<PAGE>
Annual Report
Capital
Appreciation
Fund
-----------------
December 31, 1998
-----------------
[LOGO OF T. ROWE PRICE APPEARS HERE]
<PAGE>
Report Highlights
-----------------------------------------------------------------------------
Capital Appreciation Fund
. Recovering from a sharp correction over the summer, the S&P 500 Stock Index
closed the year with an impressive gain.
. The market's advance was led by a handful of large companies; many sectors
did not participate.
. Although the fund held up well during the correction, its returns for the
6- and 12-month periods significantly lagged the S&P 500.
. Performance reflected our conservative strategy, with about 51% of assets
in common stocks and 26% in convertibles.
. The fund's consistent approach should be rewarding in the less favorable
economic environment we expect in 1999.
<PAGE>
FELLOW SHAREHOLDERS
The ayes have it -- referring not to Iraq, impeachment, index funds, Internet
stocks, or even irrational exuberance but more broadly to the American public's
overwhelming vote of confidence in the economy and the markets. Capital
Appreciation Fund's caution was clearly a minority opinion as the S&P 500 Stock
Index advanced strongly in 1998. When equities did drop sharply for 10 weeks
beginning in July, our lonely stance looked terrific. But with the powerful
year-end rally, the rather humbling comparisons you see below materialized.
- ------------------------
Performance Comparison
- --------------------------------------------------------------------------------
Periods Ended 12/31/98 6 Months 12 Months
- --------------------------------------------------------------------------------
Capital Appreciation Fund -0.07% 5.77%
................................................................................
S&P 500 9.22 28.57
................................................................................
Lipper Capital Appreciation
Funds Average 5.33 19.96
................................................................................
Your fund held up better than the broad market in the summer sell-off, but for
most of the year our conservative strategy was effectively ruled "out of order"
by U.S. investors. Worse, sectors such as energy and gold that we believe
represent excellent long-term value were virtually blacklisted.
YEAR-END DISTRIBUTIONS
Your Board of Trustees declared an income distribution of $0.50 per share, a
short-term capital gain of $0.21 per share, and a long-term capital gain of
$1.61 per share, all paid on December 17 to shareholders of record on December
15. You should already have received a check or statement reflecting these
distributions as well as your Form 1099-DIV reporting them for tax purposes.
MARKET Environment
For the eighth straight year, stock prices advanced, tying the longevity record
set in 1989. More surprisingly, the S&P 500 gained more than
1
<PAGE>
- -----------------------------------------------------------
Preparing For The Year 2000
- --------------------------------------------------------------------------------
The Year 2000 draws closer every day, and it holds special meaning beyond the
arrival of a new millennium. The issue for investors is that many computer
programs throughout the world use two digits instead of four to identify the
year and may assume the next century starts with 1900. If these programs are not
modified, they will not be able to correctly handle the century change when the
year changes from "99" to "00" on January 1, 2000, and they will no longer be
able to perform necessary functions. The Year 2000 issue affects all companies
and organizations.
T. Rowe Price has been taking steps to assure that its computer systems and
processes are capable of functioning in the Year 2000. Detailed plans for
remediation efforts have been developed and are currently being executed.
OUR PLAN OF ACTION
We began to address these issues several years ago by requiring that all new
systems process and store four-digit years. All critical systems have been
reprogrammed (including business applications required to service our customers
and processing infrastructure necessary to ensure the integrity of customer data
and investments), and they are currently being tested. Because we exchange data
electronically with customers and vendors, we are working with them to assess
the adequacy of their own compliance efforts. Our goal is to ensure the
continuation of the same level of service to all our mutual fund shareholders
and clients after December 31, 1999.
We are asking all vendors and companies we do business with for a Year 2000
compliance status, with the expectation that some organizations will not be able
to modify their interface files prior to December 31, 1999. In addition, we are
scheduling tests for critical vendors and companies that claim Year 2000
compliance to ensure that time-related data and calculations function properly
as we move into the next century.
SMOOTH TRANSITION PLANNED
We believe our programs and initiatives will provide a smooth transition into
the next millennium. We are assessing all systems providing products or services
to our retail mutual fund shareholders, retirement plan sponsors, and
participants, and we have modified them where necessary for the Year 2000.
