<PAGE>
T. Rowe Price
--------------------------------------------------------------------------------
Semiannual Report
High Yield Fund
--------------------------------------------------------------------------------
November 30, 2000
================================================================================
REPORT HIGHLIGHTS
-----------------
HIGH YIELD FUND
---------------
* While the investment-grade bond market rallied, high-yield bonds sank
during the six months ended November 30.
* The meltdown in the wireline telecommunications industry, coupled with
weak fundamentals in cyclical industries, hurt high-yield bonds.
* The fund had a weak return of -3.46% for the six months, which
nevertheless compared favorably with its index and mutual fund
benchmarks.
* Substantial holdings in industries that bucked the downtrend and
underweightings in some of the hardest-hit areas helped cushion the
fund's performance.
* Caution is the order of the day, until there is further evidence of
the economy's path.
================================================================================
UPDATES AVAILABLE
-----------------
For updates on T. Rowe Price funds following the end of each calendar
quarter, please see our Web site at www.troweprice.com.
================================================================================
FELLOW SHAREHOLDERS
-------------------
After a weak start in 2000, most areas of the bond market recovered in
recent months to chalk up solid returns for the year. Not so high-yield bonds,
which fell sharply in an exceedingly tough environment for lower-quality debt.
While your fund suffered along with the entire high-yield market, losses were
cushioned to some degree by our broad diversification among industry sectors and
thorough credit research.
"A PERFECT STORM" HITS HIGH YIELD
---------------------------------
It's been 10 years since high-yield (junk) bonds were buffeted by such
unfavorable investment weather. During the six months since our last report to
you, three negative trends that had been brewing for some time intensified
simultaneously to create "a perfect storm" for this sector. Our previous hopes
for a turnaround in the high-yield bear market turned out to be premature.
<PAGE>
The first of the trends that stymied our market was the collapse of
wireline communications companies, which had issued a substantial amount of
high-yield bonds -- as well as new stock -- in the past two years. When the
companies' rosy growth projections failed to materialize, financing avenues shut
down. Without infusions of new capital, debt service faltered and defaults
mounted among companies with weak management and shaky balance sheets. Through
November 30, overall year-to-date returns on high-yield bonds of wireline
companies were -30%. The collapse in this sector helped push the ratio of
"distressed" bonds (those yielding 10 or more percentage points over Treasuries)
to approximately 30% of outstanding corporate bonds and contributed to the rise
in the high-yield bond default rate to about 4%.
The second unfavorable trend was the poor performance of Old Economy
cyclical companies, such as automobiles, forest products, chemicals, and steel.
These companies, which had failed to participate fully in the U.S. economy's
good health, were hurt by falling commodity prices (other than oil) and by
concerns over the possibility of a steeper-than-expected slowdown in economic
growth. Negative returns in the range of 10% to 30% on their bonds (see chart on
page 2) helped drag down the entire high-yield market.
--------------------------------------------------------------------------------
TOTAL RETURN BY INDUSTRY SECTOR
-------------------------------
Percent
-------
Energy 14.82
Utitlity 9.54
Homebuilders 8.57
Aerospace 7.22
Healthcare Services 5.70
Broadcasting 5.38
Information Technology 4.74
Gaming/Leisure 4.10
Cellular 0.28
Consumner durables -6.83
Chemicals -7.69
Service -8.92
Forest producst -9.52
Cable -10.90
Retail -19.80
Automotive -21.72
Wirelines -30.44
Steel -31.77
--------------------------------------------------------------------------------
Lastly, these trends were exacerbated by a general lack of liquidity in the
market, reflecting negative cash flows in high-yield mutual funds and the
reluctance of Wall Street dealers to commit capital to facilitate trading.
<PAGE>
As the chart shows, about half of the industries in the high-yield universe
remained healthy, led by 15% returns in the energy sector and including
homebuilding, utilities, information technology, and others. Even wireless
(cellular) communications, the other major component of the beleaguered telecom
sector, eked out a positive return as the group's financial health and prospects
remained solidly positive even though the stocks were swept along in the Nasdaq
sell-off.
PERFORMANCE PICTURE HAS BRIGHT SIDE
-----------------------------------
PERFORMANCE COMPARISON
----------------------
Periods Ended 11/30/00 6 Months 12 Months
---------------------- -------- ---------
High Yield Fund -3.46% -3.79%
CS First Boston Global
High Yield Index -4.19 -5.95
Lipper High Yield
Funds Average -7.16 -9.07
In contrast to the average high-yield bond fund, which declined over 9% for
the year ended November 30, your fund returned a negative 3.79%. This return
also compared favorably with the -5.95% return of the CS First Boston Global
High Yield Index. A principal decline of $1.03 per share over the 12 months was
partially offset by per share income of $0.77. The past six months included the
bulk of the year's principal decline, which was only partially offset by income
and resulted in a total six-month return of -3.46%. For that period, the fund's
return also was better than deeper losses incurred by the average competitor
fund and our benchmark index. At period end, the fund's 30-day dividend yield
was 10.82%.
=============================
At period end, the fund's
30-day dividend yield
was 10.82%.
=============================
While there's no denying the disappointment of a negative return, we were
glad it wasn't worse and were pleased to surpass our benchmarks. Performance
reflected some defensive and offensive successes. On the defensive side, results
were aided by our reduced exposure to the troubled wireline communications area
from 10% to 6% of net assets, as shown in the Sector Diversification table
following this letter. At the same time, we increased our cash position from 6%
to 10%, which provided some ballast in the storm. Relatively limited holdings in
other hard-hit industries, such as autos, metals, and paper, also helped stem
losses.
<PAGE>
For the offense, our largest industry concentration (10%) remained wireless
communications, which, while not robust, at least held its own during the past
six months. In fact, two of our wireless holdings, VoiceStream Wireless and
Clearnet Communications, benefited from being acquired by investment-grade
companies.
The fund's results were also helped by significant exposure to industry
sectors that performed well during the period, including energy (7% of net
assets), health care (increased from 3% of net assets to 7% during the six
months), gaming (6%), and broadcasting (4%). Among our larger industry holdings,
the only group that performed badly for us besides wireline communications was
cable operators (8% of net assets).
STRATEGY FOCUSES ON RESEARCH, DIVERSIFICATION
---------------------------------------------
Our overall approach to managing the fund was unchanged, as we continued to
emphasize intensive credit research, diversification among industry sectors, and
an active sell discipline. As market conditions deteriorated over the past six
months, however, we did make some defensive moves, as noted, such as cutting
almost in half our exposure to the sinking wireline industry, increasing our
cash position, and beefing up our weighting in higher-quality (BB rated) bonds.
Credit research efforts and our disciplined selling policy continued to pay off
by largely sparing the fund from the rising tide of credit problems and bond
defaults. The two modest holdings that defaulted in 1999 were joined by only one
other, Dyersberg, a textile manufacturer whose bonds we had previously marked
down in value. The three positions together totaled about 1.4% of net assets at
period end.
The fund's overall credit quality remained at B+, with 13% now in
investment-grade securities, as shown in the pie chart, and over 70% in the BB
and B categories. We pared holdings in the lower-tier, CCC, range from 10% to
7%.
--------------------------------------------------------------------------------
Security Diversification shown here with the following pie slices;
AAA,AA,A,BBB 13%; BB 16%, B 55%, CCC 7%,
Nonrated (convertibles and equities) 9%
--------------------------------------------------------------------------------
Nextel Communications in the wireless telecom industry remained our largest
holding, with the top 25 positions composing only 27% of net assets. The fund
continued to hold securities of over 200 different companies spread over some
two dozen industries. In making new investments, we are beginning to acquire
some medium-quality, Old Economy names that have been beaten down but which we
believe have appreciation potential as well as high income.
<PAGE>
WE REMAIN CAUTIOUS
------------------
After venturing a word of optimism six months ago, we are going to keep our
head down this time. The high-yield market's near-term direction depends very
much on the direction of the economy. If growth slows more than we or even the
Federal Reserve are expecting, then lower-quality bonds will continue to
struggle. But if the economy does have a so-called soft landing -- slower growth
but no recession -- the environment should improve for the cyclical industry
sectors that performed poorly in recent months. Fed Chairman Greenspan's outlook
for slower but sustainable growth is a positive one for our market.
The problems in the wireline telecommunications industry are not directly
tied to the economy, but rather to overbuilding and changing demand, so our
market cannot look to that area as a turnaround catalyst. In contrast, we think
the wireless industry, another major source of high-yield debt, continues to
have a promising future, and its bonds could well recover when investors return
to technology and telecom stocks.
We would remind you that this sector of the market continues to generate
high income, but that this above-average income can be accompanied by the kind
of volatility we have seen recently. For that reason, an investment in the fund
is appropriate only for a long investment horizon.
We appreciate your confidence.
Very truly yours,
/s/
Mark J. Vaselkiv
Chairman of the fund's Investment Advisory Committee
December 18, 2000
================================================================================
<PAGE>
T. Rowe Price High Yield Fund
-----------------------------
PORTFOLIO HIGHLIGHTS
--------------------
KEY STATISTICS
--------------
5/31/00 11/30/00
-------------------------------------------------------------------------------
Price Per Share $ 7.50 $ 6.88
-------------------------------------------------------------------------------
Dividends Per Share
For 6 months 0.39 0.38
-------------------------------------------------------------------------------
For 12 months 0.77 0.77
-------------------------------------------------------------------------------
30-Day Dividend Yield * 10.29% 10.82%
-------------------------------------------------------------------------------
30-Day Standardized Yield to Maturity 11.47 12.49
-------------------------------------------------------------------------------
Weighted Average Maturity (years) 8.8 8.0
-------------------------------------------------------------------------------
Weighted Average Effective Duration (years) 4.3 4.5
-------------------------------------------------------------------------------
Weighted Average Quality ** B+ B+
-------------------------------------------------------------------------------
* Dividends earned for the last 30 days of each period indicated are
annualized and divided by the fund's net asset value per share at the end
of the period.
