|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previous: FIDELITY INVESTMENT TRUST, 497, 1994-04-07 |
Next: CYPRUS AMAX MINERALS CO, DEFA14A, 1994-04-07 |
<PAGE>
FELLOW SHAREHOLDERS
High-yield bonds and your Fund provided excellent returns for the 12 months
ended February 28, 1994, far surpassing gains posted by high-quality bonds.
The Fund's fiscal year closed on a down note, however, as the bond market
reacted unfavorably to the Federal Reserve's interest rate hike in early
February. High-yield bonds were not spared. In February, your Fund experienced
its first negative monthly return since October 1992. Despite this,
three-month results were respectable but lagged our peer group, as discussed
later on. Longer-term performance was in double digits, as shown below.
Performance Comparison
Periods Ended 2/28/94
3 Months 12 Months
-----------------------------
High Yield Fund 2.29% 16.59%
Lipper High Yield Fund
Average 3.76 16.66
- ------------------------------------------------------------------------------
MARKET ENVIRONMENT
Throughout most of the past year, economic conditions were virtually ideal for
high-yield bonds. The economy and corporate earnings continued to grow, stock
prices rose, longer-term interest rates declined marginally on balance, and
shorter-term rates remained historically low even after rising in the fall.
Many issuers were able to improve their financial condition by reducing debt
burdens. Credit upgrades exceeded downgrades, and the market default rate fell
to the lowest level since 1977, according to First Boston data.
While the high-quality bond market weakened in November as evidence mounted
of stronger economic growth, junk bonds were relatively unscathed. The old
year closed and the new year began on a favorable note, with the economy
surging and the stock market reaching new highs - both positives for
high-yield bonds.
In early February, the investment environment was substantially altered by
the Fed's dramatic announcement of a tighter monetary policy to contain
inflationary pressures. Interest rates rose across the board, and the stock
market declined over 3%. This time, high-yield bond prices also fell as
several developments combined to deflate market sentiment. First, declining
stock prices, if sustained, would impair the ability of junk bond issuers to
raise equity and improve their creditworthiness. Second, the late-February
collapse of the much ballyhooed Bell Atlantic/TCI merger dampened near-term
prospects for cable TV companies, which compose about 10% of the high-yield
bond universe. And third, the high-yield bond market became increasingly
vulnerable to real or perceived setbacks as its yield advantage over
high-quality debt narrowed. As the chart shows, the yield spread between
B-rated bonds and Treasuries was about 400 basis points on February 28 and the
spread versus BB-rated bonds was about 225 basis points, the smallest
differences since the end of 1988.
Edgar Description of HYF chart:
[A 2-line chart comparing the spread (in basis points) between yields on BB
and B-rated bonds and Treasuries of comparable maturities from 12/31/88 to
2/28/94, based on Salomon Brothers data.]
<PAGE>
PERFORMANCE AND STRATEGY REVIEW
Your Fund paralleled market trends and performed better than its peer group
until the final quarter. Some of the holdings that had contributed
significantly to our performance edge earlier in the year, domestic equities
and, of greater importance, emerging country debt, largely accounted for the
fourth quarter lag. A small portion of our equities, which compose about 7% of
assets, was hurt by the fall in stock prices. The prices of some of our
emerging country bonds fell initially due to international political problems,
but the decline subsequently snowballed when leveraged hedge funds, which are
major investors in such bonds, were forced to sell assets to meet margin
calls.
Our overall strategy remains relatively aggressive, reflecting our view that
the high-yield market's positive fundamentals remain intact. We have made some
changes in sector emphasis over the past year (shown in the table following
this report). Casinos and related businesses remain our major weighting, as we
expect more states to legalize gambling during the '90s, and many of the
existing, highly profitable enterprises are likely to expand. Foreign debt has
become our second largest commitment, and health care has dropped from first
place a year ago to third. While much is unclear about the shape of health
care reform, the need for hospitals to merge to remain profitable is readily
apparent. Our holdings are centered in hospital issues that have benefited
from merger-related credit upgrades.
After avoiding most cyclicals for some time, we are now investing in
industries with prospects for above-average earnings gains in a maturing
economic recovery. For instance, the paper industry, not represented for many
months, is now 5% of assets. We also increased the textile sector from 4% to
5%, with emphasis on companies likely to benefit from rebounds in auto and
apparel sales and homebuilding.
OUTLOOK
We would expect high-yield bonds to outperform high-quality bonds again this
year, but not to provide overall returns as high as in recent years.
High-yield bonds should remain a prime beneficiary of economic growth, as
earnings increases lead to further credit upgrades, particularly among
cyclical companies. Despite the recent rise in interest rates on high-quality
bonds, high-yield bonds should remain appealing to yield-oriented investors
who are comfortable with additional risk. In addition, the market has been
attracting nontraditional investors, including income-oriented stock funds and
some pension funds.
Although junk bonds often react less dramatically than other fixed-income
sectors to Fed policy changes, this does not give a complete picture of their
potential volatility. We remind you that lower-quality bonds can react sharply
to developments that might not faze high-quality bonds, such as an extended
stock market decline or signs that economic growth is flagging. And unexpected
developments can roil investor psychology almost overnight, just as in the
stock market. For this reason, high-yield bonds, like stocks, are not suitable
short-term investments, and attempts at market timing are seldom fruitful. The
potentially attractive rewards from high-yield bond investing accrue to
patient investors who can ride out periods of price volatility.
Respectfully submitted,
s/Richard S. Swingle
Richard S. Swingle
President and Chairman of the
Investment Advisory Committee
March 21, 1994
<PAGE>
STATISTICAL HIGHLIGHTS
T. ROWE PRICE HIGH YIELD FUND / FEBRUARY 28, 1994
Key Statistics
Dividend Yield* Periods Ended 2/28/94
- --------------------------------------------------- --------------------------
3 Months 8.83%
12 Months 9.35
Dividend Per Share
- ---------------------------------------------------
3 Months $0.20
12 Months 0.81
Change in Per-Share Value
- ---------------------------------------------------
3 Months (From $9.14 to $9.15) $0.01
12 Months (From $8.58 to $9.15) 0.57
- ------------------------------------------------------------------------------
*Dividends earned and reinvested for the periods indicated are annualized and
divided by the average daily net asset values per share for the same period.
