr. Sub. Notes B1 9.625 12/01/06 8,500(g) 8,733,750
Liberty Group Publishing, Inc.,
Sr. Disc. Deb., Zero Coupon (until 2/1/03) CCC+(a) 11.625 2/01/09 5,625 2,812,500
Sr. Sub. Notes CCC+(a) 9.375 2/01/08 6,550 5,829,500
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Broadcasting & Other Media (cont'd.)
Lin Holdings Corp., Sr. Disc. Notes, Zero Coupon (until
3/1/03) B3 10.00 3/01/08 $ 17,400(g) $ 11,745,000
Mail-Well Corp., Sr. Sub. Notes B1 8.75% 12/15/08 8,000 7,600,000
Paxson Communications Corp., Sr. Sub. Notes B3 11.625 10/01/02 5,295 5,467,087
Production Resource LLC., Sr. Sub. Notes B-(a) 11.50 1/15/08 15,000 13,350,000
SFX Broadcasting, Inc., Sr. Sub. Notes B3 9.125 2/01/08 19,000 17,907,500
Spectrasite Holdings, Inc., Sr. Disc. Notes,
Zero Coupon (until 4/15/04) NR 11.25 4/15/09 5,500 2,915,000
Sun Media Corp., Sr. Sub. Notes (Canada) B2 9.50 5/15/07 9,522(i) 9,450,585
Transwestern Publishing Co., Sr. Sub. Notes B2 9.625 11/15/07 5,250 5,223,750
World Color Press, Inc.,
Sr. Sub. Notes Baa3 8.375 11/15/08 4,750 4,643,125
Sr. Sub. Notes Baa3 7.75 2/15/09 13,500 12,892,500
Young America Corp., Sr. Sub. Notes B3 11.625 2/15/06 9,400 7,050,000
--------------
176,080,391
- ------------------------------------------------------------------------------------------------------------------------------
Building & Related Industries--2.7%
Ainsworth Lumber Ltd., Sr. Notes B3 12.50 7/15/07 15,500 17,127,500
American Builders, Sr. Sub. Notes B3 10.625 5/15/07 5,000 4,600,000
Building Materials Corp., Sr. Notes Ba3 8.00 12/01/08 1,750 1,579,375
Congoleum Corp., Sr. Notes B1 8.625 8/01/08 6,000 5,280,000
D.R. Horton, Inc., Sr. Notes Ba1 8.375 6/15/04 5,420 5,230,300
Del Webb Corp., Sr. Sub. Deb. B2 9.375 5/01/09 6,950 6,359,250
Falcon Holdings Group, L.P.,
Sr. Disc. Notes, Zero Coupon (until 4/15/03) B2 9.285 4/15/10 13,500 10,125,000
Sr. Notes B2 8.375 4/15/10 5,000 5,050,000
Kaufman & Broad Home Corp., Sr. Sub. Notes Ba3 9.625 11/15/06 27,750 28,443,750
Kevco, Inc., Sr. Sub. Notes B3 10.375 12/01/07 11,000 2,970,000
Nortek, Inc.,
Sr. Notes B1 9.25 3/15/07 11,405 11,119,875
Sr. Notes B1 9.125 9/01/07 500 485,000
Standard Pacific Corp., Sr. Sub. Notes Ba2 8.50 4/01/09 4,000 3,740,000
--------------
102,110,050
- ------------------------------------------------------------------------------------------------------------------------------
Cable--6.8%
Adelphia Communications Corp.,
Sr. Notes B1 8.125 7/15/03 3,120 2,979,600
Sr. Notes B+(a) 9.50 2/15/04 342 345,221
Sr. Notes B1 10.50 7/15/04 11,300 11,780,250
Avalon Cable Holdings LLC., Sr. Disc. Notes,
Zero Coupon (until 12/1/03) B2 11.875 12/01/08 8,000 5,220,000
Century Communications Corp. Sr. Notes, B1 Zero 3/15/03 2,000 1,425,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Cable (cont'd.)
Charter Communications Holdings LLC.,
Sr. Disc. Notes, Zero Coupon (until 4/1/04) B2 9.92 % 4/01/11 $ 10,755 $ 6,399,225
Sr. Notes B2 8.625 4/01/09 15,750(g) 14,686,875
Classic Cable, Inc., Sr. Sub. Notes B3 9.375 8/01/09 6,150 5,934,750
Coaxial Communications, Inc., Sr. Notes B3 10.00 8/15/06 5,750 5,635,000
Comcast UK Cable Corp., Sr. Disc. Deb., Zero Coupon
(until 11/15/00) B2 11.20 11/15/07 17,000 16,150,000
Diamond Cable Co., (United Kingdom)
Sr. Disc. Notes B3 13.25 9/30/04 10,010(i) 10,748,238
Sr. Disc. Notes, Zero Coupon (until 12/15/00) B3 11.75 12/15/05 9,275(i) 8,764,875
International Cabletel, Inc.,
Sr. Def'd. Coupon Notes, Ser. B, Zero Coupon (until
2/1/01) B3 11.50 2/01/06 2,900 2,610,000
Sr. Disc. Notes, Zero Coupon (until 4/15/00) B3 12.75 4/15/05 19,450 19,450,000
Mediacom LLC./Capital Corp., Sr. Notes B2 7.875 2/15/11 11,250 9,900,000
Multicanal S.A., Notes (Argentina) B1 13.125 4/15/09 5,750(g)(i) 5,663,750
NTL, Inc.,
Sr. Notes Zero Coupon (until 10/1/03) B3 12.375 10/01/08 5,750 4,053,750
Sr. Notes, Zero Coupon (until 4/1/03) B3 9.75 4/01/08 25,500 17,595,000
Rogers Cablesystems, Inc., (Canada) Sr. Sec'd. Notes Ba3 10.00 3/15/05 13,750(i) 14,712,500
Rogers Cantel, Inc., (Canada) 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 5,900(i) 5,501,750
TVN Entertainment Corp., Sr. Notes NR 14.00 8/01/08 15,000 5,250,000
United Int'l. Holdings, Inc., Sr. Disc. Notes, Zero
Coupon
(until 2/15/03) B3 10.75 2/15/08 56,500(g) 36,160,000
United Pan-Europe Communications, Inc.,
Sr. Disc. Notes B2 Zero 8/01/09 21,585 12,195,525
Sr. Notes B2 10.875 8/01/09 26,390 26,785,850
--------------
254,697,159
- ------------------------------------------------------------------------------------------------------------------------------
Capital Goods--1.9%
Allied Waste North America, Inc.,
Sr. Notes Ba3 7.625 1/01/06 9,000 8,100,000
Sr. Notes Ba3 7.875 1/01/09 25,500 22,440,000
Sr. Sub. Notes B2 10.00 8/01/09 41,200 36,668,000
Continental Global Group, Inc., Sr. Notes B2 11.00 4/01/07 10,000 4,900,000
--------------
72,108,000
- ------------------------------------------------------------------------------------------------------------------------------
Casinos--2.4%
Aladdin Gaming, Sr. Disc. Notes, Zero Coupon (until
3/1/03) CCC-(a) 13.50 3/01/10 14,000 5,600,000
Alliance Gaming Corp., Sr. Sub. Notes B3 10.00 8/01/07 2,075 1,156,813
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Casinos (cont'd.)
Aztar Corp., Sr. Sub. Notes B1 8.875% 5/15/07 $ 5,950(g) $ 5,712,000
Casino Magic Corp., First Mtge. Notes B1 13.00 8/15/03 3,500 3,850,000
Circus Circus Enterprises, Inc.,
Sr. Sub. Deb. Ba2 7.625 7/15/13 2,850 2,440,312
Sr. Sub. Deb. Baa3 6.70 11/15/96 3,580 3,341,250
Coast Hotels & Casinos, Inc., Sr. Sub. Notes B3 9.50 4/01/09 5,155 4,948,800
Fitzgeralds Gaming Corp., Sr. Notes, (cost $13,838,440;
purchased 12/22/97) B3 12.25 12/15/04 14,000(b)(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 7,064,500
Sr. Sub. Notes B2 8.625 5/15/09 13,450 12,945,625
Isle Capri Casinos, Inc., Sr. Sub. Notes B3 8.75 4/15/09 3,915 3,611,587
Mohegan Tribal Gaming Auth.,
Sr. Notes Ba2 8.125 1/01/06 4,000 3,880,000
Sr. Sub. Notes Ba3 8.75 1/01/09 5,125(g) 5,048,125
Station Casinos, Inc., Sr. Sub. Notes B2 10.125 3/15/06 2,800 2,856,000
Trump Atlantic City Assocs.,
First Mtge. Notes B2 11.25 5/01/06 6,195 5,017,950
First Mtge. Notes B2 11.25 5/01/06 5,000 3,750,000
--------------
90,866,712
- ------------------------------------------------------------------------------------------------------------------------------
Chemicals--2.9%
Georgia Gulf Corp., Sr. Sub. Notes B1 10.375 11/01/07 2,000 2,087,500
Huntsman ICI Chemicals LLC.,
Sr. Sub. Notes B2 9.50 7/01/07 14,500 13,847,500
Sr. Sub. Notes B2 10.125 7/01/09 17,125(g) 17,553,125
Lyondell Chemical Co.,
Sr. Sec'd Notes Ba3 9.625 5/01/07 5,750 5,879,375
Sr. Sec'd Notes Ba3 9.875 5/01/07 23,995(g) 24,474,900
Sr. Sub. Notes B2 10.875 5/01/09 3,750 3,881,250
Polymer Group, Inc., Sr. Sub. Notes B2 8.75 3/01/08 13,000 12,480,000
Sterling Chemical Holdings, Inc., Sr. Sub. Notes B3 11.75 8/15/06 6,380 4,785,000
Sterling Chemicals, Inc., Sr. Sec'd Notes B3 12.375 7/15/06 5,180 5,335,400
ZSC Specialty Chemical Plc, Sr. Notes B2 11.00 7/01/09 17,335 17,941,725
--------------
108,265,775
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Products--2.8%
Borden, Inc., Notes Ba1 9.20 3/15/21 13,500 12,140,010
Consumers Int'l., Inc., Sr. Sec'd. Notes Ba3 10.25 4/01/05 16,375 13,100,000
Corning Consumer Prod. Co., Sr. Sub. Notes B3 9.625 5/01/08 16,000 12,560,000
Desa Int'l., Inc., Sr. Sub. Notes B3 9.875 12/15/07 11,500 8,395,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Consumer Products (cont'd.)
