<PAGE>
T. Rowe Price
--------------------------------------------------------------------------------
Semiannual Report
Corporate Income Fund
--------------------------------------------------------------------------------
November 30, 2000
================================================================================
REPORT HIGHLIGHTS
-----------------
CORPORATE INCOME FUND
---------------------
* The U.S. economy showed signs of slowing following a long period of
strong growth.
* In a volatile environment for stocks and some corporate bonds, your
fund posted good results for the past six months.
* Higher-quality bonds outpaced lower-quality securities during the six
mon ths ended November 30.
* Moves by corporations to reduce debt have created attractive
opportunities.
* We have repositioned the portfolio somewhat more defensively and
maintained our exposure to attractive yields and the potential for
capital appreciation in 2001.
================================================================================
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
-------------------
The U.S. economy finally showed signs of decelerating following an extended
period of robust growth. This environment led to significant volatility in both
the equity and corporate bond markets, especially for lower-quality bonds.
However, despite the recent turmoil, your fund posted solid results during the
six months ended November 30, 2000.
MARKET ENVIRONMENT
------------------
The Federal Reserve's tight monetary policy since June 1999 has resulted in
slower economic growth both in the U.S. and abroad. In Japan export volumes are
declining and consumer demand remains weak. GDP growth in Europe and Latin
America seems to have slowed in the third quarter. Mounting evidence of economic
moderation plus ongoing retrenchment in the financial markets have fueled hopes
that the Fed's next move could be a shift to lower short-term rates in early
2001.
<PAGE>
Interest Rate Levels
--------------------
BBB-Rated 10-Year
Corporate Bonds Treasury Note
--------------- -------------
11/30/1999 7.65 6.10
7.71 6.41
7.77 6.68
Feb-2000 7.74 6.38
7.84 6.13
8.01 6.15
May-2000 8.11 6.42
7.91 6.08
7.88 6.04
Aug-2000 7.83 5.76
7.86 5.82
7.95 5.76
Nov-2000 7.90 5.56
Source: T. Rowe Price Associates
Corporations have responded to the prospect of slower growth by reducing
debt and fortifying their balance sheets to improve creditworthiness. This is a
sharp reversal from the environment of the past few years where debt was
aggressively employed at any cost. Corporations financed rapid earnings growth
by investing in new technologies to improve productivity, to build economies of
scale, and by repurchasing shares to bolster share prices. Today, reducing debt
is back in vogue as access to capital has become more restrictive and the
ability to finance a high debt load is showing signs of weakening.
Borrowing costs have increased
------------------------------
The move to reduce debt was spurred by the shrinking availability of
capital to marginal borrowers and an increase in the cost of capital for
high-quality corporations. This has created a difficult backdrop for corporate
bonds. Lower-quality bonds, including BBB, split-rated (those rated BBB and BB
by different rating agencies), and high yield (below BBB) were generally weak
during the period. However, prices of U.S. Treasuries rose and yields declined
during the past six months, especially for intermediate maturities. Thirty-year
Treasury yields fell from 6.01% six months ago to 5.61% at the end of November,
while two-year note yields dropped from 6.67% to 5.61%.
During the past few years, corporate borrowers enjoyed access to a
seemingly endless stream of low-cost financing, courtesy of both the public and
private capital markets. Many questionable business models, as well as complete
sectors of the economy, were overfunded, resulting in excess capacity and severe
price competition. A clear example of this is in the consumer long-distance
sector where overfunding resulted in cutthroat pricing for long-distance calls.
Consumers have clearly benefited while the service providers are finding it
increasingly difficult to earn a reasonable return on invested capital.
<PAGE>
Volatile markets have produced attractive opportunities
-------------------------------------------------------
The uncertainties associated with this environment tend to increase
volatility and trigger investor demand for higher yields to compensate for their
risk, particularly on lower-quality bonds. As a result, during the past 6- and
12-month periods, single B, split-rated, and BBB bonds underperformed their
high-grade (AAA and AA) counterparts.
As is often the case when investor confidence starts to fade, market
volatility tends to rise and asset prices decline. In many instances risk
premiums rise on even the best corporate credits in sympathy with the rest of
the market, resulting in attractive investment opportunities for the long-term
investor. We feel we are at the beginning of such a period and remain confident
in our ability to identify such opportunities for our shareholders.
PERFORMANCE AND STRATEGY REVIEW
-------------------------------
PERFORMANCE COMPARISON
----------------------
Periods Ended 11/30/00 6 Months 12 Months
---------------------- -------- ---------
Corporate Income Fund 6.08% 6.00%
Lehman Brothers Baa
U.S. Credit Index 6.64 5.32
Lipper Corporate Debt
BBB Funds Average 6.06 5.63
Your fund posted strong results for the six months ended November 30, 2000,
that were in line with the Lipper peer group but below the Lehman Baa U.S.
Credit Index (the name was recently changed from the Lehman Baa Corporate Bond
Index). Returns for the 12-month period reflected flat performance during the
previous six months but surpassed both benchmarks. The fund's net asset value
rose from $8.80 last May to $8.99 at the end of November, while dividends per
share remained constant at $0.34. We overweighted lower-quality corporate bonds,
which lagged Treasury and higher-grade corporate securities, and maintained a
neutral duration versus the benchmark. (Duration is a measure of a fund's
sensitivity to changes in interest rates. For example, a fund with a duration of
five years would fall or rise about 5% in price in response to a
one-percentage-point rise or fall in interest rates.)