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
Quality Diversification
Percent of Net Assets
TRPA Quality Rating* 2/28/93 11/30/93 2/28/94
- ------------------------- ---------------- ---------------- ----------------
1 0% 2% 4%
2 4 5 0
3 0 0 0
4 0 0 1
5 14 12 7
6 74 69 73
7 1 3 2
8 2 1 2
9 0 1 1
10 1 2 3
Not Rated 4 5 7
- ----------------------------------------------------------------------------
WEIGHTED AVERAGE 5.5 5.6 5.6
- ----------------------------------------------------------------------------
*On a scale of 1 to 10, with Grade 1 representing highest credit quality.
Maturity Diversification
Percent of Net Assets
Range 2/28/93 11/30/93 2/28/94
- -----------------------------------------------------------------------------
Short-Term (0 to 1 Year) 5% 7% 5%
Short Intermediate-Term
(1+ to 5 Years) 8 11 11
Long Intermediate-Term
(5+ to 10 Years) 64 56 54
Long-Term (Over 10 Years) 23 26 30
- -----------------------------------------------------------------------------
WEIGHTED AVERAGE (YEARS) 8.9 9.0 9.9
- -----------------------------------------------------------------------------
Sector Diversification*
Percent of Net Assets
2/28/93 11/30/93 2/28/94
- -----------------------------------------------------------------------------
Hotels & Gaming 9% 14% 12%
Foreign 2 8 9
Health Care 11 7 6
Textiles & Apparel 4 4 5
Paper & Paper Products 1 0 5
Container 8 4 5
Aerospace & Defense 0 1 4
Exploration & Production 3 4 4
Cable Operators 4 5 4
Building Products 2 2 3
Manufacturing 6 5 3
Telecommunications 0 1 3
Broadcasting 0 1 3
Specialty Chemicals 1 4 3
Beverages 3 4 3
Miscellaneous 3 2 3
Refining 2 2 2
Supermarkets 6 3 2
- -----------------------------------------------------------------------------
*Sectors representing at least 2% of net assets on 2/28/94.
<PAGE>
High-Yield Fund Performance Comparison
[A line graph compares the 2/28/94 value of a hypothetical of $10,000
investment made in the High-Yield Fund at its inception (12/31/84) and a
similar investment made concurrently in the First Bost High-Yield Index. At
2/28/94, the Fund investment would have been worth $27657 and the First Boston
Index investment would have been worth $33411.]
Calendar-Year Performance
Periods Ended December 31, 1993
Since
1 Year 5 Years* Inception (12/31/84)*
----------- ----------- -----------------------
21.82% 9.93% 11.89%
- ------------------------------------------------
* Average Annual Compound Total Return
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
Fiscal-Year Performance
Periods Ended February 28, 1994
Since
1 Year 5 Years* Inception (12/31/84)*
----------- ----------- -----------------------
16.59% 9.63% 11.74%
- ------------------------------------------------
* Average Annual Compound Total Return
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
<PAGE>
INVESTMENT RECORD
T. ROWE PRICE HIGH YIELD FUND
The table below shows the investment record of one share of the T. Rowe Price
High Yield Fund, purchased at the original offering price of $10.00. Over this
time, interest rates have been volatile. The results shown should not be
considered a representation of the dividend income or capital gain or loss
which may be realized from an investment made in the Fund today.
- ------------------------------------------------------------------------------
With
Dividends
and
Fiscal Net Capital With Capital
Year Asset Income Gain Dividends Gains Total
Ended Value Dividends Distributions/2/ Reinvested Reinvested Return
- --------- ------ ---------- ---------------- ----------- ---------- -------
2/28/851 $9.99 $0.22 - $10.21 $10.21 1.96
1986 10.99 1.37 - 12.79 12.79 25.45
1987 11.26 1.28 $0.13 14.71 14.88 16.36
1988 10.21 1.25 0.14 15.03 15.40 3.49
1989 10.24 1.26 - 17.04 17.46 13.37
1990 8.20 1.26 - 15.57 15.96 -8.62
1991 7.13 1.07 - 15.59 15.98 0.12
1992 8.23 0.88 - 20.14 20.65 29.15
1993 8.58 0.82 - 23.15 23.75 14.96
1994 9.15 0.81 - 26.99 27.66 16.59
- ------------------------------------------------------------------------------
TOTAL $10.22 $0.27
- ------------------------------------------------------------------------------
/1/From inception 12/31/84 to 2/28/85.
/2/Includes short-term capital gain of $0.09 on 3/11/86.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS (AMOUNTS IN THOUSANDS)
T. ROWE PRICE HIGH YIELD FUND / FEBRUARY 28, 1994
Corporate Bonds & Notes, Common & Preferred Stocks - 86.5%
<CAPTION>
Face Amount Value
---------------- -------------
<S> <C> <C>
AEROSPACE & DEFENSE - 4.3%
double dagger Abex, Common Stock..................................... 555 shs. $ 2,288
IMO Industries, Sr. Sub. Deb., 12.00%, 11/1/01......... $23,300 24,232
12.25%, 8/15/97.................................... 1,970 2,009
K & F Industries, Sr. Secured Notes, 11.875%, 12/1/03.. 9,650 9,795
Sr. Sub. Notes, 13.75%, 8/1/01..................... 14,750 14,971
double dagger Tracor, Common Stock................................... 190 shs. 1,829
double dagger Tracor Technology Resources, Common Stock.............. 40 20
Uniroyal Technology, Sr. Secured Notes, 11.75%, 6/1/03. $13,100 13,624
double dagger Warrants........................................... 131 wts. 327
69,095
AUTOMOBILES & RELATED - 1.6%
Borg Warner Automotive, Common Stock, Class A.......... 319 shs. 9,726
double dagger Envirotest Systems, Common Stock, Class A.............. 210 5,145
double dagger Lear Seating, Warrants................................. 11 wts. 5,169