Holmes Prod. Corp., Sr. Sub. Notes B3 9.875% 11/15/07 $ 8,000 $ 5,800,000
Intersil Corp., Sr. Sub. Notes B3 13.25 8/15/09 4,475 4,877,750
Pierce Leahy Command Co., Sr. Notes B3 8.125 5/15/08 4,250 3,888,750
Revlon Consumer Prod. Corp., Sr. Notes B2 9.00 11/01/06 14,150 10,754,000
Sealy Mattress Co., Sr. Sub. Disc. Notes,
Zero Coupon (until 12/15/02) NR 10.875 12/15/07 2,135 1,494,500
Verio, Inc.,
Sr. Notes B3 11.25 12/01/08 1,125 1,181,250
Sr. Notes B3 10.625 11/15/09 13,140 13,468,500
Waste Systems Int'l., Inc., Sr. Notes Caa 11.50 1/15/06 11,000 10,656,250
Windmere Durable Holdings, Inc., Sr. Notes B3 10.00 7/31/08 7,000(g) 6,825,000
--------------
105,141,010
- ------------------------------------------------------------------------------------------------------------------------------
Drugs & Health Care--5.4%
Abbey Healthcare Group, Inc., Sr. Sub. Notes B3 9.50 11/01/02 8,000 7,840,000
Biovail Corp. Int'l., Sr. Notes B2 10.875 11/15/05 3,405 3,575,250
Columbia/HCA Healthcare Corp.,
Deb. Ba2 7.50 11/15/95 3,630 3,012,900
Deb. Ba2 7.05 12/01/27 9,160 6,824,200
Notes Ba2 7.69 6/15/25 6,140 5,034,800
Notes Ba2 7.75 7/15/36 5,350 4,199,750
Concentra Operating Corp., Sr. Sub. Notes B3 13.00 8/15/09 14,000(g) 12,740,000
Dade Int'l., Inc., Sr. Sub. Notes B2 11.125 5/01/06 27,950 27,391,000
Fresenius Med. Care Capital Trust, Gtd. Notes NR 9.00 12/01/06 37,365 36,617,700
Genesis Health Ventures, Inc., Sr. Sub. Notes B2 9.875 1/15/09 500 210,000
Harborside Healthcare Corp., Sr. Sub. Disc. Notes,
Zero Coupon (until 8/1/03) B3 11.00 8/01/08 11,750 3,760,000
Healthsouth Corp., Sr. Notes Baa3 6.875 6/15/05 9,265 8,021,637
Iasis Healthcare Corp., Sr. Sub. Notes B3 13.00 10/15/09 8,810 9,074,300
ICN Pharmaceuticals, Inc.,
Sr. Notes Ba3 8.75 11/15/08 13,000 12,415,000
Sr. Notes Ba3 8.75 11/15/08 4,700 4,488,500
Integrated Health Svcs., Inc., Sr. Sub. Notes C 10.25 4/30/06 11,350(e) 936,375
Lifepoint Hospitals Holdings, Inc.,
Sr. Sub. Notes B3 10.75 5/15/09 3,135 3,260,400
Sr. Sub. Notes B3 10.75 5/15/09 5,720(g) 5,948,800
Magellan Health Svcs, Inc., Sr. Sub. Notes B3 9.00 2/15/08 34,000 27,540,000
Mariner Post Acute Network, Inc.,
Sr. Sub. Disc. Notes, Zero Coupon (until 11/1/02) C 10.50 11/01/07 14,240(e) 71,200
Sr. Sub. Notes C 9.50 11/01/07 3,000(e) 15,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Drugs & Health Care (cont'd.)
Meditrust, Notes Ba2 7.82% 9/10/26 $ 1,675 $ 1,423,750
Triad Hospitals Holdings, Inc., Sr. Sub. Notes B3 11.00 5/15/09 17,260(g) 17,950,400
--------------
202,350,962
- ------------------------------------------------------------------------------------------------------------------------------
Energy--9.6%
AES Corp.,
Sr. Notes Ba1 9.50 6/01/09 40,075 40,876,500
Sr. Sub. Notes Ba3 10.25 7/15/06 28,000(g) 28,420,000
Anker Coal Group, Inc., Sr. Sec'd. Notes, PIK NR 14.25 9/01/07 8,600(b) 6,278,000
Applied Power, Inc., Sr. Sub. Notes B1 8.75 4/01/09 6,750 6,598,125
Benton Oil & Gas Co., Sr. Notes B3 11.625 5/01/03 9,500 6,650,000
Calpine Corp., Sr. Notes Ba1 7.75 4/15/09 5,000 4,665,000
Chesapeake Energy Corp., Sr. Notes B3 9.625 5/01/05 15,285(g) 14,444,325
Cliffs Drilling Co., Sr. Notes Ba2 10.25 5/15/03 12,800 13,164,000
CMS Energy Corp.,
Sr. Notes Ba3 8.375 7/01/03 5,000(g) 4,896,000
Sr. Notes Ba3 7.50 1/15/09 5,550 5,106,000
DI Industies, Inc., Sr. Notes B1 8.875 7/01/07 12,925 11,955,625
Eott Energy Partners, Sr. Notes Ba2 11.00 10/01/09 4,420 4,596,800
Gothic Prod. Corp., Sr. Sec'd Notes B3 11.125 5/01/05 3,900 3,276,000
Gulf Canada Resources Ltd.,
Sr. Notes Ba1 8.35 8/01/06 1,100 1,082,125
Sr. Sub. Deb. Ba2 9.625 7/01/05 3,900 3,997,500
Houston Expl. Co., Sr. Sub. Notes B2 8.625 1/01/08 7,000 6,720,000
Key Energy Group, Inc., Sr. Sub. Notes NR 5.00 9/15/04 4,000 2,820,000
Leviathan Gas Pipeline/Finance Corp., Sr. Sub. Notes Ba2 10.375 6/01/09 4,400 4,576,000
Nuevo Energy Co.,
Sr. Sub. Notes B1 9.50 4/15/06 23 23,000
Sr. Sub. Notes B1 9.50 6/01/08 752 752,000
P & L Coal Holdings Corp.,
Sr. Notes Ba3 8.875 5/15/08 19,415 18,978,162
Sr. Sub. Notes B2 9.625 5/15/08 6,500 6,321,250
Parker Drilling Co., Sr. Notes B1 9.75 11/15/06 15,550 15,044,625
Plains Resources, Inc., Sr. Sub. Notes B2 10.25 3/15/06 10,165 9,910,875
Pogo Producing Co., Sr. Sub. Notes B2 8.75 5/15/07 15,600 15,015,000
R & B Falcon Corp., Sr. Notes Ba3 12.25 3/15/06 7,290(b) 8,055,450
RBF Finance Co.,
Sr. Sec'd Notes Ba3 11.00 3/15/06 12,935(b) 13,969,800
Sr. Sec'd Notes Ba3 11.375 3/15/09 10,000(b) 10,750,000
Snyder Oil Corp., Sr. Sub. Notes Ba3 8.75 6/15/07 11,000 10,945,000
Swift Energy Co., Sr. Sub. Notes B2 10.25 8/01/09 10,430 10,508,225
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 8
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Energy (cont'd.)
Tesoro Petroleum Corp., Sr. Sub. Notes B1 9.00% 7/01/08 $ 16,000 $ 15,240,000
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 2/15/04) B3 11.375 2/15/09 7,300 3,942,000
Veritas DGC, Inc., Sr. Notes Ba3 9.75 10/15/03 6,300 6,363,000
Vintage Petroleum, Inc.,
Sr. Sub. Notes B1 9.00 12/15/05 10,000(g) 9,975,000
Sr. Sub. Notes B1 8.625 2/01/09 14,185(g) 13,794,913
York Power Funding, Sr. Sec'd. Notes (Cayman Islands) NR 12.00 10/30/07 10,000(g)(i) 10,300,000
--------------
364,177,300
- ------------------------------------------------------------------------------------------------------------------------------
Financial Services--1.5%
Americredit Corp.,
Gtd. Sr. Sub. Notes Ba1 9.25 2/01/04 14,450 14,450,000
Sr. Notes Ba1 9.875 4/15/06 5,500 5,555,000
Amresco Mtg., Inc., Sr. Sub. Notes (cost $4,900,000
purchased 2/24/98) B2 9.875 3/15/05 4,275 2,821,500
Delta Financial Corp., Sr. Notes B3 9.50 8/01/04 7,320 4,758,000
Metris Cos., Inc., Sr. Notes Ba3 10.125 7/15/06 9,750 9,262,500
Octagon Investment Participating Ltd., Sr. Sec'd Notes NR 6.25 12/14/11 5,000 5,000,000
Sovereign Bancorp, Inc.,
Notes Ba1 6.625 3/15/01 3,850 3,724,875
Sr. Notes Ba3 10.50 11/15/06 10,000 10,200,000
--------------
55,771,875
- ------------------------------------------------------------------------------------------------------------------------------
Food & Beverage--3.4%
Advantica Restaurant Group, Inc., Sr. Notes B2 11.25 1/15/08 10,375 7,833,125
Agrilink Foods, Inc., Sr. Sub. Notes B3 11.875 11/01/08 5,325 5,378,250
Ameriking, Inc., Sr. Notes B3 10.75 12/01/06 3,200 2,960,000
Ameriserve Food Dist., Inc.,
Sr. Notes B2 8.875 10/15/06 8,210 4,515,500
Sr. Sub. Notes B2 10.125 7/15/07 17,260 5,868,400
Carrols Corp., Sr. Sub. Notes B2 9.50 12/01/08 14,910(g) 13,568,100
CKE Restaurants, Inc., Sr. Sub. Notes B2 9.125 5/01/09 8,500 6,460,000
Cott Corp., Sr. Notes B1 8.50 5/01/07 5,000 4,650,000
Del Monte Foods Co., Sr. Disc. Notes, Zero Coupon
(until 12/15/02) B-(a) 12.50 12/15/07 650 503,750
Dominos, Inc., Sr. Sub. Notes B3 10.375 1/15/09 2,620(g) 2,515,200
Fresh Foods, Inc., Sr. Sub. Notes B3 10.75 6/01/06 9,200(g) 8,671,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 9
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Food & Beverage (cont'd.)
