The High
Yield Income
Fund, Inc.
- ---------------------
Semi-Annual Report
February 28, 1997
<PAGE>
Letter to
Shareholders
April 10, 1997
Dear Shareholder:
Performance At A Glance.
High yield corporate bonds were the securities of choice in
the
U.S. bond market during the six months ended February 28,
1997,
leading all other types of bonds in total return. The high
coupons of these bonds and the strong profitability of most
high yield issuers, plus falling interest rates, powered
high
yield ahead of all other fixed income markets. The High
Yield
Income Fund generated a strong total return over the six
months,
although it was below the Lipper High Yield Closed-End Fund
average
because holdings with strong credit ratings generally did
not
perform as well as those with weaker ratings, and because of
losses in holdings of select paging and wireless cable
companies.
<TABLE>
FUND PERFORMANCE
As of 2/28/97
<CAPTION>
Total Return Total Return
NAV Market Price
6 months 12 months
2/28/97 2/28/97
<S> <C> <C> <C>
<C>
High Yield 8.6% 12.6%
$7.46 $7.75
Income Fund1
Lipper Closed-End 10.6% 15.2%
N/A N/A
High Current Yield Avg.2
Lipper Open-End 9.4% 13.4%
N/A N/A
High Current Yield Avg.3
</TABLE>
1Source: Prudential Mutual Fund Management, Inc. Total
return
of the Fund represents the change in net asset value from
the
beginning of the period (8/31/96) through the end of the
period
(2/28/97) and assumes the reinvestment of dividends and
distributions. Shares of the Fund are traded on the NYSE
using the symbol HYI. Past performance is no guarantee of
future results.
2Source: Lipper Analytical Services, Inc. These are the
average returns of 17 funds in the closed end high current
yield category for six months and for one year.
3Source: Lipper Analytical Services, Inc. These are the
average returns of 168 funds in the open end high current
yield category for six months and 152 funds for one year.
1
<PAGE>
Better-Rated
Junk Bonds?
We generally look for better-rated bonds,
namely those in the B and BB categories
within the junk bond market. Why?
Because we're cautious. If the economy
weakens, these bonds should hold their
value better than weaker-rated bonds
with more credit risk.
YIELD AND DIVIDEND
As of 2/28/97
Total Monthly Dividends Paid Per Share
Total Monthly Dividends,Paid Per Share Yield At
Market Price
6 months
$0.39
10.1%
The Fund seeks high current income primarily by investing in
corporate bonds rated BBB or lower by independent rating
agencies. These bonds are below investment grade and are
commonly known as junk bonds. Below investment grade bonds
are subject to greater risk of default and higher volatility
than investment grade bonds. The Fund is well diversified
and we carefully research companies to find those with
attractive yields and improving credit quality.
Our Strategy.
The six months ending February 28, 1997 were good for high
yield bonds. Although these securities are commonly known
as junk bonds, their return was anything but that -- the
high yield market returned more than any other sector of
the U.S. bond market during the six months.
The major factor driving high yield bonds higher was a low
default rate. In addition, interest rates fell slightly over
the six month period, and inflation remained under control.
Also, the stock market was so strong that many of the better
quality high yield companies were able to sell common stock
and use those proceeds to reduce debt. This combination of
good profits and stronger balance sheets cut the default
rate of the high yield market in half, from about 3% in
1995 to 1.5% in calendar 1996.
Would Growth Slow?
We had expected slower economic growth late in 1996 and
early in 1997. Therefore, we focused on the larger,
stronger companies in the high yield market by buying
bonds with weak BB and single B credit ratings, which
have less risk than the weak single B- or CCC-rated
bonds. We held more assets than the general market
in defensive industries such as telecommunications,
cable television and energy.
During the six months we benefited when the credit ratings
of a number of our larger holdings were upgraded by rating
agencies. These upgrades resulted either from a merger
with a stronger company or because either Moody's or
Standard & Poor's recognized that the strong profit
growth and lower debt ratios of the company merited
a better rating.
2
<PAGE>
Unfortunately, our investments in the paging sector of
the telecommunications market and the wireless sector
of the cable television market did not perform as
anticipated. Paging fell out of favor with investors
because of increased competition and the need to spend
large amounts of money to maintain high subscriber growth
rates, and wireless cable bonds fell late in 1996 as
expected mergers with local telephone companies did
not occur.
What Went Well.
During the six months ending February 28, 1997, there
was heavy merger activity in corporate America, and a
number high yield companies merged into investment grade
companies, generating strong capital gains for high yield
bondholders.
We owned a position (0.5% of total net assets) in MFS
Communications, an expanding U.S. local telephone company
which was acquired by WorldCom, the nation's fourth largest
long distance telephone company.
In addition, Bell Cablemedia combined with Videotron
Holdings
(0.75% of assets). Both of these companies are leading
cable/telephone companies in the United Kingdom, and their
merger created a much stronger credit so that bonds of both
companies rose strongly after their merger was announced.
And Not So Well.
In 1996, we were attracted to the great potential in the
paging
sector of the telecommunications industry and the wireless
sector
of the cable television industry. Paging offered strong
growth,
and wireless cable seemed like a natural match for local
telephone
companies looking to provide video to their customers,
supplementing telephone service. Unfortunately, both
industries ran into difficulty.
