Edgar Filing: HIGH YIELD INCOME FUND INC

High Yield Income Fund, Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES


Investment Company Act file number		811-05296

The High Yield Income Fund, Inc.

Exact name of registrant as specified in charter:

Gateway Center 3,

100 Mulberry Street,

Newark, New Jersey 07102

Address of principal executive offices:

Deborah A. Docs

Gateway Center 3,

100 Mulberry Street,

Newark, New Jersey 07102

Name and address of agent for service:

Registrant’s telephone number, including area code: 973-367-7521

Date of fiscal year end: 8/31/2009

Date of reporting period: 2/28/2009


Item 1		–		Reports to Stockholders


FEBRUARY 28, 2009		SEMIANNUAL REPORT

The High Yield Income Fund, Inc.

This report is for stockholder information. This is not a prospectus intended for use in the purchase or sale of fund shares.

The accompanying financial statements as of February 28, 2009, were not audited and, accordingly, no auditor’s opinion is expressed on them.

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.

Your Fund’s Performance

Fund objectives

The primary investment objective of The High Yield Income Fund, Inc. is to maximize current income to shareholders. As a secondary investment objective, the Fund will seek capital appreciation, but only when consistent with its primary objective. The Fund will seek to achieve its objectives by investing primarily in corporate bonds rated below investment grade by independent rating agencies. Bonds rated below investment grade are commonly known as “junk” bonds and are subject to greater risk of default and higher volatility than investment grade bonds. Furthermore, these bonds tend to be less liquid than higher-quality bonds. The Fund is diversified, and we carefully research companies to find those with attractive yields and improving credit quality. There can be no assurance that the Fund will achieve its investment objectives.

Subject to shareholder approval, all of the assets of the Fund will be acquired by the Dryden High Yield Fund, Inc. (the Dryden Fund) and the Dryden Fund will assume all of the liabilities of the Fund on or about June 22, 2009.


Performance as of 2/28/09
	Total Return Six Months		NAV 2/28/09		Market Price 2/28/09
The High Yield Income Fund¹	–21.98	%	$	3.51	$	3.22
Barclays Capital U.S. Corporate High Yield 1% Issuer Capped Index²	–21.79			N/A		N/A
Prior Index³	–21.50			N/A		N/A
Lipper Closed-End High Current Yield Funds (Leveraged) Avg.⁴	–34.87			N/A		N/A

Past performance does not guarantee future results and current performance may be lower or higher than the past performance data quoted. The investment return and principal value will fluctuate, and shares, when sold, may be worth more or less than the original cost. There are no sales charges.

¹Source: Prudential Investments LLC. Total return of the Fund represents the change in net asset value from the beginning of the period (9/1/08) through the end (2/28/09) and assumes the reinvestment of dividends and distributions. Shares of the Fund are traded on the New York Stock Exchange, Inc. using the symbol HYI. Past performance is not indicative of future results.

²Source: Barclays Capital. The Barclays Capital U.S. Corporate High Yield 1% Issuer Capped Index (1% Issuer Capped Index) covers the universe of U.S. dollar denominated, non-convertible, fixed rate, noninvestment grade debt. Issuers are capped at 1% of the Index. Index holdings must have at least one year to final maturity, at least $150 million par amount outstanding, and be publicly issued with a rating of Ba1 or lower. Index returns do not include the effect of any sales charges, mutual fund operating expenses or taxes.

³Source: Barclays Capital. The Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index (the Prior Index) is an unmanaged index of fixed-rate, noninvestment grade debt securities with at least one year remaining to maturity. However, the representation of any single bond issuer is restricted to a maximum of 2% of the total index.

⁴Source: Lipper Inc. These are the average returns of 31 funds in the Closed-End High Current Yield Funds (Leveraged) category for six months.


The High Yield Income Fund, Inc.		1

Your Fund’s Performance (continued)

Investors cannot invest directly in an index.


Yield and Dividend as of 2/28/09
Total Monthly Dividends Paid per Share Six Months		Yield at Market Price⁵
$0.3000		9.32%

⁵Yield at market price is determined by dividing total monthly dividends paid per share during the six months ended February 28, 2009 by the market price per share as of February 28, 2009.


2

Portfolio of Investments

as of February 28, 2009 (Unaudited)


	Moody’s Rating†	Interest Rate	Maturity Date	Principal Amount (000)		Value (Note 1)

LONG-TERM INVESTMENTS 127.3%
BANK LOANS(e)(g) 15.0%

Automotive 0.6%
Ford Motor Co., Bank Loan	B2	5.00%	12/15/13	$	750	$	239,687

Cable 4.2%
CSC Holdings, Bank Loan	Ba1	1.489	2/24/12		1,870		1,705,558

Chemicals 1.6%
ISP Chemco, Inc., Bank Loan	Ba3	2.379	6/04/14		798		667,639

Electric 1.5%
Texas Competitive Electric Holdings Co. LLC, Bank Loan, Term B1	Ba3	3.951	10/10/14		223		139,202
Bank Loan, Term B3	Ba3	3.951	10/10/14		742		463,123

							602,325

Gaming 1.5%
Harrahs Operating Co., Inc., Bank Loan	B1	4.163	1/28/15		497		286,836
Isle of Capri Casinos, Inc.,
Bank Loan, Delay A	B1	3.209	10/25/10		100		65,161
Bank Loan, Delay B	B1	3.209	10/25/10		114		74,094
Bank Loan, Initial	B1	3.209	10/24/11		285		185,235

							611,326

Health Care & Pharmaceutical 3.4%
HCA, Inc., Bank Loan	Ba3	2.959	11/17/12		1,183		1,029,350
Royalty Pharma Financial Trust, Bank Loan	Baa3	1.234	5/15/15		400		368,000

							1,397,350

Paper 1.4%
Georgia-Pacific LLC, Bank Loan	Ba2	3.481	12/20/12		664		572,854

Technology 0.8%
Sensata Technologies, Bank Loan	B3	2.934	4/27/13		742		331,290

Total bank loans (cost $6,939,529)							6,128,029

See Notes to Financial Statements.


The High Yield Income Fund, Inc		3

Portfolio of Investments

as of February 28, 2009 (Unaudited) continued


	Moody’s Rating†	Interest Rate	Maturity Date	Principal Amount (000)			Value (Note 1)

CORPORATE BONDS 112.3%

Aerospace/Defense 5.1%
BE Aerospace, Inc., Sr. Unsec’d Notes	Ba3	8.50%	7/01/18	$	300		$	239,250
Esterline Technologies Corp.,
Gtd. Notes	B1	7.75	6/15/13		300			281,250
Gtd. Notes	Ba2	6.625	3/01/17		175			157,500
L-3 Communications Corp.,
Gtd. Notes	Ba3	6.125	7/15/13		125			120,000
Gtd. Notes	Ba3	7.625	6/15/12		500			502,500
Gtd. Notes, Ser. B	Ba3	6.375	10/15/15		200			189,000
Moog, Inc.,
Sr. Sub. Notes	Ba3	6.25	1/15/15		300			271,500
Sr. Sub. Notes, 144A	Ba3	7.25	6/15/18		200			180,000
TransDigm, Inc., Gtd. Notes	B3	7.75	7/15/14		150			138,000

								2,079,000

Airlines 0.2%
AMR Corp., M.T.N., Sr. Unsec’d. Notes, Ser. B	CCC+(d)	10.40	3/10/11		100			58,000
Continental Airlines, Inc., Pass-Thru Certs., Ser. 1998-1, Class B (Sinkable, expected maturity 3/15/17)	Ba2	6.748	3/15/17		55			41,569

								99,569

Automotive 1.6%
Ford Motor Credit Co.,
Sr. Unsec’d. Notes	Caa1	7.25	10/25/11		490			265,613
Sr. Unsec’d. Notes	Caa1	7.875	6/15/10		290			193,264
Sr. Unsec’d. Notes	Caa1	9.875	8/10/11		100			58,129
Lear Corp., Gtd. Notes, Ser. B	Caa2	8.75	12/01/16		125			21,250
TRW Automotive, Inc., Gtd. Notes, 144A	B2	7.25	3/15/17		450			126,000
Visteon Corp., Sr. Unsec’d. Notes	Caa3	7.00	3/10/14		135			5,400

								669,656

Banking 0.1%
Kazkommerts International BV (Netherlands), Gtd. Notes, 144A	Ba3	8.50	4/16/13		205	(c)		36,900

See Notes to Financial Statements.