** Based on T. Rowe Price research.
================================================================================
T. Rowe Price High Yield Fund
-----------------------------
PORTFOLIO HIGHLIGHTS
--------------------
TWENTY-FIVE LARGEST HOLDINGS
----------------------------
Percent of
Net Assets
11/30/00
-------------------------------------------------------------------------------
Nextel Communications 2.4%
-------------------------------------------------------------------------------
Cablevision Systems (CSC Holdings) 2.1
-------------------------------------------------------------------------------
Colt Telecom 1.2
-------------------------------------------------------------------------------
Frontiervision 1.2
-------------------------------------------------------------------------------
VoiceStream Wireless 1.1
-------------------------------------------------------------------------------
<PAGE>
Dobson Communications 1.1
-------------------------------------------------------------------------------
HCA Healthcare 1.1
-------------------------------------------------------------------------------
Tenet Healthcare 1.1
-------------------------------------------------------------------------------
Lennar 1.1
-------------------------------------------------------------------------------
Courtyard by Marriott II 1.0
-------------------------------------------------------------------------------
Pegasus Communications 1.0
-------------------------------------------------------------------------------
International Wire 1.0
-------------------------------------------------------------------------------
Sinclair Broadcasting 1.0
-------------------------------------------------------------------------------
AES 1.0
-------------------------------------------------------------------------------
Intermedia Communications 1.0
-------------------------------------------------------------------------------
Amkor Technologies 0.9
-------------------------------------------------------------------------------
United International Holdings 0.9
-------------------------------------------------------------------------------
Bway 0.9
-------------------------------------------------------------------------------
Universal Compression 0.9
-------------------------------------------------------------------------------
Venetian Casino 0.9
-------------------------------------------------------------------------------
TravelCenters of America 0.9
-------------------------------------------------------------------------------
Chancellor Media 0.8
-------------------------------------------------------------------------------
Premier Parks 0.8
-------------------------------------------------------------------------------
YPF Sociedad Anonima 0.8
-------------------------------------------------------------------------------
CMS Energy 0.7
-------------------------------------------------------------------------------
Total 26.9%
Note: Table excludes reserves.
================================================================================
<PAGE>
T. Rowe Price High Yield Fund
-----------------------------
PORTFOLIO HIGHLIGHTS
--------------------
SECTOR DIVERSIFICATION
----------------------
Percent of Percent of
Net Assets Net Assets
5/31/00 11/30/00
-------------------------------------------------------------------------------
Wireless Communications 10% 10%
-------------------------------------------------------------------------------
Cable Operators 7 8
-------------------------------------------------------------------------------
Energy 7 7
-------------------------------------------------------------------------------
Health Care 3 7
-------------------------------------------------------------------------------
Wireline Communications 10 6
-------------------------------------------------------------------------------
Gaming 5 6
-------------------------------------------------------------------------------
Broadcasting 5 4
-------------------------------------------------------------------------------
Electronic Components 1 3
-------------------------------------------------------------------------------
Specialty Chemicals 2 3
-------------------------------------------------------------------------------
Service 3 3
-------------------------------------------------------------------------------
Electric Utilities 1 2
-------------------------------------------------------------------------------
Paper and Paper Products 4 2
-------------------------------------------------------------------------------
Lodging 2 2
-------------------------------------------------------------------------------
Consumer Products 3 2
-------------------------------------------------------------------------------
Long Distance 3 2
-------------------------------------------------------------------------------
Textiles and Apparel 2 2
-------------------------------------------------------------------------------
Manufacturing 2 2
-------------------------------------------------------------------------------
Food and Tobacco 2 2
-------------------------------------------------------------------------------
Automobiles and Related 2 2
-------------------------------------------------------------------------------
Building Products 2 2
-------------------------------------------------------------------------------
Metals and Mining 2 2
-------------------------------------------------------------------------------
Container 2 2
-------------------------------------------------------------------------------
Printing and Publishing 2 2
-------------------------------------------------------------------------------
Money Market Funds * 6 10
-------------------------------------------------------------------------------
All Other 10 6
-------------------------------------------------------------------------------
Other Assets Less Liabilites 2 1
-------------------------------------------------------------------------------
Total 100% 100%
* See note at end of financial statements.
================================================================================
<PAGE>
T. Rowe Price High Yield Fund
-----------------------------
PERFORMANCE COMPARISON
----------------------
These charts show the value of a hypothetical $10,000 investment in each
class over the past 10 fiscal year periods or since inception (for classes
lacking 10-year records). The result is compared with benchmarks, which may
include a broad-based market index and a peer group average or index. Market
indexes do not include expenses, which are deducted from fund returns as well as
mutual fund averages and indexes.
CS First Boston
Global High Yield Index High Yield shares
----------------------- -----------------
11/30/90 10000 10000
11/30/91 14341 13046
11/30/92 16662 14852
11/30/93 19788 18112
11/30/94 19633 16886
11/30/95 22999 19365
11/30/96 25683 21642
11/30/97 29224 24716
11/30/98 29730 26265
11/30/99 30268 26926
11/30/00 28466 25905
--------------------------------------------------------------------------------
CS First Boston
High Yield Index High Yield PLUS shares
---------------- ----------------------
3/31/00 10000 10000
11/30/00 9413 9564
AVERAGE ANNUAL COMPOUND TOTAL RETURN
------------------------------------
This table shows how each fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
Since Inception
Periods Ended 11/30/00 1 Year 5 Years 10 Years Inception Date
---------------------- ------ ------- -------- --------- ----
High Yield shares -3.79% 5.99% 9.99% - -
High Yield Advisor Class shares - - - -4.36% 3/31/00
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original purchase.
================================================================================
<PAGE>
T. Rowe Price High Yield Fund
----------------------------- Unaudited
For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
--------------------
HIGH YIELD SHARES
-----------------
6 Months Year
Ended Ended
11/30/00 5/31/00 5/31/99 5/31/98 5/31/97 5/31/96
NET ASSET VALUE
Beginning of period $ 7.50 $ 8.32 $ 8.85 $ 8.43 $ 8.13 $ 8.16
-------------------------------------------------------------------------------
Investment activities
Net investment
income (loss) 0.38 0.76 0.75 0.77 0.75 0.73
Net realized and
unrealized gain (loss) (0.62) (0.81) (0.53) 0.41 0.30 (0.02)
-------------------------------------------------------------------------------
Total from
investment activities (0.24) (0.05) 0.22 1.18 1.05 0.71
-------------------------------------------------------------------------------
Distributions
Net investment income (0.38) (0.77) (0.75) (0.76) (0.75) (0.74)
-------------------------------------------------------------------------------
NET ASSET VALUE
End of period $ 6.88 $ 7.50 $ 8.32 $ 8.85 $ 8.43 $ 8.13
Ratios/Supplemental Data
Total return* (3.46)% (0.63)% 2.73% 14.51% 13.49% 9.06%
-------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.82%+ 0.83% 0.82% 0.81% 0.84% 0.85%
-------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 10.00%+ 9.60% 8.93% 8.78% 9.15% 8.89%
-------------------------------------------------------------------------------
Portfolio turnover rate 70.6%+ 75.9% 95.6% 129.6% 111.3% 100.1%
-------------------------------------------------------------------------------
Net assets, end of period
(in millions) $ 1,408 $1,524 $1,776 $ 1,725 $ 1,401 $ 1,229
-------------------------------------------------------------------------------
* Total return reflects the rate that an investor would have earned on an
investment in the fund during each period, assuming reinvestment of all
distributions and payment of no redemption or account fees.
+ Annualized
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price High Yield Fund
----------------------------- Unaudited
For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
--------------------
HIGH YIELD ADVISOR CLASS SHARES
-------------------------------
6 Months 3/31/00
Ended Through
11/30/00 5/31/00
NET ASSET VALUE
Beginning of period $ 7.50 $ 7.70
------------------------------------------------------------------------------
Investment activities
Net investment income (loss) 0.38 0.12
Net realized and
unrealized gain (loss) (0.62) (0.19)
------------------------------------------------------------------------------
Total from
investment activities (0.24) (0.07)
------------------------------------------------------------------------------
Distributions
Net investment income (0.38) (0.13)
------------------------------------------------------------------------------
NET ASSET VALUE
End of period $ 6.88 $ 7.50
Ratios/Supplemental Data
Total return* (3.48)% (0.90)%
------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.84%+ 0.68%+
------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 9.78%+ 10.01%+
------------------------------------------------------------------------------
Portfolio turnover rate 70.6%+ 75.9%+
------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $ 500 $ 10
------------------------------------------------------------------------------
* Total return reflects the rate that an investor would have earned on
an investment in the fund during each period, assuming reinvestment of
all distributions and payment of no redemption or account fees.
