Item 1. Report to Shareholders
T. Rowe Price Capital Appreciation Fund
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June 30, 2004
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 Capital Appreciation Fund
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Certified Semiannual Report (Unaudited)
FINANCIAL HIGHLIGHTS For a share outstanding throughout each period
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6 Months Year
Ended Ended
6/30/04 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
NET ASSET
VALUE
Beginning
of period $ 17.50 $ 14.21 $ 14.64 $ 13.95 $ 12.51 $ 13.22
Investment
activities
Net investment
income (loss) 0.12 0.25 0.33 0.39 0.44 0.51
Net realized
and unrealized
gain (loss) 0.78 3.36 (0.25) 1.03 2.27 0.41
Total from
investment
activities 0.90 3.61 0.08 1.42 2.71 0.92
Distributions
Net investment
income -- (0.26) (0.28) (0.38) (0.45) (0.50)
Net realized
gain -- (0.06) (0.23) (0.35) (0.82) (1.13)
Total
distributions -- (0.32) (0.51) (0.73) (1.27) (1.63)
NET ASSET
VALUE
End of period $ 18.40 $ 17.50 $ 14.21 $ 14.64 $ 13.95 $ 12.51
---------------------------------------------------------------
Ratios/
Supplemental
Data
Total return^ 5.14% 25.47% 0.54%* 10.26% 22.17% 7.07%
Ratio of total
expenses to
average net
assets 0.79%! 0.83% 0.85% 0.86% 0.87% 0.88%
Ratio of net
investment income
(loss) to average
net assets 1.42%! 1.85% 2.39% 2.85% 3.22% 3.44%
Portfolio
turnover rate 19.3%! 17.9% 17.6% 25.1% 32.4% 28.3%
Net assets,
end of period
(in millions) $ 3,715 $ 2,942 $ 1,853 $ 1,405 $ 914 $ 856
^ 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.
* Includes 0.07% effect of payment from the manager - See Note 4.
! Annualized
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Capital Appreciation Fund
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Certified Semiannual Report (Unaudited) June 30, 2004
PORTFOLIO OF INVESTMENTS (1) Shares/$ Par Value
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COMMON STOCKS 62.7%
CONSUMER DISCRETIONARY 8.6%
Hotels, Restaurants &
Leisure 0.8%
Mandalay Resort Group 220,000 15,101
Marriott, Class A 260,000 12,969
28,070
Household Durables 2.2%
Fortune Brands 420,000 31,681
Newell Rubbermaid 2,195,000 51,582
83,263
Leisure Equipment &
Products 0.3%
Hasbro 660,000 12,540
12,540
Media 4.5%
Comcast, Class A * 622,414 17,446
Disney 587,000 14,963
Meredith 585,000 32,152
New York Times, Class A 500,000 22,355
Time Warner * 1,935,000 34,017
Washington Post, Class B 48,000 44,640
165,573
Specialty Retail 0.8%
Home Depot 855,000 30,096
Petrie Stores Liquidation Trust * 2,585,000 1,241
31,337
Total Consumer Discretionary 320,783
CONSUMER STAPLES 3.0%
Food & Staples Retailing 0.9%
CVS 811,000 34,078
34,078
Food Products 0.6%
General Mills 425,000 20,200
20,200
Tobacco 1.5%
Altria Group 992,000 49,650
Loews 289,500 7,107
56,757
Total Consumer Staples 111,035
ENERGY 7.3%
Energy Equipment &