double dagger Motor Wheel, Common Stock, Class A..................... 6 shs. 1,200
dagger
Venture Holdings Trust, Sr. Sub. Notes, 9.75%, 4/1/04.. $ 4,500 4,500
25,740
BEVERAGES - 2.7%
Coca-Cola Bottling Group, Sr. Sub. Notes, 9.00%,
11/15/03........................................... 6,000 5,910
Dr Pepper Bottling Holdings, Sr. Disc. Notes, STEP,
Zero Coupon, 2/15/98; 11.625%, 2/15/98-2/15/03.. 17,850 12,494
double dagger Common Stock, Class A.............................. 1,184 shs. 4,736
double dagger# Common Stock, Class A.............................. 120 480
double dagger Dr Pepper/Seven-Up, Common Stock....................... 533 12,982
Texas Bottling Group, Sr. Sub. Notes, 9.00%, 11/15/03.. $ 8,000 8,000
44,602
BROADCASTING - 2.9%
NewCity Communications, Sr. Sub. Notes, 11.375%,
11/1/03............................................ 7,075 7,500
double dagger SCI Television, Common Stock, Class B.................. 50 shs. 0
SPI Holding, Sr. Sub. Notes, 11.50%, 12/1/02........... $23,523 23,170
Turner Broadcasting System, Sr. Sub. Deb., 12.00%,
10/15/01........................................... 14,600 15,717
46,387
BUILDING PRODUCTS - 3.5%
Acme Holdings, Sr. Notes, 11.75%, 6/1/00............... 12,000 11,280
Del Webb, Sr. Sub. Notes, 9.00%, 2/15/06............... 1,000 980
Maxxam Group, Sr. Secured Notes, 11.25%, 8/1/03........ 11,350 11,804
Overhead Door, Sr. Notes, 12.25%, 2/1/00............... 11,825 13,126
Southdown, Sr. Sub. Notes, 14.00%, 10/15/01............ 10,175 11,905
Waxman Industries, Sr. Secured Notes, 12.25%, 9/1/98... 6,850 7,124
double dagger Warrants........................................... 133 wts. 6
dagger
56,225
BUILDING & REAL ESTATE - 0.0%
double dagger Gulfstream Housing, Warrants........................... 30 3
Mid Atlantic Realty Trust, Common Stock................ 33 shs. 325
328
CABLE OPERATORS - 3.7%
Adelphia Communications, Sr. Deb., 9.875%, 3/1/05...... $ 7,400 7,770
11.875%, 9/15/04............................... 2,000 2,220
Sr. Notes, 12.50%, 5/15/02......................... 15,600 17,316
double dagger Cencom Cable Entertainment, Warrants................... 10 wts. 650
dagger
Continental Cablevision, Sr. Sub. Deb., 11.00%, 6/1/07. $13,650 15,698
double dagger Insight Communications, Warrants....................... 80 wts. 80
double dagger Peachtree Cable Associates Ltd., Common Stock.......... 10 shs. 170
dagger
Summit Communications Group, Sr. Sub. Deb., 10.50%,
4/15/05............................................ $15,675 17,007
60,911
CONGLOMERATES - 1.4%
double dagger Insilco, Common Stock.................................. 1 shs. 9
Jordan Industries, Sr. Sub. Disc. Notes, STEP, Zero
Coupon, 8/1/98; 11.75%, 8/1/98-8/1/05.............. $31,400 19,939
double dagger Reeves Industries, Common Stock........................ 75 shs. 336
dagger
double dagger Thermadyne Industries, Common Stock.................... 26 386
dagger
double dagger Triton Group Limited, Common Stock..................... 1,026 1,540
22,210
CONTAINERS - 4.8%
double dagger Gaylord Container, Common Stock, Class A............... 1,241 6,825
Owens-Illinois, Sr. Sub. Notes, 9.75%, 8/15/04......... $20,000 21,200
Plastic Containers, Sr. Secured Notes, 10.75%, 4/1/01.. 12,300 13,099
Sea Containers Ltd., 12.50%, 12/1/04................... 9,900 11,237
Sr. Notes, Series B, 12.50%, 12/1/04............... 1,000 1,130
Silgan Holdings, Sr. Disc. Deb., STEP, Zero Coupon,
6/15/96; 13.25%, 6/15/96-12/15/02 ............. 16,530 13,059
Sr. Sub. Notes, 11.75%, 6/15/02.................... 10,000 10,700
77,250
COSMETICS - 1.2%
Revlon Worldwide, Sr. Secured Disc. Notes, Zero Coupon,
3/15/98............................................ 40,750 20,171
ELECTRONIC COMPONENTS - 1.3%
double dagger Amphenol, Common Stock, Class A........................ 150 shs. 2,323
double dagger Berg Electronics Holdings, Common Stock................ 740 1,257
dagger
Sr. Exch. Pfd. Stock, Series E..................... 684 17,968
21,548
ENTERTAINMENT & LEISURE - 0.8%
double dagger Fair Lanes Entertainment, Sr. Notes, Zero Coupon,
1/31/01...................................... $4,485 112
double dagger PIK, Series A, 9.50%, 1/31/98.................. 10,618 531
double dagger Sr. Secured Notes, 11.875%, 8/15/97................ 6,400 4,864
double dagger Common Stock, Class A.............................. 257 shs. 13
dagger Sam Houston Race Park, (144a), Sr. Secured Notes,
11.75%, 7/15/99................................ $ 6,000 6,240
double dagger Warrants........................................... 24 wts. 840
dagger
12,600
EXPLORATION & PRODUCTION - 3.9%
double dagger Argo Petroleum, Sub. Deb., 16.50%, 1/1/02.............. $ 2,000 86
Gulf Canada Resources Limited, Sr. Sub. Deb., 9.25%,
1/15/04............................................ 10,000 10,075
Maxus Energy, Sr. Notes, 9.875%, 10/15/02.............. 12,510 12,510
Mesa, Secured Disc. Notes, STEP, Zero Coupon, 6/30/95;
12.75%, 6/30/95-6/30/98........................ 10,965 9,841
Unsecured Disc. Notes, STEP, Zero Coupon, 6/30/95;
12.75%, 6/30/95-6/30/96........................ 21,276 17,978
double dagger Common Stock....................................... 323 shs. 2,303
Plains Resources, Sr. Sub. Notes, 12.00%, 10/1/99...... $10,000 10,300
63,093
FOOD PROCESSING - 1.1%
Mafco, Sr. Sub. Notes, 11.875%, 11/15/02............... 12,750 13,451
