Item 1. Report to Shareholders
T. Rowe Price High Yield Fund
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Certified Semiannual Report
This report is certified under the Sarbanes-Oxley Act of 2002, which
requires that public companies, including mutual funds, affirm that the
information provided in their annual and semiannual shareholder reports
fully and fairly represents their financial position.
T. Rowe Price High Yield Fund
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Certified Semiannual Report (Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
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High Yield class
6 Months Year
Ended Ended
11/30/03 5/31/03 5/31/02 5/31/01 5/31/00 5/31/99
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NET ASSET VALUE
Beginning of period $ 6.69 $ 6.62 $ 7.04 $ 7.50 $ 8.32 $ 8.85
Investment activities
Net investment
income (loss) 0.28 0.58 0.63 0.74 0.76 0.75
Net realized and
unrealized gain
(loss) 0.24 0.06 (0.41) (0.46) (0.81) (0.53)
Total from
investment
activities 0.52 0.64 0.22 0.28 (0.05) 0.22
Distributions
Net investment
income (0.28) (0.57) (0.64) (0.74) (0.77) (0.75)
NET ASSET VALUE
End of period $ 6.93 $ 6.69 $ 6.62 $ 7.04 $ 7.50 $ 8.32
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Ratios/Supplemental Data
Total return^ 7.96% 10.53% 3.48% 3.96% (0.63)% 2.73%
Ratio of total
expenses to
average net assets 0.78%! 0.81% 0.83% 0.82% 0.83% 0.82%
Ratio of net
investment income
(loss) to average
net assets 8.38%! 9.09% 9.56% 10.16% 9.60% 8.93%
Portfolio turnover
rate 70.3%! 59.9% 71.3% 80.1% 75.9% 95.6%
Net assets,
end of period
(in millions) $ 3,080 $ 2,568 $ 1,811 $ 1,538 $ 1,524 $ 1,776
^ 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.
T. Rowe Price High Yield Fund
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Certified Semiannual Report (Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
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Advisor Class
6 Months Year 3/31/00
Ended Ended Through
11/30/03 5/31/03 5/31/02 5/31/01 5/31/00
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NET ASSET VALUE
Beginning of period $ 6.68 $ 6.61 $ 7.04 $ 7.50 $ 7.70
Investment activities
Net investment income (loss) 0.27 0.56 0.63 0.73 0.12
Net realized and
unrealized gain (loss) 0.24 0.07 (0.43) (0.46) (0.19)
Total from
investment activities 0.51 0.63 0.20 0.27 (0.07)
Distributions
Net investment income (0.27) (0.56) (0.63) (0.73) (0.13)
NET ASSET VALUE
End of period $ 6.92 $ 6.68 $ 6.61 $ 7.04 $ 7.50
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Ratios/Supplemental Data
Total return^ 7.85% 10.32% 3.14% 3.86% (0.90)%
Ratio of total expenses to
average net assets 1.02%! 1.01% 0.99% 0.93% 0.68%!
Ratio of net investment
income (loss) to average
net assets 8.14%! 8.83% 9.46% 9.78% 10.01%!
Portfolio turnover rate 70.3%! 59.9% 71.3% 80.1% 75.9%!
Net assets, end of period
(in thousands) $619,266 $496,630 $233,802 $ 3,061 $ 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.
T. Rowe Price High Yield Fund
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Certified Semiannual Report (Unaudited) November 30, 2003
STATEMENT OF NET ASSETS (ss.) Par/Shares Value
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In thousands
CORPORATE BONDS AND NOTES 90.5%
Aerospace & Defense 2.0%
Anteon, 12.00%, 5/15/09 $ 3,412 $ 3,702
Aviall, 7.625%, 7/1/11 9,975 10,274
BE Aerospace, 144A, 8.50%, 10/1/10 3,075 3,237
Communications & Power, 12.00%, 8/1/05 4,000 4,200
Gencorp, 144A, 9.50%, 8/15/13 27,100 27,371
IT Group, VR, 2.50%, 6/11/07 4,331 433
Sequa, 9.00%, 8/1/09 1,325 1,454
Transdigm, 144A, 8.375%, 7/15/11 6,750 7,121
Vought Aircraft Industries, 144A, 8.00%, 7/15/11 17,210 17,425
75,217
Automobiles and Related 2.9%
Accuride Corporation
9.25%, 2/1/08 875 884
VR, 4.565%, 1/21/07 3,000 3,015
VR, 8.25%, 6/13/07 14,000 14,035
Collins & Aikman, 10.75%, 12/31/11 7,500 6,750
Cummins Engine, 144A, 9.50%, 12/1/10 1,200 1,380
Dana
9.00%, 8/15/11 9,775 11,119
10.125%, 3/15/10 650 744
Delco Remy International, 10.625%, 8/1/06 6,300 6,174
Eagle-Picher, 144A, 9.75%, 9/1/13 9,800 10,437
HLI Operating, 144A, 10.50%, 6/15/10 7,850 8,949
Intermet, 9.75%, 6/15/09 7,225 7,388
MSX International, 11.375%, 1/15/08 1,925 1,155
TRW Automotive
144A, 9.375%, 2/15/13 15,619 17,649
144A, 10.125%, 2/15/13 (EUR) 1,550 2,120
144A, 11.00%, 2/15/13 12,680 14,899
106,698
Beverages 0.1%
Reddy Ice Group, 144A, 8.875%, 8/1/11 4,000 4,220
4,220
Broadcasting 3.9%
Gray Communications, 9.25%, 12/15/11 9,350 10,378
Paxson Communications
10.75%, 7/15/08 $ 3,100 $ 3,364
STEP, 12.25%, 1/15/09 4,125 3,506
Quebecor Media
11.125%, 7/15/11 23,525 26,995
STEP, 13.75%, 7/15/11 7,500 6,562
Radio Unica, STEP, 11.75%, 8/1/06 15,685 10,627
Sinclair Broadcast Group, 8.00%, 3/15/12 9,050 9,593