Paging encountered problems when the second-largest company,
Mobilemedia, had difficulty integrating a major acquisition.
This focused investors' attention on the higher than
expected
expenses that paging companies were facing to continue to
increase their subscriber base. Because high levels of
spending meant less opportunity to reduce debt, many
investors became bearish on the sector.
We also experienced losses in wireless cable television,
which earlier in 1996 seemed to offer competition to
traditional hard-wire cable. We thought that the wireless
cable companies would be natural candidates for mergers or
joint ventures with local telephone companies as a result
of the Federal Telecommunications Act of 1996.
Unfortunately,
these mergers did not occur on schedule, and these companies
turned off investors. We reduced our holdings in this
sector.
3
<PAGE>
Looking Ahead.
We remain concerned that economic growth may slow later in
1997. We are also concerned about the large amount of new
bonds that have been sold over the past several years. As
a result, the default rate could increase this year. While
we do not expect defaults to rise dramatically, we do
believe
that the default rate will drift higher.
Therefore, we are continuing our focus on defensive
industries
such as telecommunications and cable television, and we are
holding less than a market share of cyclicals that benefit
from a strong economy, like steel, forest products and
retail.
We continue to focus on the larger companies in the high
yield
market, and on companies with credit ratings of single B and
BB.
The average credit spread now paid by high yield issuers
over
the government bond rate is now less than three and a half
percentage points, which is at a low level relative to the
historical average. In this environment we believe that
bonds of better quality high yield companies provide more
value than lower rated credits. Simply stated, we feel
investors are not being adequately compensated for owning
bonds of the weaker companies, and this view is guiding
our strategy for 1997.
Sincerely,
Lars M. Berkman
Co-Manager
Michael A. Snyder
Co-Manager
Richard A. Redeker
President
4
<PAGE>
Portfolio of Investments as of February 28, 1997
(Unaudited) THE HIGH YIELD
INCOME FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description (a)
Rating Rate Date (000) (Note
1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
LONG-TERM INVESTMENTS--122.1%
ASSET BACKED SECURITIES--0.6%
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Transportation--0.6%
USAir Pass-Through Trust Series 1989-A2
Total asset backed securities (cost $506,875)
B1 9.82% 1/01/13 $ 500 $
506,875
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
CORPORATE BONDS--113.6%
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Aerospace--3.5%
Fairchild Corp., Sub. Deb.
Caa 12.00 10/15/01 750
766,875
K & F Industries, Inc., Sr. Sec. Notes
B1 11.875 12/01/03 750 (b)
795,000
Talley Manufacturing & Technology, Inc., Sr. Notes
B2 10.75 10/15/03 1,250 (b)
1,306,250
- -----------
2,868,125
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Automotive Parts--3.7%
Foamex L.P., Sr. Sub. Deb.
B3 11.875 10/01/04 1,000 (b)
1,075,000
Foamex JPS Automotive, Sr. Sec'd Disc. Deb., Series B,
Zero Coupon (until 7/1/99)
NR 14.00 7/01/04 1,000
910,000
JPS Automotive, Sr. Notes
B2 11.125 6/15/01 1,000 (b)
1,085,000
- -----------
3,070,000
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Cable--13.9%
Adelphia Communications Corp., Sr. Notes, Payment in
kind
B3 9.50 2/15/04 849
772,531
American Telecasting, Inc., Sr. Disc. Notes, Zero Coupon
(until 8/15/00)
Caa 14.50 8/15/05 1,500
420,000
Cablevision Systems Corp., Sr. Sub. Notes
B2 9.25 11/01/05 665 (c)
663,337
Comcast Corp., Sr. Sub. Deb.
B1 10.625 7/15/12 1,000 (b)
1,125,000
Comcast UK Cable Corp., Sr. Disc. Deb., Zero Coupon
(until 11/15/00) (U.K.)
B2 11.20 11/15/07 250 (g)
178,125
Diamond Cable Communications PLC,
Sr. Disc. Notes, Zero Coupon (until 12/15/00) (U.K.)
B3 11.75 12/15/05 500 (g)
345,000
Sr. Disc. Notes, Zero Coupon (until 2/15/02)(U.K.)
B3 10.75 2/15/07 500 (g)
298,125
Echostar Satellite Broadcast Corp., Sr. Disc. Notes,
Zero Coupon (until 3/15/00)
Caa 13.125 3/15/04 760
611,800
Falcon Holdings Corp. L.P., Sr. Sub. Notes, Payment in
kind
NR 11.00 9/15/03 1,359
1,222,942
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 5
<PAGE>
Portfolio of Investments as of February 28, 1997
(Unaudited) THE HIGH
YIELD INCOME FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description (a)
Rating Rate Date (000) (Note
1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Cable (cont'd.)
