<PAGE> PAGE 1
000 B000000 12/31/98
000 C000000 0000700662
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 A
001 A000000 PRUDENTIAL MORTGAGE INCOME FUND, INC.
001 B000000 811-3397
001 C000000 9733677530
002 A000000 100 MULBERRY STREET
002 B000000 NEWARK
002 C000000 NJ
002 D010000 07102
002 D020000 4077
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 N
007 B000000 0
007 C010100 1
007 C010200 2
007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
008 A000001 THE PRUDENTIAL INVESTMENT CORPORATION
008 B000001 S
008 C000001 801-22808
008 D010001 NEWARK
008 D020001 NJ
008 D030001 07101
008 A000002 PRUDENTIAL INVESTMENT FUND MANAGEMENT LLC
008 B000002 A
008 C000002 801-31104
008 D010002 NEWARK
008 D020002 NJ
008 D030002 07102
008 D040002 4077
011 A000001 PRUDENTIAL SECURITIES INCORPORATED
011 B000001 8-27154
011 C010001 NEW YORK
011 C020001 NY
011 C030001 10292
<PAGE> PAGE 2
011 A000002 DELETE
012 A000001 PRUDENTIAL MUTUAL FUND SERVICES LLC
012 B000001 85-4110019
012 C010001 NEW BRUNSWICK
012 C020001 NJ
012 C030001 08906
013 A000001 PRICEWATERHOUSECOOPERS LLP
013 B010001 NEW YORK
013 B020001 NY
013 B030001 10036
014 A000001 PRUDENTIAL SECURITIES INCORPORATED
014 B000001 8-27154
014 A000002 PRUCO SECURITIES CORPORATION
014 B000002 8-16402
014 A000003 PRUDENTIAL INVESTMENTS MANAGEMENT SERVICE LLC
014 B000003 8-36540
015 A000001 STATE STREET BANK AND TRUST COMPANY
015 B000001 C
015 C010001 NORTH QUINCY
015 C020001 MA
015 C030001 02171
015 E010001 X
018 000000 Y
019 A000000 Y
019 B000000 99
019 C000000 PRUDENTIAL
020 A000001 MERRILL LYNCH, PIERCE, FENNER & SMITH, INC.
020 B000001 13-5674085
020 C000001 2
020 C000002 0
020 C000003 0
020 C000004 0
020 C000005 0
020 C000006 0
020 C000007 0
020 C000008 0
020 C000009 0
020 C000010 0
021 000000 2
022 A000001 MERRILL LYNCH, PIERCE, FENNER & SMITH, INC.
022 B000001 13-5674085
022 C000001 326324
022 D000001 123452
022 A000002 SALOMON SMITH BARNEY INC.
022 B000002 13-1912900
022 C000002 385339
022 D000002 264
022 A000003 CREDIT SUISSE FIRST BOSTON CORP.
022 B000003 13-5659485
022 C000003 314959
022 D000003 4378
<PAGE> PAGE 3
022 A000004 GOLDMAN, SACHS & CO.
022 B000004 13-5108880
022 C000004 280924
022 D000004 8512
022 A000005 BEAR, STEARNS & CO. INC.
022 B000005 13-3299429
022 C000005 275655
022 D000005 0
022 A000006 MORGAN (J.P.) SECURITIES CORP.
022 B000006 13-3224016
022 C000006 262284
022 D000006 0
022 A000007 MORGAN STANLEY DEAN WITTER
022 B000007 13-2655998
022 C000007 193438
022 D000007 29156
022 A000008 DONALDSON, LUFKIN & JENRETTE SEC. CORP.
022 B000008 13-2741729
022 C000008 101018
022 D000008 79539
022 A000009 WARBURG DILLON READ LLC
022 B000009 13-3340045
022 C000009 96326
022 D000009 0
022 A000010 DEUTSCHE BANK SECURITIES INC.
022 B000010 13-2730828
022 C000010 88287
022 D000010 0
023 C000000 2589930
023 D000000 372293
024 000000 Y
025 A000001 BEAR, STEARNS & CO. INC.
025 B000001 13-3299429
025 C000001 D
025 D000001 858
025 A000002 DEUTCHE BANK SECURITIES INC.
025 B000002 13-2730828
025 C000002 D
025 D000002 520
025 A000003 GOLDMAN, SACHS & CO.
025 B000003 13-5108880
025 C000003 D
025 D000003 484
025 A000004 MORGAN (J.P.) SECURTITIES INC.
025 B000004 13-3224016
025 C000004 D
025 D000004 858
025 A000005 WARBURG DILLON READ LLC