Spanish Broadcasting Systems, 9.625%, 11/1/09 8,425 8,846
Vivendi Universal, 144A, 9.25%, 4/15/10 20,975 24,593
XM Satellite Radio
12.00%, 6/15/10 9,400 10,551
STEP, 14.00%, 12/31/09 14,302 12,443
Young Broadcasting
8.50%, 12/15/08 150 161
8.75%, 6/15/07 6,718 6,752
10.00%, 3/1/11 7,832 8,243
142,614
Building Products 2.3%
American Builders & Contractors Supply
Series B, 10.625%, 5/15/07 12,725 13,107
Associated Materials, 9.75%, 4/15/12 16,910 18,263
Collins & Aikman Floorcoverings, 9.75%, 2/15/10 8,225 8,821
Interface
7.30%, 4/1/08 500 473
10.375%, 2/1/10 12,185 12,733
Mobile Mini, 144A, 9.50%, 7/1/13 4,425 4,823
Norcraft, 144A, 9.00%, 11/1/11 9,275 9,762
Nortek, Series B, 9.875%, 6/15/11 7,000 7,621
Texas Industries, 144A, 10.25%, 6/15/11 8,425 9,457
85,060
Building and Real Estate 1.4%
D.R. Horton, 8.50%, 4/15/12 3,225 3,677
LNR Property
7.625%, 7/15/13 1,975 2,034
144A, 7.25%, 10/15/13 10,225 10,353
Shaw Group, 144A, 10.75%, 3/15/10 14,600 15,330
Wackenhut Corrections, 144A, 8.25%, 7/15/13 2,535 2,674
WCI Communities
9.125%, 5/1/12 $ 3,075 $ 3,352
10.625%, 2/15/11 4,500 5,017
144A, 7.875%, 10/1/13 5,800 6,032
Williams Scotsman
9.875%, 6/1/07 1,325 1,305
10.00%, 8/15/08 2,750 2,984
52,758
Cable Operators 2.9%
Charter Communications
10.00%, 4/1/09 1,150 955
10.75%, 10/1/09 2,350 1,997
11.125%, 1/15/11 20,900 17,869
144A, 8.75%, 11/15/13 14,775 14,590
144A, 10.25%, 9/15/10 14,800 15,078
CSC Holdings, Series B, 7.625%, 4/1/11 100 101
Frontiervision Opera
VR, 2.415%, 3/31/06 3,380 3,296
VR, 3.415%, 3/31/06 4,420 4,309
Insight Midwest, 9.75%, 10/1/09 4,915 5,198
Insight Midwest / Insight Capital, 10.50%, 11/1/10 6,305 6,872
Mediacom Broadband, 11.00%, 7/15/13 10,565 11,357
Olympus Commerce / Olympus Capital, VR,
5.50%, 11/15/06 5,000 4,575
Olympus Communications, VR, 2.518%, 6/30/10 3,500 3,203
Telewest Communications, 9.875%, 2/1/10 8,275 4,717
Telewest, VR, 11.375%, 2/1/10 24,850 11,058
Videotron Ltee, 144A, 6.875%, 1/15/14 2,725 2,807
107,982
Consumer Products 4.0%
American Achievment, 11.625%, 1/1/07 9,570 10,551
American Safety Razor, Series B, 9.875%, 8/1/05 9,500 9,429
Armkel Finance, 9.50%, 8/15/09 11,305 12,435
Ballys Health & Tennis, 144A, 10.50%, 7/15/11 8,275 8,275
Chattem, 8.875%, 4/1/08 6,775 6,978
Commemorative Brands, 11.00%, 1/15/07 8,575 8,746
Hockey Company, 11.25%, 4/15/09 10,840 12,358
Jostens, 12.75%, 5/1/10 19,921 23,009
Jostens Holdings, 144A, STEP, 10.25%, 12/1/13 $ 15,875 $ 9,961
Playtex Products, 9.375%, 6/1/11 5,245 5,206
Rayovac, 144A, 8.50%, 10/1/13 3,500 3,636
Salton, 12.25%, 4/15/08 1,850 1,961
Sealy Mattress
9.875%, 12/15/07 12,130 12,433
STEP, 10.875%, 12/15/07 1,255 1,296
Simmons, 10.25%, 3/15/09 10,625 11,369
Sola International, 6.875%, 3/15/08 7,508 7,696
Town Sports International, 9.625%, 4/15/11 4,030 4,312
149,651
Container 3.7%
AEP Industries, 9.875%, 11/15/07 5,305 5,292
BWAY 144A, 10.00%, 10/15/10 12,530 13,407
Constar International, 11.00%, 12/1/12 6,040 4,892
Crown European Holdings
9.50%, 3/1/11 15,600 17,511
10.875%, 3/1/13 15,310 17,683
Greif Brothers, 8.875%, 8/1/12 4,850 5,262
Owens Brockway Glass Container
7.75%, 5/15/11 4,150 4,358
8.25%, 5/15/13 12,175 12,723
8.875%, 2/15/09 11,500 12,362
Owens-Illinois
7.15%, 5/15/05 2,580 2,638
Series 2008, 7.35%, 5/15/08 2,825 2,832
Plastipak Holdings, 10.75%, 9/1/11 17,480 19,141
Pliant, 11.125%, 9/1/09 7,300 7,829
Silgan Holdings, 144A, 6.75%, 11/15/13 3,950 3,960
Tekni Plex Inc., 144A, 8.75%, 11/15/13 6,325 6,515
136,405
Electric Utilities 8.9%
AES
8.875%, 2/15/11 19,725 20,613
9.375%, 9/15/10 14,050 15,016
144A, 9.00%, 5/15/15 16,125 17,576
Allegheny Energy Supply
7.80%, 3/15/11 $ 17,475 $ 16,077
VR, 7.171%, 4/18/05 11,360 11,332
144A, STEP, 8.75%, 4/15/12 9,625 9,096
ANR Pipeline, 8.875%, 3/15/10 3,175 3,528
Aquila, STEP, 14.875%, 7/1/12 6,850 9,128
Calpine
144A, 8.50%, 7/15/10 7,075 6,544
144A, 9.875%, 12/1/11 7,300 7,154
CMS Energy
8.50%, 4/15/11 1,850 1,933
9.875%, 10/15/07 13,921 15,261
VR, 9.00%, 9/28/04 43 43
Dynegy Holdings
8.75%, 2/15/12 4,975 4,801
144A, 10.125%, 7/15/13 16,425 18,067
Dynegy-Roseton Danskammer, Series A, 144A,
7.27%, 11/8/10 12,250 12,128
El Paso Energy
7.75%, 1/15/32 11,525 8,961
7.80%, 8/1/31 4,350 3,382
Illinois Power, 11.50%, 12/15/10 12,780 15,080
Orion Power, 12.00%, 5/1/10 12,650 14,801
PSEG Energy
8.50%, 6/15/11 9,450 10,052
10.00%, 10/1/09 3,575 4,076
Reliant Resources, 144A, 9.50%, 7/15/13 16,350 16,514
South Point Energy Center
Series A, 144A, 8.40%, 5/30/12 5,371 5,035
Series B, 144A, 9.825%, 5/30/19 15,800 14,141
Southern Natural Gas Company, 8.875%, 3/15/10 4,075 4,533
Teco Energy
7.00%, 5/1/12 2,925 3,005
7.20%, 5/1/11 2,900 3,009
7.50%, 6/15/10 1,250 1,325
TNP Enterprises, 10.25%, 4/1/10 6,945 7,535
Utilicorp Canada Finance Corp., 7.75%, 6/15/11 1,825 1,733
Williams Companies
7.625%, 7/15/19 $ 4,365 $ 4,338