The Securities Industry Association (SIA) is coordinating Year 2000 testing to
assure that securities markets, clearing corporations, depositories, and third
party service providers can send, receive, and process files and transactions
accurately. In late July 1998, the SIA completed a beta test of Year 2000
readiness. The test was considered successful in terms of transactions completed
and will serve as the basis for the SIA's industry-wide approach. During October
1998, T. Rowe Price completed its beta test of Year 2000 readiness with the SIA
and is ready for the industry-wide test that is scheduled for March and April
1999.
For a more detailed discussion of our Year 2000 effort, as well as continuing
updates on our progress, please check our Web site (www.troweprice.com).
2
<PAGE>
20% for the fourth year in a row, doubling the prior two-year record for such
gains. Good news on the economy and interest rates underpinned this performance.
Gross domestic product advanced at an above-average rate in '98, although
corporate profits may have been flat. Despite tight labor markets (oh, to be a
kid with computer skills!), wage gains were reasonable. Inflation was negligible
as weak economies overseas, especially in Asia, depressed global commodity
prices, and those same economies used spare capacity to pump cheap goods into
the United States.
. . .INVESTORS CAST THEIR VOTES FOR THE GIANTS IN 1998.
This positive scenario was interrupted in midsummer by an old-fashioned
financial scare: a debt default and financial collapse in Russia, and disastrous
trading losses by a major hedge fund partnership. These were the triggers, but
we have a sneaking suspicion that the long bull market had caused investors to
become a little careless and more vulnerable to unexpected bad news. (As an
aside, it appears that the hedge fund investors lost three years' worth of 35%
compound annual returns in only one month.) In any event, the Fed responded
admirably by cutting rates in three small steps between late September and early
November and also by "persuading" major investment organizations to make credit
available to the otherwise doomed hedge fund. Hats off yet again to Alan
Greenspan. Foreign stock markets were mixed: Europe was strong but Japan and
most emerging markets were weak despite some late-year rebounds.
There were, of course, negatives here in the U.S. in addition to the financial
scare. The largest 50 companies, by market value, generated nearly all of the
stock market's advance; smaller-capitalization stocks, many of them actually
very large companies, were basically unchanged. Whether attracted by the pricing
power or accounting "flexibility" of large entities or by the rash of
mega-mergers, investors cast their votes for the giants in 1998. Volatility, as
defined by days when market prices changed by 1% or more, continued at last
year's high level. Such volatility has often preceded market shifts. Most
disturbing of the negative developments was the decline in the economy's saving
rate to near zero. Americans appeared to be on a spending spree. Finally, in a
subjective vein, we were distressed that the stock market seems to have
permeated every measurement of success in our society. Popular perception
notwithstanding, a corporate CEO can be doing a good job even if the company's
stock price falls.
3
<PAGE>
PORTFOLIO HIGHLIGHTS
Our assembly of asset classes -- common stocks, convertibles, preferred
stocks, bonds, and reserves -- shifted only modestly over the year. The
changes were, as usual, driven by individual security price changes and
other opportunities rather than any grand strategy. Nevertheless, within
each asset class, particularly the common stocks and convertibles, there
was a great deal of activity. Two of our long-time top five holdings,
Genentech and Automatic Data Processing, were eliminated during the year.
When we initially purchased them, both had very limited risk of loss and
good potential for gain. At today's higher prices, however, we believed
that the relationship of risk and reward, while still marginally favorable,
no longer justified ownership. Positions established during the past six
months included convertibles issued by Loews, Union Pacific Capital Trust,
France Telecom, and Hilton Hotels. With all four of these, we give up a
portion of any future appreciation in return for contractual guarantees
that should significantly limit possible losses. Most of our common stock
purchases supplemented existing holdings, although we also established some
new positions, including Octel, Imperial Chemical, Circus Circus, and
Canadian Pacific.
- --------------------------
Security Diversification
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Common Stocks 51%
Convertibles 25%
Bonds 12%
Reserves* 8%
Preferred Stocks 4%
*Includes bonds maturing within one year. Based on net assets as of
12/31/98.
The table on page 8 breaks out the contribution of various individual
holdings to the fund's change in net asset value over the past six and 12
months. Besides the success of Genentech and Automatic Data, we were
especially pleased with the performance of media holdings such as
Washington Post and Time Warner. The media and communications industry has
been a mainstay of the portfolio for the past 10 years; not only were our
investments initially purchased at a discount to their perceived underlying
value, but that value has steadily increased, pulling up their share
prices. Niagara Mohawk, our number one 1998 contributor, continued a long
string of portfolio successes in the relatively low-risk electric utility
industry.