Grupo Azucarero, S.A., Sr. Notes (Mexico) B3 11.50% 1/15/05 $ 7,250(i) $ 2,972,500
Packaged Ice, Inc., Sr. Notes B3 9.75 2/01/05 9,640 8,820,600
Pilgrim's Pride Corp., Sr. Sub. Notes B1 10.875 8/01/03 1,460 1,470,950
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 12,299(b) 12,668,456
Purina Mills, Inc., Sr. Sub. Notes B2 9.00 3/15/10 19,500(b) 4,875,000
Sbarro, Inc., Sr. Notes Ba3 11.00 9/15/09 6,530 6,758,550
SFC New Holdings, Inc., Sr. Notes NR 11.25 8/15/01 2,630 2,505,075
Stater Brothers Holdings, Inc., Sr. Notes B2 10.75 8/15/06 17,875 18,053,750
Vlasic Foods Int'l., Inc., Sr. Sub. Notes B2 10.25 7/01/09 8,080(g) 7,696,200
--------------
128,744,406
- ------------------------------------------------------------------------------------------------------------------------------
Industrials--1.5%
Anchor Lamina, Inc., Sr. Sub. Notes B3 9.875 2/01/08 9,800 7,840,000
Collins & Aikman Products Co.,
Sr. Sub. Notes B2 11.50 4/15/06 2,100 2,073,750
Sr. Sub. Notes B3 10.00 1/15/07 1,665 1,640,025
Eagle Picher Holdings, Inc., Sr. Sub. Notes B3 9.375 3/01/08 11,000(g) 9,790,000
Gentek, Inc., Sr. Sub. Notes B2 11.00 8/01/09 9,050 9,412,000
Great Lakes Carbon Corp.,
Sr. Disc. Deb., Zero Coupon (until 5/15/03) B-(a) 13.125 5/15/09 5,680 3,010,400
Sr. Sub. Notes B3 10.25 5/15/08 5,000 4,750,000
Sun World Int'l., Inc., First Mtge. B2 11.25 4/15/04 1,440 1,468,800
Thermadyne Mfg.,
Sr. Disc. Notes, Zero Coupon (until 6/1/03) CCC+(a) 12.50 6/01/08 2,000 910,000
Sr. Sub. Notes B3 9.875 6/01/08 9,000 7,560,000
Trench Electric S.A., Gtd. Sr. Sub. Notes (Netherlands) B3 10.25 12/15/07 10,000(i) 7,400,000
--------------
55,854,975
- ------------------------------------------------------------------------------------------------------------------------------
Leisure & Tourism--4.1%
Alliance Atlantis Commerce, Inc., Sr. Sub. Notes B2 13.00 12/15/09 8,920 8,920,000
Ballys Total Fitness Holdings Corp., Sr. Sub. Notes,
Ser. C B3 9.875 10/15/07 22,000 21,285,000
Extended Stay America, Inc., Sr. Sub. Notes B2 9.15 3/15/08 11,050 9,945,000
Felcor Suites L.P., Gtd. Sr. Notes Ba1 7.375 10/01/04 17,435 16,040,200
Hedstrom Holdings, Inc.,
Sr. Disc. Notes, Zero Coupon (until 6/1/02) Caa 12.00 6/01/09 3,400 34,000
Sr. Sub. Notes B3 10.00 6/01/07 9,400 564,000
Hilton Hotels Corp., Sr. Notes Baa3 7.50 12/15/17 6,695(g) 5,589,789
HMH Properties, Inc., Sr. Notes Ba2 7.875 8/01/08 19,875 17,788,125
Hollywood Park, Inc., Gtd. Notes B2 9.25 2/15/07 18,800(g) 18,659,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 10
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Leisure & Tourism (cont'd.)
Imax Corp., Sr. Notes Ba2 7.875% 12/01/05 $ 5,250 $ 4,935,000
Louisiana Quinta Inns, Inc.,
Sr. Notes Ba1 7.25 3/15/04 6,900 5,520,690
Sr. Notes Ba1 7.40 9/15/05 1,700 1,368,772
Premier Parks, Inc.,
Sr. Disc. Notes, Zero Coupon (until 4/1/03) B3 10.00 4/01/08 12,250 8,391,250
Sr. Notes B3 9.75 6/15/07 3,075 3,090,375
PX Escrow Corp., Sr. Sub. Disc. Notes, Zero Coupon
(until 2/1/02) B3 9.625 2/01/06 10,215 5,005,350
Six Flags Entertainment Corp., Gtd. Sr. Notes B2 8.875 4/01/06 7,300 7,135,750
Town Sports Int'l., Inc., Sr. Notes B2 9.75 10/15/04 10,900 10,518,500
Vail Resorts, Inc., Sr. Sub. Notes B1 8.75 5/15/09 9,750 9,116,250
--------------
153,907,051
- ------------------------------------------------------------------------------------------------------------------------------
Miscellaneous Services--1.8%
Ball Corp., Sr. Sub. Notes B1 8.25 8/01/08 1,500 1,440,000
Coinstar, Inc., Sr. Disc. Notes NR 13.00 10/01/06 5,050 5,201,500
Color Spot Nurseries, Sr. Sub. Notes CCC(a) 10.50 12/15/07 8,000 5,600,000
Iron Mountain, Inc., Sr. Sub. Notes B2 8.25 7/01/11 7,400 6,734,000
Kindercare Learning Center, Inc., Sr. Sub. Notes B3 9.50 2/15/09 13,355 12,854,188
La. Petite Academy, Inc., Sr. Notes B3 10.00 5/15/08 6,500 4,777,500
United Rentals, Inc., Sr. Sub. Notes B1 8.80 8/15/08 7,330 6,835,225
United Stationer Supply Co., Sr. Sub. Notes B1 12.75 5/01/05 8,600 9,266,500
Viasystems, Inc., Sr. Sub. Notes B3 9.75 6/01/07 26,750 14,712,500
--------------
67,421,413
- ------------------------------------------------------------------------------------------------------------------------------
Paper & Forest Products--2.0%
Doman Industries Ltd.,
Sr. Notes (Canada) B1 8.75 3/15/04 9,395(i) 8,079,700
Sr. Notes, Ser. B B1 9.25 11/15/07 1,690 1,352,000
Graham Packaging Holdings Co.,
Sr. Disc. Notes, Zero Coupon (until 1/15/03) B-(a) 10.75 1/15/09 15,925 10,988,250
Sr. Sub. Notes B3 8.75 1/15/08 7,150 6,864,000
Indah Kiat Fin Mauritius Ltd., Gtd. Sr. Notes
(Indonesia) B3 10.00 7/01/07 10,000(i) 7,300,000
Repap New Brunswick, Inc., Sr. Sec'd. Notes Caa 10.625 4/15/05 5,750(g) 5,347,500
Riverwood Int'l. Corp.,
Sr. Notes B3 10.625 8/01/07 1,460 1,503,800
Sr. Notes B3 10.25 4/01/06 4,000(g) 4,060,000
Sr. Sub. Notes Caa 10.875 4/01/08 11,460(g) 11,230,800
Stone Container Corp.,
Sr. Notes B2 12.58 8/01/16 200 213,000
Sr. Sub. Deb., Zero Coupon (until 3/9/00) B3 12.25 4/01/02 3,500 3,543,750
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 11
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Paper & Forest Products (cont'd.)
Tekni Plex, Inc., Sr. Sub. Notes B3 9.25% 3/01/08 $ 14,550 $ 14,768,250
--------------
75,251,050
- ------------------------------------------------------------------------------------------------------------------------------
Real Estate--0.5%
CB Richards Ellis Svcs., Inc., Sr. Sub. Notes Ba3 8.875 6/01/06 8,800 7,832,000
Saul B F Real Estate Investment Trust, Sr. Sec'd. Notes B-(a) 9.75 4/01/08 13,000 11,830,000
--------------
19,662,000
- ------------------------------------------------------------------------------------------------------------------------------
Retail--1.9%
Big 5 Corp., Sr. Notes B2 10.875 11/15/07 14,900 14,676,500
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 6,045 4,594,200
Notes Ba1 7.25 9/15/05 5,250 4,200,000
Cluett American Corp., Sr. Sub. Notes B3 10.125 5/15/08 8,250 5,857,500
Franks Nursery & Crafts, Inc., Sr. Sub. Notes B3 10.25 3/01/08 15,400 10,472,000
French Fragrances, Inc.,
Sr. Notes, Ser. B B2 10.375 5/15/07 15,030 14,579,100
Sr. Notes, Ser. D B2 10.375 5/15/07 3,550 3,443,500
Musicland Group, Inc., Sr. Sub. Notes B3 9.875 3/15/08 705 638,025
Phar-Mor, Inc., Sr. Notes B3 11.72 9/11/02 2,211 2,100,450
Specialty Retailers, Inc., Sr. Notes B1 8.50 7/15/05 4,890 3,618,600
Steel Heddle Manufacturing Co., Sr. Sub. Notes B3 10.625 6/01/08 4,500 1,800,000
--------------
71,079,875
- ------------------------------------------------------------------------------------------------------------------------------
Steel & Metals--3.2%
AK Steel Corp., Sr. Notes Ba2 7.875 2/15/09 4,750(g) 4,488,750
Algoma Steel, Inc., First Mtge. Notes B1 12.375 7/15/05 1,085 1,017,188
California Steel Inds., Inc., Sr. Notes Ba3 8.50 4/01/09 3,400 3,238,500
Great Central Mines Ltd., Sr. Notes Ba2 8.875 4/01/08 5,010 4,621,725
International Wire Group, Inc., Sr. Sub. Notes B3 11.75 6/01/05 18,500 19,101,250
Kaiser Aluminum & Chemical Corp., Sr. Sub. Notes B3 12.75 2/01/03 12,650 12,650,000
LTV Corp., Sr. Notes Ba3 11.75 11/15/09 9,345(g) 9,812,250
Lukens, Inc.,
Sr. Notes Ba3 7.625 8/01/04 3,500 3,336,025
Sr. Notes Ba3 6.50 2/01/06 5,000 4,350,000
National Steel Corp., Gtd. Sec'd. First Mtge. Ba3 9.875 3/01/09 3,750(g) 3,825,000
Neenah Corp., Sr. Sub. Notes B3 11.125 5/01/07 1,500 1,387,500
Owens Illinois, Inc., Sr. Deb. Ba1 7.50 5/15/10 1,955 1,718,875
Renco Steel Holdings, Inc., Sr. Sec'd. Notes B-(a) 10.875 2/01/05 7,450 6,481,500
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 12
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Steel & Metals (cont'd.)
