UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-04519
T. Rowe Price Capital Appreciation Fund, Inc.
(Exact name of registrant as specified in charter)
100 East Pratt Street, Baltimore, MD 21202
(Address of principal executive offices)
David Oestreicher
100 East Pratt Street, Baltimore, MD 21202
(Name and address of agent for service)
Registrant’s telephone number, including area code: (410) 345-2000
Date of fiscal year end: December 31
Date of reporting period: June 30, 2024
Item 1. Reports to Shareholders
(a) Report pursuant to Rule 30e-1
Semi-Annual Shareholder Report
June 30, 2024
Capital Appreciation and Income Fund
This semi-annual shareholder report contains important information about Capital Appreciation and Income Fund (the "fund") for the period of January 1, 2024 to June 30, 2024. You can find the fund’s prospectus, financial information on Form N‑CSR (which includes required tax information for dividends), holdings, proxy voting information, and other information atwww.troweprice.com/prospectus. You can also request this information without charge by contacting T. Rowe Price at 1‑800‑638‑5660 or info@troweprice.com or contacting your intermediary.
What were the fund costs for the last six months? (based on a hypothetical $10,000 investment)
| | Costs of a $10,000 investment | Costs paid as a percentage of a $10,000 investment |
|---|
| Capital Appreciation and Income Fund - Investor Class | $33 | 0.65% |
What are some fund statistics?
| Total Net Assets (000s) | $166,807 |
| Number of Portfolio Holdings | 202 |
| |
| Portfolio Turnover Rate | 15.2% |
What did the fund invest in?
Security Allocation (as a % of Net Assets)
| Common Stocks | 40.8% |
| U.S. Government Agency Obligations (Excluding Mortgage-Backed) | 19.6 |
| Corporate Bonds | 16.8 |
| Bank Loans | 16.8 |
| Options Written | 0.0 |
| Short-Term and Other | 6.0 |
Top Ten Holdings (as a % of Net Assets)
| U.S. Treasury Notes | 19.7% |
| Microsoft | 3.4 |
| Yum! Brands | 2.6 |
| Apple | 2.4 |
| Hilton Domestic Operating | 2.0 |
| Alphabet | 2.0 |
| Applied Systems | 1.9 |
| HUB International | 1.7 |
| Amazon.com | 1.5 |
| NVIDIA | 1.4 |
If you invest directly with T. Rowe Price, you can elect to receive future shareholder reports or other important documents through electronic delivery by enrolling at www.troweprice.com/paperless. If you invest through a financial intermediary such as an investment advisor, a bank, retirement plan sponsor or a brokerage firm, please contact that organization and ask if it can provide electronic delivery.
Capital Appreciation and Income Fund
Investor Class (PRCFX)
T. Rowe Price Investment Services, Inc.
100 East Pratt Street
Baltimore, MD 21202
Semi-Annual Shareholder Report
June 30, 2024
Capital Appreciation and Income Fund
This semi-annual shareholder report contains important information about Capital Appreciation and Income Fund (the "fund") for the period of January 1, 2024 to June 30, 2024. You can find the fund’s prospectus, financial information on Form N‑CSR (which includes required tax information for dividends), holdings, proxy voting information, and other information atwww.troweprice.com/prospectus. You can also request this information without charge by contacting T. Rowe Price at 1‑800‑638‑5660 or info@troweprice.com or contacting your intermediary.
What were the fund costs for the last six months? (based on a hypothetical $10,000 investment)
| | Costs of a $10,000 investment | Costs paid as a percentage of a $10,000 investment |
|---|
| Capital Appreciation and Income Fund - I Class | $25 | 0.49% |
What are some fund statistics?
| Total Net Assets (000s) | $166,807 |
| Number of Portfolio Holdings | 202 |
| |
| Portfolio Turnover Rate | 15.2% |
What did the fund invest in?
Security Allocation (as a % of Net Assets)
| Common Stocks | 40.8% |
| U.S. Government Agency Obligations (Excluding Mortgage-Backed) | 19.6 |
| Corporate Bonds | 16.8 |
| Bank Loans | 16.8 |
| Options Written | 0.0 |
| Short-Term and Other | 6.0 |
Top Ten Holdings (as a % of Net Assets)
| U.S. Treasury Notes | 19.7% |
| Microsoft | 3.4 |
| Yum! Brands | 2.6 |
| Apple | 2.4 |
| Hilton Domestic Operating | 2.0 |
| Alphabet | 2.0 |
| Applied Systems | 1.9 |
| HUB International | 1.7 |
| Amazon.com | 1.5 |
| NVIDIA | 1.4 |
If you invest directly with T. Rowe Price, you can elect to receive future shareholder reports or other important documents through electronic delivery by enrolling at www.troweprice.com/paperless. If you invest through a financial intermediary such as an investment advisor, a bank, retirement plan sponsor or a brokerage firm, please contact that organization and ask if it can provide electronic delivery.
Capital Appreciation and Income Fund
I Class (PRCHX)
T. Rowe Price Investment Services, Inc.
100 East Pratt Street
Baltimore, MD 21202
Item 1. (b) Notice pursuant to Rule 30e-3.
Not applicable.
Item 2. Code of Ethics.
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 is filed as an 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.
Disclosure required in registrant’s annual Form N-CSR.
Item 4. Principal Accountant Fees and Services.
Disclosure required in registrant’s annual Form N-CSR.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) Not applicable. The complete schedule of investments is included in Item 7 of this Form N-CSR.
(b) Not applicable.
Item 7. Financial Statements and Financial Highlights for Open-End Management Investment Companies.
(a – b) Report pursuant to Regulation S-X.
Financial
Highlights
Portfolio
of
Investments
Financial
Statements
and
Notes
Additional
Fund
Information
Financial
Statements
and
Other
Information
For
more
insights
from
T.
Rowe
Price
investment
professionals,
go
to
troweprice.com
.
T.
ROWE
PRICE
PRCFX
Capital
Appreciation
and
Income
Fund
–
.
PRCHX
Capital
Appreciation
and
Income
Fund–
.
I Class
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
(Unaudited)
For
a
share
outstanding
throughout
each
period
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Investor
Class
(1)
6
Months
.
Ended
6/30/24
11/29/23
(1)
Through
12/31/23
NET
ASSET
VALUE
Beginning
of
period
$
25.72
$
25.00
Investment
activities
Net
investment
income
(2)(3)
0.45
0.07
Net
realized
and
unrealized
gain/loss
0.81
0.72
Total
from
investment
activities
1.26
0.79
Distributions
Net
investment
income
(0.38)
(0.07)
NET
ASSET
VALUE
End
of
period
$
26.60
$
25.72
Ratios/Supplemental
Data
Total
return
(3)(4)
4.94%
3.15%
Ratios
to
average
net
assets:
(3)
Gross
expenses
before
waivers/payments
by
Price
Associates
0.96%
(5)
0.88%
(5)
Net
expenses
after
waivers/payments
by
Price
Associates
0.65%
(5)
0.65%
(5)
Net
investment
income
3.45%
(5)
3.23%
(5)
Portfolio
turnover
rate
15.2%
0.4%
Net
assets,
end
of
period
(in
millions)
$98
$33
0%
0%
(1)
Inception
date
(2)
Per
share
amounts
calculated
using
average
shares
outstanding
method.
(3)
Includes
the
impact
of
expense-related
arrangements
with
Price
Associates.
(4)
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,
if
applicable.
Total
return
is
not
annualized
for
periods
less
than
one
year.
(5)
Annualized
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
(Unaudited)
For
a
share
outstanding
throughout
each
period
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
I
Class
(1)
6
Months
.
Ended
6/30/24
11/29/23
(1)
Through
12/31/23
NET
ASSET
VALUE
Beginning
of
period
$
25.72
$
25.00
Investment
activities
Net
investment
income
(2)(3)
0.47
0.08
Net
realized
and
unrealized
gain/loss
0.81
0.71
Total
from
investment
activities
1.28
0.79
Distributions
Net
investment
income
(0.40)
(0.07)
NET
ASSET
VALUE
End
of
period
$
26.60
$
25.72
Ratios/Supplemental
Data
Total
return
(3)(4)
5.01%
3.16%
Ratios
to
average
net
assets:
(3)
Gross
expenses
before
waivers/payments
by
Price
Associates
0.83%
(5)
0.88%
(5)
Net
expenses
after
waivers/payments
by
Price
Associates
0.49%
(5)
0.48%
(5)
Net
investment
income
3.60%
(5)
3.40%
(5)
Portfolio
turnover
rate
15.2%
0.4%
Net
assets,
end
of
period
(in
millions)
$69
$25
0%
0%
(1)
Inception
date
(2)
Per
share
amounts
calculated
using
average
shares
outstanding
method.
(3)
Includes
the
impact
of
expense-related
arrangements
with
Price
Associates.
(4)
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,
if
applicable.
Total
return
is
not
annualized
for
periods
less
than
one
year.