Rymer Foods, Sr. Notes, 11.00%, 12/15/00............... 2,782 2,518
double dagger Common Stock....................................... 604 shs. 1,209
17,178
FOOD/TOBACCO - 0.6%
Consolidated Cigar, Sr. Sub. Notes, 10.50%, 3/1/03..... $ 9,245 9,245
GENERAL MERCHANDISERS - 1.1%
double dagger Federated Department Stores, Common Stock.............. 1 shs. 1
double dagger G.C. Murphy, Deb., 7.375%, 1/1/97...................... $ 2,310 808
double dagger Lamonts Apparel, Common Stock.......................... 309 shs. 696
dagger
double dagger Warrants........................................... 25 wts. 0
double dagger Macy (R.H.), Sr. Sub. Deb., 14.50%, 10/15/98........... $21,800 8,393
double dagger Macy Swiss Bank Debt, 10.41%, 6/24/98.................. 9,500 8,835
dagger
18,733
HEALTH CARE - 5.8%
Continental Medical Systems, Sr. Sub. Notes, 10.875%,
8/15/02............................................ 37,725 39,894
double dagger Epic Healthcare Group, Common Stock.................... 142 shs. 922
Healthtrust, Sub. Notes, 10.75%, 5/1/02................ $ 5,500 6,050
Ornda Healthcorp, Sr. Sub. Notes, 12.25%, 5/15/02...... 9,750 10,920
Quorum Health Group, Notes, 11.875%, 12/15/02.......... 19,225 21,821
double dagger The Kendall Company, Rights............................ 2 rts. 54
double dagger Warrants, Series A................................. 3 wts. 90
double dagger Series B....................................... 3 90
Wright Medical Technology, Sr. Secured Notes, Series B,
10.75%, 7/1/00................................. $14,100 14,523
double dagger Warrants........................................... 4 wts. 419
94,783
HOTELS & GAMING - 12.4%
Aztar, Sr. Sub. Notes, 11.00%, 10/15/02................ $20,600 21,115
double dagger Bally's Grand, Common Stock............................ 112 shs. 1,397
double dagger Warrants........................................... 51 wts. 229
double dagger Becker Gaming, Warrants................................ 425 1,062
dagger
dagger Belle Casinos, 1st Mtg. Notes, 12.00%, 10/15/00........ $ 6,650 6,650
double dagger Warrants........................................... 7 wts. 266
dagger
dagger Capital Gaming International, Sr. 2nd Mtg. Bonds,
11.50%, 2/1/01................................. $ 8,300 $10,292
double dagger Warrants........................................... 12 wts. 31
dagger
dagger Capital Queen and Casino, 1st Mtg. Notes, 12.00%,
11/15/00........................................... $ 6,800 5,984
dagger
$1,000 par 1st Mtg. Note, 12.50%, 10/1/00 and
40.794 warrants)................................... 19,500 19,500
GNF, 1st Mtg. Notes, Series B, 10.625%, 4/1/03......... 8,000 7,540
Gold River Hotel & Casino, 1st Mtg. Bonds, 11.375%,
8/31/99............................................ 6,500 6,045
Grand Casino Resorts, Gtd. 1st Mtg. Bonds, Series B,
12.50%, 2/1/00..................................... 20,000 22,000
double dagger Grand Casinos, Common Stock............................ 161 shs. 4,671
double dagger GTech Holdings, Common Stock........................... 8 271
dagger Hemmeter Enterprises, PIK, Units, (Each unit consists
of a $1,000 par Sr. Sec. Note, 11.50%, 12/15/00,
and 12 warrants)................................... $10,500 11,235
double dagger Hollywood Casino, Common Stock, Class A................ 633 shs. 7,917
double dagger Hollywood Park, Common Stock........................... 130 2,990
Pioneer Finance, 1st Mtg. Bonds, 13.50%, 12/1/98....... $16,425 17,287
dagger President Riverboat Casinos, Sr. Sub. Notes, 11.75%,
9/15/01........................................ 17,500 18,287
double dagger Common Stock....................................... 30 shs. 495
double dagger Warrants........................................... 147 wts. 588
dagger
PRT Funding, Sr. Notes, 11.625%, 4/15/04............... $ 7,500 7,369
Resorts International, Secured Notes, PIK, Series B,
15.00%, 4/15/94.................................... 5,447 3,400
Trump Taj Mahal, 1st Mtg. Bonds, PIK, 11.35%,
11/15/99........................................... 25,486 25,415
202,036
MANUFACTURING - 3.1%
American Standard, Sr. Deb., 11.375%, 5/15/04.......... 21,250 23,481
Sr. Sub. Disc. Notes, STEP, Zero Coupon, 6/1/98;
10.50%, 6/1/98-6/1/05.......................... 1,000 670
Calmar, Sr. Secured Notes, 12.00%, 12/15/97............ 9,000 9,180
Calmar Spraying Systems, Sr. Sub. Notes, 14.00%,
2/15/99............................................ 4,100 4,213
Coltec Industries, Sr. Sub. Notes, 10.25%, 4/1/02...... 7,350 7,864
double dagger PST Holdings, Common Stock............................. 70 shs. 70
double dagger Simplicity Manufacturing, Common Stock................. 23 23
Terex, Sr. Secured Notes, 13.00%, 8/1/96............... $ 4,950 4,678
50,179
MEDIA & ADVERTISING - 1.0%
Heritage Media, Sr. Sub. Notes, 11.00%, 10/1/02........ 15,300 16,677
METALS & MINING - 1.2%
Freeport McMoRan Copper & Gold, Conv. Pfd. Stock....... 125 shs. 3,109
Weirton Steel, Sr. Notes, 11.50%, 3/1/98............... $15,500 16,585
19,694
MISCELLANEOUS - 2.6%
Allied Waste Industries, Sr. Sub. Notes, 10.75%,
2/1/04......................................... 2,225 2,314
double dagger Common Stock....................................... 130 shs. 715
Anacomp International N.V., Conv. Sub. Deb., 9.00%,
1/15/96............................................ $ 1,900 1,871
double dagger Borg Warner Security, Common Stock..................... 40 shs. 730