RMI USA LLC, Sr. Notes B1 10.00% 6/01/09 $ 1,900 $ 1,890,500
Russel Metals, Inc., Sr. Notes B1 10.00 6/01/09 2,850 2,835,750
Sheffield Steel Corp., First Mtge. B-(a) 11.50 12/01/05 6,650 5,652,500
Silgan Holdings, Inc., Sr. Sub. Deb. B1 9.00 6/01/09 12,000 11,520,000
Wheeling Pittsburgh Corp., Sr. Notes Aaa 9.25 11/15/07 9,400 8,883,000
WHX Corp., Sr. Notes B3 10.50 4/15/05 14,750 14,455,000
--------------
121,265,313
- ------------------------------------------------------------------------------------------------------------------------------
Supermarkets--1.1%
Pantry, Inc., Sr. Sub. Notes B3 10.25 10/15/07 20,250 19,743,750
Pathmark Stores, Inc., Sr. Sub. Notes B3 9.625 5/01/03 14,565(g) 10,632,450
Southland Corp., Sr. Sub. Deb. Ba3 5.00 12/15/03 15,000 12,900,000
--------------
43,276,200
- ------------------------------------------------------------------------------------------------------------------------------
Technology--1.4%
Details Holding Corp., Sr. Disc. Notes, Zero Coupon
(until 11/15/02) NR 12.50 11/15/07 10,185 5,296,200
Details, Inc., Sr. Sub. Notes B3 10.00 11/15/05 6,625 6,095,000
DII Group, Inc., Sr. Sub. Notes B1 8.50 9/15/07 11,500 11,442,500
MCMS, Inc., Sr. Sub. Notes B3 9.75 3/01/08 14,000 7,420,000
Metromedia Fiber Network, Inc., Sr. Notes B2 10.00 12/15/09 15,805(g) 16,160,613
Pioneer-Standard Electronics, Inc., Sr. Notes Baa3 8.50 8/01/06 6,000 5,702,460
--------------
52,116,773
- ------------------------------------------------------------------------------------------------------------------------------
Telecommunications--22.8%
21st Century Telecom Group, Inc., Sr. Disc. Notes, Zero
Coupon (until 2/15/03) NR 12.25 2/15/08 11,500 7,705,000
Allegiance Telecom, Inc.,
Sr. Disc. Notes, Zero Coupon (until 2/15/03) B(a) 11.75 2/15/08 14,275 10,206,625
Sr. Notes B(a) 12.875 5/15/08 9,500 10,640,000
Arch Escrow Corp., Sr. Notes B3 13.75 4/15/08 8,000 6,480,000
Barak ITC Int'l. Telecom, Sr. Disc. Notes (Israel) Zero
Coupon
(until 11/15/02) B3 12.50 11/15/07 36,500(i) 19,710,000
Bestel S.A. De CV, Sr. Disc. Notes (Mexico) Zero Coupon
(until 5/15/01) NR 12.75 5/15/05 11,000(i) 6,930,000
Birch Telecom, Inc., Sr. Notes NR 14.00 6/15/08 5,000 5,050,000
Call-Net Enterprises, Inc., Sr. Disc. Notes, Zero
Coupon
(until 8/15/03) B2 8.94 8/15/08 2,800 1,372,000
Caprock Communications Corp., Sr. Notes B3 12.00 7/15/08 5,000 5,175,000
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 13,069(b) 1,437,590
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Telecommunications (cont'd.)
Cencall Communications Corp., Sr. Disc. Notes B2 10.125% 1/15/04 $ 500 $ 517,500
Clearnet Communications, Inc., Sr. Disc. Notes,
Zero Coupon (until 5/1/04) B3 10.125 5/01/09 3,105(g) 1,886,288
Comunicacion 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
Dialog Corp., Sr. Sub. Notes (United Kingdom) B3 11.00 11/15/07 13,500(i) 6,480,000
DTI Holdings, Inc., Sr. Disc. Notes, Zero Coupon (until
3/1/03) NR 12.50 3/01/08 7,250 2,610,000
Exodus Communications, Inc., Sr. Notes B-(a) 10.75 12/15/09 8,675(g) 8,805,125
Firstworld Communications, Inc., Sr. Notes, Zero Coupon
(until 4/1/03) NR 13.00 4/15/08 12,400 8,308,000
Global Crossing Holdings Ltd.,
Sr. Notes Ba2 9.125 11/15/06 8,925 8,824,594
Sr. Notes Ba2 9.50 11/15/09 16,535 16,348,981
Gtd. Notes Ba2 9.625 5/15/08 1,820 1,815,450
Global Telesystems, Sr. Notes NR 10.50 12/01/06 25,000 25,375,000
Globix Corp., Sr. Notes NR 13.00 5/01/05 8,500 8,585,000
Grupo Iusacell S.A. De CV, Sr. Notes (Mexico) B2 10.00 7/15/04 4,000(i) 3,800,000
GST Equipment, Inc., Sr. Sec'd. Notes NR 13.25 5/01/07 10,000 9,800,000
GST Telecommunications, Inc.,
Conv. Sr. Disc. Notes, Zero Coupon (until 12/15/00) NR 13.875 12/15/05 2,262 2,601,300
Sr. Sub. Notes NR 12.75 11/15/07 6,000 5,760,000
GST USA, Inc., Sr. Disc. Notes, Zero Coupon (until
12/15/00) NR 13.875 12/15/05 17,096 12,608,300
Hyperion Telecommunications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 4/15/01) B3 13.00 4/15/03 8,525(b)(g) 7,587,250
Sr. Sec. Notes B3 12.25 9/01/04 2,300(g) 2,461,000
ICG Holdings, Inc.,
Sr. Disc. Notes, Zero Coupon (until 9/15/00) B-(a) 13.50 9/15/05 1,100 951,500
Sr. Disc. Notes, Zero Coupon (until 3/15/02) B-(a) 11.625 3/15/07 5,000 3,262,500
Impsat Corp.,
Sr. Notes B1 12.125 7/15/03 12,870 12,097,800
Sr. Notes B(a) 12.375 6/15/08 12,000 10,800,000
Intermedia Communications of Florida,
Sr. Disc. Notes, Zero Coupon (until 5/15/01) B2 12.50 5/15/06 22,500 19,687,500
Sr. Disc. Notes, Zero Coupon (until 7/15/02) B2 11.25 7/15/07 17,750(e) 13,046,250
International Wireless Communications, Inc., Sr. Disc.
Notes,
(cost $5,300,862; 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 10.87 5/01/08 16,000 12,000,000
Jordan Telecommunication Prod., Sr. Sub. Notes B3 9.875 8/01/07 10,750 11,610,000
Level 3 Communications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 12/1/03) B3 10.50 12/01/08 8,285(g) 4,991,712
Sr. Notes B3 9.125 5/01/08 17,125(g) 16,183,125
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 14
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Telecommunications (cont'd.)
Long Distance Int'l, Inc., Sr. Notes NR 12.25% 4/15/08 $ 6,500(b)(e) $ 2,925,000
Mastec, Inc., Sr. Sub. Notes Ba3 7.75 2/01/08 19,500 18,330,000
McLeodUSA, Inc.,
Sr. Notes B1 9.25 7/15/07 9,500 9,523,750
Sr. Notes B1 8.125 2/15/09 6,495 6,040,350
Microcell Telecommunications, Sr. Disc. Notes,
Zero Coupon (until 6/1/04) B3 12.00 6/01/09 6,250 4,015,625
Netia Holdings BV, (Poland)
Gtd. Sr. Disc. Notes, Zero Coupon (until 11/1/01) B3 11.25 11/01/07 12,500(i) 7,812,500
Gtd. Sr. Notes B3 10.25 11/01/07 10,150(i) 8,526,000
Nextel Communications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 9/15/02) B1 10.65 9/15/07 3,365(g) 2,515,337
Sr. Notes B1 9.375 11/15/09 95,810(g) 94,133,325
Nextel Partners, Inc., Sr. Disc. Notes B3 Zero 2/01/09 18,000 11,790,000
Nextlink Communications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 12/1/04) B2 12.125 12/01/09 17,965 10,464,612
Sr. Notes B(a) 10.75 11/15/08 10,000 10,300,000
Sr. Notes B3 10.75 6/01/09 5,010(g) 5,160,300
Sr. Notes B(a) 10.50 12/01/09 13,970 14,424,025
Northeast Optic Network, Inc., Sr. Notes NR 12.75 8/15/08 10,415 11,039,900
Omnipoint Corp.,
Sr. Notes B2 11.625 8/15/06 3,300 3,498,000
Sr. Notes B2 11.50 9/15/09 6,250 6,750,000
Pagemart Nationwide, Inc., Sr. Disc. Notes, Zero Coupon
(until 2/1/00) B3 15.00 2/01/05 21,900 19,217,250
Price Communications Wireless,
Sr. Sec'd. Notes Ba2 9.125 12/15/06 3,700 3,792,500
Sr. Sub. Notes B3 11.75 7/15/07 12,500(g) 13,750,000
Primus Telecommunications Group, Inc., Sr. Notes B3 12.75 10/15/09 10,755 11,131,425
PsiNet, Inc., Sr. Notes B3 11.00 8/01/09 25,000 25,687,500
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) 8,877,500
RCN Corp.,
Sr. Notes B3 10.00 10/15/07 1,515 1,507,425
Sr. Notes B3 10.125 1/15/10 10,000(g) 9,975,000
RSL Communications,
Sr. Notes B2 12.25 11/15/06 3,500 3,552,500
Sr. Notes B2 12.00 11/01/08 5,750 5,793,125
Rural Cellular Corp., Sr. Sub. Notes B3 9.625 5/15/08 11,000 11,220,000
SCG Holding & Semiconductor Corp., Sr. Sub. Notes B2 12.00 8/01/09 9,365(g) 9,950,313
Splitrock Services, Inc., Sr. Note NR 11.75 7/15/08 6,250 5,750,000
Star Choice Communications, Sr. Sec'd. Notes B3 13.00 12/15/05 5,000 5,087,500
Telewest Communications, Sr. Disc. Notes, Zero Coupon
(until 4/15/04) B1 9.25 4/15/09 9,350 5,937,250
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 15
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Telecommunications (cont'd.)