+ Annualized
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price High Yield Fund
-----------------------------
Unaudited November 30, 2000
STATEMENT OF NET ASSETS
----------------------- Par/Shares Value
In thousands
CORPORATE BONDS AND NOTES 80.6%
Aerospace and Defense 1.3%
Anteon, Sr. Sub. Notes, 12.00%, 5/15/09 $ 4,550 $ 4,084
-----------------------------------------------------------------------------
BE Aerospace, Sr. Sub. Notes, 8.00%, 3/1/08 4,875 4,436
-----------------------------------------------------------------------------
Communications & Power Industries
Sr. Sub. Notes, 12.00%, 8/1/05 4,000 2,840
-----------------------------------------------------------------------------
Dyncorp, Sr. Sub. Notes, 9.50%, 3/1/07 6,750 5,332
-----------------------------------------------------------------------------
Hexcel, Sr. Sub. Notes, 9.75%, 1/15/09 2,085 1,916
-----------------------------------------------------------------------------
18,608
-----------------------------------------------------------------------------
Automobiles and Related 1.8%
Advance Stores, Sr. Sub. Notes, 10.25%, 4/15/08 5,840 4,088
-----------------------------------------------------------------------------
Aftermarket Technology, Sr. Sub. Notes,
12.00%, 8/1/04 3,810 3,658
-----------------------------------------------------------------------------
Dana, Sr. Notes, 6.50%, 3/1/09 3,000 2,280
-----------------------------------------------------------------------------
Hayes Lemmerz International, Sr. Sub. Notes,
8.25%, 12/15/08 4,300 2,494
-----------------------------------------------------------------------------
Hayes Wheels International, Sr. Sub. Notes,
11.00%, 7/15/06 2,725 1,948
-----------------------------------------------------------------------------
Lear
Sr. Notes
7.96%, 5/15/05 1,725 1,619
-----------------------------------------------------------------------------
8.11%, 5/15/09 4,050 3,660
-----------------------------------------------------------------------------
MSX International, Sr. Sub. Notes, 11.375%,1/15/08 6,550 5,993
-----------------------------------------------------------------------------
25,740
-----------------------------------------------------------------------------
Broadcasting 2.4%
Acme Television, Sr. Disc. Notes, 10.875%, 9/30/04 6,075 5,346
-----------------------------------------------------------------------------
<PAGE>
Chancellor Media
Sr. Sub Notes
8.00%, 11/1/08 6,700 6,700
-----------------------------------------------------------------------------
8.125%, 12/15/07 1,750 1,776
-----------------------------------------------------------------------------
8.75%, 6/15/07 2,850 2,879
-----------------------------------------------------------------------------
Paxson Communications, Sr. Sub. Notes,
11.625%, 10/1/02 4,750 4,833
-----------------------------------------------------------------------------
Radio Unica, Sr. Notes, STEP, 0%, 8/1/06 11,075 7,199
-----------------------------------------------------------------------------
Sinclair Broadcasting, Sr. Sub. Notes,
10.00%, 9/30/05 4,800 4,512
-----------------------------------------------------------------------------
33,245
-----------------------------------------------------------------------------
Building Products 1.8%
American Builders & Contractors Supply,
Sr. Sub. Notes
10.625%, 5/15/07 8,800 7,128
-----------------------------------------------------------------------------
Associated Materials, Sr. Sub. Notes, 9.25%,3/1/08 2,650 2,544
-----------------------------------------------------------------------------
ISG Resources, Sr. Sub. Notes, 10.00%, 4/15/08 14,500 9,570
-----------------------------------------------------------------------------
Nortek, Sr. Sub. Notes, 9.875%, 3/1/04 6,300 5,780
-----------------------------------------------------------------------------
25,022
-----------------------------------------------------------------------------
Building and Real Estate 1.1%
Lennar, Sr. Notes, 9.95%, 5/1/10 $ 15,000 $ 14,850
-----------------------------------------------------------------------------
14,850
-----------------------------------------------------------------------------
Cable Operators 6.0%
Callahan Nordrhein, Sr. Notes
(144a), 14.00%, 7/15/10 (EUR) + 9,700 7,254
-----------------------------------------------------------------------------
Charter Communications Holdings, Sr. Disc. Notes
STEP, 0%, 4/1/11 5,875 3,143
-----------------------------------------------------------------------------
Classic Cable
Sr. Sub. Notes
9.375%, 8/1/09 4,250 2,125
-----------------------------------------------------------------------------
10.50%, 3/1/10 2,500 1,250
-----------------------------------------------------------------------------
Coaxial Commerce Central Ohio, Sr. Notes,
10.00%, 8/15/06 6,250 5,938
-----------------------------------------------------------------------------
<PAGE>
Coaxial, Sr. Notes, STEP, 0%, 8/15/08 4,200 2,961
-----------------------------------------------------------------------------
Frontiervision Holdings
Sr. Disc. Notes, STEP, 0%, 9/15/07 18,600 14,508
-----------------------------------------------------------------------------
Sr. Notes, 11.00%, 10/15/06 2,625 2,257
-----------------------------------------------------------------------------
International Cabletel, Sr. Notes, STEP, 0%,2/1/06 6,650 5,719
-----------------------------------------------------------------------------
Northland Cable Television, Sr. Sub. Notes,
10.25%, 11/15/07 6,000 4,380
-----------------------------------------------------------------------------
NTL Communications, Sr. Notes, (144a),
11.875%, 10/1/10 + 8,125 6,622
-----------------------------------------------------------------------------
Telewest Communications
Sr. Disc. Deb., 11.00%, 10/1/07 6,300 5,292
-----------------------------------------------------------------------------
Sr. Notes, 9.875%, 2/1/10 4,750 3,563
-----------------------------------------------------------------------------
United International Holdings
Sr. Disc. Notes, STEP, 0%, 2/15/08 31,325 12,843
-----------------------------------------------------------------------------
United Pan Europe Communications
Sr. Disc. Notes, STEP, 0%, 2/1/10 19,850 5,161
-----------------------------------------------------------------------------
Sr. Notes, 10.875%, 8/1/09 3,100 1,767
-----------------------------------------------------------------------------
84,783
-----------------------------------------------------------------------------
Consumer Products 2.2%
Ballys Total Fitness, Sr. Sub. Notes,
9.875%, 10/15/07 7,075 6,438
-----------------------------------------------------------------------------
Chattem
Sr. Sub. Notes
8.875%, 4/1/08 4,500 3,150
-----------------------------------------------------------------------------
12.75%, 6/15/04 2,000 2,000
-----------------------------------------------------------------------------
Corning Consumer Products, Sr. Sub. Notes,
9.625%, 5/1/08 2,650 530
-----------------------------------------------------------------------------
Hedstrom Holdings, Sr. Disc.Notes, STEP, 0%,6/1/09 2,100 21
-----------------------------------------------------------------------------
Holmes Products, Gtd. Sr. Sub. Notes
9.875%, 11/15/07 2,800 1,512
-----------------------------------------------------------------------------
Jostens, Units
(Each unit consists of a $1,000 par
Sr. Sub. Note
(144a), 12.75%, 5/1/10, and 1 warrant) + $ 5,050 $ 4,545
-----------------------------------------------------------------------------
<PAGE>
Mattress Discounters, Sr. Notes, 12.625%, 7/15/07 4,000 3,580
-----------------------------------------------------------------------------
Sleepmaster, Sr. Sub. Notes, 11.00%, 5/15/09 10,000 8,588
-----------------------------------------------------------------------------
30,364
-----------------------------------------------------------------------------
Container 1.5%
Applied Extrusion Technology, Sr. Notes,
11.50%, 4/1/02 5,575 4,321
-----------------------------------------------------------------------------
BWAY, Sr. Sub. Notes, 10.25%, 4/15/07 13,905 12,653
-----------------------------------------------------------------------------
U.S. Can, Sr. Notes, (144a), 12.375%, 10/1/10 + 5,000 4,900
-----------------------------------------------------------------------------
21,874
-----------------------------------------------------------------------------
Electric Utilities 2.4%
Aes
Sr. Notes
8.50%, 11/1/07 7,000 6,545
-----------------------------------------------------------------------------
9.50%, 6/1/09 7,000 6,965
-----------------------------------------------------------------------------
CMS Energy, Sr. Notes, 9.875%, 10/15/07 10,000 10,283
-----------------------------------------------------------------------------
Orion Power Holdings, Sr. Notes, (144a),
12.00%, 5/1/10 + 8,820 9,437
-----------------------------------------------------------------------------
33,230
-----------------------------------------------------------------------------
Electronic Components 3.2%
Amkor Technology
Sr. Notes, 9.25%, 5/1/06 7,000 6,615
-----------------------------------------------------------------------------
Sr. Sub. Notes, 10.50%, 5/1/09 7,000 6,615
-----------------------------------------------------------------------------
Asat Finance, Gtd. Sr. Notes, (144a),
12.50%, 11/1/06 8,515 8,174
-----------------------------------------------------------------------------
Chippac International, Sr. Sub. Notes,
12.75%, 8/1/09 1,925 1,935
-----------------------------------------------------------------------------
Fairchild Semiconductor, Sr. Sub. Notes,
10.375%, 10/1/07 5,800 5,568
-----------------------------------------------------------------------------
Flextronics International
Sr. Sub. Notes, (144a)
9.75%, 7/1/10 (EUR) + 1,500 1,285
-----------------------------------------------------------------------------
9.875%, 7/1/10 + 4,500 4,263
-----------------------------------------------------------------------------
<PAGE>
Intersil, Sr. Sub. Notes, 13.25%, 8/15/09 553 614
-----------------------------------------------------------------------------
SCG Holding & Semiconductor, Sr. Sub. Notes,
12.00%, 8/1/09 7,588 7,133
-----------------------------------------------------------------------------
Viasystems, Sr. Sub. Notes
9.75%, 6/1/07 3,020 2,507
-----------------------------------------------------------------------------
44,709
-----------------------------------------------------------------------------
Energy 6.5%
Canadian Forest Oil, Sr. Sub. Notes, 8.75%,9/15/07 7,200 6,912
-----------------------------------------------------------------------------
Comstock Resources, Sr. Notes, 11.25%, 5/1/07 7,100 7,242
-----------------------------------------------------------------------------
Energy Corp. of America, Sr. Sub. Notes,
9.50%, 5/15/07 7,050 5,499
-----------------------------------------------------------------------------
Eott Energy Partners, Sr. Notes, 11.00%, 10/1/09 $ 4,900 $ 5,072
-----------------------------------------------------------------------------
Forest Oil, Sr. Sub. Notes, 10.50%, 1/15/06 4,800 4,872
-----------------------------------------------------------------------------
Frontier Oil, Sr. Notes, 11.75%, 11/15/09 750 746
-----------------------------------------------------------------------------
Geophysique, Sr. Notes, (144a), 10.625%,11/15/07 + 4,950 4,956