4


	Moody’s Rating†	Interest Rate	Maturity Date	Principal Amount (000)			Value (Note 1)

Building Materials & Construction 1.4%
Beazer Homes USA, Inc., Gtd. Notes	B3	8.625%	5/15/11	$	110		$	47,300
D.R. Horton, Inc.,
Gtd. Notes	Ba3	6.50	4/15/16		100			78,000
Gtd. Notes	Ba3	7.875	8/15/11		100			92,000
KB Home, Gtd. Notes	Ba3	6.375	8/15/11		125			109,375
Owens Corning, Inc., Gtd. Notes	Ba1	6.50	12/01/16		125			91,856
Toll Corp., Gtd. Notes	Ba2	8.25	2/01/11		175			172,375

								590,906

Cable 6.1%
Charter Communications Holdings I LLC,
Gtd. Notes	C	10.00	5/15/14		99			990
Gtd. Notes	C	11.125	1/15/14		198			1,980
Gtd. Notes, 144A	Caa2	10.25	10/01/13		300			232,500
CSC Holdings, Inc., Sr. Unsec’d. Notes	B1	7.875	2/15/18		50			45,000
DirectTV Holdings LLC
Gtd. Notes	Ba3	7.625	5/15/16		50			48,000
Gtd. Notes	Ba3	8.375	3/15/13		175			176,750
Echostar DBS Corp.,
Gtd. Notes	Ba3	7.00	10/01/13		75			69,938
Gtd. Notes	Ba3	7.125	2/01/16		255			230,137
Mediacom Broadband LLC, Sr. Unsec’d. Notes	B3	8.50	10/15/15		125			105,938
Shaw Communications, Inc. (Canada), Sr. Unsec’d. Notes	Ba1	8.25	4/11/10		450	(c)		450,000
Sr. Unsec’d. Notes	Ba1	7.20	12/15/11		300	(c)		289,875
Videotron Ltee, (Canada),
Gtd. Notes	Ba2	6.375	12/15/15		100	(c)		90,000
Gtd. Notes	Ba2	6.875	1/15/14		108	(c)		100,980
Gtd. Notes, 144A	Ba2	9.125	4/15/18		375	(c)		378,750
Virgin Media Finance PLC (United Kingdom),
Gtd. Notes	B2	9.125	8/15/16		300	(c)		263,625

								2,484,463

Capital Goods 16.9%
Actuant Corp., Gtd. Notes	Ba2	6.875	6/15/17		125			110,625
ALH Finance LLC, Gtd. Notes	B3	8.50	1/15/13		250			205,000

See Notes to Financial Statements.


The High Yield Income Fund, Inc		5

Portfolio of Investments

as of February 28, 2009 (Unaudited) continued


	Moody’s Rating†	Interest Rate	Maturity Date	Principal Amount (000)			Value (Note 1)

Capital Goods (cont’d)
Allied Waste North America, Inc.,.
Sr. Sec’d. Notes	Baa3	6.125%	2/15/14	$	150		$	142,500
Sr. Sec’d. Notes	Baa3	6.375	4/15/11		250			245,625
Sr. Sec’d. Notes	Baa3	6.50	11/15/10		500			497,500
Sr. Sec’d. Notes	Baa3	7.25	3/15/15		95			92,625
Sr. Sec’d. Notes, Ser. B	Baa3	5.75	2/15/11		450			438,750
Ashtead Capital, Inc., Sec’d. Notes, 144A	B1	9.00	8/15/16		475			275,500
Ashtead Holdings PLC (United Kingdom),
Sec’d. Notes, 144A	B1	8.625	8/01/15		150	(c)		90,000
Baldor Electric Co., Gtd. Notes	B3	8.625	2/15/17		280			221,900
Blount, Inc., Gtd. Notes	B2	8.875	8/01/12		360			361,800
Columbus McKinnon Corp., Gtd. Notes	B1	8.875	11/01/13		450			410,625
Hertz Corp., Gtd. Notes	B1	8.875	1/01/14		670			328,300
Interline Brands, Inc., Gtd. Notes	B3	8.125	6/15/14		200			170,000
JohnsonDiversey Holdings, Inc.,
Discount Notes	Caa1	10.67	5/15/13		310			229,400
Gtd. Notes, Ser. B	B2	9.625	5/15/12		75			62,625
Mobile Mini, Inc., Gtd. Notes	B2	6.875	5/01/15		135			99,900
RBS Global, Inc. & Rexnord Corp., Gtd. Notes	B3	9.50	8/01/14		270			228,150
Rental Service Corp., Gtd. Notes	Caa1	9.50	12/01/14		370			197,950
SPX Corp., Sr. Unsec’d. Notes, 144A	Ba2	7.625	12/15/14		675			626,062
Stena AB (Sweden),
Sr. Unsec’d. Notes	Ba2	7.00	12/01/16		229	(c)		162,590
Sr. Unsec’d. Notes	Ba2	7.50	11/01/13		275	(c)		206,250
Terex Corp.,
Gtd. Notes	Ba1	7.375	1/15/14		275			233,750
Sr. Sub. Notes	Ba3	8.00	11/15/17		275			221,375
Ucar Finance, Inc., Gtd. Notes	Ba3	10.25	2/15/12		52			46,800
United Rentals North America, Inc.,
Gtd. Notes	B2	6.50	2/15/12		350			274,750
Valmont Industries, Inc., Gtd. Notes	Ba2	6.875	5/01/14		650			560,624
Waste Management, Inc., Gtd. Notes	Baa3	6.375	3/11/15		175			173,311

								6,914,287

See Notes to Financial Statements.


6


	Moody’s Rating†	Interest Rate	Maturity Date	Principal Amount (000)			Value (Note 1)

Chemicals 3.6%
Huntsman LLC, Sec’d. Notes	Ba1	11.625%	10/15/10	$	261		$	258,390
Koppers, Inc., Sr. Sec’d. Notes	Ba3	9.875	10/15/13		355			331,925
Momentive Performance Materials, Inc,
Gtd. Notes	B3	9.75	12/01/14		200			76,000
Mosaic Co. (The),
Sr. Unsec’d. Notes, 144A	Baa3	7.375	12/01/14		125			121,563
Sr. Unsec’d. Notes, 144A	Baa3	7.625	12/01/16		125			120,000
Nalco Co., Gtd. Notes	B1	7.75	11/15/11		575			569,250

								1,477,128

Consumer 2.7%
Mac-Gray Corp., Gtd. Notes	B3	7.625	8/15/15		150			137,250
Realogy Corp.,
Gtd. Notes	Ca	10.50	4/15/14		1,050			220,500
Gtd. Notes, PIK	Ca	11.00	4/15/14		50			5,493
Service Corp. International,
Sr. Unsec’d. Notes	B1	6.75	4/01/16		50			45,500
Sr. Unsec’d. Notes	B1	7.375	10/01/14		450			429,750
Stewart Enterprises, Inc., Gtd. Notes	Ba3	6.25	2/15/13		200			175,000
Ticketmaster, Gtd. Notes, 144A	Ba3	10.75	8/01/16		125			90,000

								1,103,493

Electric 10.2%
AES Corp.,
Sr. Sec’d. Notes, 144A	Ba3	8.75	5/15/13		47			45,590
Sr. Unsec’d. Notes	B1	7.75	3/01/14		150			134,625
Sr. Unsec’d Notes	B1	7.75	10/15/15		125			110,000
Sr. Unsec’d Notes	B1	8.00	10/15/17		500			425,000
AES Eastern Energy LP, Pass-Through Cert.,
Ser. 1999-A	Ba1	9.00	1/02/17		180			167,831
Aquila, Inc., Sr. Unsec’d. Notes	Baa2	7.95	2/01/11		225			220,423
Dynegy Holdings, Inc.,
Sr. Unsec’d. Notes	B2	8.375	5/01/16		50			31,750
Dynegy Roseton/Danskammer,
Pass-Through Trust, Ser. B	Ba3	7.67	11/08/16		550			412,500
Energy Future Holdings Corp.,
Gtd. Notes, PIK	B3	11.25	11/01/17		200			88,000
Mirant Corp., 144A	NR	7.40	7/15/49		75	(a)(e)		75

See Notes to Financial Statements.


