<PAGE>
Semiannual Report
------
HIGH YIELD
FUND
November 30, 1996
[LOGO OF T. ROWE PRICE / ARTWORK APPEARS HERE]
<PAGE>
REPORT HIGHLIGHTS
-----------------------------------------------------------------------
. Responding to the economy's strong growth for most of the 12 months
ended November 30, 1996, high-yield bonds outperformed high-quality
issues.
. High-yield bonds also benefited from strong cash flows into the high-
yield market, which easily absorbed the huge new issue supply.
. Your fund provided solid returns of 7.00% and 11.76% for the 6- and
12-month periods, surpassing the benchmark First Boston index but
not the peer group average.
. Our strategy remained focused on achieving a good balance among industry
sectors and building a core of B-rated holdings.
. We are more cautious than six months ago and believe returns in 1997
will be driven primarily by the fund's high income with less
contribution from appreciation than in 1996.
<PAGE>
FELLOW SHAREHOLDERS
Although the 1996 bull market in high-yield bonds lost some steam in the fall as
the economy slowed, returns remained solid for the six months ended November 30
and reached double digits for the 12-month period. The economy's generally
strong showing throughout the first half was good news for lower-quality bonds,
enabling them to substantially outperform their high-quality counterparts.
MARKET ENVIRONMENT
INTEREST RATE LEVELS
[LINE GRAPH APPEARS HERE]
The interest rate chart tells much of the tale about high-yield bonds for the
past 12 months. As the economy gained momentum in the spring and summer,
culminating in a 4.7% annual growth rate in the second quarter, investors
expected the Federal Reserve to take preventive measures against a rise in
inflationary pressures. Anticipating tighter monetary policy that, in fact,
never came, investors pushed interest rates higher, depressing prices of
Treasuries and other high-quality bonds. In contrast, bonds of lower credit
quality thrived in this environment since their prices generally respond more
directly to changes in the economy's health and corporate earnings than to
changes in interest rates.
In the third quarter, however, when it became evident that growth was slowing
and that the Fed was unlikely to act, interest rates retraced much of their
rise. This environment favored high-quality bonds, which outperformed lower-
quality issues during October and November.
1
<PAGE>
HIGH YIELD BOND ISSUANCE VS. CASH FLOW*
[BAR GRAPH APPEARS HERE]
(in billions)
New Issuance Cash Flow*
11/90 0.4 -3.2
11/91 8.3 3.3
11/92 32.8 6.4
11/93 59.4 10.9
11/94 35.1 1.6
11/95 38.5 11.0
11/96 62.1 11.7
* Includes Reinvested Dividends
Source: Morgan Stanley, Investment Company Institute
The superior overall performance of high-yield bonds also reflected favorable
technical factors within their market. Demand was robust from high-yield bond
mutual funds, fed by huge cash inflows, and from other types of funds and
investors seeking incremental yield or a good source of diversification. Demand
was more than adequate to absorb the large quantity of new high-yield issues.
PERFORMANCE AND STRATEGY REVIEW
Your fund provided strong absolute returns for both the past 6- and 12-month
periods, as shown in the table. In each case, high income was augmented by
share price appreciation. On a comparative basis, results exceeded the
benchmark First Boston index for both periods but trailed the Lipper peer group
average. The fund's stronger relative showing since the spring of 1996 reflects
the effects of our realignment of the portfolio to achieve a better balance
among industry sectors and a solid core of B-rated holdings.
There were no significant shifts in the portfolio over the past six months, as
we largely completed our strategic moves initiated last spring. As shown in the
Quality Diversification chart, 72% of holdings are now B-rated. We like the
pickup in yield provided by these bonds and also believe they strike a good
balance between sensitivity to
Performance Comparison
<TABLE>
<CAPTION>
Periods Ended 11/30/96 6 Months 12 Months
<S> <C> <C>
High Yield Fund 7.00% 11.76%
First Boston High Yield Index 6.49 11.67
Lipper High Yield
Funds Average 7.39 13.86
</TABLE>
2
<PAGE>
QUALITY DIVERSIFICATION
[PIE CHART APPEARS HERE]
Bond Rating Portion of Investment Fund
BB 14%
B 72%
CCC 2%
CC and Below 1%
Nonrated 6%
AAA, AA, A, BBB 5%
interest rate risk and credit risk. We continued to increase slightly our
previously underweighted exposure to cyclical industries, particularly aerospace
and financial services, as shown in the Sector Diversification table following
this letter.
Several previous sector changes proved rewarding in recent months. A number of
sectors performed very well, especially energy, which we have overweighted in
the portfolio. We had increased some positions in gaming, where a consolidation
trend is under way, and were pleased when Bally was bought out by Hilton.
Recently, we have reduced the position in this volatile industry. Our consumer-
related holdings did well in general, but this sector also contained our biggest
disappointment, Marvel (comics, baseball cards). It foundered on earnings
difficulties, and we sold the position.
OUTLOOK
High-yield bonds had a great run over the past year. The health of the economy
remains the single most important influence on the high-yield bond market, and
our forecast calls for another year of reasonable growth. Nevertheless, a
number of developments lead us to expect solid but less robust returns in 1997.
The sharp narrowing of yield spreads between higher- and lower-quality bonds
that contributed to price appreciation in our market in 1996 is unlikely to be
repeated. At some point, narrow spreads are self-correcting as some investors
decide that the incremental yield provided by lower-quality bonds is not
sufficient for the additional risk, and therefore shift assets away from the
area. Also, if history is any guide, the huge supply of new issues over the
past several years is likely to spawn credit problems in coming years. A few
well-publicized defaults can damage market
3
<PAGE>
psychology, thus hurting even those investors who do not own any troubled
issues. Finally, the markets seem to be increasingly intolerant of the least
whiff of earnings disappointments or fundamental problems, punishing stocks and
bonds alike.
