The High
Yield Income
Fund, Inc.
- ----------------------------------------
Semi-Annual Report
February 28, 1994<PAGE>
<PAGE>
LETTER TO
SHAREHOLDERS
April 4, 1994
Dear Shareholder:
In the last six months, high yield bonds performed well as investors were
attracted to their potential for higher income and greater total return. We are
happy to report that the High Yield Income Fund Inc. benefited from the
increased demand for high yield bonds and provided healthy yields and a solid
total return during this time.
The High Yield Income Fund Inc. seeks high current income and capital
appreciation from a portfolio of high-yielding, noninvestment grade bonds.
FUND PERFORMANCE
As of February 28, 1994*
<TABLE>
<CAPTION>
Total Return NAV as of Market Price Yield @
6 Mo. 12 Mo. 2/28/94 as of 2/28/94 NAV
<S> <C> <C> <C> <C> <C>
8.7% 19.3% $7.95 $8.875 11.3%
</TABLE>
*Total return of the Fund represents the change in net asset value from the
beginning of the periods noted through 2/28/94 and assumes the reinvestment of
dividends and distributions. Shares of the Fund are traded on the NYSE. Past
performance is no guarantee of future results.
STOCK LISTING
The High Yield Income Fund Inc.'s common stock is traded on the New York
Stock Exchange under the symbol "HYI" and is frequently listed as
"HighYldIncome" or "HighYldFd" in the financial sections of newspapers. It is
also listed in a closed-end fund table every Monday in The Wall Street Journal.
The Fund paid a dividend of $0.51 per share during the past six months.
The Fund's portfolio primarily contains "junk" bonds, which are rated
double-B or below by the recognized rating services. The Fund also invests in
non-rated securities the Advisor believes to be of comparable quality. The bulk
of holdings are in bonds rated B or better.
Good News On The Economic Front...
For the past three years, the high yield bond market benefited from growing
productivity and a strong equity market. In addition, low interest rates and
an accommodative Federal Reserve policy combined to boost economic growth. In
fact, fourth quarter GDP growth increased to 7.0%, while inflation remained low
and business and consumer confidence improved.
... Leads to Improved Credit Trends
In actions that could lead to further credit rating upgrades, many high yield
issuers took advantage of the strong economy to improve operating cash flows
and strengthen earnings. When a company is upgraded, bondholders, such as your
Fund, benefit because bond prices usually increase. Furthermore, many high
yield companies capitalized on the recent strong equity market to issue stock
and decrease outstanding debt. Low interest rates also allowed many companies
to refinance high coupon bonds. This bolstered their balance sheets, decreased
interest costs and improved their credit quality.
-1-
<PAGE>
(CHART)
The Lehman Brothers High Yield Index is a weighted index comprised of publicly
issued corporate debt, rated below investment grade, with one or more years
remaining to maturity and having $50 million or more outstanding.
Unisys (about 2.5% of the portfolio as of February 28, 1994) and Auburn Hills
Trust (approximately 2.3% of the portfolio before being sold) are examples of
Fund holdings that increased in value in the last six months following improved
credit ratings. On the other hand, our Stone Container Corp. positions (about
0.5% of the portfolio before they were sold) were downgraded.
Over the past six months, our sector allocation has remained fairly constant.
Despite this, the recent financial market volatility has prompted us to
continually monitor economic trends to determine if any major near-term
strategic shifts are needed. If any of our bonds are called, we will search for
replacements that offer the highest yields possible without compromising our
current average single-B credit quality.
While bond calls marketwide increased over the last year, the Fund was able
to raise its monthly dividend last November from $0.075 to $0.080 for several
months to more accurately reflect the portfolio's then current earning rate.
Of course, the Fund's dividend rate can never be guaranteed.
Strong Demand For Yield Bids Up Prices
Since fixed income investors have few viable investment options in this
low-rate environment, high yield bonds profited from generally strong demand
levels. The 10-year Treasury note currently yields about 6.9%, while many money
market funds presently hover around 3.0%. As a result, many fixed-income
investors have become more willing to assume the greater volatility and risk of
high yield bonds for the opportunity to earn better total returns. In fact,
high yield bond demand was so strong that the market absorbed most new issue
supply for the past year. Recent large supply worries and the Fed's short-term
rate increase created long-term volatility.
High Coupons Outweigh Leveraging Costs
While rates were falling, we leveraged about 20% of the portfolio--borrowing
at low short-term rates and investing in high yield bonds--to help enhance
yield and total return. Although rates have risen, our leveraging costs have
increased. In this environment, we will continually monitor our leveraged
position.
-2-
<PAGE>
Effective with the dividend payable on May 31, 1994, the High Yield Income
Fund's monthly per share dividend rate will be reduced from $0.08 to $0.0725.
This dividend rate approximates the Fund's current earnings rate. Future
monthly dividends may be adjusted to reflect the then current portfolio
earnings level.
How Long Can It Last?
Moderate economic growth should support the high yield bond market this year.
Although we do not believe that they will provide the returns and higher
yields of the past two or three years, high yield bonds should continue to
offer higher coupons and the potential for better total returns than their
investment-grade counterparts. Of course, volatility in the financial markets,
recession and high yield bond calls could hamper Fund performance.
As always, it is a pleasure having you as a shareholder of the High Yield
Income Fund Inc., and we remain committed to managing the Fund for your
long-term benefit.
Sincerely,
Lawrence C. McQuade
President
George Edwards
Portfolio Manager
3
<PAGE>
<PAGE>
- ----------------------------------------------------------
THE HIGH YIELD INCOME FUND, INC.