The High Yield Income Fund, Inc		7

Portfolio of Investments

as of February 28, 2009 (Unaudited) continued


	Moody’s Rating†	Interest Rate	Maturity Date	Principal Amount (000)			Value (Note 1)

Electric (cont’d)
Mirant Mid Atlantic LLC, Pass-Through Cert.,
Ser. A,	Ba1	8.625%	6/30/12	$	42		$	41,783
Ser. B,	Ba1	9.125	6/30/17		335			328,739
Mirant North America LLC, Gtd. Notes	B1	7.375	12/31/13		100			91,500
NRG Energy, Inc.,
Gtd. Notes	B1	7.25	2/01/14		400			377,000
Gtd. Notes	B1	7.375	2/01/16		280			258,300
Orion Power Holdings, Inc.,
Sr. Unsec’d. Notes	Ba3	12.00	5/01/10		695			713,243
PSEG Energy Holdings, Inc.,
Sr. Unsec’d. Notes	Ba3	8.50	6/15/11		275			272,778
Sithe Independence Funding Corp.,
Ser. A, Sr. Sec’d. Notes	Ba2	9.00	12/30/13		169			156,616
Tenaska Alabama Partners LP, Sr. Sec’d. Notes, 144A (original cost $126,213; purchased 5/02/08 - 7/01/08)	Ba2	7.00	6/30/21		133	(e)(f)		100,652
Texas Competitive Electric Holdings Co. LLC,
Ser. B, Gtd. Notes	B3	10.25	11/01/15		325			164,125

								4,140,530

Energy - Other 6.9%
Compagnie Generale de Geophysique-Veritas
(France), Gtd. Notes	Ba3	7.50	5/15/15		110			86,075
Denbury Resources, Inc., Sr. Sub. Notes	B1	9.75	3/01/16		150			141,000
Forest Oil Corp., Sr. Notes, 144A	B1	8.50	2/15/14		175			159,250
McMoRan Exploration Co., Gtd. Notes	Caa1	11.875	11/15/14		275			200,063
Newfield Exploration Co., Sr. Sub. Notes	Ba3	6.625	4/15/16		350			304,500
OPTI Canada, Inc., (Canada),
Sec’d. Notes	B3	7.875	12/15/14		400	(c)		132,000
Sec’d. Notes	B3	8.25	12/15/14		75	(c)		25,500
PetroHawk Energy Corp.,
Gtd. Notes	B3	9.125	7/15/13		150			141,750
Gtd. Notes, 144A	B3	7.875	6/01/15		150			129,000

See Notes to Financial Statements.


8


	Moody’s Rating†	Interest Rate	Maturity Date	Principal Amount (000)			Value (Note 1)

Energy - Other (cont’d)
Petroplus Finance Ltd. (Bermuda),
Gtd. Notes, 144A	B1	6.75%	5/01/14	$	325	(c)	$	251,875
Gtd. Notes, 144A	B1	7.00	5/01/17		225	(c)		166,500
Pioneer Natural Resource Co.,
Gtd. Notes	Ba1	5.875	7/15/16		50			38,137
Sr. Unsec’d. Notes	Ba1	6.65	3/15/17		415			325,101
Sr. Unsec’d. Notes	Ba1	6.875	5/01/18		125			96,926
Plains Exploration & Production Co.,
Gtd. Notes	B1	7.00	3/15/17		185			157,713
Gtd. Notes	B1	7.625	6/01/18		25			21,750
Gtd. Notes	B1	7.75	6/15/15		50			45,750
Sandridge Energy, Inc.,
Gtd. Notes, 144A	B3	8.00	6/01/18		400			312,000
Swift Energy Co., Gtd. Notes	B1	7.125	6/01/17		130			84,500

								2,819,390

Foods 3.7%
Alberton’s, Inc.,
Debentures, Sr. Unsec’d. Notes	Ba3	8.70	5/01/30		70			60,200
Sr. Unsec’d. Notes	Ba3	8.35	5/01/10		175			173,250
Aramark Corp.,
Gtd. Notes	B3	4.67(g)	2/01/15		200			157,000
Gtd. Notes	B3	8.50	2/01/15		150			136,500
Carrols Corp., Gtd. Notes	B3	9.00	1/15/13		175			147,875
Del Monte Corp., Gtd. Notes	B2	8.625	12/15/12		100			100,750
Dole Food Co., Inc., Gtd. Notes	Caa2	7.25	6/15/10		150			134,250
National Beef Packing Co. LLC,
Sr. Unsec’d. Notes	Caa1	10.50	8/01/11		150			109,500
Stater Brothers Holdings,
Gtd. Notes	B2	7.75	4/15/15		225			216,000
SUPERVALU, Inc.,
Sr. Unsec’d. Notes	Ba3	7.50	5/15/12		100			97,000
Tyson Foods, Inc.,
Sr. Unsec’d. Notes, 144A	Ba3	10.50	3/01/14		175			164,938

								1,497,263

Gaming 3.3%
CCM Merger, Inc., Notes, 144A
(original cost $536,438; purchased 7/14/05 - 2/22/08)	Caa3	8.00	8/01/13		550	(f)		203,500

See Notes to Financial Statements.


The High Yield Income Fund, Inc		9

Portfolio of Investments

as of February 29, 2009 (Unaudited) continued


	Moody’s Rating†	Interest Rate	Maturity Date	Principal Amount (000)			Value (Note 1)

Gaming (cont’d)
Harrah’s Operating Co. Inc.,
Gtd. Notes	Caa2	10.75%	2/01/16	$	603		$	84,420
Gtd. Notes	Caa3	5.50	7/01/10		150			38,250
Gtd. Notes	Caa3	5.625	6/01/15		117			7,020
Gtd. Notes	Caa3	6.50	6/01/16		17			1,020
Sr. Sec’d. Notes, 144A	CCC-(d)	10.00	12/15/18		163			45,640
Mandalay Resort Group, Gtd. Notes	Caa3	9.375	2/15/10		100			48,000
MGM Mirage, Inc.,
Gtd. Notes	B3	6.875	4/01/16		225			100,125
Sr. Sec’d Notes, 144A	Ba3	13.00	11/15/13		100			72,000
Mohegan Tribal Gaming Authority,
Sr. Sub. Notes	Caa1	8.00	4/01/12		175			56,000
Sr. Sub. Notes	Caa1	8.375	7/01/11		850			518,500
Park Place Entertainment, Inc.,
Gtd. Notes	Caa3	8.125	5/15/11		135			22,275
Shingle Springs Tribal Gaming Authority,
Sr. Notes, 144A (original cost $150,844; Purchased 6/22/07 - 6/26/07)	B3	9.375	6/15/15		150	(e)(f)		87,750
Station Casinos, Inc.,
Sr. Sub. Notes	C	6.50	2/01/14		275			8,250
Sr. Sub. Notes	C	6.625	3/15/18		75			2,250
Sr. Sub. Notes	C	6.875	3/01/16		65			1,950
Sr. Unsec’d. Notes	Ca	6.00	4/01/12		100			31,000

								1,327,950

Health Care & Pharmaceutical 12.7%
Accellent, Inc., Gtd. Notes	Caa3	10.50	12/01/13		550			398,750
Alliance Imaging, Inc., Sr. Sub. Notes	B3	7.25	12/15/12		150			140,250
Biomet, Inc.,
Gtd. Notes	Caa1	11.625	10/15/17		480			443,999
Gtd. Notes, PIK	B3	10.375	10/15/17		200			174,500
Bio-Rad Labortories, Inc., Sr. Sub. Notes	Ba3	7.50	8/15/13		125			118,750
Boston Scientific Corp., Sr. Unsec’d. Notes	Ba2	6.25	11/15/15		250			238,750
Catalent Pharma Solutions, Inc., Gtd. Notes	Caa1	9.50	4/15/15		325			110,500

See Notes to Financial Statements.