(5)
Annualized
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
June
30,
2024
(Unaudited)
Par/Shares
$
Value
(Cost
and
value
in
$000s)
‡
BANK
LOANS
16.8%
(1)
Alliant
Holdings
Intermediate,
FRN
1M
TSFR
+
3.50%,
8.842%,
11/6/30 (2)
665,483
667
Applied
Systems,
FRN
1M
TSFR
+
3.50%,
8.835%,
2/24/31 (2)
2,606,897
2,625
Applied
Systems,
FRN
1M
TSFR
+
5.25%,
10.585%,
2/23/32 (2)
498,000
514
AssuredPartners,
FRN
1M
TSFR
+
3.50%,
8.844%,
2/14/31 (2)
883,785
886
Avantor
Funding,
FRN
1M
TSFR
+
2.00%,
7.444%,
11/8/27 (2)
484,839
487
Azalea
Topco,
FRN
1M
TSFR
+
3.50%,
8.844%,
4/30/31 (2)
372,000
371
BroadStreet
Partners,
FRN
1M
TSFR
+
3.25%,
8.594%,
6/13/31 (2)
801,378
799
Delta
2,
FRN
1M
TSFR
+
2.25%,
7.585%,
1/15/30 (2)
1,207,000
1,209
Ellucian
Holdings,
FRN
1M
TSFR
+
3.50%,
8.944%,
10/9/29 (2)
726,842
730
Epicor
Software,
FRN
1M
TSFR
+
3.25%,
7.797%,
5/23/31 (2)(3)
1,218,918
1,223
Filtration
Group,
FRN
1M
TSFR
+
3.50%,
8.958%,
10/21/28 (2)
1,986,968
1,995
Four
Seasons
Hotels,
FRN
1M
TSFR
+
2.00%,
7.344%,
11/30/29 (2)
1,179,176
1,183
Hilton
Domestic
Operating,
FRN
1M
TSFR
+
1.75%,
7.095%,
11/8/30 (2)
1,677,000
1,678
HUB
International,
FRN
1M
TSFR
+
3.25%,
8.575%,
6/20/30 (2)
1,250,870
1,253
ICON
Luxembourg,
FRN
1M
TSFR
+
2.00%,
7.335%,
7/3/28 (2)
781,521
784
IRB
Holding,
FRN
1M
TSFR
+
2.75%,
8.194%,
12/15/27 (2)
952,277
951
Loire
Finco
Luxembourg,
FRN
1M
TSFR
+
3.50%,
8.944%,
4/21/27 (2)
863,617
855
Mileage
Plus
Holdings,
FRN
3M
TSFR
+
5.25%,
10.744%,
6/21/27
264,923
270
Ryan
Specialty,
FRN
1M
TSFR
+
2.75%,
8.094%,
9/1/27
653,610
656
SBA
Senior
Finance
II,
FRN
1M
TSFR
+
2.00%,
7.35%,
1/25/31 (2)
1,548,810
1,550
Severin
Acquisition,
FRN
3M
TSFR
+
3.00%,
8.33%,
8/1/27
1,559,125
1,563
SkyMiles
IP,
FRN
3M
TSFR
+
3.75%,
9.075%,
10/20/27 (2)
404,893
414
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
Par/Shares
$
Value
(Cost
and
value
in
$000s)
‡
Trans
Union,
FRN
1M
TSFR
+
1.75%,
7.194%,
11/16/26 (2)
510,778
510
Trans
Union,
FRN
1M
TSFR
+
2.00%,
7.344%,
12/1/28 (2)
515,792
516
TransDigm,
FRN
1M
TSFR
+
2.75%,
8.085%,
3/22/30 (2)
656,820
658
TransDigm,
FRN
3M
TSFR
+
2.75%,
8.085%,
8/24/28 (2)
667,789
669
Truist
Insurance
Holdings,
FRN
1M
TSFR
+
4.75%,
10.085%,
5/6/32 (2)
295,000
300
UKG,
FRN
1M
TSFR
+
3.25%,
8.555%,
2/10/31 (2)
1,370,904
1,375
USI,
FRN
1M
TSFR
+
2.75%,
8.085%,
9/27/30 (2)
432,862
433
USI,
FRN
1M
TSFR
+
2.75%,
8.094%,
11/23/29 (2)
882,824
882
Total
Bank
Loans
(Cost
$28,010)
28,006
COMMON
STOCKS
40.8%
COMMUNICATION
SERVICES
3.3%
Interactive
Media
&
Services
3.0%
Alphabet,
Class
A
17,909
3,262
Meta
Platforms,
Class
A
3,423
1,726
4,988
Wireless
Telecommunication
Services
0.3%
T-Mobile
U.S.
2,697
475
475
Total
Communication
Services
5,463
CONSUMER
DISCRETIONARY
3.9%
Broadline
Retail
1.5%
Amazon.com (4)
12,864
2,486
2,486
Diversified
Consumer
Services
0.1%
Service
Corp
International
3,599
256
256
Hotels,
Restaurants
&
Leisure
1.8%
Domino's
Pizza
469
242
Hilton
Worldwide
Holdings
2,000
436
Marriott
International,
Class
A
1,343
325
McDonald's
3,087
787
Starbucks
4,181
325
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
Par/Shares
$
Value
(Cost
and
value
in
$000s)
‡
Yum!
Brands
6,422
851
2,966
Household
Durables
0.2%
Lennar,
Class
A
1,814
272
272
Specialty
Retail
0.3%
O'Reilly
Automotive (4)
316
334
Ulta
Beauty (4)
385
148
482
Total
Consumer
Discretionary
6,462
CONSUMER
STAPLES
0.9%
Food
Products
0.3%
Mondelez
International,
Class
A
7,193
471
471
Household
Products
0.6%
Procter
&
Gamble
5,819
960
960
Total
Consumer
Staples
1,431
ENERGY
1.8%
Oil,
Gas
&
Consumable
Fuels
1.8%
Canadian
Natural
Resources
35,091
1,249
Cheniere
Energy
1,213
212
EOG
Resources (5)
4,158
523
Exxon
Mobil (5)
8,981
1,034
Total
Energy
3,018
FINANCIALS
4.6%
Banks
1.4%
Bank
of
America
22,538
896
JPMorgan
Chase
6,882
1,392
2,288
Capital
Markets
1.1%
Goldman
Sachs
Group
938
424
Intercontinental
Exchange
2,764
379
Morgan
Stanley
5,905
574
Raymond
James
Financial
3,115
385
1,762
Financial
Services
1.5%
Fiserv (4)
3,061
456
Mastercard,
Class
A
2,299
1,015
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
Par/Shares
$
Value
(Cost
and
value
in
$000s)
‡
Visa,
Class
A
3,845
1,009
2,480
Insurance
0.6%
Aflac
2,105
188
Marsh
&
McLennan
3,719
784
972
Total
Financials
7,502
HEALTH
CARE
7.2%
Biotechnology
0.8%
AbbVie (5)
6,077
1,043
Biogen (4)
1,662
385
1,428
Health
Care
Equipment
&
Supplies
1.5%
Abbott
Laboratories
5,248
545
Becton
Dickinson
&
Company
4,173
975
GE
HealthCare
Technologies
5,785
451
Stryker
1,495
509
2,480
Health
Care
Providers
&
Services
2.1%
Elevance
Health (5)
1,076
583
HCA
Healthcare
1,784
573
Humana
641
239
McKesson (5)
664
388
UnitedHealth
Group
3,265
1,663
3,446
Life
Sciences
Tools
&
Services
1.9%
Agilent
Technologies
3,642
472
Danaher
2,480
620
IQVIA
Holdings (4)
1,483
313
Mettler-Toledo
International (4)
214
299
Revvity
5,700
598
Thermo
Fisher
Scientific
1,455
805
3,107
Pharmaceuticals
0.9%
Eli
Lilly
788
713
Johnson
&
Johnson (5)
2,384
349
Zoetis
2,503
434
1,496
Total
Health
Care
11,957
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
Par/Shares
$
Value
(Cost
and
value
in
$000s)
‡
INDUSTRIALS
&
BUSINESS
SERVICES
4.4%
Aerospace
&
Defense
0.4%
Lockheed
Martin
1,387
648
648
Building
Products
0.2%
A.O.
Smith
4,176
341
341
Commercial
Services
&
Supplies
1.6%
Republic
Services
3,930
764
Veralto
6,293
601
Waste
Connections
3,725
653
Waste
Management
3,065
654
2,672
Electrical
Equipment
0.2%
AMETEK
1,889
315
315
Ground
Transportation
0.4%
CSX
13,330
446
Old
Dominion
Freight
Line
1,456
257
703
Industrial
Conglomerates
0.2%
Roper
Technologies
715
403
403
Machinery
1.4%
Dover
2,189
395
Fortive
5,408
401
IDEX
1,316
265
Illinois
Tool
Works
1,652
391
Ingersoll
Rand
4,481
407
Parker-Hannifin
502
254
Snap-on
725
189
2,302
Total
Industrials
&
Business
Services
7,384
INFORMATION
TECHNOLOGY
10.4%
Electronic
Equipment,
Instruments
&
Components
0.5%
TE
Connectivity
2,367
356
Teledyne
Technologies (4)
1,281
497
853
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
Par/Shares
$
Value
(Cost
and
value
in
$000s)
‡
IT
Services
0.3%
Accenture,
Class
A
674
204
VeriSign (4)
1,772
315
519
Semiconductors
&
Semiconductor
Equipment
2.1%
Applied
Materials
1,924
454
Microchip
Technology
3,550
325
NVIDIA
18,757
2,317
NXP
Semiconductors
1,525
410
3,506
Software
5.2%
Adobe (4)
879
488
Cadence
Design
Systems (4)
1,099
338
Intuit
1,193
784
Microsoft
12,575
5,621
PTC (4)
2,706
492
Salesforce
3,917
1,007
8,730
Technology
Hardware,
Storage
&
Peripherals
2.3%
Apple
18,627
3,923
3,923
Total
Information
Technology
17,531
MATERIALS
0.4%
Chemicals
0.4%
Linde
1,399
614
Total
Materials
614
REAL
ESTATE
0.4%
Industrial
Real
Estate
Investment
Trusts
0.1%
Prologis,
REIT
1,555
175
175
Specialized
Real
Estate
Investment
Trusts
0.3%
American
Tower,
REIT
2,470
480
480
Total
Real
Estate
655
UTILITIES
2.7%
Electric
Utilities
0.7%
Entergy
3,353
359
Evergy
5,044
267
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
Par/Shares
$
Value
(Cost
and
value
in
$000s)
‡
Exelon
17,827
617
1,243
Multi-Utilities
2.0%
Ameren
10,389
739
CenterPoint
Energy
17,488
542
CMS
Energy
4,533
270
DTE
Energy
4,395
488
NiSource
17,157
494
Public
Service
Enterprise
Group
4,085
301
WEC
Energy
Group
7,464
585
3,419
Total
Utilities
4,662
Total
Miscellaneous
Common
Stocks
0.8%
(6)
1,340
Total
Common
Stocks
(Cost
$63,134)
68,019
CORPORATE
BONDS
16.8%
Alliant