Convex Computer, Conv. Sub. Deb., 6.00%, 3/1/12........ $ 7,500 5,109
Cooper Industries, Conv. Pfd. Stock.................... 100 shs. 2,475
double dagger Efficient Market Services, Conv. Pfd. Stock,
dagger Series C*.......................................... 364 4,000
double dagger Louisiana State Agricultural Fin. Auth., Series 86A,
8.80%, 10/1/96................................. $ 6,700 5,159
double dagger Series A, 8.25%, 10/1/96........................... 1,500 1,155
double dagger Memphis Tennessee Health Education & Housing,
Securitized Notes, Series A, 8.68%, 9/15/96........ 1,850 1,425
double dagger Nutri System, Warrants................................. 150 wts. 0
dagger Protection One Alarm Monitoring, Sr. Sub. Notes, Series
A, 12.00%, 11/1/03............................. $ 4,750 4,560
double dagger Warrants........................................... 133 wts. 427
dagger
double dagger Southeast Texas Housing Fin., Securitized Notes, Series
A, 8.60%, 9/1/96................................... $ 6,000 4,620
double dagger Wang Laboratories, Common Stock........................ 411 shs. 7,297
41,857
MISCELLANEOUS CONSUMER PRODUCTS - 0.0%
double dagger Miramar Marine, Warrants............................... 54 wts. 1
PAPER & PAPER PRODUCTS - 4.9%
double dagger Kane Industries, Sr. Sub. Disc. Notes, STEP, Zero
Coupon, 8/1/95; 8.00%, 8/1/95-2/1/98................... $ 1,050 11
double dagger Warrants........................................... 45 wts. 0
double dagger Papercraft Holding, Common Stock....................... 9 shs. 0
Repap Enterprises, Conv. Notes, 8.50%, 8/1/97.......... $ 5,000 4,775
double dagger Common Stock....................................... 1,696 shs. 6,360
Repap Wisconsin, Sr. Secured 2nd Priority Notes,
9.875%, 5/1/06..................................... $11,325 11,665
Stone Container, Sr. Sub. Notes, 9.875%, 2/1/01........ 18,500 18,130
10.75%, 6/15/97................................ 2,000 1,980
10.75%, 4/1/02................................. 22,500 22,163
double dagger Common Stock....................................... 700 shs. 11,025
Conv. Exch. Pfd. Stock, Series E................... 161 2,916
double dagger Stone Savannah River Pulp & Paper, Common Stock........ 5 62
dagger
79,087
PRINTING & PUBLISHING - 0.0%
double dagger New Century Communications, Pfd. Stock................. 124 124
dagger
double dagger Warrants, Series A................................. 46 wts. 5
dagger
double dagger Series B....................................... 29 0
dagger
129
REFINING - 2.3%
Tesoro Petroleum, Sub. Deb., 12.75%, 3/15/01........... $21,375 21,589
Wainoco Oil Company, Conv. Sub. Deb., 12.00%, 8/1/02... 14,900 15,794
37,383
SAVINGS & LOAN - 0.7%
Coast Federal Bank, Cap. Notes, 13.00%, 12/31/02....... 9,145 10,723
SERVICE - 1.5%
Solon Automated Services, Sr. Notes, 12.75%, 7/15/01... 18,750 21,094
Sr. Sub. Notes, 13.75%, 10/15/02................... 2,900 3,262
24,356
SPECIALTY CHEMICALS - 2.8%
Agriculture Minerals and Chemicals, Sr. Notes, 10.75%,
9/30/03............................................ 7,000 7,525
IMC Fertilizer Group, Sr. Notes, Series B, 9.25%, $ 6,000 6,240
10/1/00........................................
10.125%, 6/15/01................................... 4,690 5,065
10.75%, 6/15/03.................................... 16,750 18,090
Methanex, Sr. Secured 2nd Priority Notes, 8.875%, 8,200 8,508
11/15/01...........................................
45,428
SPECIALTY RETAILERS - 2.6%
Barry's Jewelers, Sub. Notes, 12.625%, 5/16/96......... 86 20
double dagger Common Stock....................................... 968 shs. 1,149
double dagger Dart Drug Stores, Pfd. Stock, $4.00.................... 46 0
double dagger Warrants........................................... 6 wts. 0
Eckard, Sr. Sub. Notes, 9.25%, 2/15/04................. $12,750 12,878
dagger Loehmann's Holdings, Sr. Secured Notes, 10.50%,
10/1/97........................................ 7,500 6,975
Sr. Sub. Notes, 13.75%, 2/15/99.................... 10,850 10,959
double dagger Common Stock....................................... 476 shs. 476
dagger
double dagger Class B........................................ 321 643
Pfd. Stock, Series A............................... 524 209
double dagger Merry Go Round Enterprises, 5.50%, 7/3/95.............. $10,594 9,429
dagger
double dagger Payless Cashways, Warrants............................. 10 wts. 297
double dagger The Southland Company, Common Stock.................... 1 shs. 0
43,035
SUPERMARKETS - 2.1%
Grand Union Capital, Sr. Sub. Notes, STEP, Zero Coupon,
7/15/99; 15.00%, 7/15/99-7/15/04............... $10,000 4,400
Zero Coupon, 1/15/07............................... 15,760 2,009
Grand Union Holdings, Pfd. Stock, Series A............. 33 shs. 4,026
double dagger Warrants, Class A.................................. 1 wts. 767
dagger
GU Acquisition, Sr. Sub. Notes, 13.00%, 3/2/98......... $1,200 1,254
The Grand Union Company, Sr. Sub. Notes, 12.25%,
7/15/02............................................ 20,100 21,206
TELECOMMUNICATIONS - 2.9%
double dagger ALC Communications, Warrants........................... 60 wts. 60
Allnet Communication Services, Sr. Sub. Notes, 9.00%,
5/15/03............................................ $12,255 12,592
Dial Page, Sr. Notes, 12.25%, 2/15/00.................. 14,530 16,274
dagger Mobile Telecommunication Technologies, (144a), Conv.