So while we are always happy to be surprised on the upside, we are more cautious
than six months ago and would expect performance to be driven primarily by the
fund's high income in the coming year.
Respectfully submitted,
/s/ Mark J. Vaselkiv
Mark J. Vaselkiv
Chairman of the Investment Advisory Committee
December 20, 1996
4
<PAGE>
T. ROWE PRICE HIGH YIELD FUND
- ------------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
KEY STATISTICS
5/31/96 11/30/96
- -------------------------------------------------------------------------------
<S> <C> <C>
Price Per Share $ 8.13 $8.31
...............................................................................
Dividends Per Share
...............................................................................
For 6 months 0.38 0.38
.......................................................................
For 12 months 0.74 0.75
.......................................................................
Dividend Yield *
...............................................................................
For 6 months 9.21% 9.33%
.......................................................................
For 12 months 9.38 9.56
.......................................................................
Weighted Average Maturity (years) 8.5 8.6
...............................................................................
Weighted Average Effective Duration (years) 4.3 3.8
...............................................................................
Weighted Average Quality ** B+ B+
...............................................................................
</TABLE>
* 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.
** Based on T. Rowe Price research.
5
<PAGE>
T. ROWE PRICE HIGH YIELD FUND
- -----------------------------------------------------------
PORTFOLIO HIGHLIGHTS
- -----------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
<TABLE>
<CAPTION>
Percent of
Net Assets
11/30/96
<S> <C>
- ----------------------------------------------------------
Dr Pepper Bottling 2.46%
..........................................................
K & F Industries 1.95
..........................................................
Revlon 1.78
..........................................................
Keebler 1.49
..........................................................
Coinmach 1.47
- ----------------------------------------------------------
Rogers Cablesystems 1.45
..........................................................
Synthetic Industries 1.33
..........................................................
Agricultural Minerals and Chemicals 1.32
..........................................................
CF Cable TV 1.29
..........................................................
Owens-Illinois 1.27
- ----------------------------------------------------------
Trump Atlantic City Associates 1.24
..........................................................
Heritage Media 1.24
..........................................................
Communication & Power Industries 1.24
..........................................................
Silgan 1.22
..........................................................
Doane Products 1.21
- ----------------------------------------------------------
Container Corporation of America 1.19
..........................................................
Loehmann's 1.17
..........................................................
Six Flags Theme Parks 1.16
..........................................................
SD Warren 1.16
..........................................................
Herff Jones 1.14
- ----------------------------------------------------------
Portola Packaging 1.14
..........................................................
Rowan Companies 1.11
..........................................................
Pathmark Stores 1.06
..........................................................
Teleport Communications Group 1.06
..........................................................
Benedek Broadcasting 1.05
- ----------------------------------------------------------
Total 33.20%
</TABLE>
6
<PAGE>
T. ROWE PRICE HIGH YIELD FUND
PORTFOLIO HIGHLIGHTS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SECTOR DIVERSIFICATION
Percent of Percent of
Net Assets Net Assets
5/31/96 11/30/96
<S> <C> <C>
- -----------------------------------------------------------------------------
Energy 9% 8%
.............................................................................
Telecommunications 8 8
.............................................................................
Cable Operators 9 8
.............................................................................
Consumer Products 6 6
.............................................................................
Aerospace and Defense 5 5
.............................................................................
Gaming 9 5
.............................................................................
Service 3 5
.............................................................................
Broadcasting 6 4
.............................................................................
Paper and Paper Products 3 4
.............................................................................
Financial 2 4
.............................................................................
Container 3 4
.............................................................................
Manufacturing 1 4
.............................................................................
Short-Term 4 4
.............................................................................
Health Care 4 3
.............................................................................
Textiles and Apparel 2 3
.............................................................................
Automobiles and Related 1 3
.............................................................................
Food and Tobacco 1 3
.............................................................................
Beverages 2 2
.............................................................................
Supermarkets 2 2
.............................................................................
Retail 2 2
.............................................................................
Building Products 2 2
.............................................................................
Entertainment and Leisure 2 2
.............................................................................
All Other 12 8
.............................................................................
Other Assets Less Liabilities 2 1
- -----------------------------------------------------------------------------
Total 100% 100%
</TABLE>
7
<PAGE>
T. ROWE PRICE HIGH YIELD FUND
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON
- --------------------------------------------------------------------------------
This chart shows the value of a hypothetical $10,000 investment in the
fund over the past 10 fiscal year periods or since inception (for funds
lacking 10-year records). The result is compared with a broad-based
average or index. The index return does not reflect expenses, which have
been deducted from the fund's return.
[LINE GRAPH APPEARS HERE]
HIGH YIELD FUND
-----------------------------------------------------------------------
First Boston High Yield
High Yield Index Fund
Nov. 30, '86 10,000 10,000
11/87 12,218 10,426
11/88 12,064 12,096
11/89 12,243 12,146
11/90 11,355 10,633
11/91 16,284 13,871
11/92 18,920 15,791
11/93 22,470 19,258
11/94 22,294 17,954
11/95 26,116 20,590
11/96 29,164 23,011
AVERAGE ANNUAL COMPOUND TOTAL RETURN
- --------------------------------------------------------------------------------
This table shows how the fund would have performed each year if its
actual (or cumulative) returns for the periods shown had been earned at
a constant rate.
Periods Ended 11/30/96 1 Year 3 Years 5 Years 10 Years
------------------------------------------------------------------------
High Yield Fund 11.76% 6.11% 10.65% 8.69%
Investment return and principal value represent past performance and
will vary. Shares may be worth more or less at redemption than at
original purchase.
8
<PAGE>
T. ROWE PRICE HIGH YIELD FUND
- --------------------------------------------------------------------------------
Unaudited
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
6 Months Year 3 Months++ Year
Ended Ended Ended Ended
11/30/96 5/31/96 5/31/95 5/31/94 2/28/94 2/28/93 2/29/92
NET ASSET VALUE
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning of period $ 8.13 $ 8.16 $ 8.37 $ 9.15 $ 8.58 $ 8.23 $ 7.13
............................................................................
