T. Rowe Price Capital Appreciation Fund, 100 East Pratt Street, Baltimore,
Maryland 21202
George J. Collins
Chairman
April 3, 1997
PLEASE MAIL YOUR PROXY CARD TODAY
Dear Fellow Shareholder:
We are writing to ask you to vote as soon as possible on a number of matters
affecting the Capital Appreciation Fund. In early March, we mailed proxy
materials to you, but, to date, we have not received your signed proxy card.
The principal matter to be voted on is the Trustees' recommendation to phase
out the performance fee adjustment that has existed since the fund's inception
in 1986. The history of this adjustment was detailed in the information you
received earlier. In summary, the Trustees feel that a fee based on
performance relative to the S&P 500 is not consistent with the fund's
risk-averse investment approach of the past eight years -- an approach
shareholders expect and rely upon. During the 18-month phase-out period, fee
adjustments will be made only if they decrease the fee payable to T. Rowe
Price Associates.
We appreciate your prompt attention to this matter, which can help save
additional expenses for your fund. A proxy card and postpaid envelope are
enclosed for your convenience.
Sincerely,
George J. Collins
Enclosure