Pfd. Stock......................................... 192 shs. 5,667
dagger Page America Group, Sr. Sub. Notes, 12.00%, 12/31/03... $ 8,000 7,660
double dagger Common Stock....................................... 500 shs. 2,078
dagger
dagger Conv. Pfd. Stock, Series 1......................... 20 1,847
double dagger Warrants........................................... 711 wts. 591
dagger
46,769
TEXTILES & APPAREL - 5.2%
dagger Acme Boot, Sr. Notes, 11.50%, 12/15/00................. $ 7,500 7,537
dagger Units, (Each unit consists of 1 share of 12.50%
Cum. Pfd. Stock and 7 shares of common stock).. 4 shs. 3,819
Dan River, Sr. Sub. Notes, 10.125%, 12/15/03........... $ 7,850 8,007
Londontown, Sr. Sub. Notes, 13.625%, 6/15/99........... 9,875 10,541
Plaid Clothing Group, Sr. Sub. Notes, 11.00%, 8/1/03... 14,275 14,775
Synthetic Industries, Sr. Sub. Deb., 12.75%, 12/1/02... 18,050 20,487
Westpoint Stevens, Sr. Notes, 9.375%, 12/15/02......... 19,500 19,695
84,861
TRANSPORTATION - 0.5%
Greyhound Lines, Sub. Conv. Deb., 8.50%, 3/31/07....... $ 5,500 6,036
Tiphook Finance, Gtd. Notes, 8.00%, 3/15/00............ 3,000 2,595
8,631
- -------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS & NOTES, COMMON & PREFERRED STOCKS
(COST - $1,346,577) 1,404,607
U.S. Government Mortgage-Backed Securities - 0.3%
U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.1%
Federal National Mortgage Assn., Inverse Floating Rate,
CMO, 17.194%, 6/25/99.............................. 989 1,003
STRIPPED MORTGAGE SECURITIES** - 0.2%
Federal Home Loan Mortgage, Inverse Floating Rate, CMO,
Interest Only, 4.9625%, 4/15/23.................... 46,005 3,680
- -------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-BACKED SECURITIES (COST - $4,625) 4,683
Hybrid Instruments - 0.5%
Bankers Trust Bank Notes, 5.00%, 12/14/94; principal
repayment value is indexed to the spread between
Mexican par bonds and U.S. Treasury Bonds.......... 4,750 3,713
Goldman Sachs L.P., CP, 3.80%, 12/2/94; principal
repayment value is indexed to the spread between
Mexican par bonds and U.S. Treasury Bonds.......... 4,750 3,966
- -------------------------------------------------------------------------------------------------------
TOTAL HYBRID INSTRUMENTS (COST - $9,322) 7,679
U.S. $ Denominated Foreign Securities/1/ - 6.0%
Algeria Reprofiling Loans, FR, 4.9375%, 3/4/00......... 13,000 7,800
Argentina Bonds, FR, 4.1875%, 3/31/05.................. 5,000 4,037
Argentina Discount Bonds, FR, 4.3125%, 3/31/23......... 6,000 4,800
Argentina Par Bonds, FR, 4.00%, 3/31/23................ 16,000 9,760
Brazil Bonds, Series C, 4.00%, When-&-If-Issued........ 7,000 4,935
Brazil Exit Bonds, 6.00%, 9/15/13...................... 15,000 10,012
double dagger Bulgaria Syndicated, Non-performing Loans.............. 4,000 1,500
Kingdom of Morrocco, FR, 5.00%, 1/1/09................. 6,500 4,826
Mexico Aztec Bonds, 5.00%, 3/31/08..................... 2,000 1,940
Nigeria Promissory Note, 1/5/10........................ 1,000 360
Poland Debt Deferred Restructure Agreement............. 5,000 2,069
double dagger Poland Revolving Short-Term Trade Agreement............ 25,667 12,064
Venezuela DCB, FR, 4.3125%, 12/18/07................... 35,000 20,825
Venezuela FLIRB, Series A, 6.00%, 3/31/07.............. 7,000 4,489
Venezuela Par Bonds, 6.75%, 3/31/20.................... 5,000 2,975
double dagger Vnesheconombank Bilateral, Non-performing Loans........ 2,767 816
double dagger Vnesheconombank Syndicated, Non-performing Loans....... 17,000 5,015
- -------------------------------------------------------------------------------------------------------
TOTAL U.S. $ DENOMINATED FOREIGN SECURITIES (COST - $103,401) 98,223
Non-U.S. $ Denominated Foreign Securities/2/ - 2.9%
Bulgaria Letter of Credit.............................. ATS 117,767 $ 3,830
double dagger Bulgaria Syndicated, Non-performing Loans.............. ATS 80,001 2,635
Eskom, Series E, 11.00%, 6/1/08........................ ZAR 98,700 18,735
Mexican Cetes Treasury Bills, 11.47%, 12/8/94.......... MXN 7,246 2,105
13.20%, 10/27/94....................................... MXN 18,086 5,315
Poland Debt Deferred Restructure Agreement............. CHF 12,000 3,346
double dagger Poland Revolving Short-Term Trade Agreement............ CHF 4,517 1,410
double dagger Poland Revolving Short-Term Trade Agreement............ ECU 5,000 2,525
Vnesheconombank, 12.25%, 3/6/94........................ ITL 735,000 433
double dagger Vnesheconombank Syndicated, Non-performing Loans....... ATS 32,415 689
double dagger Non-performing Loans................................... CHF 2,000 358
double dagger Non-performing Loans................................... ECU 5,500 1,592
double dagger Non-performing Loans................................... FRF 30,750 1,328
double dagger Non-performing Loans................................... GBP 8,755 3,322
- -------------------------------------------------------------------------------------------------------
TOTAL NON - U.S. $ DENOMINATED FOREIGN SECURITIES (COST - $52,293) 47,623
Options Written - 0.0%
double dagger Venezuela DCB, Expires 4/28/94......................... $ 5,000 (13)
double dagger Venezuela DCB, Expires 5/2/94.......................... 5,000 (15)
- ------------------------------------------------------------------------------------------------------
TOTAL OPTIONS WRITTEN (COST - $(306)) (28)
Commercial Paper - 3.3%
Exxon Imperial, 3.40%, 3/1/94.......................... 2,010 2,010
Harvard University, 3.45%, 3/1/94...................... 26,267 26,264
UBS Finance (Delaware), 3.45%, 3/1/94.................. 25,000 24,998
- ------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER (COST - $53,272) 53,272
- ------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES - 99.5% OF NET ASSETS
(COST - $1,569,184).................................... $1,616,059
- ------------------------------------------------------------------------------------------------------
<FN>
/1/Marketable securities (payable in U.S. dollars) issued or guaranteed by a
foreign government or community.
/2/Denominated in foreign currency.
double dagger Non-income Producing
dagger Private Placement
*Security valued by the Fund's Board of Directors.
**For Interest Only securities, face amount represents notional principal, on
which the Fund receives interest.
#Restricted as to the resale of the security.
CMO - Collateralized Mortgage Obligation
CP - Commercial Paper
DCB - Debt Conversion Bond
FLIRB - Front Loaded Interest Reduction Bond
FR - Floating Rate
PIK - Paid in Kind
STEP - Stepped Coupon Bond
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 institutional buyers.