Investment activities
Net investment income 0.38 0.73 0.75 0.18 0.81 0.82 0.88
Net realized and
unrealized gain (loss) 0.18 (0.02) (0.20) (0.78) 0.57 0.35 1.10
............................................................................
Total from
investment activities 0.56 0.71 0.55 (0.60) 1.38 1.17 1.98
............................................................................
Distributions
Net investment income (0.38) (0.74) (0.76) (0.18) (0.81) (0.82) (0.88)
............................................................................
NET ASSET VALUE
End of period $ 8.31 $ 8.13 $ 8.16 $ 8.37 $ 9.15 $ 8.58 $ 8.23
............................................................................
Ratios/Supplemental Data
Total return 7.00% 9.06% 7.09% (6.52)% 16.59% 14.96% 29.15%
.........................................................................................................
Ratio of expenses to
average net assets 0.85%+ 0.85% 0.88% 0.85%+ 0.85% 0.89% 0.97%
.........................................................................................................
Ratio of net investment
income to average
net assets 9.24%+ 8.89% 9.27% 8.37%+ 8.99% 9.85% 11.22%
.........................................................................................................
Portfolio turnover rate 102.4%+ 100.1% 74.2% 62.5%+ 107.0% 104.4% 58.9%
.........................................................................................................
Net assets, end of period
(in millions) $ 1,317 $ 1,229 $ 1,208 $ 1,241 $ 1,624 $ 1,404 $1,108
.........................................................................................................
</TABLE>
+ Annualized.
++The fund's fiscal year-end was changed to May 31.
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
T. ROWE PRICE HIGH YIELD FUND
- -----------------------------------------------------------------------------
Unaudited November 30, 1996
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS Par/Shares Value
- -----------------------------------------------------------------------------
In thousands
<S> <C> <C>
CORPORATE BONDS AND NOTES 88.6%
Advertising 0.9%
Outdoor Systems, Sr. Sub. Notes, 9.375%, 10/15/06 $12,000 $ 12,060
.............................................................................
12,060
...........
Aerospace and Defense 5.1%
BE Aerospace, Sr. Sub. Notes, 9.875%, 2/1/06 6,000 6,240
.............................................................................
Communications & Power Industries, Sr. Sub. Notes,
12.00%, 8/1/05 15,000 16,275
.............................................................................
K & F Industries
Sr. Secured Notes, 11.875%, 12/1/03 12,650 13,599
.........................................................................
Sr. Sub. Notes, 10.375%, 9/1/04 11,475 12,106
.............................................................................
Tracor, Sr. Sub. Notes, 10.875%, 8/15/01 6,000 6,390
.............................................................................
UNC, Sr. Sub. Notes, 11.00%, 6/1/06 12,000 12,810
.............................................................................
67,420
...........
Automobiles and Related 2.0%
Aetna Industries, Sr. Notes, (144a), 11.875%, 10/1/06 6,000 6,270
.............................................................................
Hayes Wheels International, Sr. Sub. Notes, 11.00%,
7/15/06 7,000 7,508
.............................................................................
Speedy Muffler King, Sr. Notes, 10.875%, 10/1/06 12,000 12,780
.............................................................................
26,558
...........
Beverages 1.3%
Dr Pepper Bottling, Sr. Disc. Notes, STEP,
Zero Coupon, 2/15/98;
11.625%, 2/15/98-2/15/03 18,050 16,696
.............................................................................
16,696
...........
Broadcasting 4.1%
Argyle Television, Sr. Sub. Notes, 9.75%, 11/1/05 3,000 3,038
.............................................................................
Benedek Broadcasting, Sr. Notes, 11.875%, 3/1/05 12,900 13,867
.............................................................................
Chancellor Broadcasting, Sr. Sub. Notes, 9.375%,
10/1/04 12,000 11,970
.............................................................................
Heritage Media, Sr. Sub. Notes, 11.00%, 10/1/02 15,300 16,333
.............................................................................
Jacor, Sr. Sub. Notes, 10.125%, 6/15/06 8,500 8,712
.............................................................................
53,920
...........
Building Products 2.0%
Associated Materials, Sr. Sub. Notes, 11.50%, 8/15/03 1,500 1,530
.............................................................................
Building Material Corporation of America,
Sr. Disc. Notes, STEP,
Zero Coupon, 7/1/99;
11.75%, 7/1/99-7/1/04 7,500 6,450
.............................................................................
</TABLE>
10
<PAGE>
T. ROWE PRICE HIGH YIELD FUND
- --------------------------------------------------------------------------------
Par/Shares Value
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
<S> <C> <C>
Foamex, Sr. Sub. Deb., 11.875%, 10/1/04 $11,850 $12,650
.........................................................................
Waxman Industries, Sr. Disc. Notes, STEP,
Zero Coupon, 6/1/99;
12.75%, 6/1/99-6/1/04 7,100 5,183
.........................................................................
25,813
.........
Cable Operators 8.0%
American Telecasting, Sr. Disc. Notes, STEP,
Zero Coupon, 6/15/99;
14.50%, 6/15/99-6/15/04 8,375 5,192
.........................................................................
CF Cable TV, Sr. Secured 2nd Priority Notes,
11.625%, 2/15/05 14,700 17,052
.........................................................................
CS Wireless Systems, Units,
(Each unit consists of 4 $1,000 par
Sr. Disc. Notes, (144a), STEP, Zero Coupon,
3/1/01; 11.375%, 3/1/01-3/1/06, and 1.1 shs.
of common stock) 13,500 5,130
.........................................................................
Diamond Cable Communications, Sr. Disc. Notes, STEP,
Zero Coupon, 12/15/00;
11.75%, 12/15/00-12/15/05 15,750 10,986
.........................................................................