--------------------------------------------------------------------------------
Quality Diversification pie chart shown here, A Rated and above 29%; BBB Rated
49%; BB Rated 15%; B Rated 7%
--------------------------------------------------------------------------------
<PAGE>
Our convertible preferred securities preformed remarkably well through
October. However, with the sharp stock market decline in November, some of our
largest investments, including Liberty Media/Sprint PCS, Media One/Vodafone PLC,
and Global Crossing, also fell in price. The yields on these investments remain
attractive and offer protection against further price declines, in our view.
They also provide an opportunity for potential long-term appreciation. As equity
prices dropped, we selectively added to some convertible positions including
Media One, Liberty Media, and Sovereign Bancorp. The bulk of the portfolio
performed quite well relative to the benchmarks, leading to so lid six-month
performance in a difficult environment.
Positioning the portfolio for the months ahead
----------------------------------------------
Given the uncertain outlook for global economic growth and the length of
time required for borrowers to fortify their balance sheets, we expect the risk
premiums on lower-quality securities to remain high by historical standards over
the near term. Accordingly, we positioned the portfolio more defensively by
selling some corporate bonds and investing the proceeds in U.S. Treasury and
agency obligations. In addition, we extended the duration of the portfolio based
on our outlook for lower interest rates and higher bond prices over the next six
months.
OUTLOOK
-------
During the coming year, we expect the Fed to lower rates enough to assure
that the U.S. economy continues to grow at a sustainable rate. The U.S. Treasury
yield curve should continue to normalize with short-term rates falling below
long-term rates, and the difference in yields between low- and high-quality
bonds should begin to decline as investor confidence in the economy and
corporate creditworthiness is restored. This type of environment bodes well for
corporate bond investors. The fund should be in a position to benefit from the
changes we see falling into place, and we remain optimistic about its long-term
prospects.
Thank you for investing with T. Rowe Price.
Respectfully submitted,
/s/
Robert M. Rubino
Chairman of the Fund's Investment Advisory Committee
December 18, 2000
================================================================================
<PAGE>
T. Rowe Price Corporate Income Fund
-----------------------------------
PORTFOLIO HIGHLIGHTS
--------------------
KEY STATISTICS
------------- 5/31/00 11/30/00
------------- ------- --------
Price Per Share $ 8.80 $ 8.99
Dividends Per Share
For 6 months 0.34 0.34
For 12 months 0.68 0.69
30-Day Dividend Yield * 7.98 7.52
30-Day Standardized Yield to Maturity 8.98 8.14
Weighted Average Maturity (years) 11.7 12.4
Weighted Average Effective Duration (years) 5.5 5.9
Weighted Average Quality ** BBB+ BBB+
* 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 Corporate Income Fund
-----------------------------------
PORTFOLIO HIGHLIGHTS
--------------------
SECTOR DIVERSIFICATION
---------------------- Percent of Percent of
Net Assets Net Assets
5/31/00 11/30/00
------- --------
Telecommunications 7% 13%
Banking 12 12
Energy and Petroleum 8 7
Aerospace and Defense 4 5
Savings and Loan 1 4
Paper and Paper Products 4 4
U. S. Treasury Obligations 3 4
Equity and Convertible Securities 2 4
Airlines 3 4
Media and Communications 5 3
Food and Tobacco 4 3
Gaming 2 2
U.S. Government Agency Obligations - 2
Services 3 2
Foreign Government and Municipalities 6 2
All Other 36 28
Other Assets Less Liabilities - 1
Total 100% 100%
================================================================================
<PAGE>
T. Rowe Price Corporate Income Fund
-----------------------------------
PERFORMANCE COMPARISON
----------------------
This chart shows the value of a hypothetical $10,000 investment in the fund
over the past 10 fiscal year periods or since inception (for funds lacking
10-year records). The result is compared with 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.
--------------------------------------------------------------------------------
Lehman Brothers Baa Lipper Corporate Debt Corporate
U.S. Credit Index BBB Funds Average Income Fund
----------------- ----------------- -----------
10/31/1995 10000 10000 10000
Nov-1996 10927 10783 10941
Nov-1997 11831 11671 12062
Nov-1998 12759 12442 12369
Nov-1999 12734 12299 12367
Nov-2000 13411 12902 13109
AVERAGE ANNUAL COMPOUND TOTAL RETURN
------------------------------------
This table shows how the fund would have performed each year if its actual
(or cumulative) returns for the periods shown had been earned at a constant
rate.