Portfolio of Investments
February 28, 1994
(Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
- ----------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM INVESTMENTS--120.2%
BONDS--118.7%
Advertising--0.6%
Outdoor Systems, Inc.,
Sr. Notes,
B2 $ 500 10.75%, 8/15/03........ $ 525,000
------------
Air Transportation--1.5%
USAir, Inc.,
Sr. Deb.,
Ba3 300 12.875%, 4/1/00........ 313,500
Sr. Notes,
Ba3 500 10.00%, 7/1/03......... 472,500
Ba2 500# 10.375%, 3/1/13........ 505,490
------------
1,291,490
------------
Aircraft Manufacturer--1.1%
PA Holdings Corp.,
Sr. Sub. Notes,
B3 905# 13.75%, 7/15/99........ 972,875
------------
Apparel--2.1%
Cole National Group,
Inc.,
Sr. Notes,
B1 625 11.25%, 10/1/01........ 668,750
Speciality Retailers,
Inc.,
Sr. Sub. Notes,
B2 1,000 14.625%, 8/15/99....... 1,125,000
$( ----%%%--)-
$ !! ! " ! $ 1,793,750
------------
Automobiles & Auto Parts--1.5%
Lear Siegler Seating
Corp.,
Sub. Deb.,
B3 600 14.00%, 12/1/00........ 632,400
Sealed Power Technologies, L.P.,
Sr. Sub. Deb.,
B3 575# 14.50%, 5/15/99........ 623,156
------------
1,255,556
------------
Automotive Production & Parts--0.9%
Allison Engine, Inc.,
Sr. Sub. Notes,
B2 250 10.00%, 12/1/03........ 253,125
Motor Wheel Corp.,
Sr. Notes, Ser. B,
B2 $ 500 11.50%, 3/1/00......... $ 545,000
------------
798,125
------------
Beverages-Bottlers--1.8%
Kemmerer Bottling Group, Inc.,
Sr. Sec. Notes,
B3 1,000# 10.875%, 6/1/00........ 1,035,000
Seven-Up/RC Bottling
Co.,
Sr. Sec. Notes,
Caa 500 11.50%, 8/1/99......... 510,000
------------
1,545,000
------------
Broadcasting--4.9%
Adelphia Communications Corp.,
Sr. Sub. Notes,
B2 500 9.50%, 2/15/04......... 485,000
GACC Holdings, Inc.,
Sr. Sec. Notes,
NR 11 9.50%, 12/31/00, PIK... 9,900
Newcity Communications, Inc.,
Sr. Sub. Notes,
B3 1,000# 11.375%, 11/1/03....... 1,060,000
Sinclair Broadcast Group, Inc.,
Sr. Sub. Notes,
B3 500# 10.00%, 12/15/03....... 523,750
SPI Holdings, Inc.,
Sr. Sub. Notes,
B-* 750 11.50%, 12/1/02........ 738,750
Turner Broadcasting System, Inc.,
Sr. Sub. Deb.,
B1 800# 12.00%, 10/15/01....... 861,200
Univision Television Group, Inc.,
Sr. Sub. Notes,
B2 500 11.75%, 1/15/01........ 550,000
------------
4,228,600
------------
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
<S> <C> <C> <C>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
- ----------------------------------------------------------
Building & Related Industries--10.8%
American Standard,
Inc.,
Sr. Sub. Deb.,
Zero Coupon (until
6/1/98),
B1 $ 100 10.50%, 6/1/05......... $ 84,375
Sr. Sub. Notes,
B1 500# 9.875%, 6/1/01......... 522,500
Baldwin Co.,
Sr. Notes, Ser. B,
B2 750# 10.375%, 8/1/03........ 731,250
Inter-City Prods.
Corp.,
Sr. Sec. Notes,
Ba3 750 9.75%, 3/1/00.......... 751,875
Monogram Industries,
Inc.,
Sub. Deb.,
Caa 500 11.00%, 4/30/04........ 500,000
Nortek, Inc.,
Sr. Sub. Notes,
Caa 500 9.875%, 3/1/04......... 488,750
Sr. Sub. Deb.,
Caa 500 13.50%, 6/15/97........ 510,000
NVR, Inc.,
Sr. Notes,
B2 1,000# 11.00%, 4/15/03........ 1,070,000
SnyderGeneral Corp.,
Sr. Sub. Deb.,
B3 1,500# 14.25%, 11/15/00....... 1,590,000
Southdown, Inc.,
Sr. Sub Notes, Ser.
B,
B3 350# 12.00%, 5/1/97......... 360,500
Sr. Sub. Notes,
B3 500# 14.00%, 10/15/01....... 585,000
Triangle Corp.,
Sr. Sub. Notes,
B2 1,000# 10.50%, 8/1/03......... 1,060,000
Wickes Lumber Co.,
Sr. Sub. Notes,
B3 1,000 11.625%, 12/15/03...... 1,065,000
------------
9,319,250
------------
Cable & Pay Television Systems--3.4%
Comcast Corp.,
Sr. Sub. Deb.,
B1 1,000 11.875%, 3/1/04........ 1,050,000
Scott Cable
Communications, Inc.,
Sub. Deb.,
B3 $ 250 12.25%, 4/15/01........ $ 225,000
Storer Communications,
Inc.,
Sub. Deb.,
B1 500# 10.00%, 5/15/03........ 505,000
United Artists, Inc.,
Sr. Sec. Notes,
Ba3 1,000# 11.50%, 5/1/02......... 1,105,000
------------
2,885,000
------------
Chemicals--6.5%
Agriculture Minerals & Chemicals,
Inc.,
Sr. Notes,
B2 500# 10.75%, 9/30/03........ 537,500
G-I Holdings,
Sr. Def'd. Cpn.