Frontiervision Operating Partners, Sr. Sub. Notes,
11.00%, 10/15/06 6,400 6,368
.........................................................................
Fundy Cable, Sr. Secured 2nd Priority Notes,
11.00%, 11/15/05 12,000 12,600
.........................................................................
Galaxy Telecom, Sr. Sub. Notes, 12.375%, 10/1/05 12,000 12,510
.........................................................................
Poland Communications, Sr. Notes, (144a), 9.875%,
11/1/03 2,000 1,995
.........................................................................
Rogers Cablesystems
Sr. Secured 2nd Priority Notes, 10.00%, 3/15/05 10,000 10,675
...................................................................
Sr. Secured Notes, 9.625%, 8/1/02 8,000 8,380
.........................................................................
Videotron Holdings, Sr. Disc. Notes, STEP,
Zero Coupon, 8/15/00;
11.00%, 8/15/00-8/15/05 5,000 3,937
.........................................................................
Wireless One, Units,
(Each unit consists of a $1,000 par Sr. Note,
13.00%, 10/15/03, and 3 warrants) 10,380 10,588
.........................................................................
105,413
............
</TABLE>
11
<PAGE>
T. ROWE PRICE HIGH YIELD FUND
- --------------------------------------------------------------------------------
Par/Shares Value
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
<S> <C> <C>
Conglomerates 1.1%
Alpine Group, Sr. Secured Notes, 12.25%, 7/15/03 $ 2,444 $ 2,664
.......................................................................
Jordan Industries, Sr. Notes, 10.375%, 8/1/03 12,000 11,700
.......................................................................
14,364
.........
Consumer Products 5.9%
American Safety Razor, Sr. Notes, 9.875%, 8/1/05 12,000 12,900
.......................................................................
Doane Products, Sr. Notes, 10.625%, 3/1/06 15,000 15,975
.......................................................................
Herff Jones, Sr. Sub. Notes, 11.00%, 8/15/05 14,025 15,077
.......................................................................
International Semi-Tech, Sr. Disc. Notes, STEP,
Zero Coupon, 8/15/00;
11.50%, 8/15/00-8/15/03 11,000 6,820
.......................................................................
PM Holdings, Sub. Disc. Notes, STEP,
Zero Coupon, 9/1/00;
11.50%, 9/1/00-9/1/05 5,850 3,846
.......................................................................
Revlon Consumer Products, Sr. Sub. Notes, 10.50%,
2/15/03 7,000 7,315
.......................................................................
Revlon Worldwide, Sr. Secured Disc. Notes,
Zero Coupon, 3/15/98 18,725 16,174
.......................................................................
78,107
.........
Container 3.6%
Owens-Illinois, Sr. Deb., 11.00%, 12/1/03 15,180 16,793
.......................................................................
Portola Packaging, Sr. Notes, 10.75%, 10/1/05 14,435 15,012
.......................................................................
Silgan, Sr. Sub. Notes, 11.75%, 6/15/02 15,000 16,050
.......................................................................
47,855
.........
Electronic Components 0.5%
Celestica International, Gtd. Sr. Sub. Notes, (144a),
10.50%, 12/31/06 6,525 6,737
.......................................................................
6,737
.......
Energy 7.6%
Coda Energy, Sr. Sub. Notes, 10.50%, 4/1/06 9,000 9,112
.......................................................................
Dual Drilling, Sr. Sub. Notes, 9.875%, 1/15/04 12,625 13,635
.......................................................................
Flores & Rucks, Sr. Sub. Notes, 9.75%, 10/1/06 6,850 7,210
.......................................................................
Kelley Oil & Gas, Sr. Sub. Notes, (144a), 10.375%,
10/15/06 2,000 2,040
.......................................................................
Maxus Energy, Sr. Notes, 9.375%, 11/1/03 12,075 12,316
.......................................................................
Mesa Operating, Sr. Sub. Notes, 10.625%, 7/1/06 5,150 5,562
.......................................................................
Parker Drilling, Gtd. Sr. Notes, (144a), 9.75%,
11/15/06 4,400 4,532
.......................................................................
Petroleum Heat & Power, Sub. Deb., 12.25%, 2/1/05 8,916 9,986
.......................................................................
Plains Resources, Sr. Sub. Notes, 10.25%, 3/15/06 5,385 5,695
.......................................................................
Rowan Companies, Sr. Notes, 11.875%, 12/1/01 13,750 14,609
.......................................................................
</TABLE>
12
<PAGE>
T. ROWE PRICE HIGH YIELD FUND
- --------------------------------------------------------------------------------
Par/Shares Value
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
<S> <C> <C>
Trans Texas Gas, Sr. Secured Notes, 11.50%, 6/15/02 $ 6,900 $ 7,487
.......................................................................
Tuboscope Vetco International, Sr. Sub. Notes,
10.75%, 4/15/03 7,455 8,182
.......................................................................
100,366
..........
Entertainment and Leisure 1.8%
Alliance Entertainment, Sr. Sub. Notes, 11.25%,
7/15/05 12,000 7,980
.......................................................................
Six Flags Theme Parks, Sr. Sub. Disc. Notes, STEP,
Zero Coupon, 6/15/98;
12.25%, 6/15/98-6/15/05 16,575 15,249
.......................................................................
23,229
........
Financial 2.7%
BF Saul REIT, Sr. Secured Notes, 11.625%, 4/1/02 9,000 9,720
.......................................................................
First Federal Financial, Notes, 11.75%, 10/1/04 2,200 2,332
.......................................................................
First Nationwide Holdings, Sr. Sub. Notes, (144a),
10.625%, 10/1/03 8,000 8,560
.......................................................................
Mego Mortgage, Sr. Sub. Notes, 12.50%, 12/1/01 4,000 4,070
.......................................................................