025 B000005 13-3340045
025 C000005 D
025 D000005 858
<PAGE> PAGE 4
025 D000006 0
025 D000007 0
025 D000008 0
026 A000000 N
026 B000000 Y
026 C000000 Y
026 D000000 Y
026 E000000 N
026 F000000 N
026 G010000 N
026 G020000 N
026 H000000 N
027 000000 Y
028 A010000 2253
028 A020000 487
028 A030000 0
028 A040000 4903
028 B010000 685
028 B020000 476
028 B030000 0
028 B040000 2701
028 C010000 1734
028 C020000 473
028 C030000 0
028 C040000 3886
028 D010000 314
028 D020000 472
028 D030000 0
028 D040000 2041
028 E010000 233
028 E020000 468
028 E030000 0
028 E040000 2375
028 F010000 1559
028 F020000 594
028 F030000 0
028 F040000 6402
028 G010000 6778
028 G020000 2970
028 G030000 0
028 G040000 22308
028 H000000 3839
029 000000 Y
030 A000000 22
030 B000000 4.00
030 C000000 1.00
031 A000000 0
031 B000000 0
032 000000 0
033 000000 22
034 000000 Y
<PAGE> PAGE 5
035 000000 87
036 A000000 N
036 B000000 0
037 000000 N
038 000000 0
039 000000 N
040 000000 Y
041 000000 Y
042 A000000 0
042 B000000 0
042 C000000 0
042 D000000 100
042 E000000 0
042 F000000 0
042 G000000 0
042 H000000 0
043 000000 483
044 000000 0
045 000000 Y
046 000000 N
047 000000 Y
048 000000 0.500
048 A010000 0
048 A020000 0.000
048 B010000 0
048 B020000 0.000
048 C010000 0
048 C020000 0.000
048 D010000 0
048 D020000 0.000
048 E010000 0
048 E020000 0.000
048 F010000 0
048 F020000 0.000
048 G010000 0
048 G020000 0.000
048 H010000 0
048 H020000 0.000
048 I010000 0
048 I020000 0.000
048 J010000 0
048 J020000 0.000
048 K010000 0
048 K020000 0.000
049 000000 N
050 000000 N
051 000000 N
052 000000 N
053 A000000 N
054 A000000 Y
054 B000000 Y
<PAGE> PAGE 6
054 C000000 N
054 D000000 N
054 E000000 N
054 F000000 N
054 G000000 N
054 H000000 N
054 I000000 N
054 J000000 Y
054 K000000 N
054 L000000 N
054 M000000 N
054 N000000 N
054 O000000 N
055 A000000 N
055 B000000 N
056 000000 Y
057 000000 N
058 A000000 N
059 000000 N
060 A000000 Y
060 B000000 Y
061 000000 0
062 A000000 Y
062 B000000 0.0
062 C000000 0.0
062 D000000 2.6
062 E000000 0.0
062 F000000 0.0
062 G000000 0.0
062 H000000 0.0
062 I000000 0.0
062 J000000 0.0
062 K000000 0.0
062 L000000 0.0
062 M000000 29.2
062 N000000 43.9
062 O000000 0.0
062 P000000 3.7
062 Q000000 20.5
062 R000000 0.1
063 A000000 0
063 B000000 7.0
064 A000000 Y
064 B000000 N
066 A000000 N
067 000000 N
068 A000000 N
068 B000000 N
069 000000 N
070 A010000 Y
070 A020000 Y
<PAGE> PAGE 7
070 B010000 N
070 B020000 N
070 C010000 Y
070 C020000 N
070 D010000 N
070 D020000 N
070 E010000 Y
070 E020000 Y
070 F010000 N
070 F020000 N
070 G010000 N
070 G020000 N
070 H010000 N
070 H020000 N
070 I010000 N
070 I020000 N
070 J010000 N
070 J020000 N
070 K010000 N
070 K020000 N
070 L010000 N
070 L020000 N
070 M010000 N
070 M020000 N
070 N010000 Y
070 N020000 Y
070 O010000 Y
070 O020000 N
070 P010000 N
070 P020000 N
070 Q010000 N
070 Q020000 N
070 R010000 N
070 R020000 N
071 A000000 368558
071 B000000 372783
071 C000000 150068
071 D000000 246
072 A000000 12
072 B000000 10699
072 C000000 0
072 D000000 0
072 E000000 209
072 F000000 765
072 G000000 0
072 H000000 0
072 I000000 264
072 J000000 120
072 K000000 0
072 L000000 70
072 M000000 21
<PAGE> PAGE 8
072 N000000 25
072 O000000 0
072 P000000 0
072 Q000000 0
072 R000000 28