Notes,
Ba3 750# Zero Coupon, 10/1/98... 502,500
Georgia Gulf Corp.,
Sr. Sub. Notes,
B1 500# 15.00%, 4/15/00........ 555,000
ICF International Inc.,
Sr. Sub. Notes,
B3 500 12.00%, 12/31/03....... 520,000
INDSPEC Chemical
Corp.,**
Sr. Sub. Notes,
(cost $512,005;
purchase date -
11/19/93), Zero
Coupon (until
12/1/98),
NR 874 11.50%, 12/1/03........ 541,880
National Gypsum Co.,
Sr. Notes,
B1 501 10.00%, 7/1/03......... 502,253
NL Industries, Inc.,
Sr. Sec. Disc. Notes,
Zero Coupon (until
10/15/98),
B2 1,000 13.00%, 10/15/05....... 640,000
Sr. Sec. Notes,
B1 500 11.75%, 10/15/03....... 536,875
Rexene Corp.,
Sr. Notes,
NR 800 9.00%, 11/15/99........ 760,000
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
<S> <C> <C> <C>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
- ----------------------------------------------------------
Chemicals--(cont'd)
UCC Investors Holdings,
Inc.,
Sr. Sub. Notes,
B3 $ 500# 11.00%, 5/1/03......... $ 542,500
------------
5,638,508
------------
Chemical Fertilizer--1.6%
Arcadian Partners L.P.,
Sr. Notes, Ser. A,
B2 1,000# 10.75%, 5/1/05......... 1,045,000
IMC Fertilizer Group,
Inc.,
Sr. Notes, Ser. B,
NR 250 10.75%, 6/15/03........ 270,000
------------
1,315,000
------------
Conglomerate--1.6%
Interlake Corp.,
Sr. Sub. Deb.,
B3 250 12.125%, 3/1/02........ 257,500
PG Partners I L.P.,**
Lmt. Participating
Int.,
(cost $93,211;
purchase date -
3/31/93),
NR 93 Zero Coupon, 6/15/98... 116,513
Talley Manufacturing &
Technology, Inc.,
Sr. Notes,
B2 500 10.75%, 10/1/03........ 523,750
Valcor, Inc.,
Sr. Notes,
B1 500 9.625%, 11/1/03........ 502,500
------------
1,400,263
------------
Consumer Products--0.5%
Mary Kay Corp.,
Sr. Notes,
NR 375 10.25%, 12/31/00....... 383,438
------------
Containers--4.8%
Container Corp. of
America,
Sr. Sub. Notes,
B2 1,000# 13.50%, 12/1/99........ 1,110,000
Gaylord Container
Corp.,
Sr. Notes,
B3 500# 11.50%, 5/15/01........ 535,000
Ivex Packaging Corp.,
Sr. Disc. Deb., Ser.
B,
Zero Coupon (until
3/15/00),
Caa $ 1,250 13.25%, 3/15/05........ $ 637,500
Sr. Sub. Notes,
B3 500 12.50%, 12/15/02....... 556,250
Stone Container Corp.,
Sr. Notes,**
B1 500 9.875%, 2/1/01......... 490,000
Sr. Notes,**
(cost $750,000;
purchase date -
6/24/93),
B1 750# 12.625%, 7/15/98....... 806,250
------------
4,135,000
------------
Convenience Stores--0.6%
Southland Corp.,
Sr. Sub. Deb.,
B3 500# 12.00%, 6/15/09........ 500,000
------------
Cosmetics/ Toiletries--1.8%
MacAndrews & Forbes
Group, Inc., Sub.
Deb.,
NR 500 13.00%, 3/1/99......... 502,500
Sub. Notes,
NR 500 12.25%, 7/1/96......... 512,500
Playtex Family Products Corp.,
Sr. Sub. Notes,
Caa 500 13.50%, 12/15/98....... 528,750
------------
1,543,750
------------
Electronics--1.8%
Affinity Group, Inc.,
Sr. Sub. Notes,
B2 500# 11.50%, 10/15/03....... 538,750
IMO Industries, Inc.,
Sr. Sub. Deb.,
Caa 1,000# 12.00%, 11/1/01........ 1,040,000
------------
1,578,750
------------
Energy--4.0%
Berg Electronics, Inc.,
Sr. Sub. Deb.,
B3 1,000# 11.375%, 5/1/03........ 1,040,000
Ferrell Gas, Inc.,
Sr. Notes, Ser. D,
Ba3 1,000# 12.00%, 8/1/96......... 1,105,000
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
<S> <C> <C> <C>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
- ----------------------------------------------------------
Energy--(cont'd)
National Propane Corp.,
Sr. Sub. Deb.,
Caa $ 800 13.125%, 3/1/99........ $ 802,000
Trident, Inc.,
Sub. Notes,
B1 500# 10.25%, 4/15/03........ 515,000
------------
3,462,000
------------
Entertainment--0.5%
Imax Corp.,
Sr. Notes,
NR 500 7.00%, 3/1/01.......... 461,875
------------
Financial Services--3.4%
Acme Boot Co.,**
Sr. Notes,
(cost $253,750;
purchase date -
5/25/93),
B2 250 11.50%, 12/15/00....... 252,500
Acme Holdings, Inc.,
Sr. Notes,
B3 500# 11.75%, 6/1/00......... 467,500
Mesa Capital Corp.,
Sec. Disc. Notes,
B3 1,000# 12.75%, 6/30/98........ 897,500
Scotsman Group, Inc.,
Sr. Sec. Notes,
B1 250 9.50%, 12/15/00........ 255,625
Tiphook Finance Corp.,
Sr. Notes,
B3 1,000# 7.125%, 5/1/98......... 875,000
B3 250# 8.00%, 3/15/00......... 216,250
------------
2,964,375
------------
Food & Beverage--7.9%
Chiquita Brands International, Inc.,
Sr. Notes,
B1 250 9.125%, 3/1/04......... 248,437
Del Monte Corp.,**
Sub. Notes,
(cost $1,030,500; purchase
date - 3/12/93)
NR 1,061 12.25%, 9/1/02......... 1,050,390
Fresh Del Monte Produce, N.V.,
Sr. Notes,
Ba3 1,000 10.00%, 5/1/03......... 990,000
Pathmark Stores, Inc.,
Jr. Sub. Deb.,
B3 $ 500 Zero Coupon, 11/1/03... $ 278,750
Pilgrims Pride Corp.,
Sr. Sub. Notes,
B3 1,750# 10.875%, 8/1/03........ 1,802,500
Specialty Foods Acquisition Corp.,
Sr. Sec. Disc. Notes,
Caa 500# Zero Coupon, 8/15/05... 267,500
Specialty Foods Corp.,
Sr. Notes, Series 13,
NR 1,000 10.25%, 8/15/01........ 1,050,000
Sr. Sub. Notes,
NR 500# 11.25%, 8/15/03........ 530,000
White Rose Foods,
Inc.,**
Sr. Notes,
(cost $561,811;
purchase date -
10/29/93),
NR 1,000 Zero Coupon, 11/1/98... 575,000
------------
6,792,577
------------
Food Processing--0.8%
Premium Standard Farms,
Sr. Sec. Disc. Notes,
NR 939 Zero Coupon, 9/15/03... 713,640
------------
Foods--3.9%
ARA Group, Inc.,
Sub. Deb.,
B1 1,000# 12.50%, 7/15/01........ 1,085,000
Carrols Corp.,
Sr. Notes,
B3 1,000# 11.50%, 8/15/03........ 1,045,000
Di Giorgio Corp.,
Sr. Notes,
B2 250 12.00%, 2/15/03........ 265,000
Flagstar Corp.,
Sr. Sub. Deb.,
B2 939 11.25%, 11/1/04........ 957,780
------------
3,352,780
------------
Furniture--0.6%
Levitz Furniture Corp.,
Sr. Notes,
B1 500 12.375%, 4/15/97....... 555,000
------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
<S> <C> <C> <C>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
- ----------------------------------------------------------
Gaming--0.9%
Grand Casino Resorts,
Inc.,**
First Mtge. Notes,
(cost $238,038;
purchase date -
1/22/93),
12.50%, 2/1/00, Ser.