Ocwen Financial, Sr. Notes, 11.875%, 10/1/03 10,050 10,804
.......................................................................
35,486
..........
Food and Tobacco 2.5%
Keebler, Sr. Sub. Notes, 10.75%, 7/1/06 18,000 19,665
.......................................................................
MAFCO, Sr. Sub. Notes, 11.875%, 11/15/02 13,000 13,650
.......................................................................
33,315
..........
Gaming 5.0%
Bally's Park Place, 1st Mtg. Notes, 9.25%, 3/15/04 3,500 3,857
.......................................................................
Capitol Queen & Casino, 1st Mtg. Notes, 12.00%,
11/15/00 *+ 3,400 2,550
.......................................................................
Eldorado Resorts, Sr. Sub. Notes, (144a), 10.50%,
8/15/06 3,750 3,938
.......................................................................
GNF, 1st Mtg. Notes, 10.625%, 4/1/03 10,750 11,865
.......................................................................
Players International, Sr. Notes, 10.875%, 4/15/05 2,200 2,178
.......................................................................
President Casinos, Sr. Notes, 13.00%, 9/15/01 14,225 11,736
.......................................................................
Rio Hotel & Casino, Sr. Sub. Notes, 10.625%, 7/15/05 11,970 12,658
.......................................................................
Trump Atlantic City Associates, 1st Mtg. Notes,
11.25%, 5/1/06 17,285 16,334
.......................................................................
65,116
..........
Health Care 3.3%
Dade International, Sr. Sub. Notes, 11.125%, 5/1/06 11,600 12,528
.......................................................................
Imed, Sr. Sub. Notes, (144a), 9.75%, 12/1/06 6,700 6,767
.......................................................................
Owens & Minor, Sr. Sub. Notes, 10.875%, 6/1/06 12,500 13,344
.......................................................................
Paracelsus Healthcare, Sr. Sub. Notes, 10.00%,
8/15/06 3,050 2,638
.......................................................................
</TABLE>
13
<PAGE>
T. ROWE PRICE HIGH YIELD FUND
- -----------------------------------------------------------------------------
Par/Shares Value
- -----------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
<S> <C> <C>
Regency Health Services, Sub. Notes, 12.25%, 7/15/03 $ 7,000 $ 7,437
........................................................................
42,714
.........
Lodging 1.0%
Courtyard by Marriott II, Sr. Secured Notes, 10.75%,
2/1/08 12,500 13,188
........................................................................
13,188
.........
Manufacturing 3.6%
American Standard, Sr. Sub. Disc. Deb., STEP,
Zero Coupon, 6/1/98;
10.50%, 6/1/98-6/1/05 11,000 10,257
........................................................................
Amtrol, Sr. Sub. Notes, (144a), 10.625%, 12/31/06 2,000 2,020
........................................................................
Coltec Industries, Sr. Sub. Deb., 10.25%, 4/1/02 6,300 6,694
........................................................................
Hawk, Sr. Notes, (144a), 10.25%, 12/1/03 7,450 7,599
........................................................................
International Knife & Saw, Sr. Sub. Notes, (144a),
11.375%, 11/15/06 6,850 7,056
........................................................................
Mettler Toledo, Gtd. Sr. Sub. Notes, 9.75%, 10/1/06 6,625 6,923
........................................................................
Tokheim, Sr. Sub. Notes, (144a), 11.50%, 8/1/06 6,250 6,609
........................................................................
47,158
........
Metals and Mining 0.6%
Haynes International, Sr. Notes, 11.625%, 9/1/04 8,000 8,360
........................................................................
8,360
........
Paper and Paper Products 3.8%
Container Corporation of America, Sr. Notes, 11.25%,
5/1/04 14,550 15,714
........................................................................
Gaylord Container, Sr. Sub. Deb., 12.75%, 5/15/05 12,300 13,468
........................................................................
Repap Wisconsin, Sr. Secured 2nd Priority Notes,
9.875%, 5/1/06 6,375 6,120
........................................................................
S D Warren, Sr. Sub. Notes, 12.00%, 12/15/04 14,500 15,225
........................................................................
50,527
........
Publishing 0.4%
Petersen Publishing, Sr. Sub. Notes, (144a), 11.125%,
11/15/06 5,000 5,113
........................................................................
5,113
........
Retail 1.9%
Barry's Jewelers, Sr. Secured Notes, 11.00%, 12/22/00 9,500 8,823
........................................................................
Cole National Group
Sr. Notes, 11.25%, 10/1/01 1,306 1,430
Sr. Sub. Notes, (144a), 9.875%, 12/31/06 4,000 4,050
........................................................................
Loehmann's, Sr. Notes, 11.875%, 5/15/03 10,375 11,205
........................................................................
Merry Go Round Enterprises, 5.50%, 7/3/97 *+# 10,594 0
........................................................................
25,508
........
</TABLE>
14
<PAGE>
T. ROWE PRICE HIGH YIELD FUND
- --------------------------------------------------------------------------------
Par/Shares Value
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
<S> <C> <C>
Service 4.2%
Allied Waste North America, Sr. Sub. Notes, (144a),
10.25%, 12/1/06 $ 7,975 $ 8,185
..........................................................................
Coinmach, Sr. Notes, 11.75%, 11/15/05 17,975 19,323
..........................................................................
Host Marriott Travel Plazas, Sr. Notes, 9.50%,
5/15/05 9,000 9,270
..........................................................................
Intertek Finance, Sr. Sub. Notes, (144a), 10.25%,
11/1/06 9,005 9,230
..........................................................................
Protection One Alarm, Gtd. Sr. Disc. Notes, STEP,
Zero Coupon, 6/30/98;
13.625%, 6/30/98-6/30/05 10,500 9,555
..........................................................................
55,563
..........