-----------------------------------------------------------------------------
Nuevo Energy
Sr. Sub. Notes
9.50%, 6/1/08 2,500 2,500
-----------------------------------------------------------------------------
(144a), 9.375%, 10/1/10 + 1,500 1,496
-----------------------------------------------------------------------------
PDVSA Finance, 6.80%, 11/15/08 8,700 7,495
-----------------------------------------------------------------------------
Plains Resources
Sr. Sub. Notes
10.25%, 3/15/06 5,335 5,362
-----------------------------------------------------------------------------
(144a), 10.25%, 3/15/06 + 2,000 1,995
-----------------------------------------------------------------------------
R&B Falcon, Sr. Notes, 6.75%, 4/15/05 2,500 2,350
-----------------------------------------------------------------------------
RBF Finance, Sr. Notes, 11.00%, 3/15/06 4,800 5,544
-----------------------------------------------------------------------------
Swift Energy, Sr. Sub. Notes, 10.25%, 8/1/09 7,000 7,070
-----------------------------------------------------------------------------
Universal Compression, Sr. Disc. Notes, STEP,
0%, 2/15/08 15,615 12,492
-----------------------------------------------------------------------------
YPF Sociedad Anonima, Sr. Notes, 10.00%, 11/2/28 10,000 10,584
-----------------------------------------------------------------------------
92,187
-----------------------------------------------------------------------------
<PAGE>
Entertainment and Leisure 1.3%
Cinemark USA, Sr. Sub. Notes, 8.50%, 8/1/08 3,125 1,938
-----------------------------------------------------------------------------
Premier Parks
Sr. Disc. Notes, STEP, 0%, 4/1/08 9,500 6,412
-----------------------------------------------------------------------------
Sr. Notes, 9.75%, 6/15/07 5,000 4,675
-----------------------------------------------------------------------------
Yankeenets Capital, Sr. Notes, (144a),
12.75%, 3/1/07 + 5,750 5,671
-----------------------------------------------------------------------------
18,696
-----------------------------------------------------------------------------
Financial 1.6%
Bank United, Jr. Sub. Notes, 10.25%, 12/31/26 7,500 5,700
-----------------------------------------------------------------------------
DLJ Secured Loan Trust, 10.125%, 7/7/07 4,500 4,680
-----------------------------------------------------------------------------
Euronet Services, 12.375%, 7/1/06 (EUR) 10,500 2,217
-----------------------------------------------------------------------------
Golden State Holdings
Sr. Notes
7.00%, 8/1/03 7,025 6,714
-----------------------------------------------------------------------------
7.125%, 8/1/05 2,975 2,762
-----------------------------------------------------------------------------
22,073
-----------------------------------------------------------------------------
Food and Tobacco 1.9%
B&G Foods, Sr. Sub. Notes, 9.625%, 8/1/07 12,000 7,980
-----------------------------------------------------------------------------
Cott
Sr. Notes
8.50%, 5/1/07 $ 6,000 $ 5,565
-----------------------------------------------------------------------------
9.375%, 7/1/05 4,575 4,438
-----------------------------------------------------------------------------
Doane Pet Care, Sr. Sub. Notes, 9.75%, 5/15/07 8,343 6,007
-----------------------------------------------------------------------------
Luigino's, Sr. Sub. Notes, 10.00%, 2/1/06 3,675 2,903
-----------------------------------------------------------------------------
26,893
-----------------------------------------------------------------------------
Gaming 5.8%
Anchor Gaming, Sr. Sub. Notes, (144a),
9.875%, 10/15/08 + 4,650 4,720
-----------------------------------------------------------------------------
Argosy Gaming, Sr. Sub. Notes, 10.75%, 6/1/09 9,450 9,733
-----------------------------------------------------------------------------
Capital Gaming International, Sr. Notes,
12.00%, 5/28/01 *++* 2 0
-----------------------------------------------------------------------------
<PAGE>
Eldorado Resorts, Sr. Sub. Notes, 10.50%, 8/15/06 6,750 6,683
-----------------------------------------------------------------------------
Hollywood Casino Shreveport, 1st Mtg.,
13.00%, 8/1/06 5,000 5,325
-----------------------------------------------------------------------------
Horseshoe Gaming LLC, Sr. Sub. Notes,
9.375%, 6/15/07 9,425 9,260
-----------------------------------------------------------------------------
International Game Technology, Sr. Notes,
8.375%, 5/15/09 10,000 9,750
-----------------------------------------------------------------------------
Isle of Capri Casinos, Sr. Sub. Notes,
8.75%, 4/15/09 7,850 6,673
-----------------------------------------------------------------------------
Mandalay Resort Group, Sr. Notes, 9.50%, 8/1/08 4,400 4,378
-----------------------------------------------------------------------------
Mohegan Tribal Gaming, Sr. Notes, 8.125%, 1/1/06 5,000 4,875
-----------------------------------------------------------------------------
Station Casinos, Sr. Sub. Notes, 10.125%, 3/15/06 8,000 8,160
-----------------------------------------------------------------------------
Venetian Casino, Sr. Sub. Notes, 14.25%, 11/15/05 12,525 12,274
-----------------------------------------------------------------------------
81,831
-----------------------------------------------------------------------------
Health Care 6.5%
Bio-Rad Labs, Sr. Sub. Notes, 11.625%, 2/15/07 7,800 8,034
-----------------------------------------------------------------------------
Dade International, Sr. Sub. Notes, 11.125%,5/1/06 2,125 319
-----------------------------------------------------------------------------
Davita, Conv. Notes, 7.00%, 5/15/09 1,299 958
-----------------------------------------------------------------------------
Fresenius Medical Care Capital Trust
I, 9.00%, 12/1/06 6,500 6,240
-----------------------------------------------------------------------------
II, 7.875%, 2/1/08 3,650 3,321
-----------------------------------------------------------------------------
HCA Healthcare, 8.75%, 9/1/10 15,000 15,347
-----------------------------------------------------------------------------
Laisis Healthcare, Sr. Sub. Notes, 13.00%,10/15/09 5,000 4,400
-----------------------------------------------------------------------------
King Pharmaceuticals, Sr. Sub. Notes,
10.75%, 2/15/09 5,800 6,090
-----------------------------------------------------------------------------
Lifepoint Hospitals Holdings, Sr. Sub. Notes,
10.75%, 5/15/09 5,800 6,032
-----------------------------------------------------------------------------
Mariner Post Acute Network
Sr. Sub. Notes, 9.50%, 11/1/07 * 3,000 60
-----------------------------------------------------------------------------
Sr. Sub. Disc. Notes, Zero Coupon, 11/1/07 * 8,100 81
-----------------------------------------------------------------------------
<PAGE>
Omnicare, Sr. Sub. Deb. Conv., 5.00%, 12/1/07 8,000 5,976
-----------------------------------------------------------------------------
Owens & Minor, Sr. Sub. Notes, 10.875%, 6/1/06 1,000 1,030
-----------------------------------------------------------------------------
Quest Diagnostics, Gtd. Sr. Sub. Notes,
10.75%, 12/15/06 8,050 8,533
-----------------------------------------------------------------------------
Tenet Healthcare
Sr. Notes, 9.25%, 9/1/10 $ 6,000 $ 6,195
-----------------------------------------------------------------------------
Sr. Sub. Notes, 8.125%, 12/1/08 5,000 4,775
-----------------------------------------------------------------------------
Sub. Exch. Notes, 6.00%, 12/1/05 5,000 4,350
-----------------------------------------------------------------------------
Total Renal Care
Conv. Notes, 5.625%, 7/15/06 5,700 4,218
-----------------------------------------------------------------------------
Triad Hospitals, Sr. Sub. Notes, 11.00%, 5/15/09 5,500 5,665
-----------------------------------------------------------------------------
91,624
-----------------------------------------------------------------------------
Internet Service Providers 0.8%
Exodus Communications
Sr. Notes
10.75%, 12/15/09 3,150 2,489
-----------------------------------------------------------------------------
11.25%, 7/1/08 3,850 3,080
-----------------------------------------------------------------------------
(144a), 11.375%, 7/15/08 (EUR) + 5,850 4,222
-----------------------------------------------------------------------------
Globix, Sr. Notes, 12.50%, 2/1/10 4,000 1,920
-----------------------------------------------------------------------------
11,711
-----------------------------------------------------------------------------
Lodging 2.0%
Courtyard by Marriott II, Sr. Notes, 10.75%,2/1/08 14,700 14,626
-----------------------------------------------------------------------------
HMH Properties, Sr. Notes, 7.875%, 8/1/08 6,225 5,696
-----------------------------------------------------------------------------
John Q. Hammons Hotels, 1st Mtg. Notes,
8.875%, 2/15/04 4,500 4,185
-----------------------------------------------------------------------------
Lodgian Financing, Sr. Sub. Notes, 12.25%, 7/15/09 4,050 3,767
-----------------------------------------------------------------------------
28,274
-----------------------------------------------------------------------------
Long Distance 1.7%
Energis, Sr. Notes, 9.75%, 6/15/09 4,400 4,092
-----------------------------------------------------------------------------
Esprit Telecom, Sr. Notes, 10.875%, 6/15/08 2,000 60
-----------------------------------------------------------------------------
<PAGE>
Hermes Europe Railtel
Sr. Notes
10.375%, 1/15/09 150 60
-----------------------------------------------------------------------------
11.50%, 8/15/07 2,150 860
-----------------------------------------------------------------------------
L3 Communications
Sr. Notes
9.125%, 5/1/08 2,650 1,749
-----------------------------------------------------------------------------
11.00%, 3/15/08 4,800 3,696
-----------------------------------------------------------------------------
Sr. Sub. Notes, 10.375%, 5/1/07 4,780 4,888
-----------------------------------------------------------------------------
Metromedia Fiber Network, Sr. Notes,
10.00%, 11/15/08 7,000 5,390
-----------------------------------------------------------------------------
Worldwide Fiber, Sr. Notes, 12.00%, 8/1/09 4,750 3,135
-----------------------------------------------------------------------------
23,930
-----------------------------------------------------------------------------
Manufacturing 2.0%
Alfa Laval Special Finance, Sr. Notes, (144a)
12.125%, 11/15/10 (EUR) + $ 2,400 $ 2,108
-----------------------------------------------------------------------------
Hawk, Sr. Notes, 10.25%, 12/1/03 7,779 7,390
-----------------------------------------------------------------------------
HCC Industries, Sr. Sub. Notes, 10.75%, 5/15/07 9,025 4,061
-----------------------------------------------------------------------------
International Wire, Sr. Sub. Notes
11.75%, 6/1/05 14,302 14,016
-----------------------------------------------------------------------------
27,575
-----------------------------------------------------------------------------
Metals and Mining 1.3%
Bethlehem Steel, Sr. Notes, 10.375%, 9/1/03 4,950 3,465
-----------------------------------------------------------------------------