Services 1.0%
Baker Hughes 920,000 34,638
34,638
Oil & Gas 6.3%
Amerada Hess 920,000 72,855
ChevronTexaco 246,300 23,179
Devon Energy 203,150 13,408
Imperial Oil 384,000 17,979
Marathon Oil 725,000 27,434
Murphy Oil 610,000 44,957
Royal Dutch Petroleum ADS 665,000 34,360
234,172
Total Energy 268,810
FINANCIALS 9.9%
Capital Markets 0.8%
Lehman Brothers 395,000 29,724
29,724
Commercial Banks 0.4%
Royal Bank of Scotland Group (GBP) 495,000 14,250
14,250
Insurance 7.8%
Assurant 922,000 24,322
Genworth Financial, Class A * 1,305,000 29,950
Hartford Financial Services 192,700 13,246
Loews 611,000 36,636
Marsh & McLennan 1,150,000 52,187
Prudential 661,000 30,717
SAFECO 1,018,000 44,792
Saint Paul Companies 531,000 21,527
UnumProvident 696,500 11,074
White Mountains Insurance Group 51,700 26,367
290,818
Real Estate 0.9%
Rouse, REIT 668,278 31,743
31,743
Total Financials 366,535
HEALTH CARE 5.7%
Health Care Equipment &
Supplies 0.9%
Baxter International 917,000 31,646
31,646
Health Care Providers &
Services 1.0%
AmerisourceBergen 650,000 38,857
38,857
Pharmaceuticals 3.8%
Bristol-Myers Squibb 1,032,000 25,284
Merck 806,000 38,285
Schering-Plough 1,512,000 27,942
Wyeth 1,383,000 50,009
141,520
Total Health Care 212,023
INDUSTRIALS & BUSINESS
SERVICES 8.3%
Aerospace & Defense 2.1%
Honeywell International 761,000 27,876
Lockheed Martin 930,000 48,434
76,310
Air Freight & Logistics 1.4%
Ryder System 1,310,000 52,492
52,492
Commercial Services &
Supplies 1.7%
R.R. Donnelley 300,000 9,906
ServiceMaster 2,485,000 30,615
Waste Management 750,000 22,988
63,509
Industrial Conglomerates 1.7%
3M 252,000 22,682
Tyco International 1,263,000 41,856
64,538
Road & Rail 1.4%
Burlington Northern Santa Fe 858,000 30,090
CSX 680,000 22,283
52,373
Total Industrials & Business
Services 309,222
INFORMATION TECHNOLOGY 1.3%
Computers & Peripherals 0.7%
Hewlett-Packard 1,221,000 25,763
25,763
IT Services 0.4%
Electronic Data Systems 750,000 14,363
14,363
Semiconductor & Semiconductor
Equipment 0.2%
Texas Instruments 335,000 8,100
8,100
Total Information Technology 48,226
MATERIALS 11.0%
Chemicals 4.4%
Agrium 1,238,100 18,014
Dow Chemical 340,000 13,838
DuPont 950,000 42,199
Great Lakes Chemical 830,000 22,460
Octel ! 990,000 26,067
Potash Corp./Saskatchewan 440,000 42,636
165,214
Containers & Packaging 0.1%
Longview Fibre * 144,200 2,124
2,124
Metals & Mining 5.1%
Alcoa 430,000 14,203
Newmont Mining 2,295,000 88,954
Nucor 745,000 57,186
Phelps Dodge * 362,000 28,059
188,402
Paper & Forest Products 1.4%
Bowater 570,000 23,706
Potlatch 710,000 29,565
53,271
Total Materials 409,011
TELECOMMUNICATION SERVICES 2.3%
Diversified Telecommunication
Services 2.3%
Qwest Communications International * 8,310,000 29,833
Sprint 1,335,000 23,496
Verizon Communications 880,000 31,847
Total Telecommunication Services 85,176
UTILITIES 5.3%
Electric Utilities 3.7%
FirstEnergy 1,376,946 51,512
Pinnacle West Capital 296,000 11,955