Specialty Chemicals 1.3%
Agricultural Minerals and Chemicals, Sr. Notes,
10.75%, 9/30/03 16,200 17,375
..........................................................................
17,375
.........
Supermarkets 2.3%
Core Mark International, Sr. Sub. Notes, (144a),
11.375%, 9/15/03 3,500 3,544
..........................................................................
Grand Union, Sr. Notes,-12.00%, 9/1/04 12,000 12,465
..........................................................................
Pathmark Stores, Sr. Sub. Notes, 9.625%, 5/1/03 14,205 13,992
..........................................................................
30,001
.........
Telecommunications 7.8%
Brooks Fiber
Sr. Disc. Notes, STEP,
Zero Coupon, 3/01/01;
10.875%, 3/1/01-3/1/06 11,650 7,631
........................................................................
Sr. Disc. Notes, (144a), STEP,
Zero Coupon, 11/1/01;
11.875%, 11/1/01-11/1/06 9,500 5,985
..........................................................................
Call-Net Enterprises, Sr. Disc. Notes, STEP,
Zero Coupon, 12/1/99;
13.25%, 12/1/99-12/1/04 6,700 5,393
..........................................................................
Clearnet Communications, Sr. Disc. Notes, STEP,
Zero Coupon, 12/15/00;
14.75%, 12/15/00-12/15/05 10,250 6,304
..........................................................................
ICG Holdings, Sr. Disc. Notes, STEP,
Zero Coupon, 9/15/00;
13.50%, 9/15/00-9/15/05 3,850 2,657
..........................................................................
</TABLE>
15
<PAGE>
T. ROWE PRICE HIGH YIELD FUND
- ----------------------------------------------------------------------------
Par/Shares Value
- ----------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
<S> <C> <C>
Intercel, Sr. Disc. Notes, STEP,
Zero Coupon, 2/1/01;
12.00%, 2/1/01-2/1/06 $10,000 $ 5,800
.........................................................................
Intermedia Communications of Florida
Sr. Disc. Notes, STEP,
Zero Coupon, 5/15/01;
12.50%, 5/15/01-5/15/06 17,000 11,092
.........................................................................
Sr. Notes, 13.50%, 6/1/05 1,950 2,233
.........................................................................
Nextel Communications, Sr. Disc. Notes, STEP,
Zero Coupon, 2/15/99;
9.75%, 2/15/99-8/15/04 7,850 5,191
.........................................................................
Nextlink Communications, Sr. Notes, 12.50%, 4/15/06 5,000 5,262
.........................................................................
Omnipoint, Sr. Notes, (144a), 11.625%, 8/15/06 7,650 8,052
.........................................................................
Page America Group, PIK, 15.00%, 12/31/96 + 9,800 8,207
.........................................................................
Pricellular Wireless, Sr. Notes, (144a), 10.75%,
11/1/04 3,000 3,120
.........................................................................
Pronet, Sr. Sub. Notes, 11.875%, 6/15/05 6,300 5,953
.........................................................................
RSL Communications, Units,
(Each unit consists of a $1,000 par
Sr. Note, (144a), 12.25%, 11/15/06,
and 1 warrant) 5,800 5,771
.........................................................................
Teleport Communications Group, Sr. Disc. Notes, STEP,
Zero Coupon, 7/1/01;
11.125%, 7/1/01-7/1/07 20,575 13,940
.........................................................................
102,591
..........
Textiles and Apparel 3.2%
Dan River, Sr. Sub. Notes, 10.125%, 12/15/03 12,000 12,000
.........................................................................
Dominion Textile USA, Gtd. Sr. Notes, 9.25%, 4/1/06 6,000 6,120
.........................................................................
Pillowtex, Sr. Sub. Notes, (144a), 10.00%, 11/15/06 5,625 5,766
.........................................................................
Plaid Clothing Group, Sr. Sub. Notes, 11.00%, 8/1/03 * 8,650 519
.........................................................................
Synthetic Industries, Sr. Sub. Deb., 12.75%, 12/1/02 15,830 17,452
.........................................................................
41,857
.........
Transportation 1.1%
Clark Material Handling, Sr. Notes, (144a), 10.75%,
11/15/06 5,000 5,112
.........................................................................
Sea Containers Ltd., Sr. Sub. Deb., 12.50%, 12/1/04 5,438 5,955
.........................................................................
Transportacion Maritima Mexicana, Sr. Notes,
10.00%, 11/15/06 3,000 3,026
.........................................................................
14,093
............
Total Corporate Bonds and Notes (Cost $1,151,346) 1,166,503
............