Time Warner Telecom LLC., Sr. Notes B2 9.75% 7/15/08 $ 8,900 $ 9,122,500
Tritel PCS, Inc., Sr. Sub. Disc. Notes, Zero Coupon
(until 5/15/04) B3 12.75 5/15/09 18,000 11,340,000
Triton PCS, Inc., Sr. Sub. Disc. Notes, Zero Coupon
(until 5/1/03) B3 11.00 5/01/08 5,225 3,696,688
US Exchange LLC., Sr. Notes NR 15.00 7/01/08 7,000 6,370,000
US Unwired, Inc., Sr. Sub. Disc. Notes, Zero Coupon
(until 11/1/04) CCC+(a) 13.375 11/01/09 14,815 8,666,775
Versatel Telecom BV, (Netherlands)
Sr. Notes B-(a) 13.25 5/15/08 9,000(i) 9,585,000
Sr. Notes B-(a) 11.875 7/15/09 5,375(i) 5,482,500
Viatel, Inc.,
Sr. Disc. Notes, Zero Coupon (until 4/15/03) B-(a) 12.50 4/15/08 8,400 5,376,000
Sr. Notes B-(a) 11.25 4/15/08 5,050 5,024,750
Sr. Notes NR 11.50 3/15/09 10,976 10,976,480
Voicestream Wireless Corp.,
Sr. Notes NR 10.375 11/15/09 20,480(g) 21,094,400
Sr. Disc. Notes, Zero Coupon (until 11/15/04) B2 11.875 11/15/09 16,390 9,874,975
WamNet, Inc., Sr. Disc. Notes, Zero Coupon (until
3/1/02) CCC+(a) 13.25 3/01/05 6,000 3,465,000
Williams Communications Group, Inc., Sr. Notes B2 10.875 10/01/09 31,020 32,454,675
Worldwide Fiber, Inc.,
Sr. Notes B3 12.00 8/01/09 4,880 5,038,600
Sr. Notes B3 12.50 12/15/05 10,000 10,450,000
--------------
857,861,745
- ------------------------------------------------------------------------------------------------------------------------------
Textiles--0.8%
Foamex L.P., Sr. Sub. Notes B3 9.875 5/15/07 12,550(d) 10,416,500
Phillips Van Heusen Corp., Sr. Sub. Notes B1 9.50 5/01/08 8,050 7,486,500
Worldtex, Inc., Sr. Notes B1 9.625 12/15/07 15,000 12,150,000
--------------
30,053,000
- ------------------------------------------------------------------------------------------------------------------------------
Transportation/Trucking/Shipping--2.1%
American Commercial Lines, Sr. Notes B1 10.25 6/30/08 17,000 16,320,000
Autopistas Del Sol S.A., Sr. Notes (Argentina) BB-(a) 10.25 8/01/09 3,500(g)(i) 2,695,000
Continental Airlines, Inc., Sr. Notes Ba2 8.00 12/15/05 9,100 8,323,406
Holt Group, Inc., Sr. Notes B+(a) 9.75 1/15/06 8,320 5,200,000
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) 8,100,000
Stena AB, (Sweden)
Sr. Notes Ba2 8.75 6/15/07 5,250(i) 4,305,000
Sr. Notes B1 10.625 6/01/08 1,230(i) 738,000
USAir, Inc.
Sr. Notes B3 9.625 2/01/01 2,850 2,835,750
Pass-through Certs. Ba3 10.375 3/01/13 7,030 6,748,800
--------------
77,320,856
--------------
Total corporate bonds (cost $3,723,717,163) 3,400,259,203
--------------
- ------------------------------------------------------------------------------------------------------------------------------
Sovereign Bonds--0.1%
Republic of Brazil (cost $2,972,100) 11.625% 4/15/04 3,000(g)(i) 2,977,500
--------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 16
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note 1)
<S> <C> <C>
- ------------------------------------------------------------
PREFERRED STOCKS--5.3%
Adelphia Communications Corp.,
$13.00 74,000 $ 8,436,000
California Fed. Corp., $9.125 1,822,245 41,114,403
Chesapeake Energy Corp., $7.00 110,000 2,887,500
CSC Holdings, Inc.,
Ser. 1995K-1, $11.125 214,753 23,408,116
Ser. 1995K-2, $11.125 3,632 39,679,600
Ser. 1995K-4, $11.75 152,691 16,796,057
Eagle Picher Holdings, Inc., 1,530
$11.75 7,114,500
Global Crossing Holdings Ltd., 10,000 1,000,000
GPA Group Plc, Conv., 7.00% 13,200 6,336,000
Harborside Healthcare Corp., 2,951 885,300
Intermedia Communications of
Florida, $7.00 280,000 6,545,000
Packaging Corp. of America, Ser.
B Exchng, 12.375% 47,614 5,213,733
Paxon Communications Corp., Jr.,
$13.25 1,683 17,208,675
Primedia, Inc., $8.625 129,681 11,282,247
R & B Falcon Corp., 13.875% 4,833 5,098,815
Rural Cellular Corp., $11.375 102 104,040
Texas Utilities Co., $9.25 95,000 4,144,375
Viasystems Group, Inc., 8.00% 175,749 1,054,493
--------------
Total preferred stocks
(cost $192,684,546) 198,308,854
--------------
COMMON STOCKS(c)--0.3%
Charter Communications, Inc.,
Delaware Cl. A 61,000 $ 1,334,375
Dr. Pepper Bottling Holdings,
Inc.,
Cl. B 68,580 1,714,500
Envirosource, Inc. 61,190 47,116
Gaylord Container Corp., Cl. A 15,200 103,550
Hedstrom Holdings, Inc. 206,223 2,062
Intermedia Communications of 18,545
Florida 719,778
Peachtree Cable Assoc., Ltd. 31,559 (f) 320,971
Premier Cruise Line 888,704 (b) 2,999,376
Primus Telecomm Group, Inc. 24,700 944,775
Splitrock Services, Inc. 45,602 906,340
Viatel, Inc. 54,894 2,943,691
--------------
Total common stocks
(cost $19,724,549) 12,036,534
--------------
- ------------------------------------------------------------
Units
----------
COMMON TRUST UNITS(c)--0.3%
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 December 31, PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Expiration Value
Date Warrants (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
WARRANTS(c)--0.4%
- ------------------------------------------------------------------------------------------------------------------------------
Aladdin Gaming 3/1/10 170,000 $ 1,700
Allegiance Telecom, Inc. 2/3/08 14,200 710,000
American Banknote Corp. 12/1/02 3,750 38
American Mobile Satellite Corp. 4/1/08 10,000 400,000
Anker Coal Group, Inc. 10/30/03 201 302
Bell Technology Group Ltd. 5/1/05 8,500 212,500
Bestel S.A. De CV, 5/15/05 11,000 55,000
Birch Telecom, Inc. 6/15/08 5,000 27,500
Cellnet Data Systems, Inc. 9/15/07 44,455 0
Clearnet Communications, Inc. 9/15/05 66,495 398,970
Comcel 11/15/03 29,000 1,450,000
DTI Holdings, Inc. 3/1/08 36,250 362
Firstworld Communications, Inc. 4/15/08 12,400 1,488,000
Intelcom Group, Inc., expiring 9/15/05 127,809 1,278,090
Intermedia Communications of Florida 6/1/00 11,250 1,260,000
International Wireless Communications, Inc. 8/15/01 8,000(d) 0
Intersil Holding Corp. 8/15/09 4,475 671,250
Long Distance Int'l., Inc. 4/15/08 6,500(d) 0
Price Communications Wireless 8/1/07 17,200 2,872,400
Primus Telecommunications Group 8/1/04 12,250 612,500
R & B Falcon Corp. 5/1/09 4,500 1,125,000
Star Choice Communications 12/15/05 115,800 451,620
Sterling Chemical Holdings, Inc. 8/15/08 5,450 87,200
TVN Entertainment Corp. 8/1/08 15,000(d) 0
USN Communications, Inc. 10/15/04 92,500 925
Versatel Telecom BV 5/15/08 9,000 3,600,000
WamNet, Inc. 3/1/05 22,500 511,875
Waste Systems Int'l, Inc. 1/15/06 165,000 123,750
--------------
Total warrants
(cost $533,750) 17,338,982
--------------
Total long-term investments
(cost $3,955,591,129) 3,641,389,960
--------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 18
<PAGE>
Portfolio of Investments as
of December 31, 1999 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Interest Maturity Amount Value
Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--4.1%
- ---------------------------------------------------------------------------------------------------------------------------------
Countrywide Home Loan, Inc., commercial paper 5.40 % 1/03/00 $39,423 $ 39,411,172
Market Street Funding Corp., commercial paper 5.00 1/05/00 10,000 9,994,444
Market Street Funding Corp., commercial paper 5.00 1/06/00 11,591 11,582,951
Banque Nationale, time deposit 2.00 1/3/00 3,985(h) 3,985,000
Barton Cap Corp., commercial paper 6.00 1/18/00 17,200(h) 17,151,267
Barton Cap Corp., commercial paper 6.00 1/21/00 12,559(h) 12,517,555
Coca Cola Enterprises, commercial paper 5.25 1/3/00 7,939(h) 7,936,684
Deutsche Bank, time deposit 5.00 1/3/00 17,000(h) 17,000,000
Falcon Asset Securities, commercial paper 6.00 1/11/00 20,000(h) 19,966,667
Keyspan Corp., commercial paper 6.50 1/12/00 7,000(h) 6,986,098
PHH Corp, commercial paper 6.95 1/27/00 7,000(h) 6,964,864
--------------
Total short-term investments
(cost $153,496,702) 153,496,702
--------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Investments, Before Outstanding Options Written--100.7%
(cost $4,109,087,831; Note 4) 3,794,886,662
Contracts
---------
OUTSTANDING CALL OPTIONS WRITTEN(c)
Jordan Telecommunications Prod., Sr. Sub. Notes,
9.875% 8/1/07 expiring 3/20/2000 @ $1,116
(premium received $215,000) 10,750 (0)
--------------
Total Investments, Net of Outstanding Options Written
(cost $4,108,872,831) 3,794,886,662
Liabilities in excess of other assets--(0.7)% (27,971,463)
--------------
Net Assets--100% $3,766,915,199
--------------
--------------
</TABLE>
- ------------------------------
(a) Standard & Poor's Rating.