PPL 320,572 14,714
TXU 805,000 32,611
Unisource Energy 1,039,000 25,819
136,611
Gas Utilities 0.4%
NiSource 772,000 15,919
15,919
Multi-Utilities &
Unregulated Power 1.2%
Duke Energy 2,195,000 44,536
44,536
Total Utilities 197,066
Total Common Stocks
(Cost $1,729,921) 2,327,887
CONVERTIBLE PREFERRED STOCKS 6.6%
Amerada Hess 270,000 19,520
Baxter International 55,000 3,133
Conseco * 360,000 9,688
El Paso Energy Capital Trust I 124,300 3,474
Ford Motor Company Capital Trust II 435,000 23,821
Genworth Financial * 718,000 20,307
Hercules Trust II 37,525 28,894
IMC Global 176,000 16,289
Newell Financial Trust I 420,000 18,693
Owens-Illinois 325,000 10,923
Scottish RE Group 560,000 16,279
Travelers Property Casualty 986,400 23,476
Unocal Capital Trust 435,000 22,674
UnumProvident 110,000 3,678
UnumProvident !!*@ 337,500 8,372
Xl Capital Ltd 635,000 16,123
Total Convertible Preferred Stocks
(Cost $218,274) 245,344
PREFERRED STOCKS 0.0%
Entergy-GSU 12,332 659
Pacific Gas & Electric 19,000 477
Southern California Edison 5,000 491
Total Preferred Stocks (Cost $874) 1,627
CONVERTIBLE BONDS 9.2%
America Online, Zero Coupon,
12/6/19 18,000,000 11,431
Amerisource Health Corp, 5.00%,
12/1/07 10,500,000 12,377
Corning, Zero Coupon,
11/8/15 38,500,000 30,358
Crown Castle International, 4.00%,
7/15/10 ! 11,200,000 18,060
Delta Air Lines
144A, 2.875%, 2/18/24 35,500,000 23,385
8.00%, 6/3/23 5,000,000 2,850
Duane Reade, 2.148%, 4/16/22 9,215,000 5,253
GAP, 144A, 5.75%, 3/15/09 6,000,000 9,383
King Pharmaceuticals, 2.75%, 11/15/21 16,700,000 15,476
Liberty Media, Class B, 3.25%, 3/15/31 21,700,000 19,148
Loews, 3.125%, 9/15/07 24,100,000 23,031
Lowes, LYONs, 144A, 2/16/21 3,500,000 3,024
Lucent Technologies, 8.00%, 8/1/31 27,700,000 31,216
Oak Industries, 4.875%, 3/1/08 2,800,000 2,912
Radian Group, 2.25%, 1/1/22 7,500,000 7,690
Red Hat, 144A, 0.50%, 1/15/24 12,978,000 14,619
Roche Holdings, LYONs, 144A, 7/25/21 86,000,000 52,244
Scottish RE Group, 4.50%, 12/1/22 1,453,000 1,771
Selective Insurance, 1.616%, 9/23/32 15,400,000 8,532
Teck, 3.75%, 7/15/06 18,600,000 17,903
Tyco International
Class A, 144A, 2.75%, 1/15/18 8,250,000 12,368
Class B, 144A, 3.125%, 1/15/23 4,125,000 6,684
USF&G, Zero Coupon, 3/3/09 15,550,000 12,612
Total Convertible Bonds
(Cost $314,004) 342,327
CORPORATE BONDS 0.4%
Potlatch, 10.00%, 7/15/11 3,000,000 3,330
XM Satellite Radio
12.00%, 6/15/10 3,341,000 3,826
STEP, 0%, 12/31/09 5,660,442 5,321
Total Corporate Bonds
(Cost $11,397) 12,477
SHORT-TERM INVESTMENTS 20.7%
Money Market Fund 20.7%
T. Rowe Price Reserve
Investment Fund, 1.16% #! 770,709,339 770,709
Total Short-Term Investments
(Cost $770,709) 770,709
Total Investments in Securities
99.6% of Net Assets
(Cost $3,045,179) $ 3,700,371
--------------------
(1) Denominated in U.S. dollar unless otherwise noted
# Seven-day yield
* Non-income producing
! Affiliated company - See Note 2.