Since Inception
Periods Ended 11/30/00 1 Year 3 Years 5 Years Inception Date
---------------------- ------ ------- ------- --------- ----
Corporate Income Fund 6.00% 2.81% 5.22% 5.47% 10/31/95
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 Corporate Income Fund
----------------------------------- Unaudited
For a share outstanding throughout each period
FINANCIAL HIGHLIGHTS
--------------------
6 Months Year 10/31/95
Ended Ended Through
11/30/00 5/31/00 5/31/99 5/31/98 5/31/97 5/31/96
NET ASSET VALUE
Beginning of period $ 8.80 $ 9.54 $ 10.39 $ 9.81 $ 9.58 $ 10.00
-------------------------------------------------------------------------------
Investment activities
Net investment
income (loss) 0.34* 0.68* 0.70* 0.75* 0.73* 0.44*
Net realized and
unrealized gain (loss 0.19 (0.74) (0.83) 0.59 0.23 (0.42)
-------------------------------------------------------------------------------
Total from
investment activities 0.53 (0.06) (0.13) 1.34 0.96 0.02
-------------------------------------------------------------------------------
Distributions
Net investment income (0.34) (0.68) (0.70) (0.76) (0.73) (0.44)
Net realized gain - - (0.02) - - -
-------------------------------------------------------------------------------
Total distributions (0.34) (0.68) (0.72) (0.76) (0.73) (0.44)
-------------------------------------------------------------------------------
NET ASSET VALUE
End of period $ 8.99 $ 8.80 $ 9.54 $ 10.39 $ 9.81 $ 9.58
Ratios/Supplemental Data
Total return+ 6.08%* (0.63%)* (1.21%)* 13.96%* 10.35%* 0.09%*
-------------------------------------------------------------------------------
Ratio of total expenses to
average net assets 0.80%+* 0.80%* 0.80%* 0.80%* 0.80%* 0.80%+*
-------------------------------------------------------------------------------
Ratio of net investment
income (loss) to average
net assets 7.60%+* 7.44%* 7.12%* 7.33%* 7.55%* 7.56%+*
-------------------------------------------------------------------------------
Portfolio turnover rate 81.8%+ 90.9% 140.8% 146.0% 119.5% 70.5%+
-------------------------------------------------------------------------------
Net assets, end of period
(in thousands) $49,130 $43,725 $ 50,822 $42,829 $ 20,732 $ 12,461
-------------------------------------------------------------------------------
+ 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.
* Excludes expenses in excess of a 0.80% voluntary expense
limitation in effect through 5/31/01.
+ Annualized
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Corporate Income Fund
-----------------------------------
Unaudited November 30, 2000
PORTFOLIO OF INVESTMENTS
------------------------ Par/Shares Value
In thousands
CORPORATE BONDS AND NOTES 84.7%
Aerospace and Defense 4.6%
Lockheed Martin, Sr. Notes, 8.20%, 12/1/09 $ 1,000 $ 1,069
-------------------------------------------------------------------------------
Newport News Shipbuilding, Sr. Notes, 8.625%, 12/1/06 400 396
-------------------------------------------------------------------------------
Raytheon, Sr. Notes, 5.70%, 11/1/03 800 777
-------------------------------------------------------------------------------
2,242
-------------------------------------------------------------------------------
Airlines 3.5%
Atlas Air, ETC
8.77%, 1/2/11 452 462
-------------------------------------------------------------------------------
9.702%, 1/2/10 250 263
-------------------------------------------------------------------------------
Continental Airlines, 8.312%, 4/2/11 500 503
-------------------------------------------------------------------------------
Delta Air Lines, Sr. Notes, 7.90%, 12/15/09 500 475
-------------------------------------------------------------------------------
1,703
-------------------------------------------------------------------------------
Banking 11.7%
Banco Generale, Sr. Sub. Notes, (144a), 7.70%, 8/1/02 900 880
-------------------------------------------------------------------------------
Banco Santiago, Sr. Sub. Notes, 7.00%, 7/18/07 770 705
-------------------------------------------------------------------------------
Bank United, MTN, 8.00%, 3/15/09 750 734
-------------------------------------------------------------------------------
Capital One Bank, Sr. Notes, 8.25%, 6/15/05 650 639
-------------------------------------------------------------------------------
Imperial Bank, Sr. Sub. Notes, 8.50%, 4/1/09 725 706
-------------------------------------------------------------------------------
MBNA America Bank, Sr. Sub. Notes, 6.75%, 3/15/08 900 809
-------------------------------------------------------------------------------
Northern Trust, MTN, 7.30%, 9/15/06 500 499
-------------------------------------------------------------------------------
State Street, Sr. Sub. Notes, 7.65%, 6/15/10 375 384
-------------------------------------------------------------------------------
Sumitomo Bank International, Sr. Sub. Notes
8.50%, 6/15/09 400 409
-------------------------------------------------------------------------------
5,765
-------------------------------------------------------------------------------
Beverages 1.7%
Coca Cola Femsa, Sr. Notes, 8.95%, 11/1/06 375 377
-------------------------------------------------------------------------------
<PAGE>
Panamerican Beverages, Sr. Notes, 7.25%, 7/1/09 500 436
-------------------------------------------------------------------------------
813
-------------------------------------------------------------------------------
Broadcasting 0.5%
Chancellor Media
Sr. Notes, 8.00%, 11/1/08 125 125
-------------------------------------------------------------------------------
Sub. Notes, 8.125%, 12/15/07 125 127
-------------------------------------------------------------------------------
252
-------------------------------------------------------------------------------
Building and Real Estate 1.3%
Lennar, Sr. Notes, 9.95%, 5/1/10 150 149
-------------------------------------------------------------------------------
Regency Centers, Sr. Notes, REIT, 7.40%, 4/1/04 500 493
-------------------------------------------------------------------------------
642
-------------------------------------------------------------------------------
Cable Operators 1.3%
Lenfest Communications, Sr. Sub. Notes, 10.50%, 6/15/06 $ 250 $ 280
-------------------------------------------------------------------------------
Northland Cable Television, Sr. Sub. Notes
10.25%, 11/15/07 250 183