NR $ 250 B.................... $ 278,750
Sam Houston Race Park, Ltd.,
Sr. Sec. Notes,
NR 500 11.75%, 7/15/99........ 520,000
------------
798,750
------------
General Industrial--3.5%
Amerace Corp.,
Sr. Sub. Notes,
B3 450# 13.75%, 3/15/98........ 479,250
Collins & Aikman Group,
Inc.,
Sr. Sub. Deb.,
Caa 1,450 11.875%, 6/1/01........ 1,486,250
Colt Industries, Inc.,
Deb.,
Ba2 1,003 11.25%, 12/1/15........ 1,073,210
------------
3,038,710
------------
Health Care--3.4%
American Medical
International, Inc.,
Sr. Sub. Notes,
B1 1,000# 13.50%, 8/15/01........ 1,172,500
Hospital Corp. of
America,
Deb.,
Baa1 665# 11.25%, 12/1/15........ 709,289
OrNda HealthCorp, Inc.,
Sr. Sub. Notes,
B3 500 12.25%, 5/15/02........ 560,000
Paracelsus Healthcare
Corp.,
Sr. Sub. Notes,
B1 500 9.875%, 10/15/03....... 512,500
------------
2,954,289
------------
Home Building & Real Estate--0.6%
Forecast Group, L.P.,
Sr. Notes,
B3 500 11.375%, 2/1/01........ 500,000
------------
Leisure & Tourism--3.9%
Casino America, Inc.,
First Mtge. Bonds,
B1 1,000 11.50%, 11/15/01....... 1,030,000
Casino Magic Finance
Corp.,
First Mtge. Bonds,
B1 $ 750 11.50%, 10/15/01....... $ 780,000
Host Marriott
Hospitality, Inc.,
Sr. Notes, Ser. B,
B1 475 10.625%, 2/1/00........ 486,875
Kloster Cruise Ltd.,
Sr. Sec'd. Notes,
B2 500 13.00%, 5/1/03......... 555,000
Red Roof Inns, Inc.,**
Sr. Notes,
(cost $500,000;
purchase date -
12/8/93),
B3 500 9.625%, 12/15/03....... 515,000
------------
3,366,875
------------
Machinery--0.3%
Clark R&M Holdings,
Inc.,
Sr. Sec. Notes,
B1 500 Zero Coupon, 2/15/00... 275,000
------------
Manufacturing--1.0%
Overhead Door Corp.,
Sr. Notes,
B1 750# 12.25%, 2/1/00......... 832,500
------------
Mineral Resources--1.0%
Magma Copper Co.,
Sr. Sub. Notes,
Ba3 500# 12.00%, 12/15/01....... 568,750
Ba3 250# 11.50%, 1/15/02........ 279,375
------------
848,125
------------
Misc. Consumer Growth--1.5%
Eye Care Centers America, Inc.,
Sr. Notes,
B3 500 12.00%, 10/1/03........ 522,500
Mail Well Envelope
Corp.,**
Sr. Sub. Notes,
(cost $250,000;
purchase date -
2/18/94),
B3 250 10.50%, 2/15/04........ 248,750
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
<S> <C> <C> <C>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
- ----------------------------------------------------------
Misc. Consumer Growth--(cont'd)
Mail Well Holding,
Inc.,
Sr. Notes,
Zero Coupon (until
2/15/00),
Caa $ 900 11.75%, 2/15/06........ $ 499,500
------------
1,270,750
------------
Miscellaneous Services--0.6%
Americold Corp.,
First Mtg. Bonds,
Ser. B,
B1 500# 11.50%, 3/1/05......... 520,000
------------
Office Equipment & Supplies--2.5%
Unisys Corp.,
Notes,
Ba3 1,500# 13.50%, 7/1/97......... 1,732,500
Sr. Notes,
Ba3 350# 10.625%, 10/1/99....... 386,750
------------
2,119,250
------------
Oil Services--2.0%
Clark Oil and Refining
Corp.,
Sr. Notes,
Ba2 500# 10.50%, 12/1/01........ 545,000
Presidio Oil Co.,
Sr. Sec. Notes,
Ser. B,
NR 750 11.50%, 9/15/00........ 768,750
Sr. Sub. Notes,
NR 400 13.25%, 7/15/02........ 422,000
------------
1,735,750
------------
Oil & Gas--0.9%
Falcon Drilling, Co.,
Sr. Notes,
B2 250 9.75%, 1/15/01......... 257,500
Gulf Canada Resources
Ltd.,
Sr. Sub. Deb.,
B2 500 9.25%, 1/15/04......... 503,750
------------
761,250
------------
Paper--2.3%
Domtar, Inc.,
Notes,
Ba1 750# 12.00%, 4/15/01........ 843,750
Sr. Notes,
Ba1 250# 11.75%, 3/15/99........ 273,750
Fort Howard Corp.,
Sr. Sub. Notes,
B2 $ 500 9.00%, 2/1/06.......... $ 487,500
Seminole Kraft Corp.,
Sub. Notes,
NR 392 13.50%, 10/15/96....... 391,020
------------
1,996,020
------------
Paper & Forest Products--0.6%
Stone Consolidated
Corp.,
Sr. Sec'd Notes,
B1 500# 10.25%, 12/15/00....... 507,500
------------
Plastic Products--0.6%
Uniroyal Technology
Corp.,
Notes,
B2 500 11.75%, 6/1/03......... 520,000
------------
Printing--1.9%
Sullivan Graphics,
Inc.,
Sr. Sub. Notes,
Ca 1,000# 15.00%, 2/1/00......... 1,080,000
Williamhouse Regency
Delaware, Inc.,
Sr. Sub. Deb.,
B2 500 11.50%, 6/15/05........ 540,000
------------
1,620,000
------------
Publishing--1.2%
Big Flower Press, Inc.,
Sr. Sub. Notes,
B3 1,000# 10.75%, 8/1/03......... 1,045,000
------------
Restaurants--0.6%
Family Restaurants,
Inc.,
Sr. Notes,
B1 500 9.75%, 2/1/02.......... 497,500
------------
Retail--2.7%
Caldor Corp.,
Sr. Sub. Notes,
B2 1,275 15.00%, 6/1/00......... 1,472,625
Pier 1 Imports, Inc.,
Sub. Deb.,
B1 375 11.50%, 7/15/03........ 390,000
Wherehouse Entertainment, Inc.,
Sr. Sub. Notes, Ser. B,
B3 500 13.00%, 8/1/02......... 495,000
------------
2,357,625
------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
<S> <C> <C> <C>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
- ----------------------------------------------------------
Steel & Metals--5.6%
Geneva Steel Co.,
Sr. Notes,
B1 $ 500 11.125%, 3/15/01....... $ 545,000
B1 500 9.50%, 1/15/04......... 505,000
Kaiser Aluminum &
Chemical Corp., Sr.