10


	Moody’s Rating†	Interest Rate	Maturity Date	Principal Amount (000)			Value (Note 1)

Health Care & Pharmaceutical (cont’d)
Columbia/HCA Healthcare Corp.,
Sr. Unsec’d. Notes	Caa1	7.50%	11/15/95	$	100		$	47,631
Sr. Unsec’d. Notes, M.T.N.	Caa1	8.70	2/10/10		500			493,801
Community Health Systems, Inc.,
Gtd. Notes	B3	8.875	7/15/15		150			141,938
HCA, Inc., Sr. Sec’d. Notes, 144A	B2	9.875	2/15/17		200			192,000
Omega Healthcare Investors, Inc.,
Gtd. Notes	Ba3	7.00	4/01/14		150			141,000
Gtd. Notes	Ba3	7.00	1/15/16		320			290,400
Psychiatric Solutions, Inc., Gtd. Notes	B3	7.75	7/15/15		175			153,563
Res-Care, Inc., Gtd. Notes	B1	7.75	10/15/13		325			280,313
Select Medical Corp., Gtd. Notes	B3	7.625	2/01/15		45			27,675
Senior Housing Properties Trust,
Sr. Unsec’d. Notes	Ba1	8.625	1/15/12		618			550,019
Skilled Healthcare Group, Inc., Gtd. Notes	Caa1	11.00	1/15/14		328			321,440
Sun Healthcare Group, Inc., Gtd. Notes	B3	9.125	4/15/15		500			458,749
Surgical Care Affiliates, Inc.,
Sr. Sub. Notes, 144A (original cost $191,750; purchased 6/21/07 - 1/4/08)	Caa1	10.00	7/15/17		200	(e)(f)		110,000
Vanguard Health Holdings Co. II LLC,
Gtd. Notes	Caa1	9.00	10/01/14		75			68,625
Ventas Realty LP, Gtd. Notes	Ba1	9.00	5/01/12		75			74,063
Viant Holdings, Inc., Gtd. Notes, 144A
(original cost $564,957; purchased 6/28/07)	Caa1	10.125	7/15/17		555	(e)(f)		194,250

								5,170,966

Lodging 0.9%
Felcor Lodging LP, Gtd. Notes	B1	9.00	6/01/11		95			51,300
Host Hotels & Restaurant, Gtd. Notes	Ba1	7.125	11/01/13		400			317,000

								368,300

Media & Entertainment 2.5%
AMC Entertainment, Inc.,
Gtd. Notes	B2	11.00	2/01/16		50			45,000
Sr. Sub. Notes	B2	8.00	3/01/14		100			80,000

See Notes to Financial Statements.


The High Yield Income Fund, Inc		11

Portfolio of Investments

as of February 28, 2009 (Unaudited) continued


	Moody’s Rating†	Interest Rate	Maturity Date	Principal Amount (000)			Value (Note 1)

Media & Entertainment (cont’d)
Cinemark, Inc., Sr. Disc. Notes
(Zero Coupon until 3/15/09)	B3	12.048%(h)	3/15/14	$	90		$	82,350
Clear Channel Communications, Inc.,
Debentures, Sr. Unsec’d. Notes	Caa1	6.875%	6/15/18		25			2,125
Sr. Unsec’d. Notes	Caa1	5.50	9/15/14		150			12,750
Sr. Unsec’d. Notes	Caa1	5.75	1/15/13		250			21,250
CMP Susquehanna Corp., Gtd. Notes	Ca	9.875	5/15/14		50			1,500
Dex Media West LLC,
Sr. Unsec’d. Notes	Caa2	8.00	11/15/13		165			10,725
Sr. Sub. Notes, Ser. B	Caa1	9.875	8/15/13		415			63,288
Intelsat Subsidiary Holding Co. Ltd., (Bermuda),
Sr. Unsec’d Notes, 144A	B3	8.875	1/15/15		225	(c)		212,625
LIN Television Corp., Gtd. Notes	B3	6.50	5/15/13		85			44,200
Medianews Group, Inc., Sr. Sub. Notes	Ca	6.875	10/01/13		125			3,438
Morris Publishing Group LLC, Gtd. Notes	Ca	7.00	8/01/13		65			3,250
Rainbow National Services LLC,
Gtd. Notes, 144A	B2	10.375	9/01/14		20			20,475
RH Donnelley Corp.,
Sr. Unsec’d. Notes	Caa3	8.875	10/15/17		150			6,750
Sr. Unsec’d. Notes, Ser. A-3	Caa3	8.875	1/15/16		225			10,125
Sun Media Corp. (Canada), Gtd. Notes	Ba2	7.625	2/15/13		400	(c)		239,999
Universal City Florida Holdings Co.,
Sr. Notes	B3	5.92(g)	5/01/10		250			120,000
Univision Communications, Inc.,
Gtd. Notes, PIK, 144A	Caa2	9.75	3/15/15		350			26,250

								1,006,100

Metal 5.1%
Aleris International, Inc., Gtd. Notes, PIK	NR	9.00	12/15/14		150	(a)(e)		450
Century Aluminum Co., Gtd. Notes	B3	7.50	8/15/14		80			32,000
FMG Finance Pty. Ltd. (Australia),
Sr. Sec’d. Notes, 144A	B1	10.625	9/01/16		400	(c)		340,000
Foundation Coal Co., Sr. Unsec’d. Notes	Ba3	7.25	8/01/14		50			45,125

See Notes to Financial Statements.


12


	Moody’s Rating†	Interest Rate	Maturity Date	Principal Amount (000)			Value (Note 1)

Metal (cont’d)
Freeport-McMoRan Copper & Gold, Inc.,
Sr. Unsec’d. Notes	Ba2	7.084%(g)	4/01/15	$	100		$	74,750
Sr. Unsec’d. Notes	Ba2	8.375	4/01/17		340			293,250
Gerdau AmeriSteel Corp. (Canada),
Gtd. Notes	Ba1	10.375	7/15/11		200	(c)		204,500
Ispat Inland ULC (Canada), Gtd. Notes	Baa2	9.75	4/01/14		690	(c)		636,525
Metals USA, Inc., Sr. Sec’d. Notes	B3	11.125	12/01/15		397			226,290
Novelis, Inc. (Canada), Gtd. Notes	B3	7.25	2/15/15		115	(c)		35,938
U.S. Steel Corp., Sr. Unsec’d. Notes	Baa3	7.00	2/01/18		225			168,622

								2,057,450

Non Captive Finance 1.2%
Lender Process Services, Inc., Gtd. Notes	Ba2	8.125	7/01/16		475			474,406