Heartland Wireless Communication, Inc., Sr. Notes
NR 13.00% 4/15/03 $ 500 $
480,000
Intermedia Capital Partners L.P. Sr. Disc. Notes
B2 11.25 8/01/06 820
875,350
International Cabletel, Inc.,
Sr. Def'd. Coupon Notes, Series B, Zero Coupon (until
2/1/01)
B3 11.50 2/01/06 375
251,250
Sr. Notes, Zero Coupon (until 10/15/98)
B3 10.875 10/15/03 500
427,500
Marcus Cable Operating Co., Sr. Notes Zero Coupon (until
8/1/99)
B3 13.50 8/01/04 2,250
1,878,750
Rogers Cablesystems, Inc., Sr. Notes, (Canada)
Ba3 10.00 3/15/05 1,000 (b)(g)
1,065,000
Tevecap S.A., Sr. Notes (Brazil)
B2 12.625 11/26/04 500 (g)
537,500
United Int'l. Holdings, Inc., Sr. Disc. Notes
B3 Zero 11/15/99 500
365,000
- -----------
11,517,210
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Casinos--11.8%
Aztar Corp., Sr. Sub. Notes
B2 13.75 10/01/04 750
851,250
Boomtown Inc., First Mtge. Notes
B1 11.50 11/01/03 1,000 (b)
1,090,000
Colorado Gaming & Entertainment Co., Sr. Notes, Payment
in kind
NR 12.00 6/01/03 1,322
1,282,340
Empress River Casino Finance Corp., Sr. Notes
Ba3 10.75 4/01/02 500 (b)
536,250
Grand Casino, Inc.
Ba3 10.125 12/01/03 1,000 (c)
1,030,000
Lady Luck Gaming Finance Corp.
B2 11.875 3/01/01 1,000 (b)
960,000
Louisiana Casino Cruises Inc., First Mtge. Notes
NR 11.50 12/01/98 500
510,000
Majestic Star Casino
B(h) 12.75 5/15/03 1,200
1,311,000
Riviera Holdings Corp.
B1 11.00 12/31/02 250
258,125
Showboat Marina Casino Participation First Mtge. Notes,
Series B
B2 13.50 3/15/03 650
744,250
Trumps Atlantic City Assoc., First Mtge. Notes
B1 11.25 5/01/06 750
723,750
Trumps Castle Funding, Inc., First Mtge. Notes
Caa 11.75 11/15/03 500
440,000
- -----------
9,736,965
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Chemicals--1.7%
Applied Extrusion Technology, Inc., Sr. Notes, Series B
B2 11.50 4/01/02 1,000 (b)
1,070,000
Sterling Chemical Holdings, Inc.,
Sr. Disc. Notes, Zero Coupon (until 8/15/01)
Caa 13.50 8/15/08 140
95,900
Sr. Sub. Notes
B3 11.75 8/15/06 250 (b)
272,500
- -----------
1,438,400
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 6
<PAGE>
Portfolio of Investments as of February 28, 1997
(Unaudited) THE HIGH
YIELD INCOME FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description (a)
Rating Rate Date (000) (Note
1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Conglomerate--2.7%
IMO Industries, Inc., Sr. Sub. Notes
Caa 11.75% 5/01/06 $ 750 $
742,500
Interlake Corp., Sr. Sub. Deb. Notes
B3 12.125 3/01/02 250
260,000
Newflo Corp., Sub. Notes
B2 13.25 11/15/02 1,150 (b)
1,267,875
- -----------
2,270,375
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Consumer Products--4.8%
Hines Horticulture, Inc., Sr. Sub. Notes, Series B
B3 11.75 10/15/05 1,000 (b)
1,105,000
Lifestyle Furnishings, Inc., Sr. Sub. Notes
B1 10.875 8/01/06 500
550,000
MacAndrews & Forbes Group Holdings, Inc., Sub. Deb.
NR 13.00 3/01/99 500
500,625
Rayovac Corp., Sr. Sub. Notes
B3 10.25 11/01/06 500
525,000
Sealy Corp., Sr. Sub. Notes
B1 10.25 5/01/03 250 (b)
255,000
Twin Laboratories, Inc., Sr. Sub. Notes
B3 10.25 5/15/06 1,000
1,045,000
- -----------
3,980,625
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Drugs & Health Care--2.5%
Imed Corp., Sr. Sub. Notes
B3 9.75 12/01/06 490
508,375
Owens & Minor, Inc., Sr. Sub. Notes
B1 10.875 6/01/06 750 (b)
824,063
Paracelsus Healthcare Corp., Sr. Sub. Notes
B1 10.00 8/15/06 750
735,000
- -----------
2,067,438
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Energy--4.1%
AES China Generating Co., Notes (Bermuda)
Ba3 10.125 12/15/06 500 (g)
530,000
Falcon Drilling Inc., Sr. Sub. Notes, Series B
B3 12.50 3/15/05 500
557,500
Long Island Lighting Co.,
Ba3 9.00 11/01/22 250
263,905
Maxus Energy Corp., Medium Term Note
B1 10.83 9/01/04 1,000
1,110,000
Petroleum Heat & Power Inc., Sub. Deb.