7.75%, 6/15/31 2,425 2,340
8.625%, 6/1/10 7,050 7,799
Series A, 7.50%, 1/15/31 5,825 5,555
STEP, 8.125%, 3/15/12 3,800 4,104
STEP, 8.75%, 3/15/32 22,050 23,346
328,961
Electronic Components 3.7%
AMI Semiconductor, 10.75%, 2/1/13 3,283 3,915
Amkor Technology
10.50%, 5/1/09 5,000 5,350
144A, 7.75%, 5/15/13 7,525 8,052
ASAT Finance, 12.50%, 11/1/06 8,031 8,452
Avaya, 11.125%, 4/1/09 12,025 14,129
Chippac International, Series B, 12.75%, 8/1/09 7,525 8,353
Fairchild Semiconductor, 10.50%, 2/1/09 5,085 5,683
Flextronics, 9.75%, 7/1/10 (EUR) 4,500 5,885
Lucent Technologies
5.50%, 11/15/08 2,125 1,939
6.45%, 3/15/29 11,950 9,052
Nortel Networks
6.125%, 2/15/06 6,075 6,121
6.875%, 9/1/23 13,275 12,346
On Semiconductor
12.00%, 3/15/10 4,475 5,325
STEP, 13.00%, 5/15/08 9,800 11,368
Sanmina-SCI, 10.375%, 1/15/10 7,475 8,708
SCG Holding & Semiconductor, 12.00%, 8/1/09 13,470 14,581
Seagate Technology, 8.00%, 5/15/09 3,135 3,401
Stratus Technologies, 144A, 10.375%, 12/1/08 2,875 2,940
Telex Communications, 144A, 11.50%, 10/15/08 2,400 2,520
138,120
Energy 4.3%
Amerigas Partners
8.875%, 5/20/11 20,570 22,318
10.00%, 4/15/06 3,500 3,815
BRL Universal Equipment, 8.875%, 2/15/08 6,170 6,633
Chesapeake Energy, 9.00%, 8/15/12 7,000 8,050
Dresser, 9.375%, 4/15/11 $ 9,040 $ 9,469
Encore Acquisition, 8.375%, 6/15/12 4,010 4,251
Ferrellgas Partners, 8.75%, 6/15/12 12,295 13,371
Geophysique, 10.625%, 11/15/07 9,197 9,795
Hanover Equipment Test, Series A, 9.487%, 9/1/08 2,850 2,900
Hilcorp Energy, 144A, 10.50%, 9/1/10 12,025 13,107
Magnum Hunter Resources
9.60%, 3/15/12 4,150 4,669
10.00%, 6/1/07 2,321 2,398
North American Energy Partners, 144A, 8.75%, 12/1/11 4,325 4,455
Parker Drilling, 144A, 9.625%, 10/1/13 8,500 8,627
Petroleum Geo Services, 10.00%, 11/5/10 9,625 10,106
Petroleum Helicopters, 9.375%, 5/1/09 6,400 6,896
Stone Energy, 8.25%, 12/15/11 675 724
Swift Energy, 10.25%, 8/1/09 14,210 15,382
Tom Brown, 7.25%, 9/15/13 175 183
Universal Compression Holdings, 7.25%, 5/15/10 8,550 8,871
Westport Resources, 8.25%, 11/1/11 2,550 2,780
158,800
Entertainment and Leisure 1.6%
AMC Entertainment
9.50%, 3/15/09 1,000 1,030
9.875%, 2/1/12 3,725 4,079
AMF Bowling Worldwide, 13.00%, 9/1/08 7,550 8,532
Gaylord Entertainment, 144A, 8.00%, 11/15/13 1,750 1,820
Imax, 144A, 9.625%, 12/1/10 3,925 4,043
Six Flags
8.875%, 2/1/10 1,900 1,867
9.50%, 2/1/09 13,805 13,977
9.75%, 4/15/13 14,725 14,909
Universal City Development Partners, 144A,
11.75%, 4/1/10 6,550 7,598
57,855
Finance and Credit 0.2%
FBOP Capital Trust II, 144A, 10.00%, 1/15/09 4,200 4,515
Willis Corroon, 9.00%, 2/1/09 4,125 4,383
8,898
Food/Tobacco 3.3%
Agrilink Foods, 11.875%, 11/1/08 $ 2,700 $ 2,828
B&G Foods, 9.625%, 8/1/07 15,925 16,363
Burns Philip Capital Property, 144A, 10.75%, 2/15/11 7,400 7,745
Dimon, 9.625%, 10/15/11 12,910 14,395
Doane Pet Care, 10.75%, 3/1/10 4,800 4,944
Dole Food
8.875%, 3/15/11 10,505 11,398
VR, 8.625%, 5/1/09 5,175 5,576
Dominos, 144A, 8.25%, 7/1/11 8,800 9,273
Le Natures, 144A, 9.00%, 6/15/13 17,030 17,796
Luigino's, 10.00%, 2/1/06 10,456 10,770
Merisant, 144A, 9.50%, 7/15/13 7,575 7,764
Pinnacle Foods Holdings, 144A, 8.25%, 12/1/13 5,820 5,995
Premium Standard Farms, 9.25%, 6/15/11 5,325 5,378
120,225
Gaming 3.6%
Ameristar Casinos, 10.75%, 2/15/09 9,725 11,135
Argosy Gaming, 10.75%, 6/1/09 12,320 13,336
Chukchansi Economic Development Authority, 144A
14.50%, 6/15/09 11,000 13,090
Coast Hotels & Casinos, 9.50%, 4/1/09 2,550 2,697
Herbst Gaming, 10.75%, 9/1/08 5,395 6,029
Hollywood Park, 9.25%, 2/15/07 15,000 15,450
Isle of Capri Casinos, 8.75%, 4/15/09 6,375 6,694
Majestic Star Casino, 144A, 9.50%, 10/15/10 9,825 9,972
Old Evangeline Downs, 13.00%, 3/1/10 5,015 5,291
Penn National Gaming, 11.125%, 3/1/08 13,775 15,497
Resorts International Hotel, 11.50%, 3/15/09 775 823
Station Casinos, 9.875%, 7/1/10 6,360 7,028
Trump Casino Holdings, 11.625%, 3/15/10 5,255 4,703
Turning Stone Casino Resort, 144A, 9.125%, 12/15/10 4,000 4,330
Venetian Casino Resort, 11.00%, 6/15/10 13,205 15,285
131,360
Healthcare Services 3.1%
Alliance Imaging, 10.375%, 4/15/11 8,310 8,591
Alpharma, 144A, 8.625%, 5/1/11 2,175 2,164
AmeriPath, 10.50%, 4/1/13 15,150 15,983
Biovail Corp., 7.875%, 4/1/10 2,855 2,755
Concentra Operations
9.50%, 8/15/10 $ 3,575 $ 3,816
Series B, 13.00%, 8/15/09 12,823 14,394
Fisher Scientific, 8.125%, 5/1/12 1,236 1,326
Fresenius Medical Capital Trust II, 7.875%, 2/1/08 8,975 9,424
Fresenius Medical Capital Trust IV, 7.875%, 6/15/11 1,370 1,445
Genesis Healthcare, 144A, 8.00%, 10/15/13 9,225 9,363
Insight Health Services, 9.875%, 11/1/11 7,860 8,263
Quintiles Transnational, 144A, 10.00%, 10/1/13 11,325 12,118
Tenet Healthcare, 7.375%, 2/1/13 11,125 10,736
Vicar Operating, 9.875%, 12/1/09 12,422 13,726
114,104
Internet Service Providers 0.0%