Holdings
Intermediate,
4.25%,
10/15/27 (7)
162,000
152
Alliant
Holdings
Intermediate,
5.875%,
11/1/29 (7)
178,000
166
Alliant
Holdings
Intermediate,
6.75%,
10/15/27 (7)
551,000
541
Alliant
Holdings
Intermediate,
6.75%,
4/15/28 (7)
151,000
151
American
Tower,
3.80%,
8/15/29
435,000
405
American
Tower,
5.90%,
11/15/33
397,000
406
Avantor
Funding,
3.875%,
11/1/29 (7)
915,000
830
Avantor
Funding,
4.625%,
7/15/28 (7)
216,000
206
Biogen,
3.15%,
5/1/50
674,000
430
Biogen,
3.25%,
2/15/51
634,000
413
Biogen,
5.20%,
9/15/45
416,000
376
Booz
Allen
Hamilton,
3.875%,
9/1/28 (7)
435,000
411
Booz
Allen
Hamilton,
4.00%,
7/1/29 (7)
234,000
219
Booz
Allen
Hamilton,
5.95%,
8/4/33
396,000
409
BroadStreet
Partners,
5.875%,
4/15/29 (7)
450,000
420
CCO
Holdings,
5.00%,
2/1/28 (7)
430,000
402
CCO
Holdings,
5.125%,
5/1/27 (7)
427,000
410
Charles
River
Laboratories
International,
3.75%,
3/15/29 (7)
275,000
251
Charles
River
Laboratories
International,
4.00%,
3/15/31 (7)
371,000
330
Exelon,
4.45%,
4/15/46
488,000
408
Fortive,
4.30%,
6/15/46
671,000
551
Gartner,
3.625%,
6/15/29 (7)
673,000
613
Gartner,
3.75%,
10/1/30 (7)
930,000
831
Gartner,
4.50%,
7/1/28 (7)
428,000
412
GFL
Environmental,
6.75%,
1/15/31 (7)
256,000
261
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
Par/Shares
$
Value
(Cost
and
value
in
$000s)
‡
Hilton
Domestic
Operating,
3.625%,
2/15/32 (7)
1,438,000
1,244
Hilton
Domestic
Operating,
4.00%,
5/1/31 (7)
242,000
216
Hilton
Domestic
Operating,
4.875%,
1/15/30
216,000
207
Howmet
Aerospace,
3.00%,
1/15/29
245,000
222
Howmet
Aerospace,
5.90%,
2/1/27
180,000
182
Howmet
Aerospace,
5.95%,
2/1/37
601,000
618
Howmet
Aerospace,
6.75%,
1/15/28
181,000
189
HUB
International,
5.625%,
12/1/29 (7)
671,000
632
HUB
International,
7.25%,
6/15/30 (7)
914,000
932
IQVIA,
5.00%,
5/15/27 (7)
419,000
408
IQVIA,
5.70%,
5/15/28
202,000
204
IQVIA,
6.50%,
5/15/30 (7)
202,000
204
Lockheed
Martin,
4.70%,
5/15/46
491,000
441
Marriott
International,
Series GG,
3.50%,
10/15/32
547,000
474
MSCI,
3.25%,
8/15/33 (7)
502,000
413
MSCI,
3.625%,
9/1/30 (7)
371,000
333
MSCI,
3.625%,
11/1/31 (7)
287,000
252
MSCI,
3.875%,
2/15/31 (7)
372,000
336
MSCI,
4.00%,
11/15/29 (7)
450,000
421
Northrop
Grumman,
5.25%,
5/1/50
721,000
676
PRA
Health
Sciences,
2.875%,
7/15/26 (7)
227,000
215
PTC,
4.00%,
2/15/28 (7)
875,000
823
RTX,
5.15%,
2/27/33
205,000
202
SBA
Communications,
3.125%,
2/1/29
1,632,000
1,450
Service
Corp.
International,
3.375%,
8/15/30
143,000
124
Service
Corp.
International,
4.00%,
5/15/31
350,000
312
TransDigm,
4.625%,
1/15/29
231,000
215
TransDigm,
7.125%,
12/1/31 (7)
403,000
415
UKG,
6.875%,
2/1/31 (7)
196,000
198
VICI
Properties,
4.125%,
8/15/30 (7)
915,000
831
VICI
Properties,
4.625%,
12/1/29 (7)
899,000
850
Workday,
3.80%,
4/1/32
239,000
214
Yum!
Brands,
3.625%,
3/15/31
755,000
664
Yum!
Brands,
4.625%,
1/31/32
786,000
721
Yum!
Brands,
4.75%,
1/15/30 (7)
662,000
630
Yum!
Brands,
5.35%,
11/1/43
451,000
430
Yum!
Brands,
5.375%,
4/1/32
685,000
659
Yum!
Brands,
6.875%,
11/15/37
379,000
410
Total
Corporate
Bonds
(Cost
$28,059)
27,971
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
Par/Shares
$
Value
(Cost
and
value
in
$000s)
‡
U.S.
GOVERNMENT
AGENCY
OBLIGATIONS
(EXCLUDING
MORTGAGE-BACKED)
19.6%
U.S.
Treasury
Obligations
19.6%
U.S.
Treasury
Notes,
4.00%,
2/15/34
14,251,000
13,837
U.S.
Treasury
Notes,
4.375%,
5/15/34
6,079,000
6,081
U.S.
Treasury
Notes,
4.50%,
11/15/33
12,765,000
12,884
32,802
Total
U.S.
Government
Agency
Obligations
(Excluding
Mortgage-Backed)
(Cost
$33,088)
32,802
SHORT-TERM
INVESTMENTS
7.7%
Money
Market
Funds
7.7%
T.
Rowe
Price
Government
Reserve
Fund,
5.38% (8)(9)
12,822,810
12,823
Total
Short-Term
Investments
(Cost
$12,823)
12,823
Total
Investments
in
Securities
101.7%
of
Net
Assets
(Cost
$165,114)
$
169,621
‡
Par/Shares
and
Notional
Amount
are
denominated
in
U.S.
dollars
unless
otherwise
noted.
(1)
Bank
loan
positions
may
involve
multiple
underlying
tranches.
In
those
instances,
the
position
presented
reflects
the
aggregate
of
those
respective
underlying
tranches
and
the
rate
presented
reflects
the
weighted
average
rate
of
the
settled
positions.
(2)
All
or
a
portion
of
this
loan
is
unsettled
as
of
June
30,
2024.
The
interest
rate
for
unsettled
loans
will
be
determined
upon
settlement
after
period
end.
(3)
All
or
a
portion
of
the
position
represents
an
unfunded
commitment;
a
liability
to
fund
the
commitment
has
been
recognized.
The
fund's
total
unfunded
commitment
at
June
30,
2024,
was
$128
and
was
valued
at
$95
(0.1%
of
net
assets).
(4)
Non-income
producing
(5)
All
or
a
portion
of
this
security
is
pledged
to
cover
or
as
collateral
for
written
call
options
at
June
30,
2024.
(6)
The
identity
of
certain
securities
has
been
concealed
to
protect
the
fund
while
it
completes
a
purchase
or
selling
program
for
the
securities.
(7)
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
value
of
such
securities
at
period-end
amounts
to
$15,959
and
represents
9.6%
of
net
assets.
(8)
Seven-day
yield
(9)
Affiliated
Companies
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
.
.
.
.
.
.
.
.
.
.
1M
TSFR
One
month
term
SOFR
(Secured
overnight
financing
rate)
3M
TSFR
Three
month
term
SOFR
(Secured
overnight
financing
rate)
FRN
Floating
Rate
Note
OTC
Over-the-counter
REIT
A
domestic
Real
Estate
Investment
Trust
whose
distributions
pass-through
with
original
tax
character
to
the
shareholder
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
(Amounts
in
000s,
except
for
contracts)
OPTIONS
WRITTEN
(0.0)%
OTC
Options
Written (0.0)%
Counterparty
Description
Contracts
Notional
Amount
$
Value
Barclays
Bank
McKesson,
Call,
1/17/25
@
$580.00
4
234
(19)
Goldman
Sachs
Johnson
&
Johnson,
Call,
1/17/25
@
$180.00
19
278
(1)
JPMorgan
Chase
AbbVie,
Call,
1/17/25
@
$175.00
15
257
(13)
JPMorgan
Chase
Elevance
Health,
Call,
1/17/25
@
$550.00
2
108
(7)
Wells
Fargo
EOG
Resources,
Call,
1/17/25
@
$143.50
38
478
(14)
Wells
Fargo
Exxon
Mobil,
Call,
1/17/25
@
$115.00
19
219
(16)
Wells
Fargo
Exxon
Mobil,
Call,
1/17/25
@
$120.00
15
173
(8)
Total
Options
Written
(Premiums
$(68))
$
(78)
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
AFFILIATED
COMPANIES
($000s)
The
fund
may
invest
in
certain
securities
that
are
considered
affiliated
companies.
As
defined
by
the
1940
Act,
an
affiliated
company
is
one
in
which
the
fund
owns
5%
or
more
of
the
outstanding
voting
securities,
or
a
company
that
is
under
common
ownership
or
control.
The
following
securities
were
considered
affiliated
companies
for
all
or
some
portion
of
the
six
months
ended
June
30,
2024.
Net
realized
gain
(loss),
investment
income,
change
in
net
unrealized
gain/loss,
and
purchase
and
sales
cost
reflect
all
activity
for
the
period
then
ended.
Affiliate
Net
Realized
Gain
(Loss)
Change
in
Net
Unrealized
Gain/Loss
Investment
Income
T.
Rowe
Price
Government
Reserve
Fund,
5.38%
$
—#
$
—
$
265+
Supplementary
Investment
Schedule
Affiliate
Value
12/31/23
Purchase
Cost
Sales
Cost
Value
06/30/24
T.
Rowe
Price
Government
Reserve
Fund,
5.38%
$
9,836
¤
¤
$
12,823^
#
Capital
gain
distributions
from
underlying
Price
funds
represented
$0
of
the
net
realized
gain
(loss).
+
Investment
income
comprised
$265
of
dividend
income
and
$0
of
interest
income.
¤
Purchase
and
sale
information
not
shown
for
cash
management
funds.
^
The
cost
basis
of
investments
in
affiliated
companies
was
$12,823.