Packaging 6.0%
Ball Corp., Gtd. Notes	Ba1	6.625	3/15/18		375			361,875
Berry Plastics Holding Corp.,
Sec’d. Notes	Caa1	5.871(g)	9/15/14		225			104,625
Sr. Sec’d. Notes	Caa1	8.875	9/15/14		175			104,125
BWAY Corp., Gtd. Notes	B3	10.00	10/15/10		150			140,625
Crown Americas LLC,
Gtd. Notes	B1	7.625	11/15/13		400			402,000
Gtd. Notes	B1	7.75	11/15/15		114			114,855
Exopack Holding Corp., Gtd. Notes	B3	11.25	2/01/14		225			131,063
Graham Packaging Co., Inc.,
Gtd. Notes	Caa1	8.50	10/15/12		100			77,500
Gtd. Notes	Caa1	9.875	10/15/14		75			47,250
Greif, Inc., Gtd. Notes	Ba2	6.75	2/01/17		415			363,125
Owens Brockway Glass Container, Inc.,
Gtd. Notes	Ba3	8.25	5/15/13		450			454,500
Silgan Holdings, Inc., Sr. Sub. Notes	B1	6.75	11/15/13		175			161,000

								2,462,543

Paper 2.4%
Cascades, Inc. (Canada), Gtd. Notes	Ba3	7.25	2/15/13		185	(c)		105,913

See Notes to Financial Statements.


The High Yield Income Fund, Inc		13

Portfolio of Investments

as of February 28, 2009 (Unaudited) continued


	Moody’s Rating†	Interest Rate	Maturity Date	Principal Amount (000)			Value (Note 1)

Paper (cont’d)
Cellu Tissue Holdings, Inc., Sec’d. Notes	B2	9.75%	3/15/10	$	75	(e)	$	60,000
Domtar Corp.,
Gtd. Notes	Ba3	5.375	12/01/13		175			122,500
Gtd. Notes	Ba3	7.875	10/15/11		100			85,250
Georgia-Pacific Corp., Gtd. Notes, 144A
(original cost $275,000; purchased 12/13/06)	Ba3	7.125	1/15/17		275	(f)		252,312
Graphic Packaging International Corp.,
Gtd. Notes	B3	8.50	8/15/11		275			242,000
Norampac, Inc. (Canada), Gtd. Notes	Ba3	6.75	6/01/13		60	(c)		23,400
Verso Paper Holdings LLC,
Gtd. Notes, Ser. B	B3	11.375	8/01/16		335			70,350

								961,725

Pipelines & Other 3.4%
AmeriGas Partners LP, Sr. Unsec’d. Notes	Ba3	7.125	5/20/16		75			69,750
EL Paso Corp.,
Sr. Unsec’d. Notes	Ba3	8.25	2/15/16		175			162,750
Sr. Unsec’d. Notes, MTN	Ba3	8.05	10/15/30		110			86,854
Markwest Energy Partners LP,
Gtd. Notes, Ser. B	B2	6.875	11/01/14		50			35,125
Gtd. Notes, Ser. B	B2	8.75	4/15/18		120			85,200
Targa Resources, Inc., Gtd. Notes	B3	8.50	11/01/13		400			252,000
Williams Cos., Inc. (The),
Sr. Unsec’d. Notes	Baa3	8.125	3/15/12		350			344,750
Williams Partners LP,
Sr. Unsec’d. Notes	Ba2	7.25	2/01/17		375			326,250

								1,362,679

Retailers 1.1%
GameStop Corp., Gtd. Notes	Ba1	8.00	10/01/12		140			140,000
Neiman-Marcus Group, Inc., Gtd. Notes, PIK	B3	9.00	10/15/15		205			80,975
Pantry, Inc. (The), Gtd. Notes	Caa1	7.75	2/15/14		50			37,750
Susser Holdings LLC, Gtd. Notes	B3	10.625	12/15/13		204			195,840

								454,565

See Notes to Financial Statements.


14


	Moody’s Rating†	Interest Rate	Maturity Date	Principal Amount (000)			Value (Note 1)

Technology 8.3%
Affiliated Computer Services, Inc.,
Sr. Unsec’d. Notes	Ba2	4.70%	6/01/10	$	800		$	763,999
Avago Technologies Finance Wireless (Singapore),
Gtd. Notes	B1	10.125	12/01/13		455	(c)		383,338
Gtd. Notes	B3	11.875	12/01/15		125	(c)		92,500
Computer Associated International, Inc.,
Sr. Unsec’d. Notes, 144A	Ba1	6.125	12/01/14		150			134,438
First Data Corp., Gtd. Notes	B3	9.875	9/24/15		100			55,000
Freescale Semiconductor, Inc.,
Gtd. Notes, PIK	Caa2	9.125	12/15/14		830			53,950
Iron Mountain, Inc.,
Gtd. Notes	B2	7.75	1/15/15		250			248,125
Gtd. Notes	B2	8.00	6/15/20		50			47,000
Gtd. Notes	B2	8.625	4/01/13		175			175,000
Nortel Networks Ltd. (Canada),
Gtd. Notes	NR	10.125	7/15/13		100	(a)(c)		13,500
Open Solutions, Inc., Gtd. Notes, 144A	Caa2	9.75	2/01/15		100			15,750
Seagate Technology HDD Holdings
(Cayman Islands), Gtd. Notes	Ba2	6.375	10/01/11		674	(c)		454,949
Sensata Technologies BV (Netherlands),
Gtd. Notes	Caa3	8.00	5/01/14		200	(c)		52,000
Serena Software, Inc., Gtd. Notes	Caa1	10.375	3/15/16		225			133,313
STATS ChipPAC Ltd. (Singapore),
Gtd. Notes	Ba1	6.75	11/15/11		100	(c)		80,000
Gtd. Notes	Ba1	7.50	7/19/10		150	(c)		133,500
SunGuard Data Systems, Inc.,
Gtd. Notes	B3	4.875	1/15/14		485			386,788
Sr. Unsec’d. Notes, 144A	Caa1	10.625	5/15/15		200			169,000

								3,392,150

Telecommunications 6.9%
American Tower Corp.,
Sr. Unsec’d. Notes	Ba1	7.125	10/15/12		250			249,375
Centennial Communications Corp.,
Gtd. Notes	B2	10.125	6/15/13		175			180,906
Cincinnati Bell, Inc., Gtd. Notes	B2	8.375	1/15/14		100			91,500

See Notes to Financial Statements.


The High Yield Income Fund, Inc		15

Portfolio of Investments

as of February 28, 2009 (Unaudited) continued


	Moody’s Rating†	Interest Rate	Maturity Date	Principal Amount (000)			Value (Note 1)

Telecommunications (cont’d)
Citizens Communications Co.,
Sr. Unsec’d. Notes	Ba2	9.00%	8/15/31	$	150		$	109,500
Sr. Unsec’d. Notes	Ba2	9.25	5/15/11		100			102,000
Fairpoint Communications, Inc.,
Sr. Unsec’d. Notes, 144A	B3	13.125	4/01/18		250			103,750
Hawaiian Telcom Communications, Inc.,
Gtd Notes, Ser. B	NR	12.50	5/01/15		225	(a)(e)		2,250
Level 3 Financing, Inc., Gtd. Notes	Caa1	12.25	3/15/13		425			293,250
Qwest Communications International, Inc.,
Gtd. Notes, Ser. B	Ba3	7.50	2/15/14		205			173,738
Qwest Corp., Sr. Unsec’d. Notes	Ba1	7.50	10/01/14		275			244,406
Sprint Capital Corp.,
Gtd. Notes	Ba2	6.375	5/01/09		250			249,375
Gtd. Notes	Ba2	7.625	1/30/11		50			43,375
Gtd. Notes	Ba2	8.375	3/15/12		25			20,250
Gtd. Notes	Ba2	8.75	3/15/32		250			150,625
Time Warner Telecom Holdings, Inc.,
Gtd. Notes	B3	9.25	2/15/14		325			307,938
Windstream Corp., Gtd. Notes	Ba3	8.625	8/01/16		525			504,000

								2,826,238

Total corporate bonds (cost $59,579,743)								45,777,657


				Shares

COMMON STOCKS
Electric
Mirant Corp. (cost $1,623)					92			1,125


				Units

WARRANTS(b)
Sirius XM Radio, Inc., 144A Expiring 3/15/10					150	(e)		0
Viasystems Group, Inc., Expiring 1/10/31					10,871	(e)		1

Total warrants (cost $219,817)								1,126

Total long-term investments (cost $66,740,712)								51,906,812

See Notes to Financial Statements.