Globix Corporation, 11.00%, 5/1/08 1,958 1,683
1,683
Lodging 1.7%
Courtyard by Marriott, 10.75%, 2/1/08 16,725 16,809
HMH Properties, 7.875%, 8/1/08 2,675 2,762
Host Marriot, Series D, 8.375%, 2/15/06 2,500 2,650
Host Marriott, Series I, 9.50%, 1/15/07 2,750 3,008
John Q. Hammons Hotels, Series B, 8.875%, 5/15/12 15,140 16,578
La Quinta Inns, 7.40%, 9/15/05 6,360 6,630
La Quinta Properties, 144A, 8.875%, 3/15/11 12,700 14,018
62,455
Long Distance 0.7%
Level 3 Communications, 9.125%, 5/1/08 7,975 7,217
MCI Communications
6.50%, 4/15/10 * 17,500 14,175
6.95%, 8/15/06 * 5,475 4,435
7.125%, 6/15/27 * 875 709
8.25%, 1/20/23 * 10 8
26,544
Manufacturing 2.2%
Actuant, 13.00%, 5/1/09 11,766 14,943
Case New Holland, 144A, 9.25%, 8/1/11 10,025 11,228
General Cable, 144A, 9.50%, 11/15/10 3,750 3,956
Manitowoc, 7.125%, 11/1/13 3,125 3,195
National Waterworks, Series B, 10.50%, 12/1/12 16,365 18,268
Numatics, Series B, 9.625%, 4/1/08 $ 1,690 $ 1,327
Rexnord, 10.125%, 12/15/12 13,200 14,388
Trimas, 9.875%, 6/15/12 15,505 15,776
83,081
Metals and Mining 4.1%
Arch Western Finance, 144A, 6.75%, 7/1/13 6,850 6,987
Bethlehem Steel, 10.375%, 9/1/03 @ (misc. symbol1) 6,900 0
Better Minerals & Aggregates, 13.00%, 9/15/09 13,075 8,041
Century Aluminum, 11.75%, 4/15/08 15,740 17,393
Earle M. Jorgensen, 9.75%, 6/1/12 25,095 27,354
Euramax International, 144A, 8.50%, 8/15/11 5,850 6,142
Gerdau Ameristeel, 144A, 10.375%, 7/15/11 12,325 13,034
International Utility Structures, 13.00%, 2/1/08 * 5,000 50
Ipsco, 144A, 8.75%, 6/1/13 1,875 2,025
Joy Global, 8.75%, 3/15/12 8,290 9,119
Lukens, 7.625%, 8/1/04 * 500 1
Luscar Coal, 9.75%, 10/15/11 9,750 11,017
Neenah Foundry
144A, 11.00%, 9/30/10 4,925 5,319
144A, 13.00%, 9/30/13 6,400 6,272
Russel Metals, 10.00%, 6/1/09 6,000 6,360
Schuff Steel, 10.50%, 6/1/08 4,650 3,115
Steel Dynamics
9.50%, 3/15/09 11,610 12,684
144A, 9.50%, 3/15/09 4,700 5,135
USX-U.S. Steel Group, 9.75%, 5/15/10 9,525 10,144
Weirton Steel, STEP, 0.50%, 4/1/08 * 3,713 687
150,879
Paging 0.3%
Crown Castle International
10.75%, 8/1/11 7,525 8,353
STEP, 11.25%, 8/1/11 2,400 2,490
10,843
Paper and Paper Products 4.4%
Ainsworth Lumber
12.50%, 7/15/07 5,250 6,077
13.875%, 7/15/07 10,925 12,591
Boise Cascade, 7.00%, 11/1/13 3,775 3,848
Four M, 12.00%, 6/1/06 20,402 18,821
Georgia Pacific
7.50%, 5/15/06 $ 2,000 $ 2,095
8.875%, 2/1/10 4,300 4,848
9.375%, 2/1/13 15,225 17,433
9.875%, 11/1/21 6,150 6,388
Graphic Packaging International, 144A, 8.50%, 8/15/11 5,800 6,445
Jefferson Smurfit, 7.50%, 6/1/13 2,950 3,039
JSG Funding, 10.125%, 10/1/12 (EUR) 8,000 10,702
Longview Fibre, 10.00%, 1/15/09 16,045 17,810
MDP Acquisitions
9.625%, 10/1/12 12,275 13,625
PIK, 15.50%, 10/1/13 5,630 6,475
Potlatch, 10.00%, 7/15/11 10,580 11,863
Stone Container
8.375%, 7/1/12 5,700 6,184
9.75%, 2/1/11 3,975 4,363
144A, 11.50%, 8/15/06 8,900 9,434
U.S. Timberland Klamath Falls, 9.625%, 11/15/07 2,160 1,242
163,283
Printing and Publishing 5.4%
American Media Operations
8.875%, 1/15/11 1,510 1,616
Series B, 10.25%, 5/1/09 3,230 3,440
Canwest Media, 10.625%, 5/15/11 8,400 9,534
CBD Media, 144A, 8.625%, 6/1/11 1,925 2,084
Dex Media
144A, STEP, 9.00%, 11/15/13 10,075 6,750
144A, 8.00%, 11/15/13 3,225 3,265
Dex Media East
9.875%, 11/15/09 5,490 6,231
12.125%, 11/15/12 18,500 22,200
Dex Media West
144A, 8.50%, 8/15/10 5,200 5,668
144A, 9.875%, 8/15/13 11,925 13,535
Hollinger International Publishing, 9.00%, 12/15/10 1,750 1,855
Hollinger Participation Trust, 144A, PIK,
12.125%, 11/15/10 4,489 5,207
Houghton Mifflin
9.875%, 2/1/13 13,235 14,161
144A, STEP, 11.50%, 10/15/13 3,375 2,042
Liberty Group
9.375%, 2/1/08 $ 9,000 $ 8,955
STEP, 11.625%, 2/1/09 13,201 12,343
Mail Well I Corp., 9.625%, 3/15/12 7,250 7,975
Primedia
7.625%, 4/1/08 225 224
8.875%, 5/15/11 5,375 5,576
144A, 8.00%, 5/15/13 10,550 10,656
R.H. Donnelley Finance
8.875%, 12/15/10 8,000 8,960
144A, 8.875%, 12/15/10 1,590 1,781
144A, 10.875%, 12/15/12 17,800 21,004
Transwestern Publishing, 9.625%, 11/15/07 8,890 9,157
Vertis
10.875%, 6/15/09 6,030 6,181
144A, 9.75%, 4/1/09 7,475 7,998
198,398
Restaurants 0.3%
O'Charley's, 144A, 9.00%, 11/1/13 6,975 6,975
Perkins Family Restaurant, Series B,
10.125%, 12/15/07 2,725 2,739
9,714
Retail 0.5%
Barneys New York, 9.00%, 4/1/08 4,975 4,577
Dillard Department Stores
6.875%, 6/1/05 3,300 3,432
7.375%, 6/1/06 3,040 3,169
Dillard's, 6.69%, 8/1/07 2,375 2,435
Dollar Financial Group, 144A, 9.75%, 11/15/11 1,875 1,931
J Crew Intermediate, 144A, STEP, 16.00%, 5/15/08 1,035 807
J Crew Operating Corporation, 10.375%, 10/15/07 3,600 3,708
20,059
Satellites 1.4%
Directv, 8.375%, 3/15/13 8,450 9,559
Echostar DBS, 10.375%, 10/1/07 3,040 3,336
Orbital Imaging, 11.625%, 3/1/05 * 3,400 2,040
Pegasus Communications, Series B, 12.50%, 8/1/07 3,575 3,110
Pegasus Satellite
12.375%, 8/1/06 $ 6,010 $ 5,229