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
June
30,
2024
(Unaudited)
Statement
of
Assets
and
Liabilities
($000s,
except
shares
and
per
share
amounts)
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
Assets
Investments
in
securities,
at
value
(cost
$165,114)
$
169,621
Receivable
for
shares
sold
798
Interest
and
dividends
receivable
766
Cash
54
Due
from
affiliates
31
Receivable
for
investment
securities
sold
28
Other
assets
45
Total
assets
171,343
Liabilities
Payable
for
investment
securities
purchased
4,050
Payable
for
shares
redeemed
180
Options
written
(premiums
$68)
78
Investment
management
fees
payable
58
Other
liabilities
170
Total
liabilities
4,536
Commitments
and
Contingent
Liabilities
(note
7
)
NET
ASSETS
$
166,807
Net
Assets
Consist
of:
Total
distributable
earnings
(loss)
$
4,821
Paid-in
capital
applicable
to
6,269,962
shares
of
$0.0001
par
value
capital
stock
outstanding;
4,000,000,000,
shares
authorized
161,986
NET
ASSETS
$
166,807
NET
ASSET
VALUE
PER
SHARE
Investor
Class
(Net
assets:
$98,199;
Shares
outstanding:
3,691,200)
$
26.60
I
Class
(Net
assets:
$68,608;
Shares
outstanding:
2,578,762)
$
26.60
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
(Unaudited)
6
Months
Ended
6/30/24
Investment
Income
(Loss)
Income
.
Interest
$
1,712
Dividend
(net
of
foreign
taxes
of
$4)
582
Total
income
2,294
Expenses
Investment
management
248
Shareholder
servicing
Investor
Class
$
51
I
Class
4
55
Prospectus
and
shareholder
reports
Investor
Class
4
I
Class
2
6
Custody
and
accounting
128
Registration
44
Legal
and
audit
19
Organization
costs
10
Miscellaneous
1
Waived
/
paid
by
Price
Associates
(183)
Total
expenses
328
Net
investment
income
1,966
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
(Unaudited)
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
6
Months
Ended
6/30/24
Realized
and
Unrealized
Gain
/
Loss
–
Net
realized
gain
(loss)
Securities
147
Options
written
2
Net
realized
gain
149
Change
in
net
unrealized
gain
/
loss
Securities
3,464
Options
written
(10)
Change
in
net
unrealized
gain
/
loss
3,454
Net
realized
and
unrealized
gain
/
loss
3,603
INCREASE
IN
NET
ASSETS
FROM
OPERATIONS
$
5,569
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
(Unaudited)
Statement
of
Changes
in
Net
Assets
6
Months
Ended
6/30/24
11/29/23
Through
12/31/23
Increase
(Decrease)
in
Net
Assets
Operations
Net
investment
income
$
1,966
$
115
Net
realized
gain
149
3
Change
in
net
unrealized
gain
/
loss
3,454
1,043
Increase
in
net
assets
from
operations
5,569
1,161
Distributions
to
shareholders
Net
earnings
Investor
Class
(1,048)
(60)
I
Class
(746)
(55)
Decrease
in
net
assets
from
distributions
(1,794)
(115)
Capital
share
transactions
*
Shares
sold
Investor
Class
83,552
33,841
I
Class
46,923
24,165
Distributions
reinvested
Investor
Class
852
27
I
Class
536
19
Shares
redeemed
Investor
Class
(21,256)
(1,548)
I
Class
(5,114)
(11)
Increase
in
net
assets
from
capital
share
transactions
105,493
56,493
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
(Unaudited)
Statement
of
Changes
in
Net
Assets
The
accompanying
notes
are
an
integral
part
of
these
financial
statements.
6
Months
Ended
6/30/24
11/29/23
Through
12/31/23
Net
Assets
Increase
during
period
109,268
57,539
Beginning
of
period
57,539
–
End
of
period
$
166,807
$
57,539
*Share
information
(000s)
Shares
sold
Investor
Class
3,197
1,337
I
Class
1,795
958
Distributions
reinvested
Investor
Class
32
1
I
Class
20
1
Shares
redeemed
Investor
Class
(816)
(60)
I
Class
(195)
–
(1)
Increase
in
shares
outstanding
4,033
2,237
(1)
Amount
rounds
to
less
than
1,000
shares
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
Unaudited
NOTES
TO
FINANCIAL
STATEMENTS
T.
Rowe
Price
Capital
Appreciation
Fund,
Inc. (the
corporation) is
registered
under
the
Investment
Company
Act
of
1940
(the
1940
Act).
The
Capital
Appreciation
and
Income
Fund
(the
fund)
is a
diversified, open-end
management
investment
company
established
by
the
corporation. The
fund
incepted
on
November
29,
2023. The
fund
seeks
total
return
through
a
combination
of
income
and
capital
appreciation.
The
fund
has two classes
of
shares:
the
Capital
Appreciation
and
Income
Fund
(Investor
Class)
and
the
Capital
Appreciation
and
Income
Fund–I
Class
(I
Class).
I
Class
shares
require
a
$500,000
initial
investment
minimum,
although
the
minimum
generally
is
waived
or
reduced
for
financial
intermediaries,
eligible
retirement
plans,
and
certain
other
accounts. 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.
NOTE
1
-
SIGNIFICANT
ACCOUNTING
POLICIES
Basis
of
Preparation
The fund
is
an
investment
company
and
follows
accounting
and
reporting
guidance
in
the
Financial
Accounting
Standards
Board
(FASB)
Accounting
Standards
Codification
Topic
946
(ASC
946).
The
accompanying
financial
statements
were
prepared
in
accordance
with
accounting
principles
generally
accepted
in
the
United
States
of
America
(GAAP),
including,
but
not
limited
to,
ASC
946.
GAAP
requires
the
use
of
estimates
made
by
management.
Management
believes
that
estimates
and
valuations
are
appropriate;
however,
actual
results
may
differ
from
those
estimates,
and
the
valuations
reflected
in
the
accompanying
financial
statements
may
differ
from
the
value
ultimately
realized
upon
sale
or
maturity.
Investment
Transactions,
Investment
Income,
and
Distributions
Investment
transactions
are
accounted
for
on
the
trade
date
basis.
Income
and
expenses
are
recorded
on
the
accrual
basis.
Realized
gains
and
losses
are
reported
on
the
identified
cost
basis. Premiums
and
discounts
on
debt
securities
are
amortized
for
financial
reporting
purposes. Income
tax-related
interest
and
penalties,
if
incurred,
are
recorded
as
income
tax
expense. Dividends
received
from other
investment
companies are
reflected
as
dividend income;
capital
gain
distributions
are
reflected
as
realized
gain/loss. Dividend
income and
capital
gain
distributions
are
recorded
on
the
ex-dividend
date. Distributions
from
REITs
are
initially
recorded
as
dividend
income
and,
to
the
extent
such
represent
a
return
of
capital
or
capital
gain
for
tax
purposes,
are
reclassified
when
such
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
information
becomes
available. Non-cash
dividends,
if
any,
are
recorded
at
the
fair
market
value
of
the
asset
received. Proceeds
from
litigation
payments,
if
any,
are
included
in
either
net
realized
gain
(loss)
or
change
in
net
unrealized
gain/loss
from
securities. Distributions
to
shareholders
are
recorded
on
the
ex-dividend
date. Income
distributions,
if
any,
are
declared
and
paid
by
each
class monthly. A
capital
gain
distribution,
if
any, may
also
be
declared
and
paid
by
the
fund
annually.
Class
Accounting
Shareholder
servicing,
prospectus,
and
shareholder
report
expenses
incurred
by
each
class
are
charged
directly
to
the
class
to
which
they
relate.
Expenses
common
to
all
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.
Capital
Transactions
Each
investor’s
interest
in
the
net
assets
of the
fund
is
represented
by
fund
shares. The
fund’s
net
asset
value
(NAV)
per
share
is
computed
at
the
close
of
the
New
York
Stock
Exchange
(NYSE),
normally
4
p.m.
ET,
each
day
the
NYSE
is
open
for
business.
However,
the
NAV
per
share
may
be
calculated
at
a
time
other
than
the
normal
close
of
the
NYSE
if
trading
on
the
NYSE
is
restricted,
if
the
NYSE
closes
earlier,
or
as
may
be
permitted
by
the
SEC.
Purchases
and
redemptions
of
fund
shares
are
transacted
at
the
next-computed
NAV
per
share,
after
receipt
of
the
transaction
order
by
T.
Rowe
Price
Associates,
Inc.,
or
its
agents.
Indemnification
In
the
normal
course
of
business, the
fund
may
provide
indemnification
in
connection
with
its
officers
and
directors,
service
providers,
and/or
private
company
investments. The
fund’s
maximum
exposure
under
these
arrangements
is
unknown;
however,
the
risk
of
material
loss
is
currently
considered
to
be
remote.
NOTE
2
-
VALUATION
Fair
Value
The
fund’s
financial
instruments
are
valued
at
the
close
of
the
NYSE
and
are
reported
at
fair
value,
which
GAAP
defines
as
the
price
that
would
be
received
to
sell
an
asset
or
paid
to
transfer
a
liability
in
an
orderly
transaction
between
market
participants
at
the
measurement
date. The fund’s
Board
of
Directors
(the
Board)
has
designated
T.
Rowe
Price
Associates,
Inc.
as
the
fund’s
valuation
designee
(Valuation
Designee).
Subject
to
oversight
by
the
Board,
the
Valuation
Designee
performs
the
following
functions
in
performing
fair
value
determinations:
assesses
and
manages
valuation
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
risks;
establishes
and
applies
fair
value
methodologies;
tests
fair
value
methodologies;
and
evaluates
pricing
vendors
and
pricing
agents.
The
duties
and
responsibilities
of
the
Valuation
Designee
are
performed
by
its
Valuation
Committee. The
Valuation
Designee provides
periodic
reporting
to
the
Board
on
valuation
matters.
Various
valuation
techniques
and
inputs
are
used
to
determine
the
fair
value
of
financial
instruments.