</TABLE>
16
<PAGE>
T. Rowe Price High Yield Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par/Shares Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
EQUITY AND CONVERTIBLE SECURITIES 5.8%
Automobiles and Related 0.6%
Borg-Warner, Common Stock + $ 100 $ 4,000
- --------------------------------------------------------------------------------
Exide, Common Stock 100 2,550
- --------------------------------------------------------------------------------
Hayes Wheels International
Common Stock * 49 1,691
- --------------------------------------------------------------------------------
Warrants * 18 61
- --------------------------------------------------------------------------------
8,302
-----------
Beverages 1.2%
Dr Pepper Bottling Holdings, Common Stock, Class A *+# 1,304 15,647
- --------------------------------------------------------------------------------
15,647
-----------
Cable Operators 0.0%
Peachtree Cable Associates Ltd., Common Stock *+# 10 170
- --------------------------------------------------------------------------------
Wireless One, Warrants * 37 55
- --------------------------------------------------------------------------------
225
-----------
Electric Utilities 0.2%
El Paso Electric, 11.40%, Pfd. Stock, PIK 27 2,982
- --------------------------------------------------------------------------------
2,982
-----------
Electronic Components 0.3%
Berg Electronics, Common Stock *+# 130 3,882
- --------------------------------------------------------------------------------
3,882
-----------
Energy 0.8%
Kelley Oil & Gas, Exch. Conv. Pfd. Stock 413 9,961
- --------------------------------------------------------------------------------
9,961
-----------
Financial 1.3%
Chevy Chase Preferred Capital,
Non-Cum. Exch. Pfd. Stock, Series A 124 6,346
- --------------------------------------------------------------------------------
Criimi Mae, Cum. Conv. Pfd. Stock 245 6,983
- --------------------------------------------------------------------------------
First Nationwide Bank Federal Savings, Conv. Pfd. Stock 34 3,910
- --------------------------------------------------------------------------------
17,239
-----------
Food Processing 0.0%
Rymer Foods, Common Stock * 401 138
- --------------------------------------------------------------------------------
138
-----------
Gaming 0.1%
Becker Gaming, Warrants *+# 425 106
- --------------------------------------------------------------------------------
Hollywood Casino, Common Stock, Class A * 118 499
- --------------------------------------------------------------------------------
President Casinos, Warrants, (144a) *+# 214 54
- --------------------------------------------------------------------------------
659
-----------
</TABLE>
17
<PAGE>
T. Rowe Price High Yield Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par/Shares Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Health Care 0.0%
Wright Medical Technology, Warrants *+# $ 38 $ 495
- --------------------------------------------------------------------------------
495
-----------
Paper and Paper Products 0.2%
Repap Enterprises, Common Stock * 690 2,717
- --------------------------------------------------------------------------------
2,717
-----------
Restaurants 0.1%
Ameriking, Units,
(Each unit consists of 40 shs., 13.00%, Pfd. Stock,
and 1 share of Common Stock) * 720 763
- --------------------------------------------------------------------------------
763
-----------
Retail 0.3%
Lamonts Apparel, Common Stock * 250 0
- --------------------------------------------------------------------------------
Loehmann's
New Common Stock *++# 82 2,207
------------------------------------------------------------------------------
New Common Stock, Class B *++ 72 1,943
------------------------------------------------------------------------------
4,150
-----------
Service 0.4%
Efficient Market Services, Conv. Pfd. Stock *+++# 364 4,091
- --------------------------------------------------------------------------------
Protection One, Common Stock * 80 798
- --------------------------------------------------------------------------------
4,889
-----------
Telecommunications 0.4%
American Communications Services, Warrants * 12 1,020
- --------------------------------------------------------------------------------
Clearnet Communications, Warrants * 73 459
- --------------------------------------------------------------------------------
Intercel, Warrants * 64 672
- --------------------------------------------------------------------------------
Intermedia Communications of Florida, Warrants * 2 98
- --------------------------------------------------------------------------------
Mobile Telecommunication Technologies,
Conv. Pfd. Stock, (144a) 152 3,137
- --------------------------------------------------------------------------------
Page America Group
Common Stock *+++# 1,109 41
------------------------------------------------------------------------------
Warrants *+++# 711 0
------------------------------------------------------------------------------
Conv. Pfd. Stock, Series I *+++# 20 198
------------------------------------------------------------------------------
5,625
-----------
Options Purchased 0.0%
Loehmann's Put, 8/27/97 @ $22.752 * 153 26
- --------------------------------------------------------------------------------
26
-----------
</TABLE>
18
<PAGE>
T. Rowe Price High Yield Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par/Shares Value
- --------------------------------------------------------------------------------
In thousands
<S> <C> <C>
Options Written (0.1%)
Loehmann's Call, 8/27/97 @ $24.913 * $ (153) $ (1,041)
- --------------------------------------------------------------------------------
(1,041)
-----------
Total Equity and Convertible Securities (Cost $61,509) 76,659
-----------
ASSET-BACKED SECURITIES 1.0%
Airlines 1.0%
Airplane Pass Through Trust, 10.875%, 3/15/19 11,955 13,360
- --------------------------------------------------------------------------------
Total Asset-Backed Securities (Cost $12,040) 13,360
-----------
COMMERCIAL PAPER 4.1%
Barnett Banks, 5.28%, 12/13/96 4,000 3,992
- --------------------------------------------------------------------------------
Cargill Financial Services, 4(2),
5.25%, 12/5/96-12/6/96 20,000 19,983
- --------------------------------------------------------------------------------
Investments in Commercial Paper through a joint account,
5.70 - 5.90%, 12/2/96 29,815 29,815
- --------------------------------------------------------------------------------
Total Commercial Paper (Cost $53,790) 53,790
-----------
</TABLE>
19
<PAGE>
T. Rowe Price High Yield Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value
- --------------------------------------------------------------------------------
In thousands
<S> <C>
Total Investments in Securities
99.5% of Net Assets (Cost $1,278,685) $ 1,310,312
Other Assets Less Liabilities 6,842
------------
NET ASSETS $ 1,317,154
------------
Net Assets Consist of:
Accumulated net investment income - net of
distributions $ 961
Accumulated net realized gain/loss - net of
distributions (240,969)
Net unrealized gain (loss) 31,627
Paid-in-capital applicable to 158,481,455 shares
of $0.01 par value capital stock outstanding;
1,000,000,000 shares authorized 1,525,535
------------
NET ASSETS $ 1,317,154
------------
NET ASSET VALUE PER SHARE $ 8.31
------------
</TABLE>
+ Private Placement
* Non-income producing
# Securities contain some restrictions as to public resale--total of such
securities at year-end amounts to 2.0% of net assets.
++ Security valued by the Fund's Board of Directors
PIK Payment-in-Kind
STEP Stepped Coupon Bond
4(2) Commercial Paper sold within terms of a private placement memorandum,
exempt from registration under section 4.2 of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors".
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-- total of such securities at year-end amounts to
10.0% of net assets.