(b) Indicates a restricted security; the aggregate cost of such securities is
$143,864,448. The aggregate value $90,194,809 is approximately 2.4% of net
assets.
(c) Non-income producing securities.
(d) Consists of more than one class of securities traded together as a unit;
generally bonds with attached stock or warrants.
(e) Represents issuer in default on interest payments, non-income producing
security.
(f) Fair valued security.
(g) Portion of securities on loan, see Note 4.
(h) Represents security, or portion thereof, purchased with cash collateral
received for securities on loan.
(i) US$--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 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets December 31, 1999
Investments, at value (cost $4,109,087,831)............................................................. $ 3,794,886,662
Foreign currency, at value (cost $177).................................................................. 175
Cash.................................................................................................... 93,355
Interest receivable..................................................................................... 76,101,716
Receivable for investments sold......................................................................... 2,929,151
Receivable for Fund shares sold......................................................................... 2,260,068
Forward currency contracts - net amount receivable from counterparties.................................. 662,900
Deferred expenses and other assets...................................................................... 93,605
Receivable for securities lending....................................................................... 2,583
-----------------
Total assets......................................................................................... 3,877,030,215
-----------------
Liabilities
Payable to broker for collateral for securities on loan................................................. 91,872,080
Payable for Fund shares reacquired...................................................................... 12,614,045
Distribution fee payable................................................................................ 1,666,268
Management fee payable.................................................................................. 1,365,221
Accrued expenses........................................................................................ 1,062,023
Dividends payable....................................................................................... 1,049,358
Securities lending rebate payable....................................................................... 486,021
-----------------
Total liabilities.................................................................................... 110,115,016
-----------------
Net Assets.............................................................................................. $ 3,766,915,199
-----------------
-----------------
Net assets were comprised of:
Common stock, at par................................................................................. $ 5,109,629
Paid-in capital in excess of par..................................................................... 4,549,571,754
-----------------
4,554,681,383
Distributions in excess of net investment income..................................................... (1,049,358 )
Accumulated net realized loss on investments......................................................... (473,393,095 )
Net unrealized depreciation on investments and foreign currencies.................................... (313,323,731 )
-----------------
Net assets, December 31, 1999........................................................................... $ 3,766,915,199
-----------------
-----------------
Class A:
Net asset value and redemption price per share
($1,750,618,283 / 237,147,403 shares of common stock issued and outstanding)...................... $7.38
Sales charge (4.00% of offering price)............................................................... .31
Maximum offering price to public..................................................................... $7.69
Class B:
Net asset value, offering price and redemption price per share
($1,867,619,765 / 253,645,892 shares of common stock issued and outstanding)...................... $7.36
Class C:
Net asset value and redemption price per share
($98,347,481 / 13,356,623 shares of common stock issued and outstanding).......................... $7.36
Sales charge (1.00% of offering price)............................................................... .07
Offering price to public............................................................................. $7.43
Class Z:
Net asset value, offering price and redemption price per share
($50,329,670 / 6,813,242 shares of common stock issued and outstanding)........................... $7.39
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 20
<PAGE>
PRUDENTIAL HIGH YIELD FUND, INC.
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Income December 31, 1999
<S> <C>
Income
Interest.............................. $ 395,873,168
Dividends............................. 15,081,292
Income from securities loaned, net.... 692,500
-----------------
Total Income....................... 411,646,960
-----------------
Expenses
Distribution fee--Class A............. 4,365,306
Distribution fee--Class B............. 16,356,784
Distribution fee--Class C............. 715,823
Management fee........................ 16,790,927
Transfer agent's fees and expenses.... 4,276,000
Reports to shareholders............... 446,000
Custodian's fees and expenses......... 414,000
Legal fees and expenses............... 108,000
Registration fees..................... 101,000
Directors' fees and expenses.......... 70,000
Audit fee and expenses................ 48,000
Miscellaneous......................... 19,417
-----------------
Total expenses..................... 43,711,257
-----------------
Net investment income.................... 367,935,703
-----------------
Realized and Unrealized Gain
(Loss) on Investments and Foreign
Currency Transactions
Net realized gain (loss) on:
Investment transactions............... (178,145,980)
Foreign currency transactions......... 125,313
-----------------
(178,020,667)
-----------------
Net change in unrealized appreciation
(depreciation) of:
Investments........................... (54,465,075)
Foreign currencies.................... 662,438
Options written....................... 215,000
-----------------
(53,587,637)
-----------------
Net loss on investments and foreign
currencies............................ (231,608,304)
-----------------
Net Increase in Net Assets
Resulting from Operations................ $ 136,327,399
-----------------
-----------------
</TABLE>
PRUDENTIAL HIGH YIELD FUND, INC.
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended December 31,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income...... $ 367,935,703 $ 380,890,729
Net realized gain (loss) on
investment and foreign
currency transactions... (178,020,667) 36,353,107
Net change in unrealized
depreciation of
investments and foreign
currencies.............. (53,587,637) (422,696,898)
----------------- ----------------
Net increase (decrease) in
net assets resulting
from operations......... 136,327,399 (5,453,062)
----------------- ----------------
Dividends and distributions (Note 1)
Dividends from net
investment income
Class A................. (162,305,602) (154,810,882)
Class B................. (191,445,987) (215,059,672)
Class C................. (8,404,338) (5,714,430)
Class Z................. (5,779,776) (5,305,745)
----------------- ----------------
(367,935,703) (380,890,729)
----------------- ----------------
Dividends in excess of net
investment income
Class A................. (1,490,144) (3,143,618)
Class B................. (1,757,685) (4,367,041)
Class C................. (77,161) (116,038)
Class Z................. (53,065) (107,739)
----------------- ----------------
(3,378,055) (7,734,436)
----------------- ----------------
Tax return of capital
distributions
Class A................. (9,305,993) --
Class B................. (10,976,792) --
Class C................. (481,873) --
Class Z................. (331,391) --
----------------- ----------------
(21,096,049) --
----------------- ----------------
Fund share transactions (Net
of
share conversions) (Note 5)
Net proceeds from shares
sold.................... 2,944,859,997 2,963,551,012
Net asset value of shares
issued in reinvestment
of dividends and
distributions........... 193,970,292 194,305,581
Cost of shares
reacquired.............. (3,323,984,917) (3,024,094,927)
----------------- ----------------
Net increase (decrease) in
net assets from Fund
share transactions...... (185,154,628) 133,761,666
----------------- ----------------
Total decrease................ (441,237,036) (260,316,561)
Net Assets
Beginning of year............. 4,208,152,235 4,468,468,796
----------------- ----------------
End of year(a)................ $ 3,766,915,199 $ 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 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
December 31, 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.
Forward Currency Contracts: A forward currency contract is a commitment to
purchase or sell a foreign currency at a future date at a negotiated forward
rate. The Fund enters into forward currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings or on specific receivables and payables denominated in a foreign
currency. The contracts are valued daily at current exchange rates and any
unrealized gain or loss is included in net unrealized appreciation or
depreciation on investments and foreign currencies. Gain or loss is realized on
the settlement date of the contract equal to the difference between the
settlement value of the original and renegotiated forward contracts. This gain
or loss, if any, is included in net realized gain (loss) on foreign currency
transactions. Risks may arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of their contracts.
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.
- --------------------------------------------------------------------------------
22
<PAGE>
Notes to Financial Statements PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
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.
Options: The Fund may either purchase or write options in order to hedge against
adverse market movements or fluctuations in value caused by changes in
prevailing interest rates or foreign currency exchange rates with respect to
securities or currencies which the Fund currently owns or intends to purchase.
When the Fund purchases an option, it pays a premium and an amount equal to that
premium is recorded as an investment. When the Fund writes an option, it
receives a premium and an amount equal to that premium is recorded as a
liability. The investment or liability is adjusted daily to reflect the current
market value of the option. If an option expires unexercised, the Fund realizes
a gain or loss to the extent of the premium received or paid. If an option is
exercised, the premium received or paid is an adjustment to the proceeds from
the sale or the cost basis of the purchase in determining whether the Fund has
realized a gain or loss. The difference between the premium and the amount
received or paid on effecting a closing purchase or sale transaction is also
treated as a realized gain or loss. Gain or loss on purchased options is
included in net realized gain (loss) on investment transactions. Gain or loss on
written options is presented separately as net realized gain (loss) on written
option transactions.
The Fund, as writer of an option, has no control over whether the underlying
securities or currencies may be sold (called) or purchased (put). As a result,
the Fund bears the market risk of an unfavorable change in the price of the
security or currency underlying the written option. The Fund, as purchaser of an
option, bears the risk of the potential inability of the counterparties to meet
the terms of their contracts.
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 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 year ended December 31, 1999, PSI has been compensated
approximately $179,000.
Reclassification of Capital Accounts: The Fund accounts for and reports
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 by $1,978,918, decrease accumulated net realized loss on
investments by $75,902,012 and decrease paid in capital in excess of par by
$77,880,930. This was primarily due to the sale of securities purchased with
market discount and the expiration of a portion of the capital loss carryforward
for the year ended December 31, 1999. Net investment income, net realized gains
and net assets were not affected by this change.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement PIMF has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PIFM has entered into a subadvisory agreement with The Prudential
Investment Corporation ('PIC'); PIC furnishes investment advisory services in
connection with the management of the Fund. PIFM pays for the cost of the
subadviser's services, the compensation of officers of the Fund, occupancy and
certain clerical and bookkeeping costs of the Fund. The Fund bears all other
costs and expenses.
The management fee paid PIFM is computed daily and payable monthly, at an annual
rate of .50% of the Fund's average daily net assets up to $250 million, .475% of
the next $500 million, .45% of the next $750 million, .425% of the next $500
million, .40% of the next $500 million, .375% of the next $500 million and .35%
of the Fund's average daily net assets in excess of $3 billion.
The Fund has a distribution agreement with Prudential 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.
- --------------------------------------------------------------------------------
23
<PAGE>
Notes to Financial Statements PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
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 year ended December 31, 1999.
PIMS has advised the Fund that it has received approximately $947,100 and
$386,200 in front-end sales charges resulting from sales of Class A and Class C
shares, respectively, during the year ended December 31, 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 year ended December 31, 1999, it received
approximately $3,831,100 and $60,000 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 year ended December 31, 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 year ended December 31,
1999, the Fund incurred fees of approximately $3,660,600 for the services of
PMFS. As of December 31, 1999, $297,200 of such fees were due to PMFS. Transfer
agent fees and expenses in the Statement of Operations include certain
out-of-pocket expenses paid to nonaffiliates.