B2 9.375 2/01/06 1,000 (b)
965,000
- -----------
3,426,405
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Financial--1.5%
AmeriCredit Corp., Sr. Notes
Ba2 9.25 2/01/04 500
496,250
First Nationwide Holdings, Inc.,
Sr. Notes
B2 12.50 4/15/03 300
339,000
Sr. Sub. Notes
Ba3 10.625 10/01/03 400
442,000
- -----------
1,277,250
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 7
<PAGE>
Portfolio of Investments as of February 28, 1997
(Unaudited) THE HIGH
YIELD INCOME FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description (a)
Rating Rate Date (000) (Note
1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Food & Beverage--7.6%
Curtice Burns Foods, Inc., Sr. Sub. Notes
B3 12.25% 2/01/05 $ 750 (b) $
802,500
Del Monte Corp., Sub. Notes, Payment in kind (cost
$1,008,786; purchased - 3/12/93)
NR 12.25 9/01/02 1,081 (d)
1,103,041
Envirodyne Industries Inc., First Priority Sr. Sec'd.
Notes, Series B
B1 12.00 6/15/00 750 (b)
813,750
Fresh Del Monte Produce, N.V., Sr. Notes
(Netherlands-Antille)
Caa 10.00 5/01/03 1,500 (g)
1,492,500
Pilgrim's Pride Corp., Sr. Sub. Notes
B3 10.875 8/01/03 745
774,800
PSF Finance L.P., Sr. Sec'd. Notes, Payment in kind
(cost $322,822; purchased - 3/8/94)
NR 11.00 9/17/03 308 (d)
335,183
Specialty Foods Corp., Sr. Notes, Series B
B3 11.125 10/01/02 1,000 (b)
1,005,000
- -----------
6,326,774
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Leisure--3.0%
Plitt Theatres, Inc., Sr. Sub. Notes (Canada)
B3 10.875 6/15/04 1,000 (b)(g)
1,015,000
United Artists, Inc., Sr. Sec'd. Notes
Ba3 11.50 5/01/02 1,400 (c)
1,470,000
- -----------
2,485,000
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Lodging--3.0%
HMC Acquisition Properties, Inc., Sr. Notes, Series B
Ba3 9.00 12/15/07 500
518,750
HMH Properties, Inc., Sr. Sec'd Notes
Ba3 9.50 5/15/05 1,000
1,052,500
Host Marriott Travel Plazas, Inc., Sr. Notes
B1 9.50 5/15/05 900
947,250
- -----------
2,518,500
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Media--8.2%
Benedek Broadcasting Corp., Sr. Notes
Ba3 11.875 3/01/05 1,040 (c)
1,167,400
Globo Communications, Sr. Notes (Brazil)
B+(h) 10.50 12/20/06 260 (g)
265,525
Grupo Televisa S.A., Sr. Notes, Series B (Mexico)
NR 11.875 5/15/06 1,000 (g)
1,120,000
Jacor Communications Inc., Sr. Sub. Notes
B2 9.75 12/15/06 750 (b)
795,000
Newcity Communications, Inc., Sr. Sub. Notes
B3 11.375 11/01/03 1,000 (b)
1,115,000
Paxson Communications Corp., Sr. Sub. Notes
B3 11.625 10/01/02 1,750 (b)
1,863,750
TV Azteca S.A, de CV Sr. Notes, Series B (Mexico)
Ba3 10.50 2/15/07 500 (g)
507,500
- -----------
6,834,175
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Miscellaneous Services--2.6%
Coinstar, Inc., Sr. Sub. Disc. Notes, Zero Coupon (until
10/1/99) (cost $178,997; purchased - 10/17/96)
NR 13.00 10/01/06 250 (d)(f)
181,250
Interact Systems, Inc., Sr. Disc. Notes, Zero Coupon
(until 8/1/99)
NR 14.00 8/01/03 1,100
594,000
United Stationers Supply Co., Sr. Sub. Notes
B3 12.75 5/01/05 1,250 (c)
1,412,500
- -----------
2,187,750
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 8
<PAGE>
Portfolio of Investments as of February 28, 1997
(Unaudited) THE HIGH
YIELD INCOME FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description (a)
Rating Rate Date (000) (Note
1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Paper & Packaging--7.9%
App Int'l. Finance Co., Sec'd. Notes
(Netherlands-Antilles)
Ba3 11.75% 10/01/05 $ 750 (c)(g) $
826,875
Gaylord Container Corp., Sr. Sub. Disc. Notes
Caa 12.75 5/15/05 1,245 (b)
1,378,837
Ivex Packaging Corp., Sr. Sub. Notes
B3 12.50 12/15/02 1,600 (c)
1,744,000
Mail Well Envelope Corp., Sr. Sub. Notes
B2 10.50 2/15/04 500
517,500
Maxxam Group Holdings Inc., Sr. Sec'd Notes
B3 12.00 8/01/03 200
209,000
Pacific Lumber Co., Sr. Notes
B3 10.50 3/01/03 500 (b)
515,000
Silgan Corp., Sr. Sub. Notes
B3 11.75 6/15/02 1,250 (b)
1,337,500
- -----------
6,528,712
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Printing--1.2%
Petersen Publishing Co., Sr. Sub. Notes
B3 11.125 11/15/06 450
491,625
Sullivan Graphics Inc., Sr. Sub. Notes
Caa 12.75 8/01/05 500
525,000
- -----------
1,016,625
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Retail--3.8%
K- Mart Corp.
Ba3 8.25 1/01/22 750 (b)
663,750
K- Mart Corp.