072 S000000 15
072 T000000 483
072 U000000 0
072 V000000 0
072 W000000 6
072 X000000 1797
072 Y000000 0
072 Z000000 9111
072AA000000 1980
072BB000000 1070
072CC010000 0
072CC020000 2894
072DD010000 3503
072DD020000 5663
072EE000000 0
073 A010000 0.8100
073 A020000 2.6300
073 B000000 0.0000
073 C000000 0.0000
074 A000000 1
074 B000000 3612
074 C000000 0
074 D000000 135292
074 E000000 0
074 F000000 0
074 G000000 0
074 H000000 0
074 I000000 0
074 J000000 0
074 K000000 0
074 L000000 1249
074 M000000 3
074 N000000 140157
074 O000000 0
074 P000000 76
074 Q000000 0
074 R010000 0
074 R020000 0
074 R030000 0
074 R040000 1100
074 S000000 0
074 T000000 138981
074 U010000 3493
074 U020000 6206
074 V010000 14.33
074 V020000 14.33
<PAGE> PAGE 9
074 W000000 0.0000
074 X000000 14519
074 Y000000 7009
075 A000000 0
075 B000000 153059
076 000000 0.00
077 A000000 Y
077 B000000 Y
077 C000000 N
077 D000000 Y
077 E000000 N
077 F000000 N
077 G000000 N
077 H000000 N
077 I000000 N
077 J000000 Y
077 K000000 N
077 L000000 N
077 M000000 N
077 N000000 N
077 O000000 N
077 P000000 N
078 000000 N
080 A000000 ICI MUTUAL INSURANCE COMPANY
080 C000000 70000
081 A000000 Y
081 B000000 86
082 A000000 N
082 B000000 0
083 A000000 N
083 B000000 0
084 A000000 N
084 B000000 0
085 A000000 Y
085 B000000 N
086 A010000 0
086 A020000 0
086 B010000 0
086 B020000 0
086 C010000 0
086 C020000 0
086 D010000 0
086 D020000 0
086 E010000 0
086 E020000 0
086 F010000 0
086 F020000 0
SIGNATURE GRACE TORRES
TITLE TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000700662
<NAME> PRUDENTIAL MORTGAGE INCOME FUND, INC.
<SERIES>
<NUMBER> 001
<NAME> MORTGAGE INCOME FUND (CLASS A)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 138,120,408
<INVESTMENTS-AT-VALUE> 138,903,891
<RECEIVABLES> 1,249,219
<ASSETS-OTHER> 4,133
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 699,125
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 138,281,994
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 154,459,038
<SHARES-COMMON-STOCK> 9,698,462
<SHARES-COMMON-PRIOR> 10,573,698
<ACCUMULATED-NII-CURRENT> 709,156
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (16,970,558)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 783,483
<NET-ASSETS> (20,272,160)
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10,699,264
<OTHER-INCOME> 208,901
<EXPENSES-NET> 1,796,985
<NET-INVESTMENT-INCOME> 9,111,180
<REALIZED-GAINS-CURRENT> 909,790
<APPREC-INCREASE-CURRENT> (2,894,283)
<NET-CHANGE-FROM-OPS> 7,126,687
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (9,166,267)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17,994,308
<NUMBER-OF-SHARES-REDEEMED> (48,045,639)
<SHARES-REINVESTED> 5,824,455
<NET-CHANGE-IN-ASSETS> (26,266,456)
<ACCUMULATED-NII-PRIOR> 842,352
<ACCUMULATED-GAINS-PRIOR> (18,888,948)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 765,289
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,796,985
<AVERAGE-NET-ASSETS> 88,722,000
<PER-SHARE-NAV-BEGIN> 14.53
<PER-SHARE-NII> 0.88
<PER-SHARE-GAIN-APPREC> (0.18)
<PER-SHARE-DIVIDEND> (0.90)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.33
<EXPENSE-RATIO> 1.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000700662
<NAME> PRUDENTIAL MORTGAGE INCOME FUND, INC.