16

Moody’s
Rating†

Interest
Rate

Maturity
Date

Principal
Amount (000)

Value (Note 1)

SHORT-TERM INVESTMENTS 8.8%

U.S. GOVERNMENT AGENCY SECURITIES

Federal Home Loan Bank, Discount Notes

.12%(h)

3/02/09

1,603

1,602,989

Discount Notes

.33(h)

4/07/09

2,000

1,999,294

Total short-term investments
(cost $3,602,275)

3,602,283

Total Investments 136.1%
(cost $70,342,987; Note 4)

55,509,095

Liabilities in excess of other assets (36.1%)

(14,725,884

)

Net Assets 100.0%

40,783,211

†	The ratings reflected are as of February 28, 2009. Ratings of certain bonds may have changed subsequent to that date.

The following abbreviations are used in the portfolio descriptions:

M.T.N.—Medium Term Note

NR—Not rated by Moody’s or Standard & Poor’s

PIK—Payment in Kind

144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institution buyers. Unless other wise noted, 144A securities are deemed to be liquid.

(a)	Represents issuer in default on interest payment; non-income producing security.

(b)	Non-income producing security.

(c)	US$ denominated foreign securities.

(d)	Standard & Poor’s Rating.

(e)	Indicates a security that has been deemed illiquid.

(f)	Indicates a restricted security; the aggregate original cost of such securities is $1,845,202. The aggregate value of $948,464 is approximately 2.3% of net assets.

(g)	Indicates a variable rate security. The interest rate shown reflects the rate in effect at February 28, 2009.

(h)	Represents zero coupon or step bond. Rate shown reflects the effective yield at February 28, 2009.

See Notes to Financial Statements.


The High Yield Income Fund, Inc		17

Portfolio of Investments

as of February 28, 2009 (Unaudited) continued

Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.

Level 1—quoted prices in active markets for identical securities

Level 2—other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The following is a summary of the inputs used as of February 28, 2009 in valuing the Fund’s assets carried at fair value:


Valuation inputs	Investments in Securities		Other Financial Instruments*
Level 1—Quoted Prices	$	1,125	$	—
Level 2—Other Significant Observable Inputs		55,507,894		—
Level 3—Significant Unobservable Inputs		76		—

Total	$	55,509,095	$	—

*	Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the instrument.

The following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:


	Investments in Securities
Balance as of 8/31/08	$	76
Realized gain (loss)		—
Change in unrealized appreciation (depreciation)		—
Net purchases (sales)		—
Transfers in and/or out of Level 3		—

Balance as of 2/28/09	$	76

See Notes to Financial Statements.


18

The industry classification of portfolio holdings and liabilities in excess of other assets shown as a percentage of net assets as of February 28, 2009 were as follows:


Capital Goods	16.9	%
Health Care & Pharmaceutical	16.1
Electric	11.7
Cable	10.3
Technology	9.1
U.S. Government Agency Security	8.8
Energy - Other	6.9
Telecommunications	6.9
Packaging	6.0
Chemicals	5.2
Aerospace/Defense	5.1
Metal	5.1
Gaming	4.8
Paper	3.8
Foods	3.7
Pipelines & Other	3.4
Consumer	2.7
Media & Entertainment	2.5
Automotive	2.2
Building Materials & Construction	1.4
Non-Captive Finance	1.2
Retailers	1.1
Lodging	0.9
Airlines	0.2
Banking	0.1

	136.1
Liabilities in excess of other assets	(36.1	)

	100.0	%

See Notes to Financial Statements.


The High Yield Income Fund, Inc		19

Statement of Assets and Liabilities

as of February 28, 2009 (Unaudited)


Assets
Investments, at value (cost $70,342,987)	$	55,509,095
Foreign currency, at value (cost $66,356)		52,515
Interest receivable		1,332,270
Receivable for investments sold		512,260
Prepaid expenses		828

Total assets		57,406,968


Liabilities
Loan payable (Note 5)		15,500,000
Payable for investments purchased		849,385
Accrued expenses		164,459
Deferred directors’ fees		51,305
Management fee payable		22,645
Loan interest payable		20,864
Payable to custodian		15,099

Total liabilities		16,623,757


Net Assets	$	40,783,211


Net assets were comprised of:
Common stock, at par	$	116,052
Paid-in capital in excess of par		83,313,033

		83,429,085
Distributions in excess of net investment income		(336,558	)
Accumulated net realized loss on investments and foreign currency transactions		(27,461,583	)
Net unrealized depreciation on investments and foreign currencies		(14,847,733	)


Net assets, February 28, 2009	$	40,783,211

Net asset value per share ($40,783,211 ÷ 11,605,150 shares of common stock issued and outstanding)		$3.51

See Notes to Financial Statements.


20

Statement of Operations

Six Months Ended February 28, 2009 (Unaudited)


Net Investment Income
Income
Interest	$	3,148,284


Expenses
Management fee		152,691
Loan interest expense (Note 5)		187,617
Legal fees and expenses		53,000
Reports to shareholders		53,000
Custodian’s fees and expenses		34,000
Audit fee		25,000
Transfer agent’s fees and expenses		13,000
Registration fees		12,000
Directors’ fees and expenses		8,000
Miscellaneous		24,139

Total expenses		562,447

Net investment income		2,585,837


Realized and Unrealized Loss on Investments and Foreign Currency Transactions
Net realized loss on investments		(6,276,176	)

Net change in net unrealized appreciation/depreciation on:
Investments		(9,232,585	)
Foreign currencies		(14,340	)

		(9,246,925	)

Net loss on investments and foreign currency transactions		(15,523,101	)

Net Decrease In Net Assets Resulting From Operations	$	(12,937,264	)

See Notes to Financial Statements.


The High Yield Income Fund, Inc		21

Statement of Cash Flows

Six Months Ended February 28, 2009 (Unaudited)


Increase (Decrease) in Cash
Cash flows provided from (used in) operating activities:
Interest received (excluding discount and premium amortization of $61,499)	$	3,344,312

Operating expenses paid		(342,572	)
Loan interest paid		(228,113	)
Maturities of short-term portfolio investments, net		(682,155	)
Purchases of long-term portfolio investments		(19,909,477	)
Proceeds from disposition of long-term portfolio investments		29,284,627
Foreign currencies		(14,340	)
Prepaid expenses		(828	)

Net cash provided from operating activities		11,451,454


Cash flows provided from (used in) financing activities:
Cash dividends paid (excluding reinvestment of dividends of $17,075)		(3,480,844	)
Increase in payable to custodian for temporary overdraft		15,099
Decrease in borrowing		(8,000,000	)

Net cash used in financing activities		(11,465,745	)

Net decrease in cash		(14,291	)
Cash at beginning of period		66,806

Cash at end of period	$	52,515


Reconciliation of Net Decrease in Net Assets to Net Cash Provided from (used in) Operating Activities
Net decrease in net assets resulting from operations	$	(12,937,264	)

Decrease in investments		8,221,792
Net realized loss on investment transactions		6,276,176
Increase in net unrealized appreciation on investments		9,246,925
Increase in interest receivable		315,766
Increase in receivable for investments sold		(512,260	)
Increase in prepaid expenses		(828	)
Increase in payable for investments purchased		849,385
Decrease in loan interest payable		(40,496	)
Increase in accrued expenses and other liabilities		32,258

Total adjustments		24,388,718

Net cash provided from operating activities	$	11,451,454

See Notes to Financial Statements.