-------------------------------------------------------------------------------
Rogers Cablesystems, Sr. Sub. Notes, 11.00%, 12/1/15 150 165
-------------------------------------------------------------------------------
628
-------------------------------------------------------------------------------
Conglomerates 1.1%
Hutchison Whampoa Finance, Sr. Notes, (144a), 7.45%, 8/1/17 600 554
-------------------------------------------------------------------------------
554
-------------------------------------------------------------------------------
Container 0.9%
Ball, Sr. Notes, 7.75%, 8/1/06 300 290
-------------------------------------------------------------------------------
Consolidated Container, Sr. Sub. Notes, 10.125%, 7/15/09 150 129
-------------------------------------------------------------------------------
419
-------------------------------------------------------------------------------
Electric Utilities 1.9%
Korea Electric Power, Sr. Notes, 7.00%, 10/1/02 500 493
-------------------------------------------------------------------------------
South Carolina Electric & Gas, 1st Mtg. Bonds
6.125%, 3/1/09 490 462
-------------------------------------------------------------------------------
955
-------------------------------------------------------------------------------
Electronic Components 0.8%
Arrow Electronics, Sr. Notes, (144a), 8.20%, 10/1/03 + 400 405
-------------------------------------------------------------------------------
405
-------------------------------------------------------------------------------
<PAGE>
Energy 5.2%
Amerigas Partners, Sr. Notes, (144a), 10.125%, 4/15/07 200 198
-------------------------------------------------------------------------------
Energy Corp. of America, Sr. Sub. Notes
9.50%, 5/15/07 50 39
-------------------------------------------------------------------------------
Offshore Logistics, Sr. Notes, (144a), 7.875%, 1/15/08 100 92
-------------------------------------------------------------------------------
PDVSA Finance Limited, Sr. Notes, 6.80%, 11/15/08 500 431
-------------------------------------------------------------------------------
Pride Petroleum Services, Sr. Notes, 9.375%, 5/1/07 200 199
-------------------------------------------------------------------------------
YPF Sociedad Anonima, Sr. Notes, 10.00%, 11/2/01 1,500 1,588
-------------------------------------------------------------------------------
2,547
-------------------------------------------------------------------------------
Entertainment and Leisure 0.7%
Premier Parks, Sr. Notes, 9.75%, 6/15/07 100 94
-------------------------------------------------------------------------------
Royal Caribbean Cruises, Sr. Notes, 6.75%, 3/15/08 290 255
-------------------------------------------------------------------------------
349
-------------------------------------------------------------------------------
Food and Tobacco 3.2%
Doane Pet Care, Sr. Sub. Notes, 9.75%, 5/15/07 175 126
-------------------------------------------------------------------------------
Keebler Foods, Sr. Sub. Notes, 10.75%, 7/1/06 250 265
-------------------------------------------------------------------------------
Philip Morris, Sr. Notes, 7.00%, 7/15/05 575 558
-------------------------------------------------------------------------------
UST, Sr. Notes, 8.80%, 3/15/05 650 640
-------------------------------------------------------------------------------
1,589
-------------------------------------------------------------------------------
Foreign Government and Municipalities 2.1%
Republic of Brazil, FRN, 7.375%, 4/15/06 $ 440 $ 402
-------------------------------------------------------------------------------
United Mexican States, Sr. Notes, 9.875%, 2/1/10 600 625
-------------------------------------------------------------------------------
1,027
-------------------------------------------------------------------------------
Gaming 2.4%
Harrahs, Gtd. Sr. Sub. Notes, 7.875%, 12/15/05 250 242
-------------------------------------------------------------------------------
International Game Technology, Sr. Notes, 8.375%, 5/15/09 250 244
-------------------------------------------------------------------------------
Mandalay Resort Group, Sr. Notes, 9.50%, 8/1/08 200 199
-------------------------------------------------------------------------------
Mohegan Tribal Gaming Authority, Sr. Notes
8.125%, 1/1/06 250 244
-------------------------------------------------------------------------------
Park Place Entertainment, Sr. Sub. Notes, 7.875%, 12/15/05 250 241
-------------------------------------------------------------------------------
1,170
-------------------------------------------------------------------------------
<PAGE>
Health Care Services 0.4%
Tenet Healthcare, Sr. Notes, 8.00%, 1/15/05 200 197
-------------------------------------------------------------------------------
197
-------------------------------------------------------------------------------
Insurance 1.8%
Fairfax Financial, Sr. Notes, 8.25%, 10/1/15 500 420
-------------------------------------------------------------------------------
Frank Russell, Sr. Notes, (144a), 5.625%, 1/15/09 + 500 450
-------------------------------------------------------------------------------
870
-------------------------------------------------------------------------------
Investment Dealers 1.1%
Goldman Sachs Group, Sr. Notes, 7.80%, 1/28/10 550 556
-------------------------------------------------------------------------------
556
-------------------------------------------------------------------------------
Lodging 0.1%
Courtyard by Marriott II, Sr. Notes, 10.75%, 2/1/08 50 50
-------------------------------------------------------------------------------
50
-------------------------------------------------------------------------------
Long Distance 2.3%
AT&T, Sr. Notes, 6.50%, 3/15/29 500 403
-------------------------------------------------------------------------------
Level 3 Communications, Sr. Notes, 11.00%, 3/15/08 150 115
-------------------------------------------------------------------------------
Sprint Capital, Sr. Notes, 6.875%, 11/15/28 750 618
-------------------------------------------------------------------------------
1,136
-------------------------------------------------------------------------------
Manufacturing 0.6%
Tyco International, Sr. Notes, 6.125%, 11/1/08 300 278