Ba3 8.375 7/01/22 500 (b)
435,000
Phar Mor Inc., Notes
B3 11.72 9/11/02 1,250 (c)
1,325,000
Speedy Muffler King Inc., Sr. Notes (Canada)
B1 10.875 10/01/06 650 (b)(g)
692,250
- -----------
3,116,000
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Steel & Metals--1.9%
Kaiser Aluminum & Chemical Corp., Sr. Sub. Notes
B2 12.75 2/01/03 960 (c)
1,056,000
WCI Steel, Inc., Sr. Notes
B2 10.00 12/01/04 500
525,000
- -----------
1,581,000
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Supermarkets--3.3%
Jitnay-Jungle Stores Inc., Sr. Notes
B2 12.00 3/01/06 1,000 (b)
1,110,000
Ralphs Grocery Co., Sr. Sub. Notes
B(h) 13.75 6/15/05 1,500 (b)
1,597,500
- -----------
2,707,500
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Technology--0.7%
Unisys Corp., Sr. Notes
B1 11.75 10/15/04 500 (b)
545,000
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 9
<PAGE>
Portfolio of Investments as of February 28, 1997
(Unaudited) THE HIGH
YIELD INCOME FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description (a)
Rating Rate Date (000) (Note
1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Telecommunications--18.5%
CCPR Services Inc., Sr. Sub. Notes
B2 10.00% 2/01/07 $ 1,000 $
1,000,000
Cellnet Data Systems, Inc., Sr. Disc. Notes, Zero Coupon
(until 6/15/00) (cost $809,745; purchased - 6/6/95)
NR 13.00 6/15/05 1,250 (d)
887,500
Centennial Cellular Corp., Sr. Notes
B1 10.125 5/15/05 750 (b)
780,000
Clearnet Communications, Inc., Sr. Disc. Notes, Zero
Coupon (until 12/15/00) (Canada)
B3 14.75 12/15/05 750 (g)
498,750
Geotek Communications, Inc., Sr. Sub. Conv. Notes, (cost
$1,000,000; purchased - 3/5/96)
Caa 12.00 2/15/01 1,000 (d)
960,000
GST Telecommunciations, Inc., Sr. Disc. Conv. Notes,
Zero Coupon (until 12/15/00)
NR 13.875 12/15/05 110
85,800
GST USA, Inc., Sr. Disc. Notes, Zero Coupon (until
12/15/00)
NR 13.875 12/15/05 880
563,200
ICG Holdings, Sr. Disc. Notes, Zero Coupon (until
9/15/00)
NR 13.50 9/15/05 2,000
1,450,000
ImpSat Corp., Sr. Notes
B2 12.125 7/15/03 1,000
1,070,000
Intermedia Communications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 5/15/01)
B3 12.50 5/15/06 500
345,000
Sr. Notes
B3 13.50 6/01/05 750 (b)
862,500
International Wireless Communications, Sr. Disc. Notes
NR Zero 8/15/01 650
370,500
Ionica PLC, Sr. Notes Senior Note (U.K.)
NR 13.50 8/15/06 500 (g)
525,000
Mcleod Inc., Sr. Disc. Notes, Zero Coupon (until 3/1/02)
B3 10.50 3/01/07 1,150
692,875
Metrocall, Inc., Sr. Sub. Notes
B3 10.375 10/01/07 1,500 (c)
1,346,250
Omnipoint Corp., Sr. Notes
B2 11.625 8/15/06 375
371,250
Pagemart Nationwide, Inc.,
Sr. Disc. Notes, Zero Coupon (until 11/1/98)
NR 12.25 11/01/03 1,000
820,000
Sr. Disc. Notes, Zero Coupon (until 2/1/00)
NR 15.00 2/01/05 1,250
887,500
Paging Network, Inc., Sr. Sub. Notes
B2 10.125 8/01/07 750 (b)
742,500
UNIFI Communications Inc., Sr. Notes
NR 14.00 3/01/04 275 (f)
286,000
Winstar Communications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 10/15/00)
NR 14.00 10/15/05 950
584,250
Sr. Sub. Disc. Conv. Notes, Zero Coupon (until
10/15/00)
NR 14.00 10/15/05 325
214,500
- -----------
15,343,375
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Textiles--1.7%
Polysindo Int'l. Finance Co., BV (Indonesia)
Ba3 11.375 6/15/06 1,250 (b)(g)
1,365,625
- -----------
Total corporate bonds (cost $90,478,653)
94,208,829
- -----------
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 10
<PAGE>
Portfolio of Investments as of February 28, 1997
(Unaudited) THE HIGH
YIELD INCOME FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Value
Value
Description (a) Shares (Note
1) Description (a) Warrants
(Note 1)
<S> <C> <C>
<C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
COMMON STOCKS(e)--1.4%
WARRANTS(e)--0.4%
Mail Well Holding, Inc. 12,784 $
254,082
Pagemart Nationwide, Inc. 3,500
24,500
PSF Finance L.P. (cost $943,947;
purchased - 3/8/94) 27,924 (d)
767,910
Rite Aid Corp. 1,852
78,016
-------
- ----
Total common stocks (cost $968,447)
1,124,508
-------
- ----
PREFERRED STOCKS--6.1%
Benedek Communications Corp. (cost
$500,000; purchased - 5,000
592,500
Cablevision Systems Corp.,
11.125%, Payment in kind 235
21,444
11.75%, Payment in kind 9,842
932,529
Series M, 11.125%, Payment in kind 42
383,250
Chancellor Broasdcasting Co. 10,000
1,127,500
ICG Holdings, Inc. 556
628,280
SFX Broadcasting Inc., Series E,
12.625%, Payment in kind 5,000
513,750
Silgan Holdings, Inc. 23
26,680
Silgan Holdings, Inc., 13.25%,
Payment 4/25/99 in kind 721
836,360
-------
- ----
Total preferred stocks (cost
$4,560,389)