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the year ended December 31, 1999 were $2,721,669,770 and $2,986,104,199,
respectively.
At December 31, 1999 the Fund had outstanding forward currency contracts to sell
foreign currencies, as follows:
<TABLE>
<CAPTION>
Value at
Foreign Currency Settlement Current
Sale Contracts Date Receivable Value Appreciation
- ------------------------ --------------- ----------- --------------
<S> <C> <C> <C>
Euro,
expiring 1/18/2000 $26,812,603 $26,149,703 $ 662,900
--------------- ----------- --------------
--------------- ----------- --------------
</TABLE>
Transactions in options written during the year ended December 31, 1999, were as
follows:
<TABLE>
<CAPTION>
Number of Premiums
Contracts Received
--------- ---------
<S> <C> <C>
Options outstanding at
December 31, 1998................ -- $ --
Options written.................... 10,750 215,000
<CAPTION>
--------- ---------
<S> <C> <C>
Options outstanding at
December 31, 1999................ 10,750 $215,000
<CAPTION>
--------- ---------
--------- ---------
</TABLE>
The federal income tax basis of the Fund's investments, including short-term
investments, as of December 31, 1999 was $4,111,085,742; accordingly, net
unrealized depreciation for federal income tax purposes was $316,199,080 (gross
unrealized appreciation--$94,048,355; gross unrealized
depreciation--$410,247,435).
For federal income tax purposes, the Fund has a capital loss carryforward as of
December 31, 1999 of approximately $442,409,300 of which $110,441,500 expires in
2000, $162,249,600 expires in 2003 and $169,718,100 expires in 2007. In
addition, the Fund will elect to treat net capital losses of approximately
$28,323,000 incurred in the two month period ended December 31, 1999 as having
been incurred in the following 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 December 31, 1999, the Fund has securities on loan with an aggregate
market value of $87,848,594. The Fund received $91,872,080 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.
- --------------------------------------------------------------------------------
24
<PAGE>
Notes to Financial Statements PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
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. Of the 510,963,160 shares of common stock issued and outstanding at
December 31, 1999, Prudential owned 1,166,093.
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>
Year ended December 31, 1999:
Shares sold................... 271,460,456 $ 2,090,617,324
Shares issued in reinvestment
of
dividends and
distributions............... 12,007,130 92,000,070
Shares reacquired............. (276,197,826) (2,130,432,426)
------------ ---------------
Net increase in shares
outstanding before
conversions................. 7,269,760 52,184,968
Shares issued upon conversion
from Class B................ 16,897,149 128,328,242
------------ ---------------
Net increase in shares
outstanding................. 24,166,909 $ 180,513,210
------------ ---------------
------------ ---------------
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
------------ ---------------
------------ ---------------
</TABLE>
<TABLE>
<CAPTION>
Class B Shares Amount
- ------------------------------ ------------ ---------------
<S> <C> <C>
Year ended December 31, 1999:
Shares sold................... 92,533,010 $ 712,091,062
Shares issued in reinvestment
of
dividends and
distributions............... 11,958,428 91,619,587
Shares reacquired............. (137,029,543) (1,051,143,533)
------------ ---------------
Net decrease in shares
outstanding before
conversion.................. (32,538,105) (247,432,884)
Shares reacquired upon
conversion into Class A..... (16,936,033) (128,328,242)
------------ ---------------
Net decrease in shares
outstanding................. (49,474,138) $ (375,761,126)
------------ ---------------
------------ ---------------
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)
------------ ---------------
------------ ---------------
<CAPTION>
Class C
- ------------------------------
<S> <C> <C>
Year ended December 31, 1999:
Shares sold................... 9,197,134 $ 70,833,321
Shares issued in reinvestment
of
dividends and
distributions............... 640,878 4,895,941
Shares reacquired............. (7,131,689) (54,661,514)
------------ ---------------
Net increase in shares
outstanding................. 2,706,323 $ 21,067,748
------------ ---------------
------------ ---------------
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>
Year ended December 31, 1999:
Shares sold................... 9,225,121 $ 71,318,290
Shares issued in reinvestment
of
dividends and
distributions............... 710,369 5,454,694
Shares reacquired............. (11,376,862) (87,747,444)
------------ ---------------
Net decrease in shares
outstanding................. (1,441,372) $ (10,974,460)
------------ ---------------
------------ ---------------
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 PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------
1999 1998 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................................. $ 7.88 $ 8.65 $ 8.39 $ 8.19
---------- ---------- ---------- ----------
Income from investment operations
Net investment income.............................................. .71 .76 .73 .75
Net realized and unrealized gain (loss) on investments............. (.45) (.76) .30 .22
---------- ---------- ---------- ----------
Total from investment operations................................ .26 -- 1.03 .97
---------- ---------- ---------- ----------
Less distributions
Dividends from net investment income............................... (.71) (.76) (.73) (.75)
Distributions in excess of net investment income................... (.01) (.01) (.04) (.02)
Tax return of capital distributions................................ (.04) -- -- --
---------- ---------- ---------- ----------
Total distributions............................................. (.76) (.77) (.77) (.77)
---------- ---------- ---------- ----------
Net asset value, end of year....................................... $ 7.38 $ 7.88 $ 8.65 $ 8.39
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
TOTAL RETURN(a).................................................... 3.38% (0.13)% 12.81% 12.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)...................................... $1,750,618 $1,677,605 $1,730,473 $1,564,429
Average net assets (000)........................................... $1,746,123 $1,712,531 $1,635,480 $1,385,143
Ratios to average net assets:
Expenses, including distribution fees........................... .80% .67% .69% .72%
Expenses, excluding distribution fees........................... .55% .52% .54% .57%
Net investment income........................................... 9.30% 9.04% 8.59% 9.20%
For Classes A, B, C and Z shares:
Portfolio turnover rate......................................... 70% 103% 113% 89%
<CAPTION>
1995
----------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................................. $ 7.68
----------
Income from investment operations
Net investment income.............................................. .81
Net realized and unrealized gain (loss) on investments............. .53
----------
Total from investment operations................................ 1.34
----------
Less distributions
Dividends from net investment income............................... (.81)
Distributions in excess of net investment income................... (.02)
Tax return of capital distributions................................ --
----------
Total distributions............................................. (.83)
----------
Net asset value, end of year....................................... $ 8.19
----------
----------
TOTAL RETURN(a).................................................... 18.17%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)...................................... $1,336,354
Average net assets (000)........................................... $1,056,555
Ratios to average net assets:
Expenses, including distribution fees........................... .75%
Expenses, excluding distribution fees........................... .60%
Net investment income........................................... 10.13%
For Classes A, B, C and Z shares:
Portfolio turnover rate......................................... 78%
</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 year reported and includes reinvestment of dividends and
distributions.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 26
<PAGE>
Financial Highlights PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
-------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------
1999 1998 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................................. $ 7.86 $ 8.63 $ 8.38 $ 8.18
---------- ---------- ---------- ----------
Income from investment operations
Net investment income.............................................. .67 .71 .68 .71
Net realized and unrealized gain (loss) on investments............. (.45) (.76) .29 .22
---------- ---------- ---------- ----------
Total from investment operations................................ .22 (.05) .97 .93
---------- ---------- ---------- ----------
Less distributions
Dividends from net investment income............................... (.66) (.71) (.68) (.71)
Distributions in excess of net investment income................... (.02) (.01) (.04) (.02)
Tax return of capital distributions................................ (.04) -- -- --
---------- ---------- ---------- ----------
Total distributions............................................. (.72) (.72) (.72) (.73)
---------- ---------- ---------- ----------
Net asset value, end of year....................................... $ 7.36 $ 7.86 $ 8.63 $ 8.38
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
TOTAL RETURN(a).................................................... 2.86% (.70)% 12.07% 11.97%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)...................................... $1,867,620 $2,381,793 $2,640,491 $2,596,207
Average net assets (000)........................................... $2,180,904 $2,557,252 $2,589,122 $2,652,883
Ratios to average net assets:
Expenses, including distribution fees........................... 1.30% 1.27% 1.29% 1.32%
Expenses, excluding distribution fees........................... .55% .52% .54% .57%
Net investment income........................................... 8.78% 8.41% 7.99% 8.62%
<CAPTION>
1995
----------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................................. $ 7.67
----------
Income from investment operations
Net investment income.............................................. .76
Net realized and unrealized gain (loss) on investments............. .53
----------
Total from investment operations................................ 1.29
----------
Less distributions
Dividends from net investment income............................... (.76)
Distributions in excess of net investment income................... (.02)
Tax return of capital distributions................................ --
----------
Total distributions............................................. (.78)
----------
Net asset value, end of year....................................... $ 8.18
----------
----------
TOTAL RETURN(a).................................................... 17.49%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)...................................... $2,730,903
Average net assets (000)........................................... $2,725,385
Ratios to average net assets:
Expenses, including distribution fees........................... 1.35%
Expenses, excluding distribution fees........................... .60%
Net investment income........................................... 9.56%
</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 year reported and includes reinvestment of dividends and
distributions.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 27
<PAGE>
Financial Highlights PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
-------------------------------------------------------
Year Ended December 31,
-------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................................. $ 7.86 $ 8.63 $ 8.38 $ 8.18 $ 7.67
------- ------- ------- ------- -------
Income from investment operations
Net investment income.............................................. .67 .71 .68 .71 .76
Net realized and unrealized gain (loss) on investments............. (.45) (.76) .29 .22 .53
------- ------- ------- ------- -------
Total from investment operations................................ .22 (.05) .97 .93 1.29
------- ------- ------- ------- -------
Less distributions
Dividends from net investment income............................... (.67) (.71) (.68) (.71) (.76)
Distributions in excess of net investment income................... (.01) (.01) (.04) (.02) (.02)
Tax return of capital distributions................................ (.04) -- -- -- --
------- ------- ------- ------- -------
Total distributions............................................. (.72) (.72) (.72) (.73) (.78)
------- ------- ------- ------- -------
Net asset value, end of year....................................... $ 7.36 $ 7.86 $ 8.63 $ 8.38 $ 8.18
------- ------- ------- ------- -------
------- ------- ------- ------- -------
TOTAL RETURN(a).................................................... 2.86% (0.70)% 12.07% 11.97% 17.49%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)...................................... $98,347 $83,687 $55,879 $43,374 $24,021
Average net assets (000)........................................... $95,443 $67,296 $45,032 $28,647 $12,063
Ratios to average net assets:
Expenses, including distribution fees........................... 1.30% 1.27% 1.29% 1.32% 1.35%
Expenses, excluding distribution fees........................... .55% .52% .54% .57% .60%
Net investment income........................................... 8.81% 8.49% 7.99% 8.60% 9.49%
</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 year reported and includes reinvestment of dividends and
distributions.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 28
<PAGE>
Financial Highlights PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class Z
------------------------------------------------
March 1,
1996(c)
Year Ended December 31, Through
------------------------------- 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.............................................. .73 .76 .74 .63
Net realized and unrealized gain (loss) on investments............. (.44) (.75) .30 .07
------- ------- ------- ------
Total from investment operations................................ .29 .01 1.04 .70
------- ------- ------- ------
Less distributions
Dividends from net investment income............................... (.73) (.76) (.74) (.63)
Distributions in excess of net investment income................... (.01) (.02) (.04) (.02)
Tax return of capital distributions................................ (.04) -- -- --
------- ------- ------- ------
Total distributions............................................. (.78) (.78) (.78) (.65)
------- ------- ------- ------
Net asset value, end of period..................................... $ 7.39 $ 7.88 $ 8.65 $ 8.39
------- ------- ------- ------
------- ------- ------- ------
TOTAL RETURN(a).................................................... 3.79% 0.00% 12.96% 8.77%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).................................... $50,330 $65,068 $41,625 $ 31,748
Average net assets (000)........................................... $60,652 $57,453 $35,808 $ 28,978
Ratios to average net assets:
Expenses, including distribution fees........................... .55% .52% .54% 57%(b)
Expenses, excluding distribution fees........................... .55% .52% .54% .57%(b)
Net investment income........................................... 9.53% 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 year reported and includes reinvestment of dividends and
distributions.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 29
<PAGE>
Report of Independent Accountants PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
Prudential High Yield Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prudential High Yield Fund, Inc.