STEP, 13.50%, 3/1/07 4,025 3,099
Pegasus Satellite Commerce
9.00%, 7/31/06 15,000 15,075
144A, 11.25%, 1/15/10 14,050 11,662
53,110
Services 3.0%
Allied Waste Industries
7.875%, 4/15/13 12,200 13,054
Series B, 7.875%, 1/1/09 600 621
Allied Waste North America, 9.25%, 9/1/12 2,925 3,276
Brand Services, 12.00%, 10/15/12 10,475 12,046
Brickman Group, 11.75%, 12/15/09 7,550 8,683
Casella Waste Systems, 9.75%, 2/1/13 17,475 19,616
Coinmach, 9.00%, 2/1/10 10,565 11,489
Iesi Corporation, 10.25%, 6/15/12 8,660 9,396
IPC Acquisition, 11.50%, 12/15/09 8,655 9,542
Synagro Technologies, 9.50%, 4/1/09 17,405 19,146
Worldspan, 144A, 9.625%, 6/15/11 3,425 3,425
110,294
Specialty Chemicals 5.5%
Arco Chemical, 9.80%, 2/1/20 7,500 7,013
Avecia Group, 11.00%, 7/1/09 15,370 13,218
Compass Minerals Group, 10.00%, 8/15/11 5,675 6,299
Equistar Chemicals, 144A, 10.625%, 5/1/11 3,750 3,975
HMP Equity Holdings, 144A, Zero Coupon, 5/15/08 10,550 5,644
Huntsman, 144A, 11.625%, 10/15/10 5,900 5,797
Huntsman Advanced Materials
144A, 11.00%, 7/15/10 200 215
144A, STEP, 9.10%, 7/15/08 5,000 5,263
Huntsman ICI Chemicals, 10.125%, 7/1/09 20,125 21,393
Huntsman International
9.875%, 3/1/09 2,345 2,521
144A, 9.875%, 3/1/09 5,000 5,375
Koppers Industries
9.875%, 12/1/07 14,545 15,024
144A, 9.875%, 10/15/13 7,450 8,083
Kronos International, 8.875%, 6/30/09 (EUR) 4,000 5,099
Lyondell Chemical
9.50%, 12/15/08 $ 5,050 $ 5,113
Series A, 9.625%, 5/1/07 3,000 3,083
MacDermid, 9.125%, 7/15/11 2,750 3,073
Messer Griesheim, 10.375%, 6/1/11 (EUR) 2,625 3,637
Nalco
144A, 7.75%, 11/15/11 5,175 5,382
144A, 8.875%, 11/15/13 13,250 13,813
Noveon, 13.00%, 8/31/11 ++ 14,058 14,972
OMNOVA Solutions, 144A, 11.25%, 6/1/10 6,950 7,523
PolyOne, 10.625%, 5/15/10 4,400 4,224
Resolution Performance Products, 9.50%, 4/15/10 7,690 7,613
Rhodia
144A, 7.625%, 6/1/10 1,175 1,116
144A, 8.875%, 6/1/11 8,150 7,295
Rockwood Specialties Group, 144A, 10.625%, 5/15/11 9,800 10,780
Salt Holdings, 144A, STEP, 12.00%, 6/1/13 17,550 11,407
203,950
Supermarkets 0.4%
The Pantry, 10.25%, 10/15/07 12,655 13,114
13,114
Textiles and Apparel 0.3%
Anvil Knitwear, 10.875%, 3/15/07 3,387 3,218
Avondale Mills, 10.25%, 7/1/13 9,650 6,272
Dyersburg, Series B, 9.75%, 9/1/07 10,150 1
9,491
Transportation 1.3%
Laidlaw International, 144A, 10.75%, 6/15/11 10,950 12,100
Northwest Airlines, 9.875%, 3/15/07 2,725 2,425
Petro Stopping, 10.50%, 2/1/07 12,280 12,495
TravelCenters of America, 12.75%, 5/1/09 16,320 18,768
US Airways, Series CL-C, ETC, 8.93%, 4/15/08 5,566 556
46,344
Wireless Communications 4.6%
Accident Escrow Corporation, 144A, 10.00%, 8/1/11 12,600 13,797
Alamosa Delaware
11.00%, 7/31/10 11,000 11,550
STEP, 12.00%, 7/31/09 882 759
Centennial Communications, 10.125%, 6/15/13 3,525 3,710
Dobson Communications
10.875%, 7/1/10 $ 12,800 $ 14,080
144A, 8.875%, 10/1/13 10,880 10,948
Nextel Communications
6.875%, 10/31/13 3,800 3,876
7.375%, 8/1/15 15,300 16,065
9.375%, 11/15/09 1,150 1,251
9.50%, 2/1/11 18,183 20,660
Nextel Partners
11.00%, 3/15/10 15,226 16,825
12.50%, 11/15/09 30 34
Rogers Cantel
8.80%, 10/1/07 6,350 6,540
9.375%, 6/1/08 8,015 8,386
Rogers Wireless, 9.625%, 5/1/11 4,150 4,845
Triton PCS Holdings, 8.50%, 6/1/13 4,950 5,198
Tsi Telecommunications Services, 12.75%, 2/1/09 1,400 1,531
US Unwired, Series B, STEP, 13.375%, 11/1/09 14,027 9,328
Western Wireless
9.25%, 7/15/13 15,935 16,493
VR, 3.60%, 3/31/05 4,875 4,826
VR, 4.20%, 12/31/03 997 997
171,699
Wireline Communications 2.5%
Alaska Communications, 144A, 9.875%, 8/15/11 11,075 11,684
Cincinnati Bell, 144A, 8.375%, 1/15/14 8,550 8,978
Colt Telecom, STEP, 12.00%, 12/15/06 4,260 4,249
Eircom Funding, 144A, 8.25%, 8/15/13 5,875 6,374
LCI International, 7.25%, 6/15/07 8,495 7,985
Qwest
6.50%, 6/5/07 12,750 13,180
6.95%, 6/30/10 4,250 4,245
Qwest Services, 144A, 13.50%, 12/15/10 25,275 29,698
Time Warner Telecom
9.75%, 7/15/08 4,575 4,667
10.125%, 2/1/11 2,400 2,484
93,544
Total Corporate Bonds and Notes (Cost $3,211,135) 3,347,413
EQUITY AND CONVERTIBLE SECURITIES 6.6%
Broadcasting 0.3%
Granite Broadcasting
Common Stock * $ 400 $ 792
Pfd. Stock, 12.75%, PIK * 9 6,079
Spanish Broadcasting Systems, Series A,
Pfd. Stock, 10.75%, 144A * 2 2,010
Time Warner, Common Stock * 2 37
XM Satellite Radio, Class A, Warrants, 12/31/09 * 5 174
9,092
Building and Real Estate 0.2%
Washington Group International, Common Stock * 175 5,855
5,855
Cable Operators 1.2%
Classic Communications, Class B, Common Stock, 144A * 9 0
Comcast, Class A, Common Stock * 0 2
CSC Holdings
Series H, Pfd. Stock, 11.75%, PIK 58 6,123
Series M, Pfd. Stock, 11.125%, PIK 342 36,193
Peachtree Cable Associates, Common Stock *++ 10 0
UIH Australia Pacific, Warrants, 5/15/06 * 5 0
42,318
Consumer Products 0.0%
Hedstrom Holdings, Warrants, 8/1/06 * 11 0
Mattress Discounters, Warrants, 7/15/07 * 4 0
0