-------------------------------------------------------------------------------
278
-------------------------------------------------------------------------------
Media and Communications 3.3%
News America, Sr. Notes, 6.75%, 1/9/10 1,000 923
-------------------------------------------------------------------------------
Time Warner, Sr. Notes
6.625%, 5/15/29 400 348
-------------------------------------------------------------------------------
8.11%, 8/15/06 350 366
-------------------------------------------------------------------------------
1,637
-------------------------------------------------------------------------------
Metals 0.4%
Alcoa, Sr. Notes, 7.375%, 8/1/10 $ 200 $ 205
-------------------------------------------------------------------------------
205
-------------------------------------------------------------------------------
Metals and Mining 1.6%
Cyprus Amax Minerals, Sr. Notes, 7.375%, 5/15/07 500 491
-------------------------------------------------------------------------------
P&L Coal Holdings, Sr. Notes, 8.875%, 5/15/08 300 296
-------------------------------------------------------------------------------
787
-------------------------------------------------------------------------------
<PAGE>
Oil Field Services 0.7%
Halliburton, Sr. Notes, 5.625%, 12/1/08 400 368
-------------------------------------------------------------------------------
368
-------------------------------------------------------------------------------
Paper and Paper Products 3.9%
Abitibi Consolidated, Sr. Notes, 8.55%, 8/1/10 425 414
-------------------------------------------------------------------------------
Bowater, Sr. Notes, 9.375%, 12/15/21 500 527
-------------------------------------------------------------------------------
Celulosa Arauco Y Constitucion, Sr. Notes
7.50%, 9/15/17 725 620
-------------------------------------------------------------------------------
Packaging Corp. of America, Sr. Sub. Notes
9.625%, 4/1/09 250 257
-------------------------------------------------------------------------------
Repap New Brunswick, Sr. Sec. Notes, 11.50%, 6/1/04 100 113
-------------------------------------------------------------------------------
1,931
-------------------------------------------------------------------------------
Petroleum 2.0%
Pemex Finance Limited, 9.03%, 2/15/11 675 695
-------------------------------------------------------------------------------
Petroleos Mexicanos, Gtd. Notes, 9.25%, 3/30/18 300 294
-------------------------------------------------------------------------------
989
-------------------------------------------------------------------------------
Printing and Publishing 0.5%
Hollinger International Publishing, Sr. Sub. Notes
9.25%, 3/15/07 250 246
-------------------------------------------------------------------------------
246
-------------------------------------------------------------------------------
Railroads 1.2%
Union Pacific, Sr. Notes, 6.625%, 2/1/08 600 581
-------------------------------------------------------------------------------
581
-------------------------------------------------------------------------------
Retail 0.0%
Safelite Glass, Sr. Sub. Notes, 9.875%, 12/15/06 * 100 1
-------------------------------------------------------------------------------
1
-------------------------------------------------------------------------------
Savings and Loan 4.4%
Bank United, Jr. Sub. Notes, 10.25%, 12/31/26 700 532
-------------------------------------------------------------------------------
Dime Capital Trust I, Jr. Sub. Notes, 9.33%, 5/6/27 350 316
-------------------------------------------------------------------------------
Golden State Holdings, Sr. Notes, 7.00%, 8/1/03 1,025 980
-------------------------------------------------------------------------------
Greenpoint Bank, Sr. Sub Notes, 9.25%, 10/1/10 350 342
-------------------------------------------------------------------------------
2,170
-------------------------------------------------------------------------------
<PAGE>
Service 2.3%
Coinmach, Sr. Sub. Notes, 11.75%, 11/15/05 $ 250 $ 251
-------------------------------------------------------------------------------
Intertek Finance, Sr. Notes, 10.25%, 11/1/06 75 38
-------------------------------------------------------------------------------
Mastec, Sr. Sub. Notes, 7.75%, 2/1/08 250 233
-------------------------------------------------------------------------------
Waste Management, Sr. Notes, 7.70%, 10/1/02 600 593
-------------------------------------------------------------------------------
1,115
-------------------------------------------------------------------------------
Specialty Chemicals 1.1%
American Pacific, Sr. Notes, 9.25%, 3/1/05 175 171
-------------------------------------------------------------------------------
ISP Holdings, Sr. Notes, 9.75%, 2/15/02 200 168
-------------------------------------------------------------------------------
Octel, Sr. Notes, 10.00%, 5/1/06 200 188
-------------------------------------------------------------------------------
527
-------------------------------------------------------------------------------
Supermarkets 1.1%
Kroger, 8.05%, 2/1/10 500 519
-------------------------------------------------------------------------------
519
-------------------------------------------------------------------------------
Telephone 4.8%
Ameritech Capital Funding Corp., Sr. Notes
6.55%, 1/15/28 400 352
-------------------------------------------------------------------------------
BellSouth Telecommunications, Sr. Notes, 6.375%, 6/1/28 700 609
-------------------------------------------------------------------------------
Deutsche Telekom, Sr. Notes, 8.00%, 6/15/10 700 709
-------------------------------------------------------------------------------
KPN, Sr. Notes, (144a) 8.00%, 10/1/10 + 210 203
-------------------------------------------------------------------------------
Qwest Capital Funding, Sr. Notes, (144a), 7.90%, 8/15/10 500 508
-------------------------------------------------------------------------------
2,381
-------------------------------------------------------------------------------
Textiles and Apparel 0.3%
Westpoint Stevens, Sr. Notes, 7.875%, 6/15/05 200 142
-------------------------------------------------------------------------------
142
-------------------------------------------------------------------------------
Transportation (excluding Railroads) 1.1%