GAAP
establishes
the
following
fair
value
hierarchy
that
categorizes
the
inputs
used
to
measure
fair
value:
Level
1
–
quoted
prices
(unadjusted)
in
active
markets
for
identical
financial
instruments
that
the
fund
can
access
at
the
reporting
date
Level
2
–
inputs
other
than
Level
1
quoted
prices
that
are
observable,
either
directly
or
indirectly
(including,
but
not
limited
to,
quoted
prices
for
similar
financial
instruments
in
active
markets,
quoted
prices
for
identical
or
similar
financial
instruments
in
inactive
markets,
interest
rates
and
yield
curves,
implied
volatilities,
and
credit
spreads)
Level
3
–
unobservable
inputs
(including
the Valuation
Designee’s assumptions
in
determining
fair
value)
Observable
inputs
are
developed
using
market
data,
such
as
publicly
available
information
about
actual
events
or
transactions,
and
reflect
the
assumptions
that
market
participants
would
use
to
price
the
financial
instrument.
Unobservable
inputs
are
those
for
which
market
data
are
not
available
and
are
developed
using
the
best
information
available
about
the
assumptions
that
market
participants
would
use
to
price
the
financial
instrument.
GAAP
requires
valuation
techniques
to
maximize
the
use
of
relevant
observable
inputs
and
minimize
the
use
of
unobservable
inputs.
When
multiple
inputs
are
used
to
derive
fair
value,
the
financial
instrument
is
assigned
to
the
level
within
the
fair
value
hierarchy
based
on
the
lowest-level
input
that
is
significant
to
the
fair
value
of
the
financial
instrument.
Input
levels
are
not
necessarily
an
indication
of
the
risk
or
liquidity
associated
with
financial
instruments
at
that
level
but
rather
the
degree
of
judgment
used
in
determining
those
values.
Valuation
Techniques
Debt
securities
generally
are
traded
in
the over-the-
counter
(OTC)
market
and
are
valued
at
prices
furnished
by
independent
pricing
services
or
by
broker
dealers
who
make
markets
in
such
securities.
When
valuing
securities,
the
independent
pricing
services
consider
factors
such
as,
but
not
limited
to,
the
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.
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
Equity
securities,
including
exchange-traded
funds, listed
or
regularly
traded
on
a
securities
exchange
or
in
the
over-the-counter
(OTC)
market
are
valued
at
the
last
quoted
sale
price
or,
for
certain
markets,
the
official
closing
price
at
the
time
the
valuations
are
made.
OTC
Bulletin
Board
securities
are
valued
at
the
mean
of
the
closing
bid
and
asked
prices.
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
closing
bid
and
asked
prices
for
domestic
securities.
Investments
in
mutual
funds
are
valued
at
the
mutual
fund’s
closing
NAV
per
share
on
the
day
of
valuation.
Listed
options,
and
OTC
options
with
a
listed
equivalent,
are
valued
at
the
mean
of
the
closing
bid
and
asked
prices
and
exchange-traded
options
on
futures
contracts
are
valued
at
closing
settlement
prices.
Assets
and
liabilities
other
than
financial
instruments,
including
short-
term
receivables
and
payables,
are
carried
at
cost,
or
estimated
realizable
value,
if
less,
which
approximates
fair
value.
Investments
for
which
market
quotations are
not
readily
available
or
deemed
unreliable
are
valued
at
fair
value
as
determined
in
good
faith
by
the
Valuation
Designee.
The
Valuation
Designee
has
adopted
methodologies
for
determining
the
fair
value
of
investments
for
which
market
quotations
are
not
readily
available
or
deemed
unreliable,
including
the
use
of
other
pricing
sources.
Factors
used
in
determining
fair
value
vary
by
type
of
investment
and
may
include
market
or
investment
specific
considerations.
The
Valuation
Designee typically
will
afford
greatest
weight
to
actual
prices
in
arm’s
length
transactions,
to
the
extent
they
represent
orderly
transactions
between
market
participants,
transaction
information
can
be
reliably
obtained,
and
prices
are
deemed
representative
of
fair
value.
However,
the
Valuation
Designee may
also
consider
other
valuation
methods
such
as
market-based
valuation
multiples;
a
discount
or
premium
from
market
value
of
a
similar,
freely
traded
security
of
the
same
issuer;
discounted
cash
flows;
yield
to
maturity;
or
some
combination.
Fair
value
determinations
are
reviewed
on
a
regular
basis.
Because
any
fair
value
determination
involves
a
significant
amount
of
judgment,
there
is
a
degree
of
subjectivity
inherent
in
such
pricing
decisions. Fair
value
prices
determined
by
the
Valuation
Designee could
differ
from
those
of
other
market
participants,
and
it
is
possible
that
the
fair
value
determined
for
a
security
may
be
materially
different
from
the
value
that
could
be
realized
upon
the
sale
of
that
security.
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
Valuation
Inputs
The
following
table
summarizes
the
fund’s
financial
instruments,
based
on
the
inputs
used
to
determine
their
fair
values
on
June
30,
2024
(for
further
detail
by
category,
please
refer
to
the
accompanying
Portfolio
of
Investments):
NOTE
3
-
DERIVATIVE
INSTRUMENTS
During
the
six
months ended
June
30,
2024,
the
fund
invested
in
derivative
instruments.
As
defined
by
GAAP,
a
derivative
is
a
financial
instrument
whose
value
is
derived
from
an
underlying
security
price,
foreign
exchange
rate,
interest
rate,
index
of
prices
or
rates,
or
other
variable;
it
requires
little
or
no
initial
investment
and
permits
or
requires
net
settlement.
The
fund
invests
in
derivatives
only
if
the
expected
risks
and
rewards
are
consistent
with
its
investment
objectives,
policies,
and
overall
risk
profile,
as
described
in
its
prospectus
and
Statement
of
Additional
Information.
The
fund
may
use
derivatives
for
a
variety
of
purposes
and
may
use
them
to
establish
both
long
and
short
positions
within
the
fund’s
portfolio.
Potential
uses
include
to
hedge
against
declines
in
principal
value,
increase
yield,
invest
in
an
asset
with
greater
efficiency
and
at
a
lower
cost
than
is
possible
through
direct
investment,
to
enhance
return,
or
to
adjust
portfolio
duration
and
credit
exposure.
The
risks
associated
with
the
use
of
derivatives
are
different
from,
and
potentially
much
greater
than,
the
risks
associated
with
investing
directly
in
the
instruments
on
which
the
derivatives
are
based.
($000s)
Level
1
Level
2
Level
3
Total
Value
Assets
Fixed
Income
Securities
1
$
—
$
88,779
$
—
$
88,779
Common
Stocks
68,019
—
—
68,019
Short-Term
Investments
12,823
—
—
12,823
Total
$
80,842
$
88,779
$
—
$
169,621
Liabilities
Options
Written
$
—
$
78
$
—
$
78
1
Includes
Bank
Loans,
Corporate
Bonds
and
U.S.
Government
Agency
Obligations
(Excluding
Mortgage-Backed).
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
The
fund
values
its
derivatives
at
fair
value
and
recognizes
changes
in
fair
value
currently
in
its
results
of
operations.
Accordingly,
the
fund
does
not
follow
hedge
accounting,
even
for
derivatives
employed
as
economic
hedges.
Generally,
the
fund
accounts
for
its
derivatives
on
a
gross
basis.
It
does
not
offset
the
fair
value
of
derivative
liabilities
against
the
fair
value
of
derivative
assets
on
its
financial
statements,
nor
does
it
offset
the
fair
value
of
derivative
instruments
against
the
right
to
reclaim
or
obligation
to
return
collateral.
The
following
table
summarizes
the
fair
value
of
the
fund’s
derivative
instruments
held
as
of
June
30,
2024,
and
the
related
location
on
the
accompanying
Statement
of
Assets
and
Liabilities,
presented
by
primary
underlying
risk
exposure:
Additionally,
the
amount
of
gains
and
losses
on
derivative
instruments
recognized
in
fund
earnings
during
the
six
months ended
June
30,
2024,
and
the
related
location
on
the
accompanying
Statement
of
Operations
is
summarized
in
the
following
table
by
primary
underlying
risk
exposure:
($000s)
Location
on
Statement
of
Assets
and
Liabilities
Fair
Value
Liabilities
Equity
derivatives
Options
Written
$
78
Total
$
78
($000s)
Location
of
Gain
(Loss)
on
Statement
of
Operations
Options
Written
Realized
Gain
(Loss)
Equity
derivatives
$
2
Total
$
2
Change
in
Unrealized
Gain
(Loss)
Equity
derivatives
$
(10)
Total
$
(10)
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
Counterparty
Risk
and
Collateral
The
fund
invests
in
derivatives,
such
as
non-cleared
bilateral
swaps,
forward
currency
exchange
contracts,
and/or
OTC
options,
that
are
transacted
and
settle
directly
with
a
counterparty
(bilateral
derivatives),
and
thereby
may
expose
the
fund
to
counterparty
risk.
To
mitigate
this
risk,
the
fund
has
entered
into
master
netting
arrangements
(MNAs)
with
certain
counterparties
that
permit
net
settlement
under
specified
conditions
and,
for
certain
counterparties,
also
require
the
exchange
of
collateral
to
cover
mark-to-market
exposure.
MNAs
may
be
in
the
form
of
International
Swaps
and
Derivatives
Association
master
agreements
(ISDAs)
or
foreign
exchange
letter
agreements
(FX
letters).
MNAs
govern
the
ability
to
offset
amounts
the
fund
owes
a
counterparty
against
amounts
the
counterparty
owes
the
fund
(net
settlement).
Both
ISDAs
and
FX
letters
generally
allow
termination
of
transactions
and
net
settlement
upon
the
occurrence
of
contractually
specified
events,
such
as
failure
to
pay
or
bankruptcy.
In
addition,
ISDAs
specify
other
events,
the
occurrence
of
which
would
allow
one
of
the
parties
to
terminate.
For
example,
a
downgrade
in
credit
rating
of
a
counterparty
below
a
specified
rating
would
allow
the
fund
to
terminate,
while
a
decline
in
the
fund’s
net
assets
of
more
than
a
specified
percentage
would
allow
the
counterparty
to
terminate.