Better Minerals & Aggregates, Sr. Sub. Notes
13.00%, 9/15/09 7,750 6,045
-----------------------------------------------------------------------------
Golden Northwest Aluminum,1st Mtg.,12.00%,12/15/06 4,550 4,322
-----------------------------------------------------------------------------
Russel Metals, Sr. Notes, 10.00%, 6/1/09 6,000 5,220
-----------------------------------------------------------------------------
19,052
-----------------------------------------------------------------------------
Paper and Paper Products 2.3%
Ainsworth Lumber, Sr. Notes, 12.50%, 7/15/07 3,400 2,686
-----------------------------------------------------------------------------
Four M, Sr. Notes, 12.00%, 6/1/06 4,750 4,418
-----------------------------------------------------------------------------
<PAGE>
Millar Western, Sr. Notes, 9.875%, 5/15/08 3,400 2,890
-----------------------------------------------------------------------------
Norampac, Sr. Notes, 9.50%, 2/1/08 875 888
-----------------------------------------------------------------------------
Paperboard International, Sr. Notes,8.375%,9/15/07 6,750 5,062
-----------------------------------------------------------------------------
Repap New Brunswick, Sr. Sec. Notes, 11.50%,6/1/04 3,950 4,464
-----------------------------------------------------------------------------
Riverwood International, Sr. Notes
10.25%, 4/1/06 2,500 2,450
-----------------------------------------------------------------------------
10.875%, 4/1/08 8,700 7,699
-----------------------------------------------------------------------------
U.S. Timberland Klamath Falls, Sr. Notes,
9.625%, 11/15/07 2,160 1,728
-----------------------------------------------------------------------------
32,285
-----------------------------------------------------------------------------
Printing and Publishing 1.5%
Hollinger International Publishing, Sr. Sub. Notes
9.25%, 3/15/07 9,900 9,751
-----------------------------------------------------------------------------
Sun Media, Sr. Sub. Notes
9.50%, 2/15/07 4,275 4,307
-----------------------------------------------------------------------------
9.50%, 5/15/07 2,925 2,947
-----------------------------------------------------------------------------
Ziff Davis Media, Sr. Sub. Notes, (144a),
12.00%, 7/15/10 + 5,700 4,731
-----------------------------------------------------------------------------
21,736
-----------------------------------------------------------------------------
Restaurants 0.6%
AFC Enterprises, Sr. Sub. Notes, 10.25%, 5/15/07 5,000 4,600
-----------------------------------------------------------------------------
Avado Brands, Sr. Notes, 9.75%, 6/1/06 2,000 900
-----------------------------------------------------------------------------
Foodmaker, Sr. Notes, 8.375%, 4/15/08 2,750 2,558
-----------------------------------------------------------------------------
8,058
-----------------------------------------------------------------------------
Retail 0.0%
Safelite Glass, Sr. Sub. Notes, 9.875, 12/15/06 * $ 6,700 $ 50
-----------------------------------------------------------------------------
50
-----------------------------------------------------------------------------
Satellites 0.6%
Orbital Imaging, Sr. Notes, 11.625%, 3/1/05 3,400 680
-----------------------------------------------------------------------------
<PAGE>
Pegasus Communications
Sr. Notes
9.625%, 10/15/05 2,950 2,714
-----------------------------------------------------------------------------
9.75%, 12/1/06 4,900 4,508
-----------------------------------------------------------------------------
7,902
-----------------------------------------------------------------------------
Service 2.5%
AP Holdings, Sr. Disc. Notes, STEP, 0%, 3/15/08 4,300 215
-----------------------------------------------------------------------------
Avis Group Holdings, Sr. Sub. Notes, 11.00%,5/1/09 8,000 8,560
-----------------------------------------------------------------------------
Coinmach, Sr. Notes, 11.75%, 11/15/05 8,475 8,518
-----------------------------------------------------------------------------
Global Imaging, Sr. Sub. Notes, 10.75%, 2/15/07 6,300 4,725
-----------------------------------------------------------------------------
Intertek Finance, Sr. Notes, 10.25%, 11/1/06 7,700 3,850
-----------------------------------------------------------------------------
Mastec, Sr. Sub. Notes, 7.75%, 2/1/08 7,425 6,905
-----------------------------------------------------------------------------
Sitel, Sr. Sub. Notes, 9.25%, 3/15/06 3,475 2,919
-----------------------------------------------------------------------------
35,692
-----------------------------------------------------------------------------
Specialty Chemicals 2.6%
American Pacific, Sr. Notes, 9.25%, 3/1/05 5,750 5,635
-----------------------------------------------------------------------------
Hercules, Sr. Notes, (144a), 11.125%, 11/15/07 + 8,125 7,719
-----------------------------------------------------------------------------
Ineos Acrylics Finance, Sr. Notes, (144a),
10.25%, 5/15/10 + 1,950 1,551
-----------------------------------------------------------------------------
Koppers, Sr. Sub. Notes, 9.875%, 12/1/07 8,850 8,363
-----------------------------------------------------------------------------
Lyondell Chemical
Sr. Notes, 9.875%, 5/1/07 2,400 2,280
-----------------------------------------------------------------------------
Sr. Sub. Notes, 10.875%, 5/1/09 2,875 2,674
-----------------------------------------------------------------------------
Octel, Sr. Notes, 10.00%, 5/1/06 9,255 8,700
-----------------------------------------------------------------------------
36,922
-----------------------------------------------------------------------------
<PAGE>
Supermarkets 0.2%
Jitney-Jungle Stores
Sr. Sub. Notes
10.375%, 9/15/07 8,000 60
-----------------------------------------------------------------------------
12.00%, 3/1/06 3,100 46
-----------------------------------------------------------------------------
The Pantry, Sr. Sub. Notes, 10.25%, 10/15/07 3,325 3,051
-----------------------------------------------------------------------------
3,157
-----------------------------------------------------------------------------
Textiles and Apparel 1.7%
Dan River, Sr. Sub. Notes, 10.125%, 12/15/03 $ 13,100 $ 9,170
-----------------------------------------------------------------------------
Delta Mills, Sr. Notes, 9.625%, 9/1/07 7,600 6,612
-----------------------------------------------------------------------------
Dyersburg, Sr. Sub. Notes, 9.75%, 9/1/07 10,150 596
-----------------------------------------------------------------------------
Westpoint Stevens
Sr. Notes
7.875%, 6/15/05 7,825 5,556
-----------------------------------------------------------------------------
7.875%, 6/15/08 2,000 1,360
-----------------------------------------------------------------------------
23,294
-----------------------------------------------------------------------------
Transportation (excluding Railroad) 1.2%
Greyhound Lines, Sr. Notes, 11.50%, 4/15/07 1,100 792
-----------------------------------------------------------------------------
Petro Stopping, Sr. Notes, 10.50%, 2/1/07 5,700 4,731
-----------------------------------------------------------------------------
TravelCenters of America, Sr. Sub. Notes, (144a),
12.75%, 5/1/09 + 12,800 12,000
-----------------------------------------------------------------------------
17,619
-----------------------------------------------------------------------------
Wireless Communications 7.5%
Airgate PCS, Sr. Sub. Notes, STEP, 0%, 10/1/09 8,600 4,128
-----------------------------------------------------------------------------
Alamosa Holdings, Sr. Disc. Notes,
Zero Coupon, 2/15/10 7,275 2,910
-----------------------------------------------------------------------------
Clearnet Communications (Class A1)
Sr. Disc. Notes, (144a), STEP, 0%, 5/1/09 + 1,450 1,153
-----------------------------------------------------------------------------
Dobson Communications, Sr. Notes, 10.875%, 7/1/10 5,000 4,800
-----------------------------------------------------------------------------
Horizon, Sr. Disc. Notes, (144a), STEP,0%,10/1/10+ 9,150 3,706
-----------------------------------------------------------------------------
IPCS, Sr. Notes, (144a), STEP, 0%, 7/15/10 + 8,700 3,524
-----------------------------------------------------------------------------
Leap Wireless, Sr. Disc. Notes, STEP, 0%, 4/15/10 3,475 695
-----------------------------------------------------------------------------
<PAGE>
Microcell Telecommunications
Sr. Disc. Notes
STEP, 0%, 10/15/07 (CAD) 1,450 689
-----------------------------------------------------------------------------
STEP, 0%, 6/1/06 (CAD) 5,375 5,093
-----------------------------------------------------------------------------
Millicom International Cellular
Sr. Sub. Disc. Notes, Zero Coupon, 6/1/06 7,825 6,104
-----------------------------------------------------------------------------
Nextel Communications
Sr. Disc. Notes
STEP, 0%, 10/31/07 2,000 1,380
-----------------------------------------------------------------------------
STEP, 0%, 2/15/08 5,775 3,869
-----------------------------------------------------------------------------
Nextel International, Sr. Notes, (144a),
12.75%, 8/1/10 + 7,000 5,740
-----------------------------------------------------------------------------
Nextel Partners, Sr. Disc. Notes, STEP, 0%, 2/1/09 14,210 9,165
-----------------------------------------------------------------------------
Price Communications Wireless, Sr. Notes,
9.125%, 12/15/06 8,675 8,935
-----------------------------------------------------------------------------
Rogers Cantel, Sr. Deb., 9.75%, 6/1/16 6,625 7,089
-----------------------------------------------------------------------------
Telecorp PCS
Sr. Sub. Disc. Notes, Zero Coupon, 4/15/09 $ 3,150 $ 2,000
-----------------------------------------------------------------------------
Sr. Sub. Notes, 10.625%, 7/15/10 3,400 3,230
-----------------------------------------------------------------------------
Triton PCS, Sr. Sub. Disc. Notes, STEP, 0%, 5/1/08 12,275 9,083
-----------------------------------------------------------------------------
Ubiquitel, Sr. Disc. Notes, STEP, 0%, 4/15/10 15,500 6,045
-----------------------------------------------------------------------------
VoiceStream Wireless, Sr. Notes, 10.375%, 11/15/09 15,000 16,050
-----------------------------------------------------------------------------
105,388
-----------------------------------------------------------------------------
Wireline Communications 4.8%
Alaska Communications, Sr. Sub. Notes,
9.375%, 5/15/09 8,700 7,134
-----------------------------------------------------------------------------
Allegiance Telecom, Sr. Notes, Zero Coupon,2/15/08 10,625 6,056
-----------------------------------------------------------------------------
Colt Telecom Group, Sr. Disc. Notes, STEP,
0%, 12/15/06 20,000 17,600
-----------------------------------------------------------------------------
Completel Europe, Sr. Notes, 14.00%, 4/15/10 (EUR) 4,850 3,248
-----------------------------------------------------------------------------
Covad Communications Group, Sr. Disc. Notes,
13.50%, 3/15/08 7,850 1,021
-----------------------------------------------------------------------------