!! Security contains restrictions as to public resale pursuant to the
Securities Act of 1933 and related rules - total value of such securities
at period-end amounts to $8,372 and represents 0.2% of net assets
@ Valued by the T. Rowe Price Valuation Committee, established by the fund's
Board of Directors
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 value of such securities at
period-end amounts to $121,707 and represents 3.3% of net assets
ADS American Depository Shares
GBP British pound
LYONs Liquid Yield Option Notes
REIT Real Estate Investment Trust
STEP Stepped coupon bond for which the coupon rate of interest will adjust on
specified future date(s)
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Capital Appreciation Fund
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Certified Semiannual Report (Unaudited) June 30, 2004
STATEMENT OF ASSETS AND LIABILITIES
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(In thousands except shares and per share amounts)
Assets
Investments in securities, at value
Affiliated companies (cost $797,001) $ 814,836
Other companies (cost $2,248,178) 2,885,535
Total investments in securities 3,700,371
Other assets 18,996
Total assets 3,719,367
Liabilities
Total liabilities 3,908
NET ASSETS $ 3,715,459
--------------------
Net Assets Consist of:
Undistributed net investment
income (loss) $ 23,556
Undistributed net realized gain (loss) 62,825
Net unrealized gain (loss) 655,192
Paid-in-capital applicable to
201,915,754 shares of no par
value capital stock outstanding;
unlimited shares authorized 2,973,886
NET ASSETS $ 3,715,459
--------------------
NET ASSET VALUE PER SHARE $ 18.40
--------------------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Capital Appreciation Fund
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Certified Semiannual Report (Unaudited)
STATEMENT OF OPERATIONS
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($ 000s)
6 Months
Ended
6/30/04
Investment Income (Loss)
Income
Dividend $ 29,208
Interest 7,373
Total income 36,581
Expenses
Investment management 10,161
Shareholder servicing 2,510
Registration 145
Custody and accounting 102
Prospectus and shareholder reports 94
Legal and audit 9
Trustees 5
Miscellaneous 2
Total expenses 13,028
Expenses paid indirectly (3)
Net expenses 13,025
Net investment income (loss) 23,556
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 50,814
Foreign currency transactions (48)
Net realized gain (loss) 50,766
Change in net unrealized gain (loss) on securities 92,310
Net realized and unrealized gain (loss) 143,076
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 166,632
--------------------
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Capital Appreciation Fund
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Certified Semiannual Report (Unaudited)
STATEMENT OF CHANGES IN NET ASSETS
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($ 000s)
6 Months Year
Ended Ended
6/30/04 12/31/03
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 23,556 $ 41,282
Net realized gain (loss) 50,766 25,902
Change in net unrealized gain (loss) 92,310 473,579
Increase (decrease) in net
assets from operations 166,632 540,763
Distributions to shareholders
Net investment income -- (42,429)
Net realized gain -- (9,792)
Decrease in net assets from
distributions -- (52,221)
Capital share transactions *
Shares sold 892,393 966,031
Distributions reinvested -- 49,785
Shares redeemed (285,401) (415,757)
Increase (decrease) in net assets
from capital share transactions 606,992 600,059
Net Assets
Increase (decrease) during period 773,624 1,088,601
Beginning of period 2,941,835 1,853,234
End of period $ 3,715,459 $ 2,941,835
-----------------------------------
(Including undistributed net
investment income of $23,556
at 6/30/04 and $0 at 12/31/03)
*Share information
Shares sold 49,829 62,005
Distributions reinvested -- 2,923
Shares redeemed (15,981) (27,232)
Increase (decrease) in
shares outstanding 33,848 37,696
The accompanying notes are an integral part of these financial statements.
T. Rowe Price Capital Appreciation Fund
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Certified Semiannual Report (Unaudited) June 30, 2004
NOTES TO FINANCIAL STATEMENTS
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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Capital Appreciation Fund (the fund) is registered under the
Investment Company Act of 1940 (the 1940 Act) as a diversified, open-end
management investment company and commenced operations on June 30, 1986. The
fund seeks maximum long-term capital appreciation by investing primarily in
common stocks, and it may also hold fixed-income and other securities to help
preserve principal value in uncertain or declining markets.
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. 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, for certain markets, the official closing price at
the time the valuations are made, except for OTC Bulletin Board securities,
which are valued at the mean of the latest 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 latest
bid and asked prices for domestic securities and the last quoted sale price for
international securities.
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 valued
at amortized cost in local currency, which approximates fair value when combined
with accrued interest.
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 Trustees.