Electric Utilities 1.6%
Duke Energy, Common Stock 517 9,318
FirstEnergy, Common Stock 219 7,581
NiSource, Common Stock 360 7,468
Pinnacle West Capital, Common Stock 193 7,594
PPL Energy, Conv. Bond, 144A, 2.625%, 5/15/23 4,453 4,399
Teco Energy, Common Stock 720 9,344
TNP Enterprises
Warrants, 4/1/11, 144A * 6 63
Series D, Pfd. Stock, 14.50%, PIK * 14 13,703
59,470
Electronic Components 0.3%
ASAT Finance, Warrants, 11/1/06, 144A * $ 2 $ 3
Lucent Technologies, Conv. Bond, 8.00%, 8/1/31 9,225 10,055
10,058
Gaming 0.0%
Lakes Entertainment, Common Stock * 18 259
Mikohn Gaming, Warrants, 8/15/08, 144A * 9 0
259
Healthcare Services 0.0%
Mariner Health Care
Common Stock * 7 103
Warrants, 5/1/04 * 7 2
105
Internet Service Providers 0.0%
Cybernet Internet Services, Warrants, 7/1/09 * 3 0
Exodus Communications, Conv. Bond, 5.25%, 2/15/08 * 8,500 32
Globix Corporation, Common Stock * 205 971
Splitrock Services, Warrants, 7/1/08 * 2 29
1,032
Long Distance 0.0%
AT&T, Common Stock 0 1
Global Crossing, Sr. Exch. Pfd. Stock * 76 681
Microcell Telecommunications
Class A, Common Stock (CAD) * 0 1
Class B, Common Stock (CAD) * 6 78
Pfd. Stock (CAD) * 6 78
Warrants, 5/1/05 (CAD) * 7 13
RSL Commincations, Warrants, 11/15/06, 144A * 3 0
852
Manufacturing 0.3%
Tyco International, Common Stock 525 12,049
12,049
Metals and Mining 0.2%
Gerdau Ameristeel, Conv. Bond, 6.50%, 4/30/07 (CAD) 7,700 5,342
Steel Dynamics, Common Stock * 162 3,241
Weirton Steel, Series C, Pfd. Conv. Stock, 0% * 61 23
8,606
Paper and Paper Products 0.0%
MDP Acquisitions, Warrants, 10/1/13 * $ 4 $ 240
240
Printing and Publishing 0.2%
Primedia, Series H, Exch. Pfd. Stock, 8.625% 25 2,263
R.H. Donnelley, Common Stock * 150 6,037
8,300
Retail 0.0%
Barneys New York, Warrants, 2/1/08 * 5 0
0
Satellites 0.2%
Pegasus Satellite, Series B, Pfd. Stock, 12.75%, PIK * 9 6,701
6,701
Specialty Chemicals 0.7%
Avecia Group, Pfd. Stock, 16.00%, PIK * 252 3,526
Hercules Trust II, Pfd. Conv. Stock, 6.50% 31 22,323
25,849
Supermarkets 0.0%
Pathmark Stores
Common Stock * 23 170
Warrants, 9/19/10 * 36 35
205
Textiles and Apparel 0.2%
Anvil Holdings, Series B, Pfd. Stock, PIK 13.00%* 278 6,543
6,543
Transportation 0.0%
TravelCenters of America, Warrants, 11/14/10 * 59 258
258
Wireless Communications 1.2%
Alamosa Holdings, Series B, Pfd. Conv. Stock, 7.50% * 18 5,650
Dobson Communications
Pfd. Stock, 12.25% 9 9,733
PIK, Pfd. Stock, 12.25% 4 3,778
Horizon PCS, Warrants, 10/1/10 * 9 0
IPCS, Warants, 7/15/10 * 9 0
Leap Wireless, Warrants, 4/15/10 * 3 4
Nextel Communications
Class A, Common Stock * $ 500 $ 12,665
Conv. Bond, 5.25%, 1/15/10 5,000 4,925
Nextel Partners, Class A, Common Stock * 760 8,960
Ubiquitel, Warrants, 4/15/10 * 19 0
45,715
Wireline Communications 0.0%
Adelphia Business Solutions, Class A, Common Stock * 60 1
Allegiance Telecom, Warrants, 2/3/08 * 8 1
E. Spire Communications, Jr. Red. Pfd. Stock,
PIK 12.75% * 83 0
KMC Telecom, Warrants, 4/15/05, 144A * 5 0
2
Total Equity and Convertible
Securities (Cost $265,397) 243,509
SHORT-TERM INVESTMENTS 1.3%
Money Market Funds 1.3%
T. Rowe Price Reserve Investment Fund, 1.12% # 47,354 47,354
Short-Term Investments (Cost $47,354) 47,354
Value
- --------------------------------------------------------------------------------
In thousands
Total Investments in Securities
98.4% of Net Assets (Cost $3,523,886) $ 3,638,276
Other Assets Less Liabilities 60,650
NET ASSETS $ 3,698,926
-----------
Net Assets Consist of:
Undistributed net investment income (loss) $ 7,656
Undistributed net realized gain (loss) (409,507)
Net unrealized gain (loss) 114,488
Paid-in-capital applicable to 534,090,824
shares of $0.01 par value capital stock
outstanding; 1,000,000,000 shares authorized 3,986,289
NET ASSETS $ 3,698,926
-----------
NET ASSET VALUE PER SHARE
High Yield class
($3,079,659,826/444,559,323 shares outstanding) $ 6.93
-----------
Advisor class
($619,226,170/89,531,501 shares outstanding) $ 6.92
-----------
# Seven-day yield
* Non-income producing
++ Security contains restrictions as to public resale pursuant
to the Securities Act of 1933 and related rules - total of
such securities at period-end amounts to $14,972,000 and
represents 0.4% of net assets
144A Security was purchased pursuant to Rule 144A under the
Securities Act of 1933 and may be resold in transactions
exempt from registration only to qualified institutional
buyers - total of such securities at period-end amounts to
$926,110 and represents 25.0% of net assets
ss. Denominated in USD unless otherwise noted
CAD Canadian dollar
ETC Equipment Trust Certificate
EUR Euro
PIK Payment-in-Kind
STEP Stepped coupon bond for which the coupon rate of interest
will adjust on specified future date(s)
VR Variable Rate
@ Valued by the T. Rowe Price Valuation Committee, established
by the fund's Board of Directors misc.