<SERIES>
<NUMBER> 002
<NAME> MORTGAGE INCOME FUND (CLASS B)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 138,120,408
<INVESTMENTS-AT-VALUE> 138,903,891
<RECEIVABLES> 1,249,219
<ASSETS-OTHER> 4,133
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 699,125
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 138,281,994
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 154,459,038
<SHARES-COMMON-STOCK> 9,698,462
<SHARES-COMMON-PRIOR> 10,573,698
<ACCUMULATED-NII-CURRENT> 709,156
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (16,970,558)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 783,483
<NET-ASSETS> (20,272,160)
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10,699,264
<OTHER-INCOME> 208,901
<EXPENSES-NET> 1,796,985
<NET-INVESTMENT-INCOME> 9,111,180
<REALIZED-GAINS-CURRENT> 909,790
<APPREC-INCREASE-CURRENT> (2,894,283)
<NET-CHANGE-FROM-OPS> 7,126,687
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (9,166,267)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17,994,308
<NUMBER-OF-SHARES-REDEEMED> (48,045,639)
<SHARES-REINVESTED> 5,824,455
<NET-CHANGE-IN-ASSETS> (26,266,456)
<ACCUMULATED-NII-PRIOR> 842,352
<ACCUMULATED-GAINS-PRIOR> (18,888,948)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 765,289
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,796,985
<AVERAGE-NET-ASSETS> 62,293,000
<PER-SHARE-NAV-BEGIN> 14.50
<PER-SHARE-NII> 0.87
<PER-SHARE-GAIN-APPREC> (0.23)
<PER-SHARE-DIVIDEND> (0.81)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.33
<EXPENSE-RATIO> 1.38
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000700662
<NAME> PRUDENTIAL MORTGAGE INCOME FUND, INC.
<SERIES>
<NUMBER> 003
<NAME> MORTGAGE INCOME FUND (CLASS C)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 138,120,408
<INVESTMENTS-AT-VALUE> 138,903,891
<RECEIVABLES> 1,249,219
<ASSETS-OTHER> 4,133
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 699,125
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 138,281,994
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 154,459,038
<SHARES-COMMON-STOCK> 9,698,462
<SHARES-COMMON-PRIOR> 10,573,698
<ACCUMULATED-NII-CURRENT> 709,156
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (16,970,558)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 783,483
<NET-ASSETS> (20,272,160)
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10,699,264
<OTHER-INCOME> 208,901
<EXPENSES-NET> 1,796,985
<NET-INVESTMENT-INCOME> 9,111,180
<REALIZED-GAINS-CURRENT> 909,790
<APPREC-INCREASE-CURRENT> (2,894,283)
<NET-CHANGE-FROM-OPS> 7,126,687
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (9,166,267)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17,994,308
<NUMBER-OF-SHARES-REDEEMED> (48,045,639)
<SHARES-REINVESTED> 5,824,455
<NET-CHANGE-IN-ASSETS> (26,266,456)
<ACCUMULATED-NII-PRIOR> 842,352
<ACCUMULATED-GAINS-PRIOR> (18,888,948)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 765,289
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,796,985
<AVERAGE-NET-ASSETS> 1,198,000
<PER-SHARE-NAV-BEGIN> 14.50
<PER-SHARE-NII> 0.85
<PER-SHARE-GAIN-APPREC> (0.21)
<PER-SHARE-DIVIDEND> (0.81)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.33
<EXPENSE-RATIO> 1.44
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000700662
<NAME> PRUDENTIAL MORTGAGE INCOME FUND, INC.