Most foreign markets close before the close of trading on the NYSE. If the fund
determines that developments between the close of a foreign market and the close
of the NYSE will, in its judgment, materially affect the value of some or all of
its portfolio securities, which in turn will affect the fund's share price, the
fund will adjust the previous closing prices to reflect the 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 Trustees. A
fund may also fair value securities in other situations, such as when a
particular foreign market is closed but the fund is open. In deciding whether to
make fair value adjustments, the fund reviews a variety of factors, including
developments in foreign markets, the performance of U.S. securities markets, and
the performance of instruments trading in U. S. markets that represent foreign
securities and baskets of foreign securities. The fund uses outside pricing
services to provide it with closing market prices and information used for
adjusting those prices. The fund cannot predict how often it will use closing
prices and how often it will adjust those prices. As a means of evaluating its
fair value process, the fund routinely compares closing market prices, the next
day's opening prices in the same markets, and adjusted prices.
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 asked 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.
Rebates and Credits
Subject to best execution, the fund may direct certain security trades to
brokers who have agreed to rebate a portion of the related brokerage commission
to the fund in cash. Commission rebates are included in realized gain on
securities in the accompanying financial statements and totaled $41,000 for the
six months ended June 30, 2004. Additionally, the fund earns credits on
temporarily uninvested cash balances at the custodian that reduce the fund's
custody charges. Custody expense in the accompanying financial statements is
presented before reduction for credits, which are reflected as expenses paid
indirectly.
Investment Transactions, Investment Income, and Distributions
Income and expenses are recorded on the accrual basis. Premiums and discounts on
debt securities are amortized for financial reporting purposes. Dividends
received from mutual fund investments 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. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Distributions to shareholders are
recorded on the ex-dividend date. Income distributions are declared and paid on
an annual basis. Capital gain distributions, if any, are declared and paid by
the fund, typically on an annual basis.
Other
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.
Affiliated Companies
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. At June 30, 2004, the
value of affiliated companies totaled $814,836,000, representing 22.0% of the
value of the fund's investments in securities. For the six months then ended,
$3,721,000 (12.6%) of dividend income and $225,000 (3.1%) of interest income,
reflected in the accompanying financial statements resulted from the fund's
transactions with affiliated companies.
Other
Purchases and sales of portfolio securities, other than short-term and U.S.
government securities, aggregated $641,743,000 and $195,372,000, respectively,
for the six months ended June 30, 2004. Sales of U.S. government securities
aggregated $61,000,000 for the six months ended June 30, 2004.
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 June
30, 2004.
At June 30, 2004, the cost of investments for federal income tax purposes was
$3,045,179,000. Net unrealized gain aggregated $655,192,000 at period-end, of
which $716,326,000 related to appreciated investments and $61,134,000 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 June 30, 2004,
the effective annual group fee rate was 0.31%, and investment management fee
payable totaled $1,810,000.
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 price 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 fund.
Expenses incurred pursuant to these service agreements totaled $1,836,000 for
the six months ended June 30, 2004, of which $272,000 was payable at period-end.
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 to mutual funds, trusts,
and other accounts managed by Price Associates and/or its affiliates, and are
not available for direct purchase by members of the public. The Reserve Funds
pay no investment management fees. During the six months ended June 30, 2004,
dividend income from the Reserve Funds totaled $3,662,000.
On October 1, 2002, Price Associates paid the fund $1.3 million to fully
reimburse the effect of not exercising a put option on a convertible bond. The
payment increased total return for the year ended December 31, 2002 by 0.07%.
T. Rowe Price Capital Appreciation Fund
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Certified Semiannual Report
INFORMATION ON PROXY VOTING
- --------------------------------------------------------------------------------
A description of the policies and procedures that the T. Rowe Price Capital
Appreciation 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.
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. Schedule of Investments.
Not applicable. The complete schedule of investments is included in Item 1 of
this Form N-CSR.
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. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. 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 11. 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) 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.
(3) Written solicitation to repurchase securities issued by closed-end
companies: not applicable.
(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 Capital Appreciation Fund
By: /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date: August 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: August 16, 2004
By: /s/ Joseph A. Carrier
Joseph A. Carrier
Principal Financial Officer
Date: August 16, 2004