<PAGE>
Focal Communications, Sr. Notes, 11.875%, 1/15/10 4,275 2,223
-----------------------------------------------------------------------------
Intermedia Communications
Sr. Disc. Notes, STEP, 0%, 5/15/06 1,000 900
-----------------------------------------------------------------------------
Sr. Notes
8.60%, 6/1/08 4,900 4,312
-----------------------------------------------------------------------------
8.875%, 11/1/07 1,400 1,232
-----------------------------------------------------------------------------
Jazztel, Sr. Notes, 13.25%, 12/15/09 2,900 1,576
-----------------------------------------------------------------------------
KMC Telecom Holdings
Sr. Notes
STEP, 0%, 2/15/08 9,650 965
-----------------------------------------------------------------------------
13.50%, 5/15/09 2,000 600
-----------------------------------------------------------------------------
McLeod USA, Sr. Notes, STEP, 0%,Zero Coupon,3/1/07 9,700 7,420
-----------------------------------------------------------------------------
Nextlink Communications, Sr. Disc. Notes, STEP,
0%, 6/1/09 3,950 1,323
-----------------------------------------------------------------------------
Tele1 Europe, Sr. Notes, 13.00%, 5/15/09 4,175 3,507
-----------------------------------------------------------------------------
Time Warner Telecom, Sr. Notes, 9.75%, 7/15/08 5,350 4,494
-----------------------------------------------------------------------------
Versatel Telecom, Sr. Notes, 13.25%, 5/15/08 6,350 4,191
-----------------------------------------------------------------------------
67,802
-----------------------------------------------------------------------------
Total Corporate Bonds and Notes (Cost $1,331,123) 1,136,176
-----------------------------------------------------------------------------
EQUITY AND CONVERTIBLE SECURITIES 9.1%
Automobiles and Related 0.0%
Hayes Wheels International, Warrants, 7/1/03 * 18 14
-----------------------------------------------------------------------------
14
-----------------------------------------------------------------------------
Broadcasting 1.4%
Citadel Broadcasting, Pfd. Stock (Series B), PIK * 70 $ 7,602
-----------------------------------------------------------------------------
Cumulus Media, Exch. Pfd. Stock (Series A), PIK * 3 2,449
-----------------------------------------------------------------------------
Sinclair Broadcasting, Conv. Pfd. 60 1,568
-----------------------------------------------------------------------------
Sinclair Capital, Pfd. Stock (Series B) 87 7,785
-----------------------------------------------------------------------------
19,404
-----------------------------------------------------------------------------
<PAGE>
Cable Operators 2.2%
Classic Communications, Common Stock, (144a) *++ 9 32
-----------------------------------------------------------------------------
CSC Holdings
Pfd. Stock (Series H), PIK 46 4,991
-----------------------------------------------------------------------------
Pfd. Stock (Series M), PIK 235 25,168
-----------------------------------------------------------------------------
Peachtree Cable Associates, Common Stock 10 0
-----------------------------------------------------------------------------
Time Warner Telecom, Common Stock 2 95
-----------------------------------------------------------------------------
UIH Australia Pacific, Warrants, 5/15/06 * 5 25
-----------------------------------------------------------------------------
30,311
-----------------------------------------------------------------------------
Consumer Products 0.0%
Hedstrom Holdings, Common Stock, (144a) * 246 2
-----------------------------------------------------------------------------
Jostens, Warrants, 5/1/10 * 5 101
-----------------------------------------------------------------------------
Mattress Discounters, Warrants, 7/15/07 * 4 40
-----------------------------------------------------------------------------
143
-----------------------------------------------------------------------------
Electronic Components 0.0%
Asat Finance LLC, Warrants, (144a) +* 2 112
-----------------------------------------------------------------------------
112
-----------------------------------------------------------------------------
Gaming 0.0%
Capital Gaming International, Common Stock++* 1 0
-----------------------------------------------------------------------------
0
-----------------------------------------------------------------------------
Health Care 0.0%
Wright Medical Technology, Warrants, 6/30/03 * 38 0
-----------------------------------------------------------------------------
0
-----------------------------------------------------------------------------
Internet Service Providers 0.0%
Cybernet Internet Services, Warrants, 7/1/09 * 3 17
-----------------------------------------------------------------------------
Splitrock Services, Warrants, 7/15/08++* 2 247
-----------------------------------------------------------------------------
264
-----------------------------------------------------------------------------
Lodging 0.2%
Lodgian Capital Trust I, Conv. Exch. Pfd. Stock * 125 2,375
-----------------------------------------------------------------------------
2,375
-----------------------------------------------------------------------------
<PAGE>
Long Distance 0.6%
Global Crossing Holdings, Sr. Pfd. Exch. Stock 101 $ 9,068
-----------------------------------------------------------------------------
RSL Communications, Warrants, (144a), 11/15/06 * 3 15
-----------------------------------------------------------------------------
9,083
-----------------------------------------------------------------------------
Metals and Mining 0.3%
International Utility Structures
Common Stock (CAD) * 25 16
-----------------------------------------------------------------------------
Pfd. Stock, PIK * 1 708
-----------------------------------------------------------------------------
Exch. Pfd. Stock, PIK * 6 2,845
-----------------------------------------------------------------------------
3,569
-----------------------------------------------------------------------------
Retail 0.0%
Lamonts Apparel
Common Stock * 3 0
-----------------------------------------------------------------------------
Warrants, 1/31/08 *++ 1 0
-----------------------------------------------------------------------------
0
-----------------------------------------------------------------------------
Satellites 0.5%
Pegasus Communications, Exch. Pfd. Stock, PIK * 7 6,933
-----------------------------------------------------------------------------
6,933
-----------------------------------------------------------------------------
Service 0.0%
Efficient Market Services, Common Stock +*++* 558 0
-----------------------------------------------------------------------------
0
-----------------------------------------------------------------------------
Supermarkets 0.0%
Pathmark Stores
Common Stock * 23 385
-----------------------------------------------------------------------------
Warrants, 9/19/10 * 36 178
-----------------------------------------------------------------------------
563
-----------------------------------------------------------------------------
Textiles and Apparel 0.3%
Anvil Holdings, Sr. Exch. Pfd.
Stock (Series B), PIK * 326 4,561
-----------------------------------------------------------------------------
4,561
-----------------------------------------------------------------------------
<PAGE>
Wireless Communications 2.5%
Dobson Communications, Pfd. Stock, PIK * 12 10,642
-----------------------------------------------------------------------------
IPCS, Warrants, 6/15/10 * 9 217
-----------------------------------------------------------------------------
Leap Wireless, Warrants, 4/15/10 * 3 42
-----------------------------------------------------------------------------
Microcell Telecommunications, Common Stock
(Class B) (CAD) * 44 1,020
-----------------------------------------------------------------------------
Nextel Communications
Common Stock * 24 $ 755
-----------------------------------------------------------------------------
Exch. Pfd. Stock (Series E), PIK * 11 8,643
-----------------------------------------------------------------------------
Exch. Pfd. Stock (Series D), PIK * 46 4,277
-----------------------------------------------------------------------------
Rural Cellular, Sr. Exch. Pfd. Stock, PIK * 11 9,517
-----------------------------------------------------------------------------
Ubiquitel, Warrants * 19 469
-----------------------------------------------------------------------------
35,582
-----------------------------------------------------------------------------
Wireline Communications 1.1%
Allegiance Telecom, Warrants, 2/3/08 * 8 225
-----------------------------------------------------------------------------
AT&T Canada, Common Stock, (144a) +* 28 718
-----------------------------------------------------------------------------
E. Spire Communications, Jr. Red. Pfd. Stock,PIK * 80 1,364
-----------------------------------------------------------------------------
Intermedia Communications, Exch. Pfd. Stock, PIK * 87 6,976
-----------------------------------------------------------------------------
KMC Telecom Holdings, Warrants, (144a), 4/15/08 * 5 12
-----------------------------------------------------------------------------
Rhythms Netconnections, Pfd. Conv., (144a) * 30 244
-----------------------------------------------------------------------------
Tele1 Europe Holding, Common Stock, ADR (USD) * 145 769
-----------------------------------------------------------------------------
XO Communications, Pfd. Stock, PIK * 121 5,071
-----------------------------------------------------------------------------
15,379
-----------------------------------------------------------------------------
Total Equity and Convertible
Securities (Cost $167,559) 128,293
-----------------------------------------------------------------------------
<PAGE>
Money Market Funds 9.8%
Reserve Investment Fund, 6.70% # 137,995 137,995
-----------------------------------------------------------------------------
Total Money Market Funds (Cost $137,995) 137,995
Total Investments in Securities
-----------------------------------------------------------------------------
99.5% of Net Assets (Cost $1,636,677) $1,402,464
Other Assets Less Liabilities 6,482
NET ASSETS $1,408,946
Net Assets Consist of:
Accumulated net investment
income - net of distributions $ 22
Accumulated net realized
gain/loss - net of distributions (218,177)
Net unrealized gain (loss) (234,219)
Paid-in-capital applicable to 204,652,806
shares of $0.01 par value capital stock
outstanding; 1,000,000,000 shares authorized 1,861,320
NET ASSETS $1,408,946
NET ASSET VALUE PER SHARE
High Yield shares
($1,408,446,573/204,580,191 shares outstanding) $ 6.88
High Yield Advisor Class shares
($499,711/72,615 shares outstanding) $ 6.88
+ Private Placement
* Non-income producing
++ Security contains some restrictions as to public resale - total of such
securities at period-end amounts to 0.02% of net assets.
* Securities valued by fund's board
# Seven-day yield
PIK Payment-in-Kind
STEP Stepped coupon note for which the interest rate will adjust on
specified future date(s).
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 period-end amounts
to 8.02% of net assets.