(ATS) - Austrian schilling denominated (GBP) - British sterling denominated
(CHF) - Swiss franc denominated (ITL) - Italian lira denominated
(ECU) - European currency unit denominated (MXN) - Mexican peso denominated
(FRF) - French franc denominated (ZAR) - South African Financial Rand denominated
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Statement of Assets and Liabilities
T. Rowe Price High Yield Fund / February 28, 1994
Amounts in Thousands
-----------------------
ASSETS
Investments in securities at value $1,616,059
(Cost - $1,569,184)................................
Receivable for investment securities sold............ 64,058
Other assets......................................... 37,955
-----------
Total assets....................................... $1,718,072
LIABILITIES
Payable for investment securities purchased.......... 70,362
Other liabilities.................................... 23,940
-----------
Total liabilities.................................. 94,302
-----------
NET ASSETS CONSISTING OF:
Accumulated net investment income - net of
distributions...................................... 4,343
Accumulated realized gains/losses - net of
distributions...................................... (123,565)
Unrealized appreciation of investments............... 46,557
Paid-in-capital applicable to 177,391,524 shares of
$0.01 par value capital stock outstanding;
1,000,000,000 shares authorized.................... 1,696,425
-----------
NET ASSETS .......................................... $1,623,770
-----------
-----------
NET ASSET VALUE PER SHARE ........................... $9.15
-----------
-----------
- -----------------------------------------------------------------------------
<PAGE>
Statement of Operations
T. Rowe Price High Yield Fund / Year Ended February 28, 1994
Amounts in Thousands
---------------------------
INVESTMENT INCOME
Interest & dividend income...................... $160,452
Expenses
Investment management fees.................... $10,554
Shareholder servicing fees & expenses......... 2,569
Custodian and accounting fees & expenses...... 360
Prospectus & shareholder reports.............. 163
Registration fees & expenses.................. 116
Legal & auditing fees......................... 67
Directors' fees & expenses.................... 27
Miscellaneous ................................ 35
-------------
Total expenses................................ 13,891
-------------
Net investment income........................... 146,561
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss)
Securities.................................... 84,762
Currencies and forward currency exchange 333
contracts...................................
Options....................................... (657)
-------------
Net realized gain............................. 84,438
Change in unrealized appreciation or
depreciation.................................. 13,959
-------------
Net gain on investments ........................ 98,397
-------------
INCREASE IN NET ASSETS FROM OPERATIONS ......... $244,958
-------------
-------------
- ----------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
Statement of Changes in Net Assets
T. Rowe Price High Yield Fund
Year Ended Year Ended
Feb. 28, Feb. 28,
1994 1993
------------ ------------
Amounts in Thousands
-------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income......................... $ 146,561 $ 120,882
Net realized gain on investments.............. 84,438 28,645
Change in unrealized appreciation or
depreciation of investments................. 13,959 22,971
------------ ------------
Increase in net assets from operations........ 244,958 172,498
------------ ------------
Distributions to shareholders
Net investment income......................... (146,027) (121,009)
------------ ------------
Capital share transactions
Sold 78,966 and 101,010 shares................ 706,868 840,145
Distributions reinvested of 13,001 and 11,680
shares...................................... 117,658 97,288
Redeemed 78,166 and 83,750 shares............. (703,713) (692,913)
------------ ------------
Increase in net assets from capital share
transactions.................................... 120,813 244,520
------------ ------------
Total increase.................................. 219,744 296,009
NET ASSETS
Beginning of year............................. 1,404,026 1,108,017
------------ ------------
End of year................................... $1,623,770 $1,404,026
------------ ------------
------------ ------------
- --------------------------------------------------------------------------
Notes to Financial Statements
T. Rowe Price High Yield Fund / February 28, 1994
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price High Yield Fund (the Fund) is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
A) Security valuation - Debt securities are generally traded in the
over-the-counter market. Investments in securities with remaining maturities
of one year or more are stated at fair value as furnished by dealers who make
markets in such securities or by an independent pricing service, which
considers yield or price of bonds of comparable quality, coupon, maturity, and
type, as well as prices quoted by dealers who make markets in such securities.
Securities with remaining maturities less than one year are stated at fair
value which is determined by using a matrix system that establishes a value
for each security based on money market yields. Equity securities are valued
at the last bid price.
For purposes of determining the Fund's net asset value per share, all assets
and liabilities initially expressed in foreign currencies are converted into
U.S. dollars at the mean of the bid and offer prices of such currencies
against U.S. dollars as quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by, or under the supervision of, the officers of
the Fund, as authorized by the Board of Directors.
B) Currency translation - Foreign currency amounts are translated into U.S.
dollars at prevailing exchange rates as follows: assets and liabilities at the
rate of exchange at the end of the respective period, purchases and sales of
securities and income and expenses at the rate of exchange prevailing on the
dates of such transactions.
<PAGE>
C) Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on an identified cost basis. Dividend income and distributions to
shareholders are recorded by the Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income
tax regulations which may differ from generally accepted accounting
principles.
D) Accounting Change - Effective as of the beginning of the year, the Fund
adopted a recently issued accounting standard related to shareholder
distributions. This change resulted in a reclassification to paid-in-capital
of permanent differences between tax and financial reporting of net investment
income and net realized gains/losses. The cumulative effect of this change as
of February 28, 1993, increased Accumulated net investment income - net of
distributions by $3,408,000, decreased Accumulated net realized gains/losses -
net of distributions by $12,280,000 and increased Paid-in-capital by
$8,872,000. The results of operations, shareholder distributions and net
assets were not affected by this change.
NOTE 2 - FINANCIAL INSTRUMENTS
As a part of its investment program, the Fund utilizes forward currency
exchange contracts, writes call options and loans its portfolio securities to
brokers. The nature and risk of these instruments and the reasons for using
them are set forth more fully in the Fund's Prospectus and Statement of
Additional Information.
At February 28, 1994, the Fund had entered into various forward currency
exchange contracts under which it is obligated to exchange currencies at
specified future dates. Risks arise from the possible inability of
counterparties to meet the terms of their contracts and from movements in
currency values. Outstanding contracts at February 28, 1994 are as follows:
Settlement Contract to Contract to
Date Receive Deliver
------------------ ------------------ ------------------
9/2/94 USD 4,055,000 ATS 49,143,000
Net unrealized depreciation of $17,000 on these contracts at February 28,
1994, is included in the accompanying financial statements.