Notes,
B1 250 9.875%, 2/15/02........ 245,000
Sr. Sub. Notes,
B2 250 12.75%, 2/1/03......... 267,500
MAXXAM Group, Inc.,
Sr. Sec. Disc. Notes,
B3 1,000# Zero Coupon, 8/1/03.... 640,000
Sr. Sec. Notes,
B3 1,000# 11.25%, 8/1/03......... 1,040,000
WCI Steel, Inc.,
Sr. Sec. Notes, Ser.
B,
B1 500 10.50%, 3/1/02......... 536,250
Weirton Steel Corp.,
Sr. Notes,
B2 1,000# 11.50%, 3/1/98......... 1,070,000
------------
4,848,750
------------
Supermarkets--6.1%
Big Bear Stores Co.,
Sr. Sub. Notes,
B2 750# 13.75%, 6/15/99........ 817,500
Farm Fresh, Inc.,**
Sr. Notes,
(cost $1,027,500;
Purchase date -
10/2/92),
B2 1,000# 12.25%, 10/1/00........ 1,075,000
Food 4 Less Supermarkets, Inc.,
Sr. Sub. Notes,
B3 1,000# 13.75%, 6/15/01........ 1,130,000
Grand Union Acquistion
Corp.,
Sr. Sub. Notes,
NR 500 13.00%, 3/2/98......... 522,500
Grand Union Co.,
Sr. Sub. Notes,
B3 500# 12.25%, 7/15/02........ 527,500
Kash-N-Karry Food Stores, Inc.,
Sub. Deb.,
B3 750 14.00%, 2/1/01......... 727,500
Purity Supreme, Inc.,
Sr. Sec. Notes,
11.75%, 8/1/99, Ser.
B1 $ 500 B.................... $ 485,000
------------
5,285,000
------------
Technology--0.7%
Neodata Svcs., Inc.,
Sr. Notes, Ser. B,
Zero Coupon (until
5/1/96),
B3 750 12.00%, 5/1/03......... 607,500
------------
Telecommunications--1.2%
Cencall Communications Corp.,
Sr. Disc. Notes,
Zero Coupon (until 1/15/99),
Caa 600# 10.13%, 1/15/04........ 384,000
Page Mart, Inc.,
Sr. Notes,
Zero Coupon (until
11/1/98),
NR 1,000 12.25%, 11/1/03........ 620,000
------------
1,004,000
------------
Textiles--3.6%
CMI Inds., Inc.,
Sr. Sub. Notes,
B1 500# 9.50%, 10/1/03......... 495,000
Forstmann Textiles,
Inc.,
Sr. Sub. Notes,
B3 1,135# 14.75%, 4/15/99........ 1,350,650
JPS Textile Group,
Inc.,
Sr. Notes,
B3 500# 11.75%, 6/1/96......... 502,500
Sr. Sub. Disc. Notes,
Caa 500 10.85%, 6/1/99......... 515,000
Westpoint Stevens,
Inc.,
Sr. Sub. Deb.,
B3 250 9.375%, 12/15/02....... 252,500
------------
3,115,650
------------
Transportation--0.6%
Transtar Holdings LP,**
Sr. Disc. Notes, Ser.
A,
(cost $466,918;
purchase date -
11/30/93),
Zero Coupon,
NR 1,000 12/15/03............. 550,000
------------
Total bonds
(cost $99,150,941)... 102,387,396
------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------
Value
Shares Description (a) (Note 1)
----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--0.1%
Building & Related Industries
Thermadyne Holdings,
80,000 Class B.............. $ 800
------------
Food & Beverage
Specialty Foods Acquisition Corp.,**
(cost $5,451; purchase
7,500 date - 8/10/93)...... 13,125
------------
Leisure & Tourism
Marriott International,
752 Inc.................. 21,996
------------
Oil & Gas--0.1%
Petrolane, Inc., Class
4,900 B.................... 58,800
------------
Total common stocks
(cost $235,177)...... 94,721
------------
PREFERRED STOCKS--1.2%
Building & Related Industries
Thermadyne Industries,
Inc.,
17.44%, Exchangeable,
43,275 PIK.................. 4,327
------------
Supermarkets--0.5%
Pantry Pride, Inc.,
14.875%, Exchangeable,
2,500 Ser. B............... 257,500
Supermarkets General
Holdings Corp.,
5,000 3.52%, Exchangeable.... 142,500
------------
400,000
------------
Tobacco--0.7%
RJR Nabisco, Inc.,
83,400 8.25%, Convertible..... 594,225
------------
Total preferred stocks
(cost $959,856)...... 998,552
------------
WARRANTS(D)--0.2%
Building & Related Industries--0.1%
Southdown, Inc.