Allied Holdings, Sr. Notes, 8.625%, 10/1/07 125 96
-------------------------------------------------------------------------------
TravelCenters of America, Sr. Sub. Notes, (144a)
12.75%, 5/1/09 + 200 189
-------------------------------------------------------------------------------
Westinghouse Air Brake, Sr. Notes, 9.375%, 6/15/05 250 240
-------------------------------------------------------------------------------
525
-------------------------------------------------------------------------------
<PAGE>
Transportation Services 1.2%
Amerco, Sr. Notes, 8.80%, 2/4/05 600 578
-------------------------------------------------------------------------------
578
-------------------------------------------------------------------------------
Wireless Communications 2.3%
Rogers Cantel, Sr. Sec. Notes
9.375%, 6/1/08 125 127
-------------------------------------------------------------------------------
9.75%, 6/1/16 125 134
-------------------------------------------------------------------------------
Vodafone Airtouch, Sr. Notes, (144a), 7.75%, 2/15/10 $ 600 $ 616
-------------------------------------------------------------------------------
VoiceStream Wireless, Sr. Notes, 10.375%, 11/15/09 250 267
-------------------------------------------------------------------------------
1,144
-------------------------------------------------------------------------------
Wireline Communications 3.3%
Intermedia Communications, Sr. Notes, 9.50%, 3/1/09 250 227
-------------------------------------------------------------------------------
Metronet Communications, Sr. Disc. Notes
STEP, 0%, 6/15/08 400 320
-------------------------------------------------------------------------------
Nextlink Communications, Sr. Disc. Notes
STEP, 0%, 6/1/09 350 117
-------------------------------------------------------------------------------
Telefonica Europe, Sr. Notes, 7.75%, 9/15/10 285 284
-------------------------------------------------------------------------------
Worldcom, Sr. Notes, 6.95%, 8/15/28 750 659
-------------------------------------------------------------------------------
1,607
-------------------------------------------------------------------------------
Total Corporate Bonds and Notes (Cost $42,608) 41,600
-------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 1.0%
Banking 1.0%
MBNA Master Credit Card Trust, Sub. Notes
6.65%, 7/17/06 500 489
-------------------------------------------------------------------------------
Total Asset-Backed Securities (Cost $493) 489
-------------------------------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-
BACKED SECURITIES 2.4%
U.S. Government Agency Obligations 2.4%
Federal Home Loan Mortgage, 5.25%, 1/15/06 300 261
-------------------------------------------------------------------------------
Federal National Mortgage Assn.
7.00%, 7/15/05 600 618
-------------------------------------------------------------------------------
7.25%, 1/15/10 275 290
-------------------------------------------------------------------------------
Total U.S. Government Mortgage-Backed Securities(Cost$1,163) 1,169
-------------------------------------------------------------------------------
<PAGE>
U.S. GOVERNMENT OBLIGATIONS 3.7%
U.S. Treasury Obligations 3.7%
U.S. Treasury Bond Strips, Principal Only, 11/15/21 125 38
-------------------------------------------------------------------------------
U.S. Treasury Bonds, 6.125%, 8/15/29 915 976
-------------------------------------------------------------------------------
U.S. Treasury Notes
5.75%, 8/15/10 $ 450 $ 460
-------------------------------------------------------------------------------
6.75%, 5/15/05 350 367
-------------------------------------------------------------------------------
Total U.S. Government Obligations (Cost $1,803) 1,841
-------------------------------------------------------------------------------
EQUITY AND CONVERTIBLE SECURITIES 4.3%
Automobiles and Related 0.3%
Ford Motor, Common 6 136
-------------------------------------------------------------------------------
136
-------------------------------------------------------------------------------
Banking 0.4%
Sovereign Bancorp, Common 4 189
-------------------------------------------------------------------------------
189
-------------------------------------------------------------------------------
Building and Real Estate 1.1%
Crescent Real Estate Equities, REIT,
Cv. Pfd. (Series A), 6.75% 5 75
-------------------------------------------------------------------------------
Equity Residential Properties Trust, REIT, Cv. Pfd, 7.25% 5 113
-------------------------------------------------------------------------------
Kimco Realty, REIT, Cv. Pfd. 1 26
-------------------------------------------------------------------------------
Reckson Associates Realty, REIT, Cv. Pfd. (Series A), 7.625% 16 346
-------------------------------------------------------------------------------
560
-------------------------------------------------------------------------------
Electric Utilities 0.6%
American Electric Power, Common 1 35
-------------------------------------------------------------------------------
Consolidated Edison, Common 1 28
-------------------------------------------------------------------------------
GPU, Common 1 26
-------------------------------------------------------------------------------
Potomac Electric Power, Common 5 110
-------------------------------------------------------------------------------
Scottish Power ADR, Common 3 77
-------------------------------------------------------------------------------
TXU, Common 1 30
-------------------------------------------------------------------------------
306
<PAGE>
-------------------------------------------------------------------------------
Media and Communications 0.8%
Media One Group, Cv. Pfd. 11 396
-------------------------------------------------------------------------------
396
-------------------------------------------------------------------------------
Miscellaneous Consumer Products 0.2%
Philip Morris, Common 2 67
-------------------------------------------------------------------------------
UST, Common 1 33
-------------------------------------------------------------------------------
100
-------------------------------------------------------------------------------
Paper and Paper Products 0.3%
International Paper, Cv. Pfd., 5.25% 4 148
-------------------------------------------------------------------------------