5,062,293
-------
- ----
WARRANTS(e)--0.4%
American Telecasting, Inc.,
expiring 6/15/99 1,500 $
4,500
Benedek Communications Corp.,
expiring 7/1/07 5,000 (d)
17,500
Cellnet Data Systems, Inc.,
expiring
6/15/05 (cost $0; purchased -
6/6/95) 5,000 (d)
90,000
Clearnet Communications, Inc.,
expiring 9/15/05 (Canada) 2,475 (g)
13,612
Coinstar, Inc., expiring 10/1/06 250 (d)(f)
0
Foamex JPS Automotive L.P.,
7/1/99 1,000
25,000
Heartland Wireless Communication,
Inc., expiring 12/31/00 3,000
6,000
ICG Communications expiring 9/15/05 9,900
128,700
Interact Systems, Inc., expiring
8/1/03 1,100
275
Intermedia Communications, Inc.,
expiring 6/1/00 (cost $0;
purchased - 5/25/96) 750 (d)
15,000
International Wireless
Communications Holdings, Inc.,
expiring 8/15/01 650
7
Nextel Communications, Inc.,
expiring 4/25/99 1,000
10
Pagemart Nationwide Inc., expiring
11/1/03 4,600
24,150
Sterling Chemical Holdings, Inc.,
expiring 8/15/08 140
4,900
UNIFI Communications Inc., expiring
3/1/07 275 (f)
0
United Int'l. Holdings, Inc.,
expiring 11/15/99 500
3,750
-------
- ----
Total warrants (cost $0)
333,404
-------
- ----
Total Investments--122.1%
(cost $96,514,364; Note 3)
101,235,909
Liabilities in excess of
other assets--(22.1)%
(18,350,228)
-------
- ----
Net Assets--100%
$82,885,681
-------
- ----
-------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 11
<PAGE>
Portfolio of Investments as of February 28, 1997
(Unaudited) THE HIGH
YIELD INCOME FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
(a) The following abbreviations are used in portfolio
descriptions:
(b) Total segregated as collateral for line of credit.
Aggregate value of segregated securities--$34,232,400; (Note
4).
(c) Portion of security segregated as collateral for line of
credit. Aggregate value of segregated securities--
$8,190,212; (Note
4).
(d) Indicates a security restricted as to resale; the
aggregate cost of such securities is $4,844,297. The
aggregate value
$4,932,384 is approximately 6.0% of net assets.
(e) Non-income producing securities.
(f) Consists of more than one class of securities traded
together as a unit; generally bonds with attached stock or
warrants.
(g) US $ Denominated Bonds-Foreign Issuers.
(h) Standard & Poor's Rating.
NR--Not rated by Moody's or Standard & Poor's.
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 12
<PAGE>
THE HIGH YIELD INCOME FUND, INC.
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
Assets February 28,
1997
<S> <C>
Investments, at value (cost $96,514,364)..... $
101,235,909
Interest receivable..........................
2,253,660
Receivable for investments sold..............
1,576,870
Prepaid expenses and other assets............
1,536
------------
- -----
Total assets..............................
105,067,975
------------
- -----
Liabilities
Bank overdraft...............................
209,108
Loan payable (Note 4)........................
20,000,000
Payable for investments purchased............
1,526,069
Accrued expenses.............................
181,251
Loan interest payable........................
97,187
Deferred directors' fees.....................
62,738
Dividends payable............................
53,966
Management fee payable.......................
51,975
------------
- -----
Total liabilities.........................
22,182,294
------------
- -----
Net Assets................................... $
82,885,681
------------
- -----
------------
- -----
Net assets were comprised of:
Common stock, at par...................... $
111,172
Paid-in capital in excess of par..........
100,045,545
------------
- -----
100,156,717
Distributions in excess of net investment
income.................................
(314,352)
Accumulated net realized loss on
investments............................
(21,678,229)
Net unrealized appreciation on
investments............................
4,721,545
------------
- -----
Net assets, February 28, 1997............. $
82,885,681
------------
- -----
------------
- -----
Net asset value and redemption price per
share
($82,885,681 / 11,117,233 shares of common
stock issued and outstanding).............
$7.46
------------
- -----
------------
- -----
</TABLE>
THE HIGH YIELD INCOME FUND, INC.
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six
Months
Ended
Net Investment Income February 28,
1997
<S> <C>
Income
Interest.................................. $
5,200,105
Dividends.................................
523
------------
- -----
5,200,628
------------
- -----
Expenses
Management fee............................