Upon
termination,
all
transactions
with
that
counterparty
would
be
liquidated
and
a
net
termination
amount
determined.
ISDAs
typically
include
collateral
agreements
whereas
FX
letters
do
not.
Collateral
requirements
are
determined
daily
based
on
the
net
aggregate
unrealized
gain
or
loss
on
all
bilateral
derivatives
with
each
counterparty,
subject
to
minimum
transfer
amounts
that
typically
range
from
$100,000
to
$250,000.
Any
additional
collateral
required
due
to
changes
in
security
values
is
typically
transferred
the
next
business
day.
Collateral may
be
in
the
form
of
cash
or
debt
securities
issued
by
the
U.S.
government
or
related
agencies,
although
other
securities
may
be
used
depending
on
the
terms
outlined
in
the
applicable
MNA.
Cash
posted
by
the
fund
is
reflected
as
cash
deposits
in
the
accompanying
financial
statements
and
generally
is
restricted
from
withdrawal
by
the
fund;
securities
posted
by
the
fund
are
so
noted
in
the
accompanying
Portfolio
of
Investments;
both
remain
in
the
fund’s
assets.
Collateral
pledged
by
counterparties
is
not
included
in
the
fund’s
assets
because
the
fund
does
not
obtain
effective
control
over
those
assets.
For
bilateral
derivatives,
collateral
posted
or
received
by
the
fund
is
held
in
a
segregated
account
at
the
fund’s
custodian.
While
typically
not
sold
in
the
same
manner
as
equity
or
fixed
income
securities,
OTC
and
bilateral
derivatives
may
be
unwound
with
counterparties
or
transactions
assigned
to
other
counterparties
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
to
allow
the
fund
to
exit
the
transaction.
This
ability
is
subject
to
the
liquidity
of
underlying
positions. As
of
June
30,
2024,
no
collateral
was
pledged
by
either
the
fund
or
counterparties for
bilateral
derivatives.
Options
The
fund
is
subject
to equity
price
risk in
the
normal
course
of
pursuing
its
investment
objectives
and
uses
options
to
help
manage
such
risk.
The
fund
may
use
options
to
manage
exposure
to
security
prices,
interest
rates,
foreign
currencies,
and
credit
quality;
as
an
efficient
means
of
adjusting
exposure
to
all
or
a
part
of
a
target
market;
to
enhance
income;
as
a
cash
management
tool;
or
to
adjust
credit
exposure.
The
fund
may
buy
or
sell
options
that
can
be
settled
either
directly
with
the
counterparty
(OTC
option)
or
through
a
central
clearinghouse
(exchange-traded
option).
Options
are
included
in
net
assets
at
fair
value,
options
purchased
are
included
in
Investments
in
Securities,
and
options
written
are
separately
reflected
as
a
liability
on
the
accompanying
Statement
of
Assets
and
Liabilities.
Premiums
on
unexercised,
expired
options
are
recorded
as
realized
gains
or
losses
on
the
accompanying
Statement
of
Operations;
premiums
on
exercised
options
are
recorded
as
an
adjustment
to
the
proceeds
from
the
sale
or
cost
of
the
purchase.
The
difference
between
the
premium
and
the
amount
received
or
paid
in
a
closing
transaction
is
also
treated
as
realized
gain
or
loss
on
the
accompanying
Statement
of
Operations.
In
return
for
a
premium
paid,
call
and
put
options
give
the
holder
the
right,
but
not
the
obligation,
to
purchase
or
sell,
respectively,
a
security
at
a
specified
exercise
price. Risks related
to
the
use
of
options
include
possible
illiquidity
of
the
options
markets;
trading
restrictions
imposed
by
an
exchange
or
counterparty;
possible
failure
of
counterparties
to
meet
the
terms
of
the
agreements;
movements
in
the
underlying
asset
values
and,
for
options
written,
the
potential
for
losses
to
exceed
any
premium
received
by
the
fund.
During
the
six
months ended
June
30,
2024,
the
volume
of
the
fund’s
activity
in
options,
based
on
underlying
notional
amounts,
was
generally
between
0%
and
2%
of
net
assets.
NOTE
4
-
OTHER
INVESTMENT
TRANSACTIONS
Consistent
with
its
investment
objective, the
fund
engages
in
the
following
practices
to
manage
exposure
to
certain
risks
and/or
to
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.
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
Noninvestment-Grade
Debt
The
fund
invests,
either
directly
or
through
its
investment
in
other
T.
Rowe
Price
funds,
in
noninvestment-grade
debt,
including
“high
yield”
or
“junk”
bonds
or
leveraged
loans.
Noninvestment-grade
debt
issuers
are
more
likely
to
suffer
an
adverse
change
in
financial
condition
that
would
result
in
the
inability
to
meet
a
financial
obligation.
The
noninvestment-
grade
debt
market
may
experience
sudden
and
sharp
price
swings
due
to
a
variety
of
factors
that
may
decrease
the
ability
of
issuers
to
make
principal
and
interest
payments
and
adversely
affect
the
liquidity
or
value,
or
both,
of
such
securities.
Accordingly,
securities
issued
by
such
companies
carry
a
higher
risk
of
default
and
should
be
considered
speculative.
Restricted
Securities
The
fund
invests
in
securities
that
are
subject
to
legal
or
contractual
restrictions
on
resale.
Prompt
sale
of
such
securities
at
an
acceptable
price
may
be
difficult
and
may
involve
substantial
delays
and
additional
costs.
Bank
Loans
The
fund
invests
in
bank
loans,
which
represent
an
interest
in
amounts
owed
by
a
borrower
to
a
syndicate
of
lenders.
Bank
loans
are
generally
noninvestment
grade
and
often
involve
borrowers
whose
financial
condition
is
highly
leveraged.
The
fund
may
invest
in
fixed
and
floating
rate
loans,
which
may
include
senior
floating
rate
loans;
secured
and
unsecured
loans,
second
lien
or
more
junior
loans;
and
bridge
loans
or
bridge
facilities.
Certain
bank
loans
may
be
revolvers
which
are
a
form
of
senior
bank
debt,
where
the
borrower
can
draw
down
the
credit
of
the
revolver
when
it
needs
cash
and
repays
the
credit
when
the
borrower
has
excess
cash.
Certain
loans
may
be
“covenant-lite”
loans,
which
means
the
loans
contain
fewer
maintenance
covenants
than
other
loans
(in
some
cases,
none)
and
do
not
include
terms
which
allow
the
lender
to
monitor
the
performance
of
the
borrower
and
declare
a
default
if
certain
criteria
are
breached.
As
a
result
of
these
risks,
the
fund’s
exposure
to
losses
may
be
increased.
Bank
loans
may
be
in
the
form
of
either
assignments
or
participations.
A
loan
assignment
transfers
all
legal,
beneficial,
and
economic
rights
to
the
buyer,
and
transfer
typically
requires
consent
of
both
the
borrower
and
agent.
In
contrast,
a
loan
participation
generally
entitles
the
buyer
to
receive
the
cash
flows
from
principal,
interest,
and
any
fee
payments
on
a
portion
of
a
loan;
however,
the
seller
continues
to
hold
legal
title
to
that
portion
of
the
loan.
As
a
result,
the
buyer
of
a
loan
participation
generally
has
no
direct
recourse
against
the
borrower
and
is
exposed
to
credit
risk
of
both
the
borrower
and
seller
of
the
participation.
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
Bank
loans
often
have
extended
settlement
periods,
generally
may
be
repaid
at
any
time
at
the
option
of
the
borrower,
and
may
require
additional
principal
to
be
funded
at
the
borrowers’
discretion
at
a
later
date
(e.g.
unfunded
commitments
and
revolving
debt
instruments).
Until
settlement,
the
fund
maintains
liquid
assets
sufficient
to
settle
its
unfunded
loan
commitments.
The
fund
reflects
both
the
funded
portion
of
a
bank
loan
as
well
as
its
unfunded
commitment
in
the
Portfolio
of
Investments.
However,
if
a
credit
agreement
provides
no
initial
funding
of
a
tranche,
and
funding
of
the
full
commitment
at
a
future
date(s)
is
at
the
borrower’s
discretion
and
considered
uncertain,
a
loan
is
reflected
in
the
Portfolio
of
Investments
only
if,
and
only
to
the
extent
that,
the
fund
has
actually
settled
a
funding
commitment.
Other
Purchases
and
sales
of
portfolio
securities
other
than
in-kind
transactions,
if
any,
short-term and
U.S.
government
securities
aggregated $95,031,000 and
$15,790,000,
respectively,
for
the
six
months ended
June
30,
2024.
Purchases
and
sales
of
U.S.
government
securities
aggregated
$23,460,000 and
$0,
respectively,
for
the
six
months ended
June
30,
2024.
NOTE
5
-
FEDERAL
INCOME
TAXES
Generally,
no
provision
for
federal
income
taxes
is
required
since
the
fund
intends
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.
Distributions
determined
in
accordance
with
federal
income
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
but
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
the
date
of
this
report.
At
June
30,
2024,
the
cost
of
investments
(including
derivatives,
if
any)
for
federal
income
tax
purposes
was
$165,048,000.
Net
unrealized
gain
aggregated
$4,495,000
at
period-end,
of
which
$5,777,000
related
to
appreciated
investments
and
$1,282,000
related
to
depreciated
investments.
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
NOTE
6
-
FOREIGN TAXES
The
fund
is
subject
to
foreign
income
taxes
imposed
by
certain
countries
in
which
it
invests.
Additionally,
capital
gains
realized
upon
disposition
of
securities
issued
in
or
by
certain
foreign
countries
are
subject
to
capital
gains
tax
imposed
by
those
countries.
All
taxes
are
computed
in
accordance
with
the
applicable
foreign
tax
law,
and,
to
the
extent
permitted,
capital
losses
are
used
to
offset
capital
gains.
Taxes
attributable
to
income
are
accrued
by
the
fund
as
a
reduction
of
income.
Current
and
deferred
tax
expense
attributable
to
capital
gains
is
reflected
as
a
component
of
realized
or
change
in
unrealized
gain/
loss
on
securities
in
the
accompanying
financial
statements.