22

Statement of Changes in Net Assets

(Unaudited)


	Six Months Ended February 28, 2009			Year Ended August 31, 2008
Decrease In Net Assets
Operations
Net investment income	$	2,585,837		$	5,440,544
Net realized loss on investment and foreign currency transactions		(6,276,176	)		(1,138,794	)
Net change in unrealized appreciation/depreciation on investments and foreign currencies		(9,246,925	)		(4,019,290	)

Net increase (decrease) in net assets resulting from operations		(12,937,264	)		282,460
Dividends paid to shareholders from net investment income		(3,480,329	)		(5,307,215	)
Net asset value of shares issued to shareholders in reinvestment of dividends		17,075			—

Total decrease		(16,400,518	)		(5,024,755	)

Net Assets
Beginning of period		57,183,729			62,208,484

End of period(a)	$	40,783,211		$	57,183,729

(a) Includes undistributed net investment income of	$	—		$	557,934

See Notes to Financial Statements.


The High Yield Income Fund, Inc		23

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.

Note 1. Accounting Policies

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.

Securities Valuation: Securities for which market quotations are readily available—including securities listed on national securities exchanges and those traded over-the-counter are valued at the last quoted sales price on the valuation date on which the security is traded. If such securities were not traded on the valuation date, but market quotations are readily available, they are valued at the most recently quoted bid price provided by an independent pricing service or by a principal market maker. Securities for which market quotations are not readily available or for which the pricing agent or market maker does not provide a valuation or methodology, or provides a valuation or methodology that, in the judgment of the adviser, does not represent fair value, are valued by a Valuation Committee appointed by the Board of Directors, in consultation with the adviser. When determining the fair valuation of securities some of the factors influencing the valuation include, the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.


24

Short-term debt securities, which mature in sixty days or less, are valued at amortized cost, which approximates market value. The amortized cost method involves valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization to maturity of the difference between the principal amount due at maturity and cost. Short-term debt securities, which mature in more than sixty days, are valued at current market quotations.

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 tri-party 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’s custodian will maintain, in a segregated account of the Fund, cash, U.S. Government securities, equity securities or other liquid, unencumbered assets marked to market daily, having a value equal to or greater than the Fund’s purchase commitments with respect to certain investments.

Restricted Securities: 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 accreting discounts and amortizing premiums on debt obligations.

Foreign Currency Translation: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:

(i) market value of investment securities, other assets and liabilities—at the current rates of exchange.

(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.


The High Yield Income Fund, Inc		25

Notes to Financial Statements

(Unaudited) continued

The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of the securities held at the end of the period. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of long-term debt securities sold during the period. Accordingly, such realized foreign currency gains or losses are included in the reported net realized gains or losses on investment transactions.

Net realized gains or losses on foreign currency transactions represent net foreign exchange gains or losses from sales and maturities of short-term securities and forward currency contracts, disposition of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, discount and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net currency gains or losses resulting from the valuing of foreign currency denominated assets (excluding investments) and liabilities at period-end exchange rates are reflected as a component of net unrealized appreciation or depreciation on investments and foreign currencies.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. companies as a result of, among other factors, the possibility of political or economic instability and the level of governmental supervision and regulation of foreign securities markets.

Security Transactions and Investment Income: Security transactions are recorded on the trade date. Realized and unrealized gains or losses from securities transactions are calculated on the identified cost basis. Interest income, which is comprised of stated coupon rate, original issue discount, market discount and premium, is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. The Fund amortizes premium and accretes discounts on debt securities as adjustments to interest income. Expenses are recorded on the accrual basis.

Taxes: For federal income tax purposes, 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 net income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required.


26

Withholding taxes on foreign dividends are recorded net of reclaimable amounts at the time the related income is earned.

Dividends and Distributions: The Fund expects to pay dividends of net investment income monthly and make distributions of net realized capital and currency gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-dividend date. Permanent book/tax differences relating to income and gains are reclassified amongst undistributed net investment income, accumulated net realized gain or loss and paid-in capital in excess of par, as appropriate.

Estimates: The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

Note 2. Agreements

The Fund has a management agreement with Prudential Investments LLC (“PI”). Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadviser’s performance of such services. PI has entered into a subadvisory agreement with Prudential Investment Management, Inc. (“PIM”). PIM furnishes investment advisory services in connection with the management of the Fund. PI pays for the services of PIM, the compensation of officers and employees 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 to PI is computed weekly and payable monthly, at an annual rate of .70 of 1% of the average weekly net assets of the Fund.

PI and PIM are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).

Note 3. Portfolio Securities

Purchases and sales of investment securities, other than short-term investments, for the six months ended February 28, 2009, aggregated $20,758,862 and $29,785,733, respectively.


The High Yield Income Fund, Inc		27

Notes to Financial Statements

(Unaudited) continued

Note 4. Tax Information

The United States federal income tax basis of the Fund’s investments and the net unrealized depreciation as of February 28, 2009, were as follows:


Tax Basis of Investments	Appreciation	Depreciation	Net Unrealized Depreciation
$70,886,595	$406,253	$(15,783,753)	$(15,377,500)

The difference between book basis and tax basis was attributed to deferred losses on wash sales and differences in the treatment of premium amortization and accreting market discount for book and tax purposes.

For federal income tax purposes, the Fund had a capital loss carryforward as of August 31, 2008 of approximately $19,388,700 of which $5,010,500 expires in 2009, $6,960,200 expires in 2010, $7,076,300 expires in 2011, $282,300 expires in 2014 and $59,400 expires in 2016. Accordingly, no capital gains distribution is expected to be paid to shareholders until net realized gains have been realized in excess of such amounts. It is unlikely the Fund will be able to realize the full benefit of the remaining carryforwards prior to the expiration date. Approximately $3,249,200 of its capital loss carryforward expired unused in the fiscal year ended August 31, 2008. The Fund elected to treat post-October capital losses of approximately $1,344,400 as having been incurred in the following fiscal year (August 31, 2009).

Management has analyzed the Funds’ tax positions taken on federal income tax returns for all open tax years and has concluded that as of February 28, 2009, no provision for income tax would be required in the Funds’ financial statements. The Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

Note 5. Borrowings

The Fund has a credit agreement with State Street Bank & Trust Co. The maximum commitment under this agreement is $30,000,000. Interest on any such borrowings outstanding fluctuates daily at .85 of 1% over the Federal Funds rate and is payable


28

monthly. The Fund may utilize these borrowings (leverage) in order to increase the potential for gain on amounts invested. There can be no guarantee that these gains will be realized. There are increased risks associated with the use of leverage. The expiration of the credit agreement is June 29, 2009. The average daily balance outstanding for the six months ended February 28, 2009, was $18,723,757 at a weighted average interest rate of 1.78%. The maximum face amount of borrowings outstanding at any month-end during the six months ended February 28, 2009 was $23,500,000.

The Fund pays commitment fees at an annual rate of .15 of 1% of the maximum commitment under the credit agreement, regardless of usage. The commitment fee is accrued daily and paid quarterly. Commitment fees are included in “Loan interest expense” as reported on the Statement of Operations.

Note 6. 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, 2009.

During the six months ended February 28, 2009 the Fund issued 4,678 shares in connection with the reinvestment of dividends. During the year ended August 31, 2008 the Fund did not issue shares in connection with the reinvestment of dividends.