284,376
Custodian's fees and expenses.............
89,000
Reports to shareholders...................
35,000
Audit fee and expenses....................
27,000
Transfer agent's fees and expenses........
25,000
Directors' fees and expenses..............
20,000
Registration fees.........................
13,000
Legal fees and expenses...................
5,000
Miscellaneous.............................
2,871
------------
- -----
Total operating expenses...............
501,247
Loan interest expense (Note 4)............
635,208
------------
- -----
Total expenses.........................
1,136,455
------------
- -----
Net investment income........................
4,064,173
------------
- -----
Realized and Unrealized
Gain (Loss) on Investments
Net realized loss on investment
transactions..............................
(15,784)
Net change in unrealized
appreciation/depreciation
on investments............................
2,678,934
------------
- -----
Net gain on investments......................
2,663,150
------------
- -----
Net Increase in Net Assets
Resulting from Operations.................... $
6,727,323
------------
- -----
------------
- -----
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 13
<PAGE>
THE HIGH YIELD INCOME FUND, INC.
Statement of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Six
Months
Ended
February
28,
Increase (Decrease) in Cash 1997
<S> <C>
Cash flows provided from operating activities:
Interest and dividends received (excluding
discount amortization of $792,246)....... $
4,514,199
Operating expenses paid.....................
(564,573)
Loan interest paid..........................
(645,903)
Maturities of short-term portfolio
investments, net.........................
1,018,000
Purchases of long-term portfolio
investments..............................
(47,147,367)
Proceeds from disposition of long-term
portfolio investments....................
46,627,588
Prepaid expenses............................
(58)
----------
- --
Net cash provided from operating
activities...............................
3,801,886
----------
- --
Cash flows used for financing activities:
Cash dividends paid (excluding reinvestment
of dividends of $313,075)................
(4,011,484)
----------
- --
Net decrease in cash...........................
(209,598)
Cash at beginning of period....................
490
----------
- --
Cash at end of period.......................... $
(209,108)
----------
- --
----------
- --
Reconciliation of Net Increase in Net Assets to
Net Cash Provided from Operating Activities
Net increase in net assets resulting from
operations.................................. $
6,727,323
----------
- --
Increase in investments........................
(344,318)
Net realized loss on investment transactions...
15,784
Net change in net unrealized
appreciation/depreciation on investments....
(2,678,934)
Increase in receivable for investments sold....
(1,450,557)
Decrease in interest receivable................
107,510
Increase in prepaid expenses and other
assets......................................
(58)
Increase in payable for investments
purchased...................................
1,499,157
Decrease in accrued expenses and other
liabilities.................................
(74,021)
----------
- --
Total adjustments...........................
(2,925,437)
----------
- --
Net cash provided from operating activities.... $
3,801,886
----------
- --
----------
- --
</TABLE>
THE HIGH YIELD INCOME FUND, INC.
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
Year Ended
Increase in February 28,
August 31,
Net Assets 1997
1996
<S> <C> <C>
Operations
Net investment income........ $ 4,064,173 $
8,429,945
Net realized loss on
investment transactions... (15,784)
(1,029,187)
Net change in unrealized
appreciation/depreciation
of investments............ 2,678,934
2,821,958
----------------- -----
- ----------
Net increase in net assets
resulting from
operations................ 6,727,323
10,222,716
Dividends paid to shareholders
from net investment income... (4,064,173)
(8,429,945)
Dividends paid to shareholders
in excess of net investment
income....................... (264,622)
- --
Return of capital
distribution................. --
(507,104)
Net asset value of shares issued
to shareholders in
reinvestment of dividends.... 313,075
633,799
----------------- -----
- ----------
Total increase.................. 2,711,603
1,919,466
Net Assets
Beginning of period............. 80,174,078
78,254,612
----------------- -----
- ----------
End of period................... $82,885,681
$80,174,078
----------------- -----
- ----------
----------------- -----
- ----------
</TABLE>
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 14
<PAGE>
Notes to Financial Statements THE HIGH
YIELD INCOME FUND, INC.
- ------------------------------------------------------------
- --------------------
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.
- ------------------------------------------------------------
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 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.
Securities issued in
private placements are valued at the mean between the bid
and asked prices
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.
In connection with transactions in repurchase agreements
with U.S. financial
institutions, it is the Fund's policy that its custodian or
designated
subcustodians, as the case may be under triparty repurchase
agreements, 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 (payment-in-kind)
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. Expenses are recorded on the
accrual basis which may
require the use of certain estimates by management.
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.
Reclassification of Capital Accounts: The Fund accounts and
reports for
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. For
the year ended
August 31, 1996, the effect caused by this statement was to
decrease paid-in
capital in excess of par by $512,797 and increase
- ------------------------------------------------------------
- --------------------
-----
15
<PAGE>
Notes to Financial Statements THE HIGH
YIELD INCOME FUND, INC.
- ------------------------------------------------------------
- --------------------
undistributed net investment income by $512,797. 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 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 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 The
Prudential Insurance
Company of America ('Prudential').
- ------------------------------------------------------------
Note 3. Portfolio Securities
Purchases and sales of investment securities, other than
short-term investments,
for the six months ended February 28, 1997 aggregated
$48,643,025 and
$48,078,145, respectively.