148
-------------------------------------------------------------------------------
Railroads 0.4%
Union Pacific Capital Trust, Cv. Pfd., 6.25% 4 $ 177
-------------------------------------------------------------------------------
177
-------------------------------------------------------------------------------
Telecommunications 0.2%
Global Crossing Limited, Cv. Pfd., 7.00% 1 114
-------------------------------------------------------------------------------
114
-------------------------------------------------------------------------------
Total Equity and Convertible Securities (Cost $2,155) 2,126
-------------------------------------------------------------------------------
CONVERTIBLE BONDS 1.0%
Miscellaneous Business Services 0.3%
Waste Management, 4.00%, 2/1/02 $ 150 143
-------------------------------------------------------------------------------
143
-------------------------------------------------------------------------------
Telephone 0.7%
Liberty Media, 4.00%, 11/15/29 500 359
-------------------------------------------------------------------------------
359
-------------------------------------------------------------------------------
Total Convertible Bonds (Cost $530) 502
-------------------------------------------------------------------------------
Money Market Funds 1.5%
Reserve Investment Fund, 6.70% # 726 726
-------------------------------------------------------------------------------
Total Money Market Funds (Cost $726) 726
Total Investments in Securities
-------------------------------------------------------------------------------
98.6% of Net Assets (Cost $49,478) $ 48,453
--------------------------------------------------------------------------------
<PAGE>
FUTURES CONTRACTS
-----------------
In thousands
Contract Unrealized
Expiration Value Gain (Loss)
---------- -------- -----------
Long, 2 U.S. Treasury Notes 5-year
contracts,$2,600 par of BellSouth
Telecommunications bonds pledged as
initial margin 3/01 $ 204 $ 1
Long, 2 U.S. Treasury Notes 10-year
contracts, $4,000 par of BellSouth
Telecommunications bonds pledged as
initial margin 3/01 206 2
Net payments (receipts) of variation
margin to date (1)
-------------------------------------------------------------------------------
Variation margin receivable
(payable) on open futures contracts 2
Other Assets Less Liabilities 675
NET ASSETS $ 49,130
+ Private Placement
* Non-income producing
# Seven-day yield
ADR American Depository Receipt
ETC Equipment Trust Certificate
FRN Floating Rate Note
MTN Medium Term Note
REIT Real Estate Mortgage Investment Trust
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 6.1% of net assets.
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Corporate Income Fund
-----------------------------------
Unaudited November 30, 2000
STATEMENT OF ASSETS AND LIABILITIES
----------------------------------- In thousands
ASSETS
------
Investments in securities, at value (cost $49,478) $ 48,453
Receivable for investment securities sold 2,167
Other assets 1,332
Total assets 51,952
LIABILITIES
-----------
Payable for investment securities purchased 2,295
Other liabilities 527
Total liabilities 2,822
NET ASSETS $ 49,130
Net Assets Consist of:
Accumulated net investment income - net of distributions $ 70
Accumulated net realized gain/loss - net of distributions (5,161)
Net unrealized gain (loss) (1,022)
Paid-in-capital applicable to 5,462,085 shares of
$0.0001 par value capital stock outstanding;
1,000,000,000 shares authorized 55,243
NET ASSETS $ 49,130
NET ASSET VALUE PER SHARE $ 8.99
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Corporate Income Fund
----------------------------------- Unaudited
STATEMENT OF OPERATIONS
----------------------- In thousands
6 Months
Ended
11/30/00
Investment Income (Loss)
Income
Interest $ 1,913
Dividend 55
--------------------------------------------------------------------------------
Total income 1,968
--------------------------------------------------------------------------------
Expenses
Custody and accounting 56
Shareholder servicing 48
Investment management 46
Registration 17
Prospectus and shareholder reports 8
Legal and audit 7
Directors 4
Miscellaneous 2
--------------------------------------------------------------------------------
Net expenses 188
--------------------------------------------------------------------------------
Net investment income (loss) 1,780
--------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (278)
Futures (35)
--------------------------------------------------------------------------------
Net realized gain (loss) (313)
--------------------------------------------------------------------------------
Change in net unrealized gain (loss)
Securities 1,246
Futures 4
--------------------------------------------------------------------------------
Change in net unrealized gain or loss 1,250
--------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 937
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 2,717
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Corporate Income 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) $ 1,780 $ 3,705
Net realized gain (loss) (313) (2,725)
Change in net unrealized gain or loss 1,250 (1,279)
--------------------------------------------------------------------------------
Increase (decrease) in net assets from operations 2,717 (299)
--------------------------------------------------------------------------------
Distributions to shareholders
Net investment income (1,768) (3,707)
Capital share transactions *
Shares sold 8,873 24,511
Distributions reinvested 1,128 2,230
Shares redeemed (5,545) (29,832)
--------------------------------------------------------------------------------
Increase (decrease) in net assets from capital
share transactions 4,456 (3,091)
--------------------------------------------------------------------------------
Net Assets
Increase (decrease) during period 5,405 (7,097)
Beginning of period 43,725 50,822
--------------------------------------------------------------------------------
End of period $ 49,130 $ 43,725
*Share information
Shares sold 984 2,666
Distributions reinvested 125 244
Shares redeemed (615) (3,271)
--------------------------------------------------------------------------------
Increase (decrease) in shares outstanding 494 (361)
The accompanying notes are an integral part of these financial statements.