(the 'Fund') at December 31, 1999, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the periods
presented, in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights (hereafter
referred to as 'financial statements') are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
February 17, 2000
- --------------------------------------------------------------------------------
30
<PAGE>
Federal Tax Information (Unaudited) PRUDENTIAL HIGH YIELD FUND, INC.
- --------------------------------------------------------------------------------
During the fiscal year ended December 31, 1999, the Fund paid ordinary income
dividends per share totalling $0.72, $0.68, $0.68 and $0.74 for Class A, B, C
and Z shares, respectively. In addition, the Fund paid dividends of $0.04 per
share in return of capital for each class of shares during the fiscal year ended
December 31, 1999. Accordingly, we wish to advise you that 4.07% of the
dividends paid qualified for the corporate dividend received deduction available
to corporate taxpayers.
- --------------------------------------------------------------------------------
31
<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>
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 semiannual 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>
Comparing a $10,000 Investment
- -------------------------------------------------------------
Prudential High Yield Fund, Inc. vs. the
Lehman Brothers High Yield Bond Index
Class A
(GRAPH)
Average Annual Total Returns
With Sales Charge As of 12/31/99
Since Inception 9.26%
Five Years 8.27
One Year -0.76
Without Sales Charge As of 12/31/99
Since Inception 9.71%
Five Years 9.16
One Year 3.38
Class B
(GRAPH)
Average Annual Total Returns
With Sales Charge As of 12/31/99
Since Inception 9.44%
Ten Years 9.04
Five Years 8.39
One Year -2.14
Without Sales Charge As of 12/31/99
Since Inception 9.44%
Ten Years 9.04
Five Years 8.53
One Year 2.86
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. The information
beneath the graphs is designed to give you an idea
of how much the Fund's returns can fluctuate from
year to year by measuring the best and worst calendar
years in terms of total annual return since inception
of each share class (or for the past ten years for
Class B shares).
These graphs compare a $10,000 investment in Prudential
High Yield Fund, Inc. (Class A, B, C, and Z shares) with
a similar investment in the Lehman Brothers High Yield
Bond Index (the Index) by portraying the initial account
values of Class A, C, and Z shares at the commencement of
operations, at the beginning of the ten-year period
for Class B shares, and at the end of the fiscal year
(December 31), as measured on a quarterly basis, beginning
in 1990 for Class A, 1989 for Class B, 1994 for Class C,
and 1996 for Class Z shares. For purposes of the graphs,
and unless otherwise indicated, it has been assumed that
(a) the maximum applicable front-end sales charge was
deducted from the initial $10,000 investment in Class A
and Class C shares; (b) the maximum applicable contingent
deferred sales charges were deducted from the
value of the investment in Class B and Class C shares,
<PAGE>
Class C
(GRAPH)
Average Annual Total Returns
With Sales Charge As of 12/31/99
Since Inception 7.49%
Five Years 8.31
One Year 0.83
Without Sales Charge As of 12/31/99
Since Inception 7.69%
Five Years 8.53
One Year 2.86
Class Z
(GRAPH)
Average Annual Total Returns As of 12/31/99
Since Inception 6.55%
One Year 3.79
assuming full redemption on December 31, 1999; (c) all
recurring fees (including management fees) were deducted;
and (d) all dividends and distributions were reinvested.
Class B shares will automatically convert to Class A
shares, on a quarterly basis, approximately seven years
after purchase. This conversion feature is not reflected
in the graphs. Class Z shares are not subject to a sales
charge or distribution and service (12b-1) fees.
The Index is an unmanaged index of fixed-rate,
noninvestment-grade debt securities with at least
one year remaining to maturity. The Index gives a
broad look at how high-yield (junk) bonds have performed.
The Index returns include the reinvestment of all dividends,
but do not include the effect of any sales charges or operating
expenses of a mutual fund. The securities in the Index may differ
substantially from the securities in the Fund. The Index is not
the only one that may be used to characterize performance of
bond funds, and other indexes may portray different comparative
performance. Investors cannot invest directly in an index.
These graphs are furnished to you in accordance with SEC regulations.
<PAGE>
The Prudential Mutual Fund Family
Prudential offers a broad range of mutual funds designed to meet
your individual needs. For information about these funds, contact
your financial adviser or call us at (800) 225-1852. Read the
prospectus carefully before you invest or send money.
STOCK FUNDS
Prudential Emerging Growth Fund, Inc.
Prudential Equity Fund, Inc.
Prudential Equity Income Fund
Prudential Index Series Fund
Prudential Small-Cap Index Fund
Prudential Stock Index Fund
The Prudential Investment Portfolios, Inc.
Prudential Jennison Growth Fund
Prudential Jennison Growth & Income Fund
Prudential Mid-Cap Value Fund
Prudential Real Estate Securities Fund
Prudential Sector Funds, Inc.
Prudential Financial Services Fund
Prudential Health Sciences Fund
Prudential Technology Fund
Prudential Utility Fund
Prudential Small-Cap Quantum Fund, Inc.
Prudential Small Company Value Fund, Inc.
Prudential Tax-Managed Funds
Prudential Tax-Managed Equity Fund
Prudential 20/20 Focus Fund
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Target Funds
Large Capitalization Growth Fund
Large Capitalization Value Fund
Small Capitalization Growth Fund
Small Capitalization Value Fund
Asset Allocation/Balanced Funds
Prudential Balanced Fund
Prudential Diversified Funds
Conservative Growth Fund
Moderate Growth Fund
High Growth Fund
The Prudential Investment Portfolios, Inc.
Prudential Active Balanced Fund
GLOBAL FUNDS
Global Stock Funds
Prudential Developing Markets Fund
Prudential Developing Markets Equity Fund
Prudential Latin America Equity Fund
Prudential Europe Growth Fund, Inc.
Prudential Global Genesis Fund, Inc.
Prudential Index Series Fund
Prudential Europe Index Fund
Prudential Pacific Index Fund
Prudential Natural Resources Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential World Fund, Inc.
Prudential Global Growth Fund
Prudential International Value Fund
Prudential Jennison International Growth Fund
Global Utility Fund, Inc.
Target Funds
International Equity Fund
Global Bond Funds
Prudential Global Total Return Fund, Inc.
Prudential International Bond Fund, Inc.
BOND FUNDS
Taxable Bond Funds
Prudential Diversified Bond Fund, Inc.
Prudential Government Income Fund, Inc.
Prudential Government Securities Trust
Short-Intermediate Term Series
Prudential High Yield Fund, Inc.
Prudential High Yield Total Return Fund, Inc.
Prudential Index Series Fund
Prudential Bond Market Index Fund
Prudential Structured Maturity Fund, Inc.
Income Portfolio
Target Funds
Total Return Bond Fund
Tax-Exempt Bond Funds
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Income Series
Insured Series
Prudential Municipal Series Fund
Florida Series
Massachusetts Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
MONEY MARKET FUNDS
Taxable Money Market Funds
Cash Accumulation Trust
Liquid Assets Fund
National Money Market Fund
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Special Money Market Fund, Inc.
Money Market Series
Prudential MoneyMart Assets, Inc.
Tax-Free Money Market Funds
Prudential Tax-Free Money Fund, Inc.
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund
Institutional Money Market Funds
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
visit our website at www.prudential.com
Fund Symbols
NASDAQ CUSIP
Class A PBHAX 74435F106
Class B PBHYX 74435F205
Class C PBHCX 74435F304
Class Z PHYZX 74435F403
Directors
Eugene C. Dorsey
Delayne Dedrick Gold
Robert F. Gunia
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
John R. Strangfeld
Nancy H. Teeters
Louis A. Weil, III
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Deborah A. Docs, Secretary
Stephen M. Ungerman, Assistant Treasurer
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
405 Lexington Avenue
New York, NY 10174
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.
This report is not authorized for distribution to
prospective investors unless preceded or accompanied
by a current prospectus.
(ICON) Printed on Recycled Paper
<PAGE>
Fund Symbols
NASDAQ CUSIP
Class A PBHAX 74435F106
Class B PBHYX 74435F205
Class C PBHCX 74435F304
Class Z PHYZX 74435F403
visit our website at www.prudential.com
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.
This report is not authorized for distribution to prospective
investors unless preceded or accompanied by a current
prospectus.
MF110E (ICON) Printed on Recycled Paper