<SERIES>
<NUMBER> 004
<NAME> MORTGAGE INCOME FUND (CLASS Z)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 138,120,408
<INVESTMENTS-AT-VALUE> 138,903,891
<RECEIVABLES> 1,249,219
<ASSETS-OTHER> 4,133
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 699,125
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 138,281,994
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 154,459,038
<SHARES-COMMON-STOCK> 9,698,462
<SHARES-COMMON-PRIOR> 10,573,698
<ACCUMULATED-NII-CURRENT> 709,156
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (16,970,558)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 783,483
<NET-ASSETS> (20,272,160)
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10,699,264
<OTHER-INCOME> 208,901
<EXPENSES-NET> 1,796,985
<NET-INVESTMENT-INCOME> 9,111,180
<REALIZED-GAINS-CURRENT> 909,790
<APPREC-INCREASE-CURRENT> (2,894,283)
<NET-CHANGE-FROM-OPS> 7,126,687
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (9,166,267)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17,994,308
<NUMBER-OF-SHARES-REDEEMED> (48,045,639)
<SHARES-REINVESTED> 5,824,455
<NET-CHANGE-IN-ASSETS> (26,266,456)
<ACCUMULATED-NII-PRIOR> 842,352
<ACCUMULATED-GAINS-PRIOR> (18,888,948)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 765,289
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,796,985
<AVERAGE-NET-ASSETS> 846,000
<PER-SHARE-NAV-BEGIN> 14.54
<PER-SHARE-NII> 0.88
<PER-SHARE-GAIN-APPREC> (0.15)
<PER-SHARE-DIVIDEND> (0.92)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.35
<EXPENSE-RATIO> 0.86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
For the fiscal year ended 12/31/98
File number: 811-3397
SUB-ITEM 77 D
Policies with Respect to Securities Investments
On May 13, 1998 the Directors approved revised troubled
investment procedures for the Fund in the form presented at the
meeting of the Board of Directors. The revised procedures allow
Prudential Investments, on behalf of the Fund, to retain legal
counsel or consultants with respect to any "troubled investment"
in order to obtain preliminary advice with respect to potential
alternative courses of action, the fee for such preliminary
advice not to exceed $25,000 (paid by the Fund). Prudential
Investments will then promptly advise Fund counsel after taking
such action and prepare a brief report to be given to the full
Board detailing the "troubled investment" in question.
n-sar/eqf/8-97/77d
For the period ended (b) December 31, 1998
File number (c) 811-3397
SUB-ITEM 77J
Restatement of Capital Share Account
Prudential Mortgage Income Fund accounts for and
reports distributions to shareholders in accordance with the
American Institute of Certified Public Accountants'
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
accumulated net realized losses by $1,981,853, and decrease
paid in capital in excess of par by $1,981,853 which
represents the expiration of a portion of the capital loss
carryforward. Net realized gains and net assets were not
affected by this change.
Report of Independent Accountants
To the Shareholders and Board of Directors of
Prudential Mortgage Income Fund, Inc.
In planning and performing our audit of the financial
statements of Prudential Mortgage Income Fund, Inc. (the
"Fund") for the year ended December 31, 1998, we considered
its internal control, including control activities for
safeguarding securities, in order to determine our auditing
procedures for the purpose of expressing our opinion on the
financial statements and to comply with the requirements of
Form N-SAR, not to provide assurance on internal control.
The management of the Fund is responsible for establishing
and maintaining internal control. In fulfilling this
responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs
of controls. Generally, controls that are relevant to an
audit pertain to the entity's objective of preparing
financial statements for external purposes that are fairly
presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding of
assets against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors
or fraud may occur and not be detected. Also, projection of
any evaluation of internal control to future periods is
subject to the risk that it may become inadequate because of
changes in conditions or that the effectiveness of the
design and operation may deteriorate.
Our consideration of internal control would not necessarily
disclose all matters in internal control that might be
material weaknesses under standards established by the
American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or
operation of one or more of the internal control components
does not reduce to a relatively low level the risk that
misstatements caused by error or fraud in amounts that would
be material in relation to the financial statements being
audited may occur and not be detected within a timely period
by employees in the normal course of performing their
assigned functions. However, we noted no matters involving
internal control and its operation,
including controls for safeguarding securities, that we
consider to be material weaknesses as defined above as of
December 31, 1998.
This report is intended solely for the information and use
of management, the Board of Directors of the Fund and the
Securities and Exchange Commission.
PricewaterhouseCoopers LLP
New York, New York
February 23, 1999
To the Shareholders and Board of Directors of
Prudential Mortgage Income Fund, Inc.