5,000 expiring 10/15/96...... 70,000
Thermadyne Industries,
Inc.,
197 expiring 12/31/00...... 788
------------
70,788
------------
Chemicals
ICF International Inc.,
2,400 expiring 12/31/03...... 3,600
------------
Energy
Ugi Corp.,
833 expiring 3/31/98....... $ 833
------------
Gaming--0.1%
Sam Houston Race Park Ltd.,
2,000 expiring 7/15/99....... 70,000
------------
Leisure & Tourism
Casino America, Inc.,
3,263 expiring 11/15/96...... 9,789
Casino Magic Finance
Corp.,
expiring 10/14/96
(cost $14,499; purchase
4,500 date - 11/14/93)..... 13,500
------------
23,289
------------
Plastic Products
Uniroyal Technology
Corp.,
5,000 expiring 6/1/03........ 12,500
------------
Supermarkets
Purity Supreme, Inc.,
1,733 expiring 8/6/96........ 35
------------
Total warrants
(cost $8,942)........ 181,045
------------
Total Investments--120.2%
(cost $100,354,916;
Note 3).............. 103,661,714
Liabilities in excess
of other
assets--(20.2%)...... (17,393,561)
------------
Net Assets--100%....... $ 86,268,153
------------
------------
</TABLE>
- ------------------
(a) The following abbreviations are used in portfolio descriptions:
PIK--Payment in kind securities.
# Portion of security segregated as collateral for line of credit.
Aggregate value of segregated securities--$51,181,285; (Note 4).
* Standard & Poor's Rating.
** Indicates a restricted security; the aggregate cost of such securities is
$5,703,683. The aggregate value ($6,089,615) is approximately 7.9% of net
assets.
(D) Non-income producing securities.
NR--Not rated by Moody's or Standard & Poor's.
See Notes to Financial Statements.
11
<PAGE>
<PAGE>
- ----------------------------------------------------------
THE HIGH YIELD INCOME FUND, INC.
Statement of Assets and Liabilities
February 28, 1994
(Unaudited)
- ----------------------------------------------------------
<TABLE>
<S> <C>
Assets
Investments, at value (cost
$100,354,916)........................ $103,661,714
Interest receivable.................... 2,505,407
Receivable for investments sold........ 2,152,670
Deferred expenses and other assets..... 7,917
------------
Total assets..................... 108,327,708
------------
Liabilities
Bank overdraft......................... 482,483
Loan payable (Note 5).................. 20,000,000
Payable for investments purchased...... 1,244,461
Dividends payable...................... 117,096
Accrued expenses....................... 83,538
Loan interest payable.................. 70,022
Management fee payable................. 47,263
Deferred trustees' fees................ 14,692
------------
Total liabilities................ 22,059,555
------------
Net Assets............................. $ 86,268,153
------------
------------
Net assets were comprised of:
Common stock, at par................. $ 108,469
Paid-in capital in excess of par..... 99,077,632
------------
99,186,101
Accumulated distributions in excess
of net investment income........... (375,305)
Accumulated net realized loss on
investments........................ (15,849,441)
Net unrealized appreciation of
investments........................ 3,306,798
------------
Net assets, February 28, 1994........ $ 86,268,153
------------
------------
Net asset value and redemption price
per share ($86,268,153 / 10,846,835
shares of common stock issued and
outstanding)......................... $7.95
------------
------------
</TABLE>
- ----------------------------------------------------------
THE HIGH YIELD INCOME FUND, INC.
Statement of Operations
Six Months Ended February 28, 1994
(Unaudited)
- ----------------------------------------------------------
<TABLE>
<S> <C>
Net Investment Income
Income
Interest................................ $5,640,851
Dividends............................... 37,532
----------
5,678,383
----------
Expenses
Management fees......................... 295,945
Custodian's fees and expenses........... 52,000
Reports to shareholders................. 29,000
Audit fee............................... 27,000
Transfer agent's fees and expenses...... 27,000
Trustees' fees.......................... 25,000
Registration fees....................... 13,000
Legal fees.............................. 9,000
Insurance expense....................... 8,000
Miscellaneous........................... 2,211
----------
Total operating expenses.............. 488,156
Loan interest expense (Note 5).......... 410,890
----------
Total expenses........................ 899,046
----------
Net investment income..................... 4,779,337
----------
Realized and Unrealized Gain
on Investments
Net realized gain on investment
transactions.............................. 1,996,851
Net increase in unrealized appreciation of
investments............................. 925,745
----------
Net gain on investments................... 2,922,596
----------
Net Increase in Net Assets
Resulting from Operations................. $7,701,933
----------
----------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
12
<PAGE>
<PAGE>
- ----------------------------------------------------------
THE HIGH YIELD INCOME FUND, INC.
Statement of Cash Flows
Six Months Ended February 28, 1994
(Unaudited)
- ----------------------------------------------------------
<TABLE>
<S> <C>
Increase (Decrease) in Cash
Cash flows provided from operating
activities:
Interest and dividends received
(excluding
discount amortization of
$289,975)............................ $ 5,550,120
Operating expenses paid.............. (533,174)
Loan interest paid................... (413,889)
Maturities of short-term portfolio
investments, net................... 1,072,000
Purchases of long-term portfolio
investments........................ (45,389,510)
Proceeds from disposition of
long-term
portfolio investments.............. 44,383,079
Deferred expenses.................... 7,518
----------------
Net cash provided from operating
activities......................... 4,676,144
----------------
Cash flows used for financing
activities:
Cash dividends paid (excluding
reinvestment of dividends of
$312,608).......................... (5,158,894)
----------------
Net decrease in cash................... (482,750)
Cash at beginning of period............ 267
----------------
Cash at end of period.................. $ (482,483)
----------------
----------------
Reconciliation of Net Increase in Net Assets
to Net Cash Provided from Operating Activities
Net increase in net assets resulting
from operations...................... $ 7,701,933
----------------
Decrease in investments................ 2,792,073
Net realized gain on investment
transactions......................... (1,996,850)
Net change in net unrealized
depreciation on investments.......... (925,'45)
Increase in receivable for investments
sold................................. (1,044,528)
Decrease in interest receivable........ 161,711
Decrease in deferred expenses and other
assets............................... 7,519
Decrease in payable for investments
purchased............................ (1,971,952)
Decrease in interest payable........... (2,999)
Decrease in accrued expenses and other
liabilities.......................... (45,018)
----------------
Total adjustments.................... (3,025,789)
----------------
Net cash provided from operating
activities....................... $ 4,676,144
----------------
----------------
</TABLE>
- ----------------------------------------------------------
THE HIGH YIELD INCOME FUND, INC.