ADR American depository receipt
CAD Canadian dollar
EUR Euro
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price High Yield Fund
----------------------------- Unaudited
STATEMENT OF OPERATIONS
----------------------- In thousands
6 Months
Ended
11/30/00
Investment Income (Loss)
Income
Interest $ 74,683
Dividend 8,150
-------------------------------------------------------------------------------
Total income 82,833
-------------------------------------------------------------------------------
Expenses
Investment management 4,718
Shareholder servicing
High Yield shares 1,313
High Yield Advisor shares -
Custody and accounting 115
Prospectus and shareholder reports
High Yield shares 52
High Yield Advisor shares -
Registration 22
Legal and audit 20
Directors 6
Miscellaneous 4
-------------------------------------------------------------------------------
Total expenses 6,250
Expenses paid indirectly (33)
-------------------------------------------------------------------------------
Net expenses 6,217
-------------------------------------------------------------------------------
Net investment income (loss) 76,616
-------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (35,014)
Foreign currency transactions (58)
-------------------------------------------------------------------------------
Net realized gain (loss) (35,072)
-------------------------------------------------------------------------------
Change in net unrealized gain or loss
Securities (90,612)
Other assets and liabilities
denominated in foreign currencies (6)
-------------------------------------------------------------------------------
Change in net unrealized gain or loss on securities (90,618)
-------------------------------------------------------------------------------
Net realized and unrealized gain (loss) (125,690)
-------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ (49,074)
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price High Yield Fund
----------------------------- Unaudited
STATEMENT OF CHANGES IN NET ASSETS
---------------------------------- In thousands
6 Months Year
Ended Ended
11/30/00 5/31/00
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 76,616 $ 158,245
Net realized gain (loss) (35,072) (44,390)
Change in net unrealized gain or loss (90,618) (123,759)
-------------------------------------------------------------------------------
Increase (decrease) in net assets from operations (49,074) (9,904)
-------------------------------------------------------------------------------
Distributions to shareholders
Net investment income
High Yield shares (77,474) (160,242)
High Yield Advisor Class shares (18) -
-------------------------------------------------------------------------------
Decrease in net assets from distributions (77,492) (160,242)
-------------------------------------------------------------------------------
Capital share transactions *
Shares sold
High Yield shares 110,384 263,358
High Yield Advisor Class shares 638 10
Distributions reinvested
High Yield shares 63,581 130,969
High Yield Advisor Class shares 1 -
Shares redeemed
High Yield shares (162,969) (476,197)
High Yield Advisor Class shares (106) -
Redemption fees received
High Yield shares 138 297
-------------------------------------------------------------------------------
Increase (decrease) in net assets from
capital share transactions 11,667 (81,563)
-------------------------------------------------------------------------------
Net Assets
Increase (decrease) during period (114,899) (251,709)
Beginning of period 1,523,845 1,775,554
-------------------------------------------------------------------------------
End of period $1,408,946 $ 1,523,845
*Share information
Shares sold
High Yield shares 14,752 33,110
High Yield Advisor Class shares 86 1
Distributions reinvested
High Yield shares 8,646 16,610
Shares redeemed
High Yield shares (22,027) (59,930)
High Yield Advisor Class shares (14) -
-------------------------------------------------------------------------------
Increase (decrease) in shares outstanding 1,443 (10,209)
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price High Yield Fund
-----------------------------
Unaudited November 30, 2000
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. The fund seeks high current income and, secondarily, capital
appreciation. The fund has two classes of shares -- High Yield, offered since
December 31, 1984, and High Yield Advisor Class, first offered on March 31,
2000. High Yield Advisor Class sells its shares only through financial
intermediaries, which it compensates for distribution and certain administrative
services under a Board-approved Rule 12b-1 plan. Each class has exclusive voting
rights on matters related solely to that class, separate voting rights on
matters that relate to both classes, and, in all other respects, the same rights
and obligations as the other class.
The accompanying financial statements were prepared in accordance with
generally accepted accounting principles, which require the use of estimates
made by fund management.
Valuation Debt securities are generally traded in the over-the-counter
market. Investments in securities 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.
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 that 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.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation.
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.
<PAGE>
Currency Translation Assets and liabilities denominated in foreign
currencies are translated into U.S. dollar values each day at the prevailing
exchange rate, using the mean of the bid and offer prices of such currencies
against U.S. dollars quoted by a major bank. Purchases and sales of securities
and income and expenses are translated into U.S. dollars at the prevailing
exchange rate on the dates of such transactions. The effect of changes in
foreign exchange rates on realized and unrealized security gains and losses is
reflected as a component of such gains and losses. 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.
In November, 2000, the American Institute of Certified Public Accountants
issued a revised Audit and Accounting GuideNAudits of Investment Companies (the
guide), which will be adopted be the fund as of June 1, 2001. The guide requires
all premiums and discounts on debt securities to be amortized. Upon adoption,
the fund will adjust the cost of its debt securities, and corresponding
unrealized gain/loss thereon, in the amount of the cumulative amortization that
would have been recognized had amortization been in effect from the purchase
date of each holding. This adjustment will have no effect on the fund's net
assets or results of operations.
Class Accounting The High Yield Advisor Class pays distribution and
administrative expenses, in the form of Rule 12b-1 fees, in an amount not
exceeding 0.25% of the class's average net assets. Shareholder servicing,
prospectus, and shareholder report expenses are charged directly to the class to
which they relate. Expenses common to both classes, investment income, and
realized and unrealized gains and losses are allocated to the classes based upon
the relative daily net assets of each class. Income distributions are declared
by each class on a daily basis and paid monthly.
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 net investment income and realized gains
determined in accordance with generally accepted accounting principles. Expenses
paid indirectly reflect credits earned on daily uninvested cash balances at the
custodian and are used to reduce the fund's custody charges.
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.
<PAGE>
Noninvestment-Grade Debt Securities At November 30, 2000, approximately 87%
of the fund's net assets were invested 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.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $483,920,000 and $522,107,000, respectively, for the six
months ended November 30, 2000.
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. As of May 31, 2000, the fund had capital loss carryforwards for
federal income tax purposes of $164,272,000, of which $6,571,000 expires in
2002, $40,450,000 in 2003,and $117,251,000 thereafter through 2008. The fund
intends to retain gains realized in future periods that may be offset by
available capital loss carryforwards.
At November 30, 2000, the cost of investments for federal income tax
purposes was substantially the same as for financial reporting and totaled
$1,636,677,000. Net unrealized loss aggregated $234,213,000 at period-end, of
which $10,504,000 related to appreciated investments and $244,717,000 to
depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
-----------------------------------
The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price
Associates). The investment management agreement between the fund and the
manager provides for an annual investment management fee, of which $737,000 was
payable at November 30, 2000. 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 T. Rowe Price International, Inc. (the group).
The group fee rate ranges from 0.48% for the first $1 billion of assets to
0.295% for assets in excess of $120 billion. At November 30, 2000, and for the
six months then ended, the effective annual group fee rate was 0.32%. The fund
pays a pro-rata share of the group fee based on the ratio of its net assets to
those of the group.
The manager has agreed to bear any expenses through December 31, 2001,
which would cause High Yield Advisor Class's ratio of total expenses to average
net assets to exceed 1.05%. Thereafter, through December 31, 2003, High Yield
Advisor Class is required to reimburse the manager for these expenses, provided
that its average net assets have grown or expenses have declined sufficiently to
allow reimbursement without causing its ratio of total expenses to average net
assets to exceed 1.05%.
<PAGE>
In addition, the fund has entered into agreements with Price Associates and
two wholly owned subsidiaries of Price Associates, pursuant to which the fund
receives certain other services. Price Associates computes the daily share price
and maintains the financial records of the fund. T. Rowe Price Services, Inc. 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. The fund incurred expenses pursuant to these
related party agreements totaling approximately $728,000 for the six months
ended November 30, 2000, of which $139,000 was payable at period-end.
Additionally, the fund is one of several T. Rowe Price-sponsored mutual
funds (underlying funds) in which the T. Rowe Price Spectrum Funds (Spectrum)
may invest. Spectrum does not invest in the underlying funds for the purpose of
exercising management or control. Expenses associated with the operation of
Spectrum are borne by each underlying fund to the extent of estimated savings to
it and in proportion to the average daily value of its shares owned by Spectrum,
pursuant to special servicing agreements between and among Spectrum, the
underlying funds, Price Associates, and, in the case of T. Rowe Price Spectrum
International, T. Rowe Price International. Spectrum Income Fund held
approximately 34.3% of the outstanding High Yield shares at November 30, 2000.
For the six months then ended, the High Yield shares were allocated $568,000 of
Spectrum expenses, $140,000 of which was payable at period-end.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by Price Associates. The Reserve Funds are offered
as cash management options only to mutual funds and other accounts managed by
Price Associates or T. Rowe Price International, and are not available to the
public. The Reserve Funds pay no investment management fees. Distributions from
the Reserve Funds to the fund for the six months ended November 30, 2000,
totaled $4,180,000 and are reflected as interest income in the accompanying
Statement of Operations.
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T. Rowe Price Shareholder Services
----------------------------------
INVESTMENT SERVICES AND INFORMATION
-----------------------------------
KNOWLEDGEABLE SERVICE REPRESENTATIVES
------------- ------- ---------------
BY PHONE 1-800-225-5132 Available Monday through Friday from
8 a.m. to 10 p.m. ET and weekends from 8:30a.m. to 5 p.m. ET.
IN PERSON Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
----------------
CHECKING Available on most fixed-income funds ($500 minimum).
AUTOMATIC INVESTING From your bank account or paycheck.
AUTOMATIC WITHDRAWAL Scheduled, automatic redemptions.
DISTRIBUTION OPTIONS Reinvest all, some, or none of
your distributions.
AUTOMATED 24-HOUR SERVICES Including Tele*Access[Reg Mark]
and the T. Rowe Price Web site on the Internet.
Address: www.troweprice.com.
BROKERAGE SERVICES*
-------------------
INDIVIDUAL INVESTMENTS Stocks, bonds, options, precious
metals, and other securities at a savings over full-service
commission rates. **
<PAGE>
INVESTMENT INFORMATION
----------------------
COMBINED STATEMENT Overview of all your accounts with
T. Rowe Price.
SHAREHOLDER REPORTS Fund managers' reviews of their strategies
and results.
T. ROWE PRICE REPORT Quarterly investment newsletter discussing
markets and financial strategies.
PERFORMANCE UPDATE Quarterly review of all T. Rowe Price fund
results.
INSIGHTS Educational reports on investment strategies and
financial markets.
INVESTMENT GUIDES Asset Mix Worksheet, College Planning Kit,
Diversifying Overseas: A Guide to International Investing,
Personal Strategy Planner, Retirees Financial Guide, and
Retirement Planning Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price
Investment Services, Inc., Member NASD/SIPC.
** Based on a July 2000 survey for representative-assisted
stock trades. Services vary by firm, and commissions may
vary depending on size of order.