Note 7. Reorganization

On March 10, 2009, the Board of Directors of the Fund approved an Agreement and Plan of Reorganization (the “Plan”) which provides for the transfer of all the assets of the Fund for Class A shares of the Dryden High Yield Fund, Inc., and the assumption of the liabilities of the Fund. The Plan is subject to approval by the shareholders of the Fund at a special meeting to be held on May 11, 2009.

In the event the Fund is acquired by Dryden High Yield Fund, Inc. pursuant to the Plan, the future utilization of the capital loss carryforward (Note 4) will be limited under certain conditions defined in the Internal Revenue Code of 1986, as amended.

Note 8. Subsequent Events

On March 3, 2009 and April 1, 2009 the Board of Directors of the Fund declared dividends of $.0400 and $.0375 per share, respectively, payable on March 31, 2009 and April 30, 2009, respectively, to shareholders of record on March 17, 2009 and April 15, 2009, respectively.


The High Yield Income Fund, Inc		29

Notes to Financial Statements

(Unaudited) continued

Note 9. New Accounting Pronouncements

In March 2008, the FASB released Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“FAS 161”). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. The application of FAS 161 is required for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 161 and its impact on the financial statements has not yet been determined.


30

Financial Highlights

(Unaudited)


FEBRUARY 28, 2009		SEMIANNUAL REPORT

The High Yield Income Fund, Inc.

Financial Highlights

(Unaudited)


	Six Months Ended February, 28, 2009
Per Share Operating Performance:
Net Asset Value, Beginning Of Period(a)	$	4.93

Net investment income		.22
Net realized and unrealized gain (loss) on investments		(1.34	)

Total from investment operations		(1.12	)
Dividends paid to shareholders from net investment income		(.30	)

Net asset value, at end of period(a)	$	3.51

Market price per share, end of period(a)	$	3.22

Total Investment Return(b)		(18.13	)%
Ratios/Supplemental Data:
Net assets, end of period (000)	$	40,783
Average net assets (000)	$	43,989
Ratios to average net assets:
Expenses, before loan interest		1.72	%(c)
Total expenses		2.58	%(c)
Net investment income		11.85	%(c)
Portfolio turnover rate		35	%(d)
Asset coverage		363	%
Total debt outstanding at period-end (000)	$	15,500

(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 the purpose of this calculation, to be reinvested at prices obtainable under the Fund’s dividend reinvestment plan. This amount does not reflect brokerage commissions.

(c)	Annualized.

(d)	Not annualized.

See Notes to Financial Statements.


32


Year Ended August 31,
2008			2007			2006			2005			2004

$	5.36		$	5.47		$	5.61		$	5.57		$	5.25

	.47			.42			.43			.45			.50
	(.44	)		(.08	)		(.14	)		.09			.39

	.03			.34			.29			.54			.89
	(.46	)		(.45	)		(.43	)		(.50	)		(.57	)

$	4.93		$	5.36		$	5.47		$	5.61		$	5.57

$	4.31		$	4.91		$	4.89		$	5.43		$	5.93

	(3.14	)%		9.29	%		(1.87	)%		(.04	)%		25.47	%

$	57,184		$	62,208		$	63,414		$	65,047		$	64,471
$	60,040		$	64,798		$	63,605		$	65,406		$	63,724

	1.05	%		1.12	%		1.16	%		1.36	%		1.48	%
	2.51	%		3.17	%		3.12	%		2.71	%		2.31	%
	9.06	%		7.54	%		7.85	%		7.91	%		9.05	%
	78	%		66	%		58	%		75	%		98	%
	343	%		427	%		376	%		383	%		358	%
$	23,500		$	19,000		$	23,000		$	23,000		$	25,000

See Notes to Financial Statements.


The High Yield Income Fund, Inc		33

ⁿ MAIL

ⁿ TELEPHONE

ⁿ WEBSITE

Gateway Center Three

100 Mulberry Street

Newark, NJ 07102-4077

(800) 451-6788

www.prudential.com

DIRECTORS

Kevin J. Bannon • Linda W. Bynoe • David E. A. Carson • Robert F. Gunia • Michael S. Hyland • Robert E. La Blanc • Douglas H. McCorkindale • Stephen P. Munn • Richard A. Redeker • Judy A. Rice • Robin B. Smith • Stephen G. Stoneburn

OFFICERS

Judy A. Rice, President • Robert F. Gunia, Vice President • Grace C. Torres, Treasurer and Principal Financial and Accounting Officer • Deborah A. Docs, Chief Legal Officer and Secretary •

Timothy J. Knierim, Chief Compliance Officer • Valerie M. Simpson, Deputy Chief Compliance Officer • Theresa C. Thompson, Deputy Chief Compliance Officer • Jonathan D. Shain, Assistant Secretary • Andrew R. French, Assistant Secretary • M. Sadiq Peshimam, Assistant Treasurer • Peter Parrella, Assistant Treasurer


MANAGER	Prudential Investments LLC	Gateway Center Three 100 Mulberry Street Newark, NJ 07102

INVESTMENT ADVISER	Prudential Investment Management, Inc.	Gateway Center Two 100 Mulberry Street Newark, NJ 07102

CUSTODIAN	The Bank of New York Mellon	One Wall Street New York, NY 10286

TRANSFER AGENT AND REGISTRAR	Computershare Trust Company, N.A. c/o Computershare Investor Services	PO Box 43011 Providence, RI 02940

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	KPMG LLP	345 Park Avenue New York, NY 10154

FUND COUNSEL	Sullivan & Cromwell LLP	125 Broad Street New York, NY 10004

PROXY VOTING

The Board of Directors of the Fund has delegated to the Fund’s investment adviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 451-6788 or by visiting the Securities and Exchange Commission’s website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Commission’s website.

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing.

SHAREHOLDER COMMUNICATIONS WITH DIRECTORS

Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, The High Yield Income Fund, Inc., Prudential Investments, Attn: Board of Directors, 100 Mulberry Street, Gateway Center Three, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to that Director at the same address. Communications are not screened before being delivered to the addressee.

AVAILABILITY OF PORTFOLIO SCHEDULE

The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (202) 551-8090.

Mutual Funds:


ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY		MAY LOSE VALUE		ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE

HYIS 429904105 IFS-A163931 Ed. 04/2009


Item 2	–	Code of Ethics – Not required, as this is not an annual filing.

Item 3	–	Audit Committee Financial Expert – Not required, as this is not an annual filing.

Item 4	–	Principal Accountant Fees and Services – Not required, as this is not an annual filing.

Item 5	–	Audit Committee of Listed Registrants – Not required, as this is not an annual filing.

Item 6	–	Schedule of Investments – The schedule is included as part of the report to shareholders filed under Item 1 of this Form.

Item 7	–	Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not required, as this is not an annual filing.

Item 8	–	Portfolio Managers of Closed-End Management Investment Companies – Not required, as this is not an annual filing.

Item 9	–	Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – There have been no purchases of equity securities by the registrant or any affiliated purchasers during the period covered by this report.

Item 10	–	Submission of Matters to a Vote of Security Holders – Not applicable.

Item 11	–	Controls and Procedures


(a)		It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.

(b)		There has been no significant change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter of the period covered by this report that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting.


Item 12		–		Exhibits


(a)	(1)	Code of Ethics – Not required, as this is not an annual filing.

	(2)	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.CERT.

	(3)	Any written solicitation to purchase securities under Rule 23c-1. – Not applicable.

(b)	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


(Registrant)		The High Yield Income Fund, Inc.

By (Signature and Title)*		/s/ Deborah A. Docs
		Deborah A. Docs
		Secretary


Date		April 22, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By (Signature and Title)*		/s/ Judy A. Rice
		Judy A. Rice
		President and Principal Executive Officer


Date		April 22, 2009


By (Signature and Title)*		/s/ Grace C. Torres
		Grace C. Torres
		Treasurer and Principal Financial Officer


Date		April 22, 2009

^*	Print the name and title of each signing officer under his or her signature.