(misc. symbol1) In default with respect to payment of principal and interest
The accompanying notes are an integral part of these financial statements.
T. Rowe Price High Yield Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited)
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
In thousands
6 Months
Ended
11/30/03
Investment Income (Loss)
Income
Interest $ 147,868
Dividend 5,419
Total income 153,287
Expenses
Investment management 10,334
Shareholder servicing
High Yield class 1,939
Advisor Class 310
Distribution and service (12b-1) - Advisor Class 699
Prospectus and shareholder reports
High Yield class 84
Advisor Class 54
Custody and accounting 143
Registration 114
Legal and audit 11
Directors 8
Miscellaneous 9
Total expenses 13,705
Expenses paid indirectly (55)
Net expenses 13,650
Net investment income (loss) 139,637
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities 25,940
Change in net unrealized gain (loss)
Securities 88,316
Other assets and liabilities
denominated in foreign currencies (19)
Change in net unrealized gain (loss) 88,297
Net realized and unrealized gain (loss) 114,237
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 253,874
---------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price High Yield Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited)
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
11/30/03 5/31/03
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 139,637 $ 212,255
Net realized gain (loss) 25,940 (63,550)
Change in net unrealized gain (loss) 88,297 131,885
Increase (decrease) in net assets from operations 253,874 280,590
Distributions to shareholders
Net investment income
High Yield class (116,106) (177,077)
Advisor Class (22,442) (32,309)
Decrease in net assets from distributions (138,548) (209,386)
Capital share transactions *
Shares sold
High Yield class 620,533 918,569
Advisor Class 142,664 479,933
Distributions reinvested
High Yield class 91,326 144,090
Advisor Class 21,699 31,556
Shares redeemed
High Yield class (296,956) (355,039)
Advisor Class (61,037) (270,553)
Redemption fees received
High Yield class 573 481
Increase (decrease) in net assets from
capital share transactions 518,802 949,037
Net Assets
Increase (decrease) during period 634,128 1,020,241
Beginning of period 3,064,798 2,044,557
End of period $ 3,698,926 $ 3,064,798
----------------------------
T. Rowe Price High Yield Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited)
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
In thousands
6 Months Year
Ended Ended
11/30/03 5/31/03
*Share information
Shares sold
High Yield class 91,194 143,641
Advisor Class 21,024 75,910
Distributions reinvested
High Yield class 13,415 22,706
Advisor Class 3,192 4,968
Shares redeemed
High Yield class (43,850) (56,074)
Advisor Class shares (9,002) (41,914)
Increase (decrease) in shares outstanding 75,973 149,237
The accompanying notes are an integral part of these financial statements.
T. Rowe Price High Yield Fund
- --------------------------------------------------------------------------------
Certified Semiannual Report (Unaudited) November 30, 2003
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 (the 1940 Act) 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 Fund (High Yield class), offered since December 31, 1984, and High
Yield Fund--Advisor Class (Advisor Class), offered since March 31, 2000.
Advisor Class shares are sold only through brokers and other financial
intermediaries that are compensated by the class 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
accounting principles generally accepted in the United States of America,
which require the use of estimates made by fund management.
Valuation
The fund values its investments and computes its net asset value per share
at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET,
each day that the NYSE is open for business. Debt securities are generally
traded in the over-the-counter market. Securities with original maturities
of one year or more are valued at prices furnished by dealers who make
markets in such securities or by an independent pricing service, which
considers yield or price of bonds of comparable quality, coupon, maturity,
and type, as well as prices quoted by dealers who make markets in such
securities. Securities with original maturities of less than one year are
stated at fair value, which is determined by using a matrix system that
establishes a value for each security based on bid-side money market
yields.
Equity securities listed or regularly traded on a securities exchange or in
the over-the-counter market are valued at the last quoted sale price, or
official closing price for certain markets, 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 are
valued at the mean of the latest bid and ask prices for domestic securities
and the last quoted sale price for international securities.
Investments in mutual funds are valued at the mutual fund's closing net
asset value per share on the day of valuation.
Other investments and those 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 the T. Rowe Price Valuation Committee,
established by the fund's Board of Directors.
Most foreign markets close before the NYSE. Normally, developments that
could affect the values of securities that occur between the close of a
foreign market and the close of the NYSE will not be reflected in security
valuations used by the fund to compute its share price. However, if
developments are so significant that they will, in the judgment of the
fund, clearly and materially affect security values, such valuations may be
adjusted to reflect the estimated fair value of the securities as of the
close of the NYSE, as determined in good faith by the T. Rowe Price
Valuation Committee, established by the fund's Board of Directors.
Currency Translation
Assets, including investments, 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 ask prices of such
currencies against U.S. dollars as quoted by a major bank. Purchases and
sales of securities, income, and expenses are translated into U.S. dollars
at the prevailing exchange rate on the date of the transaction. The effect
of changes in foreign currency exchange rates on realized and unrealized
security gains and losses is reflected as a component of security gains and
losses.
Class Accounting
The 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
daily net assets. Shareholder servicing, prospectus, and shareholder report
expenses incurred by each class are charged directly to the class to which
they relate. Expenses common to both classes and investment income are
allocated to the classes based upon the relative daily net assets of each
class's settled shares; realized and unrealized gains and losses are
allocated based upon the relative daily net assets of each class's
outstanding shares. Income distributions are declared by each class on a
daily basis and paid monthly. Capital gain distributions, if any, are
declared and paid by the fund, typically on an annual basis.
Expenses Paid Indirectly
Credits earned on temporarily uninvested cash balances at the custodian are
used to reduce the fund's custody charges. Custody expense in the
accompanying statement of operations is presented before reduction for
credits, which totaled $55,000 for the six months ended November 30, 2003.