================================================================================
T. Rowe Price Mutual Funds
--------------------------
STOCK FUNDS
-----------
DOMESTIC
--------
Blue Chip Growth
Capital Appreciation
Capital Opportunity
Developing Technologies
Diversified Small-Cap Growth
Dividend Growth
Equity Income
Equity Index 500
Extended Equity Market Index
Financial Services
Growth & Income
Growth Stock
<PAGE>
Health Sciences
Media & Telecommunications
Mid-Cap Growth
Mid-Cap Value
New America Growth
New Era
New Horizons*
Real Estate
Science & Technology
Small-Cap Stock
Small-Cap Value
Spectrum Growth
Tax-Efficient Growth
Total Equity Market Index
Value
BLENDED ASSET FUNDS
-------------------
Balanced
Personal Strategy Balanced
Personal Strategy Growth
Personal Strategy Income
Tax-Efficient Balanced
BOND FUNDS
----------
DOMESTIC TAXABLE
----------------
Corporate Income
GNMA
High Yield
New Income
Short-Term Bond
Spectrum Income
Summit GNMA
U.S. Bond Index
U.S. Treasury Intermediate
U.S. Treasury Long-Term
<PAGE>
DOMESTIC TAX-FREE
-----------------
California Tax-Free Bond
Florida Intermediate Tax-Free
Georgia Tax-Free Bond
Maryland Short-Term Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Summit Municipal Intermediate
Tax-Free High Yield
Tax-Free Income
Tax-Free Intermediate Bond
Tax-Free Short-Intermediate
Virginia Tax-Free Bond
MONEY MARKET FUNDS
------------------
TAXABLE
-------
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
TAX-FREE
--------
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
INTERNATIONAL/GLOBAL FUNDS
--------------------------
STOCK
-----
Emerging Europe & Mediterranean
Emerging Markets Stock
European Stock
Global Stock
Global Technology
International Discovery*
International Equity Index
International Growth & Income
International Stock
Japan
Latin America
New Asia
Spectrum International Bond
Emerging Markets Bond
International Bond
<PAGE>
T. ROWE PRICE NO-LOAD VARIABLE ANNUITY
--------------------------------------
Equity Income Portfolio
International Stock Portfolio
Limited-Term Bond Portfolio
Mid-Cap Growth Portfolio
New America Growth Portfolio
Personal Strategy Balanced Portfolio
Prime Reserve Portfolio
* Closed to new investors.
+ Investments in the funds are not insured or guaranteed by the FDIC or any
other government agency. Although the funds seek to preserve the value of
your investment at $1.00 per share, it is possible to lose money by
investing in the funds.
Please call for a prospectus, which contains complete information,
including fees and expenses. Read it carefully before investing.
The T. Rowe Price No-Load Variable Annuity [#V6021] is issued by Security
Benefit Life Insurance Company. In New York, it [#FSB201(11-96)] is issued by
First Security Benefit Life Insurance Company of New York, White Plains, NY. T.
Rowe Price refers to the underlying portfolios' investment managers and the
distributors, T. Rowe Price Investment Services, Inc.; T. Rowe Price Insurance
Agency, Inc.; and T. Rowe Price Insurance Agency of Texas, Inc. The Security
Benefit Group of Companies and the T. Rowe Price companies are not affiliated.
The variable annuity may not be available in all states. The contract has
limitations. Call a representative for costs and complete details of the
coverage.
================================================================================
T. Rowe Price Advisory Services and Retirement Resources
--------------------------------------------------------
ADVISORY SERVICES, RETIREMENT RESOURCES
--------------------------------------------------------------------------------
T. Rowe Price is your full-service retirement
specialist. We have developed unique advisory
services that can help you meet the most difficult
retirement challenges. Our broad array of
retirement plans is suitable for individuals, the
self-employed, small businesses, corporations, and
nonprofit organizations. We also provide
recordkeeping, communications, and investment
management services, and our educational
materials, self-help planning guides, and software
tools are recognized as among the industry's best.
For information or to request literature, call us
at 1-800-638-5660, or visit our Web site at
WWW.TROWEPRICE.COM.
--------------------------------------------------------------------------------
<PAGE>
ADVISORY SERVICES
T. ROWE PRICE RETIREMENT INCOME MANAGER SM helps
retirees or those within two years of retirement
determine how much income they can take in
retirement. The program uses extensive statistical
analysis and the input of financial planning
professionals to suggest an income plan that best
meets your objectives.
T. ROWE PRICE ROLLOVER INVESTMENT SERVICE offers
asset allocation advice to those planning a major
change in their qualified retirement plans, such
as a 401(k) rollover from a previous employer or
an IRA transfer.
RETIREMENT RESOURCES AT T. ROWE PRICE
--------------------------------------------------------------------------------
Traditional, Roth, and Rollover IRAs
SEP-IRA and SIMPLE IRA
Profit Sharing
Money Purchase Pension
"Paired" Plans (Money Purchase
Pension and Profit Sharing Plans)
401(k) and 403(b)
457 Deferred Compensation
PLANNING AND INFORMATIONAL GUIDES
Minimum Required Distributions Guide
Retirement Planning Kit
Retirees Financial Guide
Tax Considerations for Investors
<PAGE>
INSIGHTS REPORTS
The Challenge of Preparing for Retirement
Financial Planning After Retirement
The Roth IRA: A Review
SOFTWARE PACKAGES
T. Rowe Price Retirement Planning
Analyzer [TM] CD-ROM or diskette $19.95.
To order, please call 1-800-541-5760.
Also available on the Internet for $9.95.
T. Rowe Price Variable Annuity Analyzer [TM]
CD-ROM or diskette, free. To
order, please call 1-800-469-5304.
T. ROWE PRICE IMMEDIATE VARIABLE ANNUITY (INCOME ACCOUNT)
INVESTMENT KITS
We will be happy to send you one of our
easy-to-follow investment kits when you are ready
to invest in any T. Rowe Price retirement vehicle,
including IRAs, qualified plans, small-business
plans, or our no-load variable annuities.
================================================================================
T. Rowe Price Insights Reports
------------------------------
THE FUNDAMENTALS OF INVESTING
--------------------------------------------------------------------------------
Whether you are unsure how to get started or are
saving for a specific goal, such as retirement or college, the
T. Rowe Price Insights series can help you make informed
investment decisions. These reports, written in plain English
about fundamental investment topics, can be useful at every
stage of your investment journey. They cover a range of topics,
from the basic, such as getting started with mutual funds, to
the more advanced, such as managing risk through diversification
or buying individual securities through a broker. To request one
or more Insights, call us at 1-800-638-5660.
<PAGE>
INSIGHTS REPORTS
--------------------------------------------------------------------------------
GENERAL INFORMATION
The ABCs of Giving
Back to Basics: The ABCs of Investing
The Challenge of Preparing for Retirement
Financial Planning After Retirement
Getting Started: Investing With Mutual Funds
The Roth IRA: A Review
Tax Information for Mutual Fund Investors
INVESTMENT STRATEGIES
Conservative Stock Investing
Dollar Cost Averaging
Equity Index Investing
Growth Stock Investing
Investing for Higher Yield
Managing Risk Through Diversification
The Power of Compounding
Value Investing
TYPES OF SECURITIES
The Basics of International Stock
Investing The Basics of Tax-Free
Investing The Fundamentals of Fixed-Income
Investing Global Bond Investing
Investing in Common Stocks
Investing in Emerging Growth Stocks
Investing in Financial Services Stocks
Investing in Health Care Stocks
Investing in High-Yield Municipal Bonds
Investing in Money Market Securities
Investing in Mortgage-Backed Securities
Investing in Natural Resource Stocks
Investing in Science and Technology Stocks
Investing in Small-Company Stocks
Understanding Derivatives
Understanding High-Yield "Junk" Bonds
BROKERAGE INSIGHTS
Combining Individual Securities With Mutual Funds
Getting Started: An Introduction to Individual Securities
What You Should Know About Bonds
What You Should Know About Margin and Short-Selling
What You Should Know About Options
What You Should Know About Stocks
T. Rowe Price Insights are also available for reading or downloading on the
Internet at www.troweprice.com.
INSIGHTS REPORTS
================================================================================
<PAGE>
T. Rowe Price Brokerage
-----------------------
BROKERAGE SERVICES
------------------
T. Rowe Price Brokerage is a division of T. Rowe Price
Investment Services, Inc., Member NASD/SIPC.
T. Rowe Price Brokerage provides high-quality services and
financial tools you can use to manage your investments
effectively and conveniently. We also offer commission savings
over full-service brokerages on a number of transactions.*
INTERNET AND AUTOMATED SERVICES You can enter
trades, access quotes, and review account information
24 hours a day, seven days a week, by telephone or
computer. We offer a flat-rate commission of $19.95 on
stock trades placed through our Internet-Trader
service.**
RESEARCH SERVICES To help you make informed
investment decisions, we offer access to several
sources of data. You can research your investments
using our Online Research & News Service, provided by
Thomson Investors Network, which includes company
profiles, intraday and 12-month interactive charting,
and analysts' ratings and earnings estimates. Using our
Research On Call service, you can request reports from
Standard & Poor's, Vicker's, Lipper, and other
well-known research providers to be delivered by fax or
by mail.
DIVIDEND REINVESTMENT SERVICE This service helps
keep more of your money working for you. Cash dividends
(of $10 or greater) from your eligible securities will
be invested automatically in additional shares of the
same company, free of charge. Most stocks listed on
national securities exchanges or Nasdaq are eligible
for this service.
* Based on a July 2000 survey for
representative-assisted stock
trades. Services vary by firm, and
commissions may vary depending on
size of order.
** $19.95 per trade for up to 1,000
shares plus an additional $.02 for
each share over 1,000 shares. Visit
our Web site for a complete
commission schedule or call for
rates on representative-assisted
and other non-Internet trades.
================================================================================
<PAGE>
For fund and account information
or to conduct transactions,
24 hours, 7 days a week
By touch-tone telephone
Tele*Access 1-800-638-2587
By Account Access on the Internet
www.troweprice.com/access
For assistance
with your existing
fund account, call:
Shareholder Service Center
1-800-225-5132
To open a brokerage account
or obtain information, call:
1-800-638-5660
For the hearing impaired, call:
1-800-367-0763
Internet address:
www.troweprice.com
Plan Account Lines for retirement
plan participants:
The appropriate 800 number appears
on your retirement account statement.
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 appropriate
to the fund or funds covered in this report.
Walk-In Investor Centers:
For directions, call 1-800-225-5132
or visit our Web site at
www.troweprice.com/investorcenters
Baltimore Area
Downtown - new address
105 East Lombard Street
Owings Mills
Three Financial Center
4515 Painters Mill Road
<PAGE>
Boston Area
386 Washington Street
Wellesley
Colorado Springs
2260 Briargate Parkway
Los Angeles Area
Warner Center
21800 Oxnard Street, Suite 270
Woodland Hills
San Francisco Area
1990 North California Boulevard
Suite 100
Walnut Creek
Tampa
4200 West Cypress Street
10th Floor
Washington, D.C.
900 17th Street N.W.
Farragut Square
T. Rowe Price Investment Services, Inc., Distributor. F57-051 11/30/00