Statement of Changes
in Net Assets
(Unaudited)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
Increase in Net Assets
Six Months
Ended Year Ended
February 28, August 31,
Operations 1994 1993
<S> <C> <C>
----------------- ---------------
Net investment income..... $ 4,779,337 $ 10,877,734
Net realized gain on
investment
transactions............ 1,996,851 2,816,719
Net change in unrealized
appreciation/depreciation
of investments.......... 925,745 (801,331)
----------------- ---------------
Net increase in net assets
resulting from
operations.............. 7,701,933 12,893,122
----------------- ---------------
Dividends paid to
shareholders from net
investment income......... (4,779,337) (9,692,422)
Dividends to shareholders in
excess of net investment
income.................... (755,717) --
Net asset value of shares
issued to shareholders in
reinvestment
of dividends.............. 312,608 580,867
----------------- ---------------
Total increase.............. 2,479,487 3,781,567
Net Assets
Beginning of period......... 83,788,666 80,007,099
----------------- ---------------
End of period............... $86,268,153 $ 83,788,666
----------------- ---------------
----------------- ---------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
13
<PAGE>
<PAGE>
- ----------------------------------------------------------
THE HIGH YIELD INCOME FUND, INC.
Notes to Financial Statements
(Unaudited)
- ----------------------------------------------------------
The High Yield Income Fund, Inc. (the ``Fund'') was organized in Maryland on
August 21, 1987 as a diversified, closed-end management investment company. The
Fund's primary investment objective is to maximize current income to
shareholders through investment in a diversified portfolio of high-yield,
fixed-income securities rated in the medium to lower categories by recognized
rating services or non-rated securities of comparable quality. As a secondary
investment objective, the Fund will seek capital appreciation, but only when
consistent with its primary objective. The ability of issuers of debt
securities held by the Fund to meet their obligations may be affected by
economic or political developments in a specific industry or region.
The Fund had no transactions until October 29, 1987, when it sold 11,000
shares of common stock for $102,300 to The Prudential Insurance Company of
America (``Prudential''). Prudential continues to hold such shares. Investment
operations commenced on November 6, 1987.
Note 1. Accounting The following is a summary of
Policies 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 the mean between the
most recently quoted bid and asked prices provided by principal market makers.
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.
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.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian take possession of the
underlying collateral securities, the value of which exceeds the principal
amount of the repurchase transaction, including accrued interest. If the seller
defaults and the value of the collateral declines, or if bankruptcy proceedings
are commenced with respect to the seller of the security, realization of the
collateral by the Fund may be delayed or limited.
The Fund may invest up to 20% of its total assets in securities which are
not readily marketable, including those which are restricted as to disposition
under securities law (``restricted securities'').
Cash Flow Information: The Fund invests in securities and distributes dividends
from net investment income which are paid in cash or are reinvested at the
discretion of shareholders. These activities are reported in the Statement of
Changes in Net Assets and additional information on cash receipts and cash
payments is presented in the Statement of Cash Flows.
Accounting practices that do not affect reporting activities on a cash basis
include carrying investments at value, accruing income on PIK securities and
amortizing discounts on debt obligations. Cash, as used in the Statement of
Cash Flows, is the amount reported as ``Cash'' in the Statement of Assets and
Liabilities.
Security Transactions and Investment Income: Security transactions are recorded
on the trade date. Realized and unrealized gains and losses from securities
transactions are calculated on the identified cost basis. Interest income which
is comprised of three elements; stated coupon rate, original issue discount and
market discount, is recorded on the accrual basis. Dividend income is recorded
on the ex-dividend date.
Federal Income Taxes: It is the Fund's policy 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 shareholders.
Therefore, no federal income tax provision is required.
Dividends and Distributions: The Fund expects to pay dividends of net
investment income monthly and make distributions at least annually of net
capital gains, if any. 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 short-term capital gains.
Note 2. Agreements The Fund has a management
agreement with Prudential Mutual Fund Management,
Inc. (``PMF''). Pursuant to this agreement, PMF has responsibility for all
investment advisory services and supervises the subadviser's performance of
such services. PMF has entered into a subadvisory agreement with
14
<PAGE>
<PAGE>
The Prudential Investment Corporation (``PIC''). PIC furnishes investment
advisory services in connection with the management of the Fund. PMF pays for
the services of PIC, the cost of compensation of officers of the Fund,
occupancy and certain clerical and bookkeeping costs of the Fund. The Fund
bears all other costs and expenses.
The management fee paid PMF is computed weekly and payable monthly, at an
annual rate of .70 of 1% of the Fund's average weekly net assets.
PMF and PIC are indirect, wholly-owned subsidiaries of Prudential.
Note 3. Portfolio Purchases and sales of
Securities investment securities, other than
short-term investments, for the six months ended
February 28, 1994 aggregated $43,417,558 and $44,584,750, respectively.
The cost basis of investments for federal income tax purposes was
substantially the same as for financial reporting purposes and, accordingly at
February 28, 1994, net unrealized appreciation including short-term
investments, for federal income tax purposes was $3,306,798 (gross unrealized
appreciation-$4,910,854; gross unrealized depreciation-$1,604,056).
The Fund had a capital loss carryforward as of August 31, 1993 of
approximately $17,837,000 of which $2,525,800 expires in 1998, $6,419,700
expires in 1999 and $8,891,500 expires in 2000. Accordingly, no capital gains
distribution is expected to be paid to shareholders until net realized gains
have been realized in excess of such amounts.
Note 4. Borrowings On March 19, 1992, the Board
of Directors of the Fund approved a $20,000,000
uncommitted line of credit with State Street Bank & Trust Co. Interest on any
such borrowings outstanding fluctuates daily, at one percentage higher than the
London Interbank offered rate.
The average daily balance outstanding for the six months ended February
28,1994 was $20,000,000 at a weighted average interest rate of 4.08%.
The maximum face amount of borrowings outstanding at any month end during
the six months ended February 28, 1994 was $20,000,000.
Note 5. Capital There are 200 million shares
of $.01 par value common stock authorized.
During the six months ended February 28, 1994 and the fiscal year ended
August 31, 1993 the Fund issued 38,650 and 76,192 shares, respectively, in
connection with the reinvestment of dividends and distributions.