Redemption Fees
A 1% fee is assessed on redemptions of fund shares held less than 1 year.
Such fees are withheld from redemption proceeds and retained by the fund,
and have the primary effect of increasing paid-in capital.
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. Premiums and discounts on debt
securities are amortized for financial reporting purposes. Dividend income
and distributions to shareholders are recorded by the fund on the
ex-dividend date. Dividends from mutual fund investments are reflected as
dividend income; capital gain distributions from mutual fund investments
are reflected as realized gain/loss. In the normal course of business, the
fund enters into contracts that provide general indemnifications. The
fund's maximum exposure under these arrangements is dependent on claims
that may be made against the fund in the future and, therefore, cannot be
estimated; however, based on experience, the risk of material loss from
such claims is considered remote.
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, 2003, approximately 92.6% 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 and U.S.
government securities, aggregated $1,657,968,000 and $1,120,981,000,
respectively, for the six months ended November 30, 2003.
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 under Subchapter M of
the Internal Revenue Code and distribute to shareholders all of its taxable
income and gains. Federal income tax regulations differ from generally
accepted accounting principles; therefore, distributions determined in
accordance with tax regulations may differ in amount or character from net
investment income and realized gains
for financial reporting purposes. Financial reporting records are adjusted
for permanent book/tax differences to reflect tax character. Financial
records are not adjusted for temporary differences. The amount and
character of tax-basis distributions and composition of net assets are
finalized at fiscal year-end; accordingly, tax-basis balances have not been
determined as of November 30, 2003.
For tax purposes, the fund has elected to treat net capital losses realized
between November 1 and May 31 of each year as occurring on the first day of
the following tax year; consequently, $23,917,000 of realized losses
recognized for financial reporting purposes in the year ended May 31, 2003
were recognized for tax purposes on June 1, 2003. Further the fund intends
to retain realized gains to the extent of available capital loss
carryforwards. As of May 31, 2003, the fund had $418,658,000 of unused
capital loss carryforwards, of which $47,671,000 expire in 2004,
$10,354,000 expire in 2005, and $360,633,000 thereafter through 2011.
At November 30, 2003, the cost of investments for federal income tax
purposes was $3,521,733,000. Net unrealized gain aggregated $116,601,000 at
period-end, of which $210,167,000 related to appreciated investments and
$93,566,000 related to depreciated investments.
Note 4- Related Party Transactions
The fund is managed by T. Rowe Price Associates, Inc. (the manager or Price
Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc. The
investment management agreement between the fund and the manager provides
for an annual investment management fee, which is computed daily and paid
monthly. The fee consists of an individual fund fee, equal to 0.30% of the
fund's average daily net assets, and the fund's pro-rata share of a group
fee. The group fee is calculated based on the combined net assets of
certain mutual funds sponsored by Price Associates (the group) applied to a
graduated fee schedule, with rates ranging from 0.48% for the first $1
billion of assets to 0.295% for assets in excess of $120 billion. The
fund's portion of the group fee is determined by the ratio of its average
daily net assets to those of the group. At November 30, 2003, the effective
annual group fee rate was 0.32%, and investment management fee payable
totaled $1,835,000.
In addition, the fund has entered into service agreements with Price
Associates and two wholly owned subsidiaries of Price Associates
(collectively, Price). Price Associates computes the daily share prices and
maintains the financial records of the fund. T. Rowe Price Services, Inc.,
provides shareholder and administrative services in its capacity as the
fund's transfer and dividend disbursing agent.
T. Rowe Price Retirement Plan Services, Inc., provides subaccounting and
recordkeeping services for certain retirement accounts invested in the High
Yield class. Expenses incurred pursuant to these service agreements totaled
$673,000 for the six months ended November 30, 2003, of which $99,000 was
payable at period-end.
The fund is also one of several mutual funds sponsored by Price Associates
(underlying Price funds) in which the T. Rowe Price Spectrum Funds
(Spectrum Funds) and T. Rowe Price Retirement Funds (Retirement Funds) may
invest. Neither the Spectrum Funds nor the Retirement Funds invest in the
underlying Price funds for the purpose of exercising management or control.
Pursuant to separate, special servicing agreements, expenses associated
with the operation of the Spectrum and Retirement Funds are borne by each
underlying Price fund to the extent of estimated savings to it and in
proportion to the average daily value of its shares owned by the Spectrum
and Retirement Funds, respectively. Expenses allocated under these
agreements are reflected as shareholder servicing expenses in the
accompanying financial statements. For the six months ended November 30,
2003, the fund was allocated $898,000 of Spectrum Funds' expenses and
$52,000 of Retirement Funds' expenses. Of these amounts, $858,000 related
to services provided by Price and $156,000 was payable at period-end. At
November 30, 2003, approximately 25.6% of the outstanding shares of the
High Yield class were held by the Spectrum Funds and 0.9% were held by the
Retirement Funds.
The fund may invest in the T. Rowe Price Reserve Investment Fund and the T.
Rowe Price 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, trusts, and other accounts managed by Price Associates
and/or its affiliates, and are not available to the public. The Reserve
Funds pay no investment management fees. During the six months ended
November 30, 2003, dividend income from the Reserve Funds totaled $780,000.
T. Rowe Price High Yield Fund
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Certified Semiannual Report
INFORMATION ON PROXY VOTING
A description of the policies and procedures that the T. Rowe Price High
Yield Fund uses to determine how to vote proxies relating to portfolio
securities is available, without charge, upon request by calling
1-800-225-5132. It also appears in the fund's Statement of Additional
Information (Form 485B), which can be found on the SEC's Web site,
www.sec.gov.
Item 2. Code of Ethics.
The registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR,
applicable to its principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions. A copy of this code of ethics will be filed as a required exhibit to
the registrant's annual Form N-CSR. No substantive amendments were approved or
waivers were granted to this code of ethics during the registrant's most recent
fiscal half-year.
Item 3. Audit Committee Financial Expert.
Not effective until registrant's next annual Form N-CSR.
Item 4. Principal Accountant Fees and Services.
Not effective until registrant's next annual Form N-CSR.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial officer
have evaluated the registrant's disclosure controls and procedures within 90
days of this filing and have concluded that the registrant's disclosure controls
and procedures were effective, as of that date, in ensuring that information
required to be disclosed by the registrant in this Form N-CSR was recorded,
processed, summarized, and reported timely.
(b) The registrant's principal executive officer and principal financial officer
are aware of no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 10. Exhibits.
(a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR will be
filed with the registrant's annual Form N-CSR.
(a)(2) Separate certifications by the registrant's principal executive officer
and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of
1940, are attached.
(b) A certification by the registrant's principal executive officer and
principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940,
is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
T. Rowe Price High Yield Fund, Inc.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date January 16, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date January 16, 2004
By /s/ Joseph A. Carrier
Joseph A. Carrier
Principal Financial Officer
Date January 16, 2004