The cost basis of investments for federal income tax
purposes at February 28,
1997 was $96,516,474 and net unrealized appreciation
including short-term
investments, for federal income tax purposes was $4,719,435
(gross unrealized
appreciation-$5,895,123; gross unrealized depreciation-
$1,175,688).
The Fund had a capital loss carryforward as of August 31,
1996 of approximately
$21,657,800 of which $514,200 expires in 1998, $6,419,700
expires in 1999,
$8,891,400 expires in 2000, $263,000 expires in 2003 and
$5,569,500 expires in
2004. 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
The Fund has 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 point over the Federal Funds rate.
The average daily balance outstanding and the maximum face
amount of borrowings
outstanding at any month end for the six months ended
February 28, 1997 was
$20,000,000 at a weighted average interest rate of 6.3%.
- ------------------------------------------------------------
Note 5. Capital
There are 200 million shares of $.01 par value common stock
authorized.
Prudential owned 11,000 shares of common stock as of
February 28, 1997.
During the year ended February 28, 1997 and the fiscal year
ended August 31,
1996 the Fund issued 42,265 and 85,572 shares, respectively,
in connection with
the reinvestment of dividends.
- ------------------------------------------------------------
Note 6. Dividends and Distributions
On March 3 and April 1, 1997 the Board of Directors of the
Fund declared
dividends of $.060 per share payable on March 31 and April
30, respectively, to
shareholders of record on March 14 and April 15, 1997,
respectively.
- ------------------------------------------------------------
- --------------------
-----
16
<PAGE>
Financial Highlights THE HIGH
YIELD INCOME FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended August 31,
February 28, -------------------------------------------
- ------------
1997 1996 1995 1994 1993
1992
- ------ ------- ------- ------- -------
- -------
<S> <C>
<C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period(a)............. $
7.24 $ 7.12 $ 7.21 $ 7.75 $ 7.46 $
6.84
- ------ ------- ------- ------- -------
- -------
Net investment income...............................
.37 .77 .86 .87 1.01
.90
Net realized and unrealized gain (loss) on
investments......................................
.24 .16 (.08) (.46) .18
.62
- ------ ------- ------- ------- -------
- -------
Total from investment operations.................
.61 .93 .78 .41 1.19
1.52
- ------ ------- ------- ------- -------
- -------
Dividends paid to shareholders from net investment
income...........................................
(.37) (.77) (.87) (.91) (.90)
(.90)
Distributions to shareholders in excess of net
investment income................................
(.02) -- -- (.04) --
- --
Return of capital distributions.....................
- -- (.04) -- -- --
- --
- ------ ------- ------- ------- -------
- -------
Total dividends and distributions................
(.39) (.81) (.87) (.95) (.90)
(.90)
- ------ ------- ------- ------- -------
- -------
Net asset value, end of period(a)................... $
7.46 $ 7.24 $ 7.12 $ 7.21 $ 7.75 $
7.46
- ------ ------- ------- ------- -------
- -------
- ------ ------- ------- ------- -------
- -------
Market price per share, end of period(a)............ $
7.75 $ 7.75 $ 8.00 $ 8.00 $ 8.75 $
7.75
- ------ ------- ------- ------- -------
- -------
- ------ ------- ------- ------- -------
- -------
TOTAL INVESTMENT RETURN(b)..........................
5.37% 8.05% 12.84% 3.21% 26.80%
31.79%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)..................... $
82,885 $80,174 $78,255 $78,525 $83,789
$80,007
Average net assets (000)............................ $
81,250 $79,408 $76,345 $83,241 $80,747
$77,579
Ratio of expenses to average net assets.............
2.83% 2.89% 3.03% 2.29% 2.20%
1.55%
Ratio of net investment income to average net
assets...........................................
10.11% 10.62% 12.36% 11.49% 13.47%
12.35%
Portfolio turnover rate.............................
49% 97% 106% 79% 83%
74%
Asset coverage......................................
525% 501% 491% 493% 519%
500%
Total debt outstanding at period end (000).......... $
20,000 $20,000 $20,000 $20,000 $20,000
$20,000
</TABLE>
- ---------------
(a) NAV and market value are published in The Wall Street
Journal each Monday.
(b) 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 closing market
price on the last day of each period reported. Dividends
are assumed, for
purposes of this calculation, to be reinvested at prices
obtainable under
the Fund's dividend and reinvestment plan. This amount
does not reflect
brokerage commissions.
- ------------------------------------------------------------
- --------------------
-----
See Notes to Financial Statements. 17
<PAGE>
Directors
Delayne D. Gold
Donald D. Lennox
Edward D. Beach
Eugene C. Dorsey
Harry A. Jacobs, Jr.
Louis A. Weil, III
Mendel A. Melzer
Nancy H. Teeters
Richard A. Redeker
Robert F. Gunia
Thomas H. O'Brien
Thomas T. Mooney
Officers
Richard A. Redeker, President
Robert F. Gunia, Vice President
Grace Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Marguerite E.H. Morrison, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
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 LLP
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,
1997,
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
The views expressed in this report and information about
the fund's holdings are for the period covered by this
report and are subject to change thereafter.
429904105