Note 6. Dividends On March 1 and April 4, 1994
and Distributions the Board of Directors of the
Fund declared dividends of $.08 per share payable
on March 25 and April 29, 1994, respectively, to shareholders of record on
March 14 and April 15, 1994, respectively.
Note 7. Quarterly Data
(Unaudited)
<TABLE>
<CAPTION>
Net realized and Net increase
unrealized in net assets
Net Investment gains (losses) on resulting from
Quarterly Total income investments operations
period ended income Amount Per share Amount Per share Amount Per share
- ------------------ ---------- ------------------------ -------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
November 30, 1991 $2,645,000 $2,418,395 $ .23 $ 2,066,901 $ .19 $ 4,485,296 $ .42
February 29, 1992 2,496,433 2,267,980 .21 3,440,616 .33 5,708,596 .54
May 31, 1992 2,463,559 2,183,430 .20 506,112 .05 2,689,542 .25
August 31, 1992 3,181,849 2,714,685 .26 540,364 .05 3,255,049 .31
November 30, 1992 2,983,763 2,530,119 .23 (1,883,941) (.18) 646,178 .06
February 28, 1993 3,100,143 2,659,916 .25 1,747,668 .16 4,407,584 .40
May 31, 1993 2,985,599 2,541,318 .24 1,893,736 .18 4,435,054 .41
August 31, 1993 3,585,185 3,146,381 .29 257,925 .02 3,404,306 .32
November 30, 1993 2,959,989 2,507,291 .23 1,136,926 .11 3,644,217 .34
February 28, 1994 2,718,394 2,272,046 .21 1,785,670 .16 4,057,716 .37
<CAPTION>
Dividends
and Share
Quarterly distributions price
period ended Amount Per share High Low
- ------------------ ------------------------ ------------
<S> <C> <C> <C> <C>
November 30, 1991 $2,402,315 $ .2250 $7 1/4 $6 1/2
February 29, 1992 2,406,251 .2250 7 7/8 6 1/2
May 31, 1992 2,410,063 .2250 8 1/2 7 3/4
August 31, 1992 2,414,650 .2250 8 3/4 7 1/2
November 30, 1992 2,417,334 .2250 8 7
February 28, 1993 2,421,213 .2250 8 3/8 7 1/4
May 31, 1993 2,424,024 .2250 8 1/2 8 1/8
August 31, 1993 2,429,851 .2250 8 7/8 8 1/8
November 30, 1993 2,488,477 .2300 8 1/2 8 1/8
February 28, 1994 3,046,577 .2800 9 1/8 8 3/8
</TABLE>
15
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
THE HIGH YIELD INCOME FUND, INC.
Financial Highlights
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended August 31,
February 28, -------------------------------------------------------
1994 1993 1992 1991 1990 1989
-------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period*.......... $ 7.75 $ 7.46 $ 6.84 $ 6.79 $ 8.60 $ 9.28
-------------- ------- ------- ------- ------- -------
Net investment income.......................... .44 1.01 .90 .90 .97 1.17
Net realized and unrealized gain (loss) on
investments.................................. .27 .18 .62 .08 (1.68) (.57)
-------------- ------- ------- ------- ------- -------
Total from investment operations............. .71 1.19 1.52 .98 (.71) .60
-------------- ------- ------- ------- ------- -------
Dividends paid to shareholders from net
investment income............................ (.44) (.90) (.90) (.90) (.97) (1.17)
Distributions from net realized capital
gains........................................ -- -- -- -- -- (.09)
Distributions to shareholders in excess of net
investment income............................ (.07) -- -- -- -- (.02)
Return of capital distributions................ -- -- -- (.03) (.13) --
-------------- ------- ------- ------- ------- -------
Total dividends and distributions............ (.51) (.90) (.90) (.93) (1.10) (1.28)
-------------- ------- ------- ------- ------- -------
Net asset value, end of period*................ $ 7.95 $ 7.75 $ 7.46 $ 6.84 $ 6.79 $ 8.60
-------------- ------- ------- ------- ------- -------
-------------- ------- ------- ------- ------- -------
Market price per share, end of period*......... $ 8.88 $ 8.75 $ 7.75 $ 6.63 $ 5.75 $ 8.13
-------------- ------- ------- ------- ------- -------
-------------- ------- ------- ------- ------- -------
TOTAL INVESTMENT RETURN(D)..................... 8.00% 26.80% 31.79% 34.15% (31.20)% (1.27)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................ $ 86,268 $83,789 $80,007 $73,080 $72,494 $91,783
Average net assets (000)....................... $ 84,996 $80,747 $77,579 $67,388 $80,780 $93,792
Ratio of expenses to average net assets........ 2.13%(D)(D) 2.20% 1.55% 1.39% 1.43% 2.10%
Ratio of net investment income to average net
assets....................................... 11.34%(D)(D) 13.47% 12.35% 14.23% 12.79% 13.23%
Portfolio turnover rate........................ 44% 83% 74% 72% 27% 105%
Asset coverage................................. $ 5,313 $ 5,189 $ 5,000 -- -- $ 1,022
Total debt outstanding at year end (000
omitted)..................................... $ 20,000 $20,000 $20,000 -- -- $9,960
</TABLE>
- ---------------
* NAV and market value published in The Wall Street Journal each Monday.
(D) Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of each period reported. Dividends are
assumed, for purposes of this calculation, to be reinvested at prices
obtained under the Fund's dividend and reinvestment plan. Does not reflect
brokerage commissions.
(D)(D) Annualized.
See Notes to Financial Statements.
16
<PAGE>
<PAGE>
Directors
Eugene C. Dorsey
Donald D. Lennox
Lawrence C. McQuade
Richard A. Redeker
Stanley E. Shirk
Robin B. Smith
Officers
Lawrence C. McQuade, President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
S. Jane Rose, Secretary
Marguerite E.H. Morrison, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Custodian and Transfer Agent
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Independent Accountants
Price Waterhouse
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Dechert Price & Rhoads
1500 K Street N.W.
Washington, D.C. 20005
The accompanying financial statements as of February 28, 1994,
were not audited and,
accordingly, no opinion is expressed on them.
This report is for stockholder information. This is not a
prospectus intended for use in the purchase or sale of fund
shares.
The High Yield Income Fund, Inc.
One Seaport Plaza
New York, NY 10292
Toll free (800) 451-6788
or collect (212) 214-3332
429904105