================================================================================
<PAGE>
T. Rowe Price Corporate Income Fund
-----------------------------------
Unaudited November 30, 2000
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------
T. Rowe Price Corporate Income Fund, Inc. (the fund) is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company and commenced operations on October 31, 1995. The fund seeks
to provide high income and some capital growth.
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. Financial futures contracts
are valued at closing settlement prices. Financial futures contracts are valued
at closing settlement prices.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
fund, as authorized by the Board of Directors.
Premiums and Discounts Premiums and discounts on debt securities, other
than mortgage-backed securities (MBS), are amortized for both financial
reporting and tax purposes. Premiums and discounts on all MBS are recognized
upon disposition or principal repayment as gain or loss for financial reporting
purposes. For tax purposes, premiums and discounts on MBS acquired on or before
June 8, 1997, are recognized upon disposition or principal repayment as ordinary
income. For MBS acquired after June 8, 1997, premiums are recognized as gain or
loss; discounts are recognized as gain or loss, except to the extent of accrued
market discount.
<PAGE>
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 by the fund as of June 1, 2001. The guide requires
all premiums and discounts on debt securities to be amortized, and gain/loss on
paydowns of MBS to be accounted for as interest income. 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.
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. Credit
earned on daily uninvested cash balances at the custodian are used to reduce the
fund's custody charges. Payments ("variation margin") made or received by the
fund to settle the daily fluctuations in the value of futures contracts are
recorded as unrealized gains or losses until the contracts are closed.
Unrealized gains and losses on futures contracts are included in Other assets
and Other liabilities, and in Change in net unrealized gain or loss in the
accompanying financial statements.
NOTE 2 - INVESTMENT TRANSACTIONS
--------------------------------
Consistent with its investment objective, the fund engages in the following
practices to manage exposure to certain risks or enhance performance. The
investment objective, policies, program, and risk factors of the fund are
described more fully in the fund's prospectus and Statement of Additional
Information.
Noninvestment-Grade Debt Securities At November 30, 2000, approximately 22%
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.
Futures Contracts During the six months ended November 30, 2000, the fund
was a party to futures contracts, which provide for the future sale by one party
and purchase by another of a specified amount of a specific financial instrument
at an agreed upon price, date, time, and place. Risks arise from possible
illiquidity of the futures market and from movements in security values.
Other Purchases and sales of portfolio securities, other than short-term
and U.S. government securities, aggregated $16,422,000 and $12,511,000,
respectively, for the six months ended November 30, 2000. Purchases and sales of
U.S. government securities aggregated $6,688,000 and $5,901,000, respectively,
for the six months ended November 30, 2000.
<PAGE>
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 $3,799,000 of capital loss
carryforwards, $815,000 of which expires in 2007, and $2,984,000 in 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
$49,478,000. Net unrealized loss aggregated $1,025,000 at period-end, of which
$723,000 related to appreciated investments and $1,748,000 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 $9,000 was
payable at November 30, 2000. The fee is computed daily and paid monthly, and
consists of an individual fund fee equal to 0.15% 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.
Under the terms of the investment management agreement, the manager is
required to bear any expenses through May 31, 2001, which would cause the fund's
ratio of total expenses to average net assets to exceed 0.80%. Thereafter,
through May 31, 2003, the fund is required to reimburse the manager for these
expenses, provided that average net assets have grown or expenses have declined
sufficiently to allow reimbursement without causing the fund's ratio of total
expenses to average net assets to exceed 0.80%. Pursuant to this agreement,
$64,000 of management fees were not accrued by the fund for the six months ended
November 30, 2000. At November 30, 2000, unaccrued fees in the amount of
$320,000 remain subject to reimbursement by the fund through May 31, 2001, and
$185,000 through May 31, 2003.
<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 $84,000 for the six months ended
November 30, 2000, of which $16,000 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 $45,000 and are
reflected as interest income in the accompanying Statement of Operations.
================================================================================
================================================================================
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. F03-051 11/30/00