Call options give the holder the right to purchase a security or currency at
a specified price on a certain date. Transactions in call options written and
related premiums received during the year ended February 28, 1994, were as
follows:
Face Amount
Subject
to Options Premiums
------------------ ----------------
Options Outstanding at
Beginning of Year $ -0- $ -0-
Options Written 10,000,000 (306,250)
Options Outstanding at
End of Year $10,000,000 $(306,250)
As part of its investment program, the Fund lends securities to earn
additional income. Although risk is mitigated by obtaining collateral, the
Fund could experience a delay in recovering its securities and possibly incur
a capital loss if the borrower fails to return them. At February 28, 1994, the
market value of securities on loan to brokers was $102,412,000 for which the
Fund has collateral of $107,085,000, consisting of cash and U.S. Treasury
securities.
Purchases and sales of portfolio securities, other than short-term and U.S.
Government securities, aggregated $1,734,982,000 and $1,630,316,000. Purchases
and sales of U.S. Government securities aggregated $4,069,000 and $5,281,000,
respectively, for the year ended February 28, 1994.
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the Fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income. The Fund has unused realized capital loss carryforwards
for federal income tax purposes of $123,845,000 at February 28, 1994, which
expire in 1999 through 2000.
At February 28, 1994, the aggregate cost of investments for federal income
tax and financial reporting purposes was $1,569,184,000 and net unrealized
appreciation aggregated $46,875,000, of which $114,061,000 related to
appreciated investments and $67,186,000 to depreciated investments.
<PAGE>
NOTE 4 - RELATED PARTY TRANSACTIONS
The investment management agreement between the Fund and T. Rowe Price
Associates, Inc. (the Manager) provides for an annual investment management
fee, computed daily and paid monthly, consisting of an Individual Fund Fee
equal to 0.30% of average daily net assets and a Group Fee. The Group Fee is
based on the combined assets of certain mutual funds sponsored by the Manager
or Rowe Price-Fleming International, Inc. (the Group). The Group Fee rate
ranges from 0.48% for the first $1 billion of assets to 0.31% for assets in
excess of $34 billion. The effective annual Group Fee rate at February 28,
1994 was 0.34%, and for the year then ended was 0.35%. The Fund pays a pro
rata portion of the Group Fee based on the ratio of the Fund's net assets to
those of the Group.
T. Rowe Price Services, Inc. (TRPS) and Retirement Plan Services, Inc. (RPS)
are wholly owned subsidiaries of the Manager. TRPS provides transfer and
dividend disbursing agent functions and shareholder services for all accounts.
RPS provides subaccounting and recordkeeping services for certain retirement
accounts invested in the Fund. The Manager, under a separate agreement,
calculates the daily share price and maintains the financial records of the
Fund. The Fund is one of several T. Rowe Price mutual funds (the Underlying
Funds) in which the T. Rowe Price Spectrum Income Fund (Spectrum) invests. In
accordance with an Agreement between Spectrum, the Underlying Funds, the
Manager and TRPS, expenses from the operation of Spectrum are borne by the
Underlying Funds based on each Underlying Fund's proportionate share of assets
owned by Spectrum. For the year ended February 28, 1994, the Fund incurred
fees totalling approximately $2,389,000 for these services provided by related
parties. At February 28, 1994, investment management and service fees payable
were $1,087,000.
<TABLE>
Financial Highlights
T. Rowe Price High Yield Fund
<CAPTION>
For a share outstanding throughout each year ended
----------------------------------------------------------------
Feb. 28, Feb. 28, Feb. 29, Feb. 28, Feb. 28,
1994 1993 1992 1991 1990
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR......... $8.58 $8.23 $7.13 $8.20 $10.24
------------ ------------ ------------ ------------ ------------
Investment Activities
Net investment income..................... 0.81 0.82 0.88 1.07 1.26
Net realized and unrealized gain (loss)... 0.57 0.35 1.10 (1.07) (2.04)
------------ ------------ ------------ ------------ ------------
Total from Investment Activities........... 1.38 1.17 1.98 - (0.78)
Distributions
Net investment income.................... (0.81) (0.82) (0.88) (1.07) (1.26)
------------ ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF YEAR............... $9.15 $8.58 $8.23 $7.13 $8.20
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
- ------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total Return............................... 16.59% 14.96% 29.15% 0.12% (8.62)%
Ratio of Expenses to Average Net Assets.... 0.85% 0.89% 0.97% 1.03% 1.02%
Ratio of Net Investment Income to
Average Net Assets....................... 8.99% 9.85% 11.22% 14.02% 13.01%
Portfolio Turnover Rate.................... 107.0% 104.4% 58.9% 82.6% 65.6%
Net Assets, End of Year (in thousands)..... $1,623,770 $1,404,026 $1,108,017 $556,261 $660,014
Number of Shareholder Accounts,
End of Year.............................. 67,000 64,000 61,000 54,000 63,000
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Report of Independent Accountants
To the Shareholders and Board of Directors of
T. Rowe Price High Yield Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the selected per share data and
information (which appears under the heading "Financial Highlights") present
fairly, in all material respects, the financial position of T. Rowe Price High
Yield Fund, Inc. at February 28, 1994, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in
the period then ended and the selected per share data and information for each
of the five years in the period then ended, in conformity with generally
accepted accounting principles. These financial statements and selected per
share data and information (hereafter referred to as "financial statements")
are the responsibility of the Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at February 28, 1994 by correspondence with custodians and brokers
and, where appropriate, the application of alternative auditing procedures for
unsettled security transactions, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE
Baltimore, Maryland
March 17, 1994
Officers and Directors
George J. Collins, Chairman Andrew M. Brooks, Vice President
Richard S. Swingle, President/Director Henry H. Hopkins, Vice President
Robert P. Black, Director Hubert M. Stiles, Jr., Vice President
Calvin W. Burnett, Director Jay W. Van Ert, Vice President
Anthony W. Deering, Director Mark J. Vaselkiv, Vice President
F. Pierce Linaweaver, Director Thea N. Williams, Vice President
James S. Riepe, Vice President/Director Lenora V. Horung, Secretary
John Sagan, Director Carmen F. Deyesu, Treasurer
John G. Schreiber, Director David S. Middleton, Controller
Catherine B. Bray, Vice President
|
|