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
T. Rowe Price High Yield Fund
- --------------------------------------------------------------------------------
Unaudited
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months
Ended
11/30/96
<S> <C>
Investment Income
Interest and dividend income $ 63,636
--------
Expenses
Investment management 3,966
Shareholder servicing 1,137
Custody and accounting 115
Prospectus and shareholder reports 60
Legal and audit 41
Registration 32
Directors 7
Miscellaneous 10
--------
Total expenses 5,368
--------
Net investment income 58,268
--------
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities (20,964)
---------
Change in net unrealized gain or loss on
Securities 48,996
Written options (790)
---------
Change in net unrealized gain or loss 48,206
---------
Net realized and unrealized gain (loss) 27,242
---------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 85,510
--------
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
T. Rowe Price High Yield Fund
- --------------------------------------------------------------------------------
Unaudited
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
<TABLE>
<CAPTION>
6 Months Year
Ended Ended
11/30/96 5/31/96
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ 58,268 $ 108,179
Net realized gain (loss) (20,964) (9,370)
Change in net unrealized gain or loss 48,206 6,407
-----------------------
Increase (decrease) in net assets from
operations 85,510 105,216
-----------------------
Distributions to shareholders
Net investment income (58,218) (109,829)
-----------------------
Capital share transactions *
Shares sold 116,077 244,157
Distributions reinvested 46,668 88,814
Shares redeemed (102,036) (307,884)
Redemption fees received 29 175
-----------------------
Increase (decrease) in net assets from
capital share transactions 60,738 25,262
-----------------------
Net Assets
Increase (decrease) during period 88,030 20,649
Beginning of period $1,229,124 1,208,475
-----------------------
End of period $1,317,154 $1,229,124
-----------------------
*Share information
Shares sold 14,209 29,890
Distributions reinvested 5,699 10,876
Shares redeemed (12,518) (37,691)
-----------------------
Increase (decrease) in shares outstanding 7,390 3,075
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
T. Rowe Price High Yield Fund
- --------------------------------------------------------------------------------
Unaudited November 30, 1996
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price High Yield Fund, Inc., (the fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company and commenced operations on December 31, 1984.
Valuation Debt securities are generally traded in the over-the-counter
market. Investments in securities originally issued with 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 original maturities of 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 listed or regularly traded on a securities exchange are
valued at the last quoted sales price at the time the valuations are made.
A security which is listed or traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary market for such
security. Listed securities not traded on a particular day and securities
regularly traded in the over-the-counter market are valued at the mean of
the latest bid and asked prices. Other equity securities are valued at a
price within the limits of the latest bid and asked prices deemed by the
Board of Directors, or by persons delegated by the Board, best to reflect
fair value. Purchased and written options are valued at the latest bid and
asked prices, respectively.
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.
Premiums and Discounts Premiums on high-yield debt securities,
other than PIK and STEP bonds, are recognized upon disposition of the
security as gain or loss for both financial reporting and tax purposes.
Market discounts are recognized upon disposition of the security as gain or
loss for financial reporting purposes and as ordinary income for tax
purposes. Original issue discounts, and all premiums and discounts on PIK
and STEP bonds, are amortized for both financial reporting and tax
purposes.
23
<PAGE>
T. Rowe Price High Yield Fund
- --------------------------------------------------------------------------------
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 the 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 and may differ from those determined in
accordance with generally accepted accounting principles.
NOTE 2 - INVESTMENT TRANSACTIONS
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Noninvestment-Grade Debt Securities At November 30, 1996, the fund held
investments in noninvestment-grade debt securities, commonly referred to as
"high-yield" or "junk" bonds. A real or perceived economic downturn or
higher interest rates could adversely affect the liquidity or value, or
both, of such securities because such events could lessen the ability of
issuers to make principal and interest payments.
Commercial Paper Joint Account The fund, and other affiliated funds, may
transfer uninvested cash into a commercial paper joint account, the daily
aggregate balance of which is invested in high-grade commercial paper. All
securities purchased by the joint account satisfy the fund's criteria as to
quality, yield, and liquidity.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $679,577,000 and $609,540,000, respectively, for the
six months ended November 30, 1996.
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 $220,279,000, of which $83,409,000
expires in
24
<PAGE>
T. Rowe Price High Yield Fund
- --------------------------------------------------------------------------------
1998, $40,437,000 in 1999, and $96,433,000 thereafter through 2004. The
fund intends to retain gains realized in future periods that may be offset
by available capital loss carryforwards.
At November 30, 1996, the aggregate cost of investments for federal income
tax and financial reporting purposes was $1,278,685,000, and net unrealized
gain aggregated $31,627,000, of which $75,600,000 related to appreciated
investments and $43,973,000 to depreciated investments.
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, of which $671,000 was payable at November 30, 1996. The fee is
computed daily and paid monthly, and consists 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 0.305% for
assets in excess of $50 billion. At November 30, 1996, and for the six
months then ended, the effective annual group fee rate was 0.33%. The fund
pays a pro-rata share of the group fee based on the ratio of its net assets
to those of the group.
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund
receives certain other services. The manager computes the daily share price
and maintains the financial records of the fund. T. Rowe Price Services,
Inc. (TRPS) is the fund's transfer and dividend disbursing agent and
provides shareholder and administrative services to the fund. T. Rowe Price
Retirement Plan Services, Inc., provides subaccounting and recordkeeping
services for certain retirement accounts invested in the fund.
Additionally, 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 among 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. The fund incurred expenses
pursuant to these related party agreements totaling approximately
$1,044,000 for the six months ended November 30, 1996, of which $215,000
was payable at period-end.
25
<PAGE>
For yield, price, last transaction,
current balance or to conduct
transactions, 24 hours, 7 days
a week, call Tele*Access(R):
1-800-638-2587 toll free
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
To open a Discount Brokerage
account or obtain information,
call: 1-800-638-5660 toll free
Internet address:
http://www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for
distribution only to shareholders
and to others who have received
a copy of the prospectus of the
T. Rowe Price High Yield Fund(R).
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
[LOGO OF T.ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor RPRTHYF 11/30/96