To
the
extent
that
the
fund
has
country
specific
capital
loss
carryforwards,
such
carryforwards
are
applied
against
net
unrealized
gains
when
determining
the
deferred
tax
liability.
Any
deferred
tax
liability
incurred
by
the
fund
is
included
in
either
Other
liabilities
or
Deferred
tax
liability
on
the
accompanying
Statement
of
Assets
and
Liabilities.
NOTE
7
-
RELATED
PARTY
TRANSACTIONS
The
fund
is
managed
by
T.
Rowe
Price
Associates,
Inc.
(Price
Associates),
a
wholly
owned
subsidiary
of
T.
Rowe
Price
Group,
Inc.
(Price
Group). Price
Associates
has
entered
into
a
sub-advisory
agreement(s)
with
one
or
more
of
its
wholly
owned
subsidiaries,
to
provide
investment
advisory
services
to
the
fund.
The
investment
management
agreement
between
the
fund
and
Price
Associates
provides
for
an
annual
investment
management
fee,
which
is
computed
daily
and
paid
monthly. The
fee
consists
of
an
individual
fund
fee,
equal
to
0.16%
of
the
fund’s
average
daily
net
assets,
and
a
group
fee.
The
group
fee
rate
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
0.260%
for
assets
in
excess
of
$845
billion.
The
fund’s
group
fee
is
determined
by
applying
the
group
fee
rate
to
the
fund’s
average
daily
net
assets. At
June
30,
2024,
the
effective
annual
group
fee
rate
was
0.29%.
The Investor
Class is
subject
to
a
contractual
expense
limitation
through
the
expense
limitation
date
indicated
in
the
table
below.
This
agreement
will
continue
through
the
expense
limitation
date
indicated
in
the
table
below,
and
may
be
renewed,
revised,
or
revoked
only
with
approval
of
the
fund’s
Board.
During
the
limitation
period,
Price
Associates
is required
to
waive
or
pay
any
expenses
(excluding
interest;
expenses
related
to
borrowings,
taxes,
and
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
brokerage;
non-recurring,
extraordinary
expenses;
and
acquired
fund
fees
and
expenses)
that
would
otherwise
cause
the class’s ratio
of
annualized
total
expenses
to
average
net
assets
(net
expense
ratio)
to
exceed
its
expense
limitation.
The
class
is
required
to
repay
Price
Associates
for
expenses
previously
waived/paid
to
the
extent
the
class’s net
assets
grow
or
expenses
decline
sufficiently
to
allow
repayment
without
causing
the class’s net
expense
ratio
(after
the
repayment
is
taken
into
account)
to
exceed
the
lesser
of:
(1)
the
expense
limitation
in
place
at
the
time
such
amounts
were
waived;
or
(2)
the class’s
current
expense
limitation.
However,
no
repayment
will
be
made
more
than
three
years
after
the
date
of
a
payment
or
waiver.
The
I
Class
is
also
subject
to
an
operating
expense
limitation
(I
Class
Limit)
pursuant
to
which
Price
Associates
is
contractually
required
to
pay
all
operating
expenses
of
the
I
Class,
excluding
management
fees;
interest;
expenses
related
to
borrowings,
taxes,
and
brokerage; non-recurring,
extraordinary expenses; and
acquired
fund
fees
and
expenses, to
the
extent
such
operating
expenses,
on
an
annualized
basis,
exceed
the
I
Class
Limit. This
agreement
will
continue
through
the
expense
limitation
date
indicated
in
the
table
below,
and
may
be
renewed,
revised,
or
revoked
only
with
approval
of
the
fund’s
Board.
The
I
Class
is
required
to
repay
Price
Associates
for
expenses
previously
paid
to
the
extent
the
class’s
net
assets
grow
or
expenses
decline
sufficiently
to
allow
repayment
without
causing
the
class’s
operating
expenses
(after
the
repayment
is
taken
into
account)
to
exceed
the
lesser
of:
(1)
the
I
Class
Limit
in
place
at
the
time
such
amounts
were
paid;
or
(2)
the
current
I
Class
Limit.
However,
no
repayment
will
be
made
more
than
three
years
after
the
date
of
a
payment
or
waiver.
Pursuant
to
these
agreements,
expenses
were
waived/paid
by
and/or
repaid
to
Price
Associates
during
the
six
months ended June
30,
2024
as
indicated
in
the
table
below.
Including these
amounts,
expenses
previously
waived/paid
by
Price
Associates
in
the
amount
of $194,000 remain
subject
to
repayment
by
the
fund
at
June
30,
2024.
Any
repayment
of
expenses
previously
waived/paid
by
Price
Associates
during
the
period
would
be
included
in
the
net
investment
income
and
expense
ratios
presented
on
the
accompanying
Financial
Highlights.
Investor
Class
I
Class
Expense
limitation/I
Class
Limit
0.65%
0.05%
Expense
limitation
date
02/28/27
02/28/27
(Waived)/repaid
during
the
period
($000s)
$(105)
$(78)
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
In
addition,
the
fund
has
entered
into
service
agreements
with
Price
Associates
and
a
wholly
owned
subsidiary
of
Price
Associates,
each
an
affiliate
of
the
fund
(collectively,
Price).
Price
Associates
provides
certain
accounting
and
administrative
services
to
the
fund.
T.
Rowe
Price
Services,
Inc.
provides
shareholder
and
administrative
services
in
its
capacity
as
the
fund’s
transfer
and
dividend-disbursing
agent.
For
the
six
months
ended
June
30,
2024,
expenses
incurred
pursuant
to
these
service
agreements
were
$59,000
for
Price
Associates
and
$26,000
for
T.
Rowe
Price
Services,
Inc.
All
amounts
due
to
and
due
from
Price,
exclusive
of
investment
management
fees
payable,
are
presented
net
on
the
accompanying
Statement
of
Assets
and
Liabilities.
T.
Rowe
Price
Investment
Services,
Inc.
(Investment
Services)
serves
as
distributor
to
the
fund.
Pursuant
to
an
underwriting
agreement,
no
compensation
for
any
distribution
services
provided
is
paid
to
Investment
Services
by
the
fund
(except
for
12b-1
fees
under
a
Board-approved
Rule
12b-1
plan).
The fund
may
invest
its
cash
reserves
in
certain
open-end
management
investment
companies
managed
by
Price
Associates
and
considered
affiliates
of
the
fund:
the
T.
Rowe
Price
Government
Reserve
Fund
or
the
T.
Rowe
Price
Treasury
Reserve
Fund,
organized
as
money
market
funds
(together,
the
Price
Reserve
Funds).
The
Price
Reserve
Funds
are
offered
as
short-term
investment
options
to
mutual
funds,
trusts,
and
other
accounts
managed
by
Price
Associates
or
its
affiliates
and
are
not
available
for
direct
purchase
by
members
of
the
public.
Cash
collateral
from
securities
lending,
if
any,
is
invested
in
the
T.
Rowe
Price
Government
Reserve Fund. The
Price
Reserve
Funds
pay
no
investment
management
fees.
As
of
June
30,
2024,
T.
Rowe
Price
Group,
Inc.,
or
its
wholly
owned
subsidiaries,
owned
500,000
shares
of
the
Investor
Class,
representing
14%
of
the
Investor
Class's
net
assets,
and
500,000
shares
of
the
I
Class,
representing
19%
of
the
I
Class's
net
assets.
The fund may
participate
in
securities
purchase
and
sale
transactions
with
other
funds
or
accounts
advised
by
Price
Associates
(cross
trades),
in
accordance
with
procedures
adopted
by the
fund’s
Board
and
Securities
and
Exchange
Commission
rules,
which
require,
among
other
things,
that
such
purchase
and
sale
cross
trades
be
effected
at
the
independent
current
market
price
of
the
security.
During
the
six
months
ended
June
30,
2024,
the
fund
had
no
purchases
or
sales
cross
trades
with
other
funds
or
accounts
advised
by
Price
Associates.
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
NOTE
8
-
OTHER
MATTERS
Unpredictable environmental,
political,
social
and
economic
events,
including
but
not
limited
to,
environmental
or
natural
disasters,
war
and
conflict
(including
Russia’s
military
invasion
of
Ukraine
and
the
conflict
in
Israel,
Gaza
and
surrounding
areas),
terrorism,
geopolitical
developments
(including
trading
and
tariff
arrangements,
sanctions
and
cybersecurity
attacks),
and
public
health
epidemics
(including
the
global
outbreak
of
COVID-19)
and
similar
public
health
threats,
may
significantly
affect
the
economy
and
the
markets
and
issuers
in
which
a
fund
invests.
The
extent
and
duration
of
such
events
and
resulting
market
disruptions
cannot
be
predicted.
These
and
other
similar
events
may
cause
instability
across
global
markets,
including
reduced
liquidity
and
disruptions
in
trading
markets,
while
some
events
may
affect
certain
geographic
regions,
countries,
sectors,
and
industries
more
significantly
than
others,
and
exacerbate
other
pre-existing
political,
social,
and
economic
risks.
The
fund’s
performance
could
be
negatively
impacted
if
the
value
of
a
portfolio
holding
were
harmed
by
these
or
such
events.
Management
actively
monitors
the
risks
and
financial
impacts
arising
from
such
events.
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
APPROVAL
OF
INVESTMENT
MANAGEMENT
AGREEMENT
AND
SUBADVISORY
AGREEMENT
Each
year,
the
fund’s
Board
of
Directors
(Board)
considers
the
continuation
of
the
investment
management
agreement
(Advisory
Contract)
between
the
fund
and
its
investment
adviser,
T.
Rowe
Price
Associates,
Inc.
(Adviser),
as
well
as
the
investment
subadvisory
agreement
(Subadvisory
Contract)
that
the
Adviser
has
entered
into
with
T.
Rowe
Price
Investment
Management,
Inc.
(Subadviser)
on
behalf
of
the
fund.
In
that
regard,
at
a
meeting
held
on
March
11–12,
2024
(Meeting),
the
Board,
including
all
of
the
fund’s
independent
directors
present
in
person
at
the
Meeting,
approved
the
continuation
of
the
fund’s
Advisory
Contract
and
Subadvisory
Contract.
At
the
Meeting,
the
Board
considered
the
factors
and
reached
the
conclusions
described
below
relating
to
the
selection
of
the
Adviser
and
Subadviser
and
the
approval
of
the
Advisory
Contract
and
Subadvisory
Contract.
The
independent
directors
were
assisted
in
their
evaluation
of
the
Advisory
Contract
and
Subadvisory
Contract
by
independent
legal
counsel
from
whom
they
received
separate
legal
advice
and
with
whom
they
met
separately.
In
providing
information
to
the
Board,
the
Adviser
was
guided
by
a
detailed
set
of
requests
for
information
submitted
by
independent
legal
counsel
on
behalf
of
the
independent
directors.
In
considering
and
approving
the
continuation
of
the
Advisory
Contract
and
Subadvisory
Contract,
the
Board
considered
the
information
it
believed
was
relevant,
including,
but
not
limited
to,
the
information
discussed
below.
The
Board
considered
not
only
the
specific
information
presented
in
connection
with
the
Meeting,
but
also
the
knowledge
gained
over
time
through
interaction
with
the
Adviser
and
Subadviser
about
various
topics.
The
Board
also
considered
that
the
Subadviser
has
its
own
investment
platform
and
investment
management
leadership,
and
the
Adviser
and
Subadviser
have
implemented
information
barriers
restricting
the
sharing
of
investment
information
and
voting
activity.
The
Board
meets
regularly
and,
at
each
of
its
meetings,
covers
an
extensive
agenda
of
topics
and
materials
and
considers
factors
that
are
relevant
to
its
annual
consideration
of
the
renewal
of
the
T.
Rowe
Price
funds’
advisory
contracts,
including
performance
and
the
services
and
support
provided
to
the
funds
and
their
shareholders.
Services
Provided
by
the
Adviser
and
Subadviser
The
Board
considered
the
nature,
quality,
and
extent
of
the
services
provided
to
the
fund
by
the
Adviser
and
Subadviser.
These
services
included,
but
were
not
limited
to,
directing
the
fund’s
investments
in
accordance
with
its
investment
program
and
the
overall
management
of
the
fund’s
portfolio,
as
well
as
a
variety
of
related
activities
such
as
financial,
investment
operations,
and
administrative
services;
compliance;
maintaining
the
fund’s
records
and
registrations;
and
shareholder
communications.
However,
the
Board
noted
that
there
are
information
barriers
between
investment
personnel
of
the
Adviser
and
Subadviser
that
restrict
the
sharing
of
certain
information,
such
as
investment
research,
trading,
and
proxy
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
voting.
The
Board
also
reviewed
the
background
and
experience
of
the
Adviser’s
and
Subadviser’s
senior
management
teams
and
investment
personnel
involved
in
the
management
of
the
fund,
as
well
as
the
Adviser’s
compliance
record.
The
Board
concluded
that
the
information
it
considered
with
respect
to
the
nature,
quality,
and
extent
of
the
services
provided
by
the
Adviser
and
Subadviser,
as
well
as
the
other
factors
considered
at
the
Meeting,
supported
the
Board’s
approval
of
the
continuation
of
the
Advisory
Contract
and
Subadvisory
Contract.
Investment
Performance
of
the
Fund
The
fund
only
recently
incepted
in
November
2023,
so
the
fund’s
relative
performance
was
not
evaluated
at
the
Meeting.
Costs,
Benefits,
Profits,
and
Economies
of
Scale
The
Board
reviewed
detailed
information
regarding
the
revenues
received
by
the
Adviser
under
the
Advisory
Contract
and
other
direct
and
indirect
benefits
that
the
Adviser
(and
its
affiliates,
including
the
Subadviser)
may
have
realized
from
its
relationship
with
the
fund.
In
considering
soft-dollar
arrangements
pursuant
to
which
research
may
be
received
from
broker-dealers
that
execute
the
fund’s
portfolio
transactions,
the
Board
noted
that
during
2023
the
Adviser
paid
the
costs
of
research
services
for
all
client
accounts
that
it
advises,
including
the
T.
Rowe
Price
funds.
However,
effective
January
1,
2024,
the
Adviser
will
begin
using
brokerage
commissions
in
connection
with
certain
T.
Rowe
Price
funds’
securities
transactions
to
pay
for
research
when
permissible.
The
Board
received
information
on
the
estimated
costs
incurred
and
profits
realized
by
the
Adviser
from
managing
the
T.
Rowe
Price
funds
but
did
not
review
information
regarding
profits
realized
from
managing
the
fund
in
particular
because
the
fund
had
recently
incepted.
Under
the
Advisory
Contract,
the
fund
pays
a
fee
to
the
Adviser
for
investment
management
services
composed
of
two
components—a
group
fee
rate
based
on
the
combined
average
net
assets
of
most
of
the
T.
Rowe
Price
funds
(including
the
fund)
that
declines
at
certain
asset
levels
and
an
individual
fund
fee
rate
based
on
the
fund’s
average
daily
net
assets—and
the
fund
pays
its
own
expenses
of
operations.
Under
the
Subadvisory
Contract,
the
Adviser
may
pay
the
Subadviser
up
to
60%
of
the
advisory
fees
that
the
Adviser
receives
from
the
fund.
The
group
fee
rate
decreases
as
total
T.
Rowe
Price
fund
assets
grow,
which
reduces
the
management
fee
rate
for
any
fund
that
has
a
group
fee
component
to
its
management
fee,
and
reflects
that
certain
resources
utilized
to
operate
the
fund
are
shared
with
other
T.
Rowe
Price
funds,
thus
allowing
shareholders
of
those
funds
to
share
potential
economies
of
scale.
The
fund’s
individual
fund
fee
contains
a
breakpoint
that
reduces
the
individual
fund
fee
rate
once
the
fund’s
assets
reach
a
certain
level
and
provides
additional
opportunities
for
sharing
potential
economies
of
scale.
APPROVAL
OF
INVESTMENT
MANAGEMENT
AGREEMENT
AND
SUBADVISORY
AGREEMENT
(continued)
T.
ROWE
PRICE
Capital
Appreciation
and
Income
Fund
The
fund’s
shareholders
also
benefit
from
potential
future
economies
of
scale
through
a
decline
in
certain
operating
expenses
as
the
fund
grows
in
size.
However,
the
fund
is
also
subject
to
contractual
expense
limitations
that
require
the
Adviser
to
waive
its
fees
and/or
bear
any
expenses
that
would
otherwise
cause
the
expenses
of
a
share
class
of
the
fund
to
exceed
a
certain
percentage
based
on
the
class’s
net
assets.
The
expense
limitations
protect
shareholders
from
relatively
high
expenses
until
the
fund
reaches
greater
scale
and
mitigate
the
potential
for
an
increase
in
operating
expenses
above
a
certain
level
that
could
impact
shareholders.
Fees
and
Expenses
The
Board
was
not
provided
with
data
for
peer
groups
compiled
by
Broadridge
since
the
fund
incepted
in
November
2023,
and
Broadridge
prepares
such
information
as
of
September
30,
2023.
However,
in
connection
with
its
approval
of
the
initial
Advisory
Contract,
the
Board
reviewed
comparisons
of
the
fund’s
proposed
fee
structure
relative
to
similarly
managed
competitor
funds
and
T.
Rowe
Price
funds
and,
on
the
basis
of
the
information
provided
and
the
factors
considered,
the
Board
concluded
that
the
fee
structure
was
reasonable
and
appropriate.
Approval
of
the
Advisory
Contract
and
Subadvisory
Contract
As
noted,
the
Board
approved
the
continuation
of
the
Advisory
Contract
and
Subadvisory
Contract.
No
single
factor
was
considered
in
isolation
or
to
be
determinative
to
the
decision.
Rather,
the
Board
concluded,
in
light
of
a
weighting
and
balancing
of
all
factors
considered,
that
it
was
in
the
best
interests
of
the
fund
and
its
shareholders
for
the
Board
to
approve
the
continuation
of
the
Advisory
Contract
and
Subadvisory
Contract
(including
the
fees
to
be
charged
for
services
thereunder).
APPROVAL
OF
INVESTMENT
MANAGEMENT
AGREEMENT
AND
SUBADVISORY
AGREEMENT
(continued)
100
East
Pratt
Street
Baltimore,
MD
21202
T.
Rowe
Price
Investment
Services,
Inc.
Call
1-800-225-5132
to
request
a
prospectus
or
summary
prospectus;
each
includes
investment
objectives,
risks,
fees,
expenses,
and
other
information
that
you
should
read
and
consider
carefully
before
investing.
F1577-051
8/24
Item 8. Changes in and Disagreements with Accountants for Open-End Management Investment Companies.
Not applicable.
Item 9. Proxy Disclosures for Open-End Management Investment Companies.
Not applicable.
Item 10. Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies.
Remuneration paid to Directors is included in Item 7 of this Form N-CSR and/or the Statement of Additional Information.
Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.
If applicable, see Item 7.
Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 13. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 14. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 15. Submission of Matters to a Vote of Security Holders.
There has been no change to the procedures by which shareholders may recommend nominees to the registrant’s board of directors.
Item 16. 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 change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 17. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 18. Recovery of Erroneously Awarded Compensation.
Not applicable.
Item 19. Exhibits.
| (a)(1) | The registrant’s code of ethics pursuant to Item 2 of Form N-CSR is filed with the registrant’s annual Form N-CSR. |
| (2) | Listing standards relating to recovery of erroneously awarded compensation: Not applicable. |
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 Capital Appreciation and Income Fund
| | | | |
| By | | /s/ David Oestreicher | | |
| | David Oestreicher | | |
| | Principal Executive Officer | | |
| | |
| Date | | August 20, 2024 | | |
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/ David Oestreicher | | |
| | David Oestreicher | | |
| | Principal Executive Officer | | |
| | |
| Date | | August 20, 2024 | | |
| | | | |
| By | | /s/ Alan S. Dupski | | |
| | Alan S. Dupski | | |
| | Principal Financial Officer | | |
| | |
| Date | | August 20, 2024 | | |