4
<PAGE>
Unfortunately, although perhaps inevitably given the broad market's
dynamics, this year also featured some negative contributors. Natural
resources -- energy, gold, or forest-related -- occupied the cellar. (This
was particularly galling given my long involvement with these industries.)
I remain convinced that the fund's specific holdings, including Amerada
Hess, Mitchell Energy & Development, Newmont Mining, and MacMillan Bloedel
are attractively positioned, but I have been forced to recognize that the
expected payoff has been tabled for the time being. As an aside that
illustrates the extremes of current investor enthusiasm, we note that
Microsoft has a market value greater than the combined total of all the
metals, forest, and chemical companies in the S&P 500. This does not seem
reasonable!
FUND OPERATING GUIDELINES
Three decades of investing experience have convinced me that shareholders
achieve considerably lower returns over time than those of the funds they
own. Why? Because they are whipsawed by emotion. Greed causes them to buy
funds that have soared, while fear causes them to sell when their holdings
have experienced painful losses. Our strategy in managing Capital
Appreciation Fund recognizes the importance of dampening these inevitable
mood swings. Of course, none of us has a problem dealing with the euphoria
of a rising market, but, realistically, if we are to avoid or at least
mitigate the gloom of falling prices, we must prepare for pain when the
outlook seems perfect. This may mean giving up some returns in the good
times. Since the fund's inception, we have followed a reasonably simple set
of operating guidelines that help us manage the portfolio and should help
shareholders understand our strategy. These personal bylaws make this fund
significantly different from most, if not all, others and are well worth
repeating.
. We work as hard to reduce risk as to maximize gain.
. Attractively priced value stocks (as opposed to growth stocks) are
our investment of choice.
. We will make short-term, opportunistic investments as well as more
typical long-term ones.
. No type of investment is off-limits (bonds, stocks, convertibles,
etc.) if the risk/reward characteristics are attractive.
. Our decisions reflect case-by-case investment judgment; we have no
all-encompassing formula.
5
<PAGE>
. Our asset allocations result largely from individual security
decisions, not vice versa.
. In general, we favor large-cap stocks over small-cap, because we
like to take big positions, making the most of our intensive
analysis of individual securities.
VALUATION
In past shareholder reports we have commented on the market's high
valuation levels, and we believe they merit even more attention now. Let's
begin with a definition. Valuation is the creation and comparison of
financial ratios that involve stock prices. But the process of establishing
and comparing valuations is not as objective as that statement makes it
seem. First, which ratios should be used? Second, valuation at any given
time reflects particular circumstances, but corporations, individually and
collectively, change over time; they are not immutable substances like
gold. Third, corporate managers of financial performance may be more or
less motivated to mislead investors given the large amounts of money at
stake. Fourth, the financial environment changes: today's lower interest
rates compared with recent history mitigate the extreme differences between
the time periods shown in the table below.
- ------------------------------
Estimated S&P 500 Valuations
- --------------------------------------------------------------------------------
(Based on Leuthold data)
Average
12/31/98 12/31/88 Since 1960
- --------------------------------------------------------------------------------
Price/Earnings 28X 15X 18X
................................................................................
Price/Book Value 5.0 2.3 2.0
................................................................................
Price/Sales 1.8 0.7 0.8
................................................................................
Dividend Yield 1.4% 3.7% 3.5%
................................................................................
Can we conclude from this data that stocks are richly valued? Yes. Can we
conclude that stock prices will fall? No. But averages by their very nature
are composed of both higher and lower numbers, and we know that at today's
valuation levels there is little room for disappointment in the key factors
driving stock prices: the economy, which includes corporate earnings, and
interest rates. Valuation, with its admitted flaws, remains the major
reason for our cautious stock market strategy.
6
<PAGE>
OUTLOOK
We were surprised that the economy in 1998 could be so strong while inflation
stayed low and interest rates fell. We seriously doubt this will happen again.
More likely, in our view, is a modest economic slowing and perhaps lower
interest rates -- a benign but not highly positive financial market outlook.
Some may disagree with this forecast, but it seems reasonable to me.
Your fund is positioned for this scenario and the valuation concerns previously
mentioned. Should stock prices fall, we would expect the fund to do better than
the broad market. In the third quarter decline, the fund dropped only about
one-third as much as the market. On the other hand, if stocks soar for an
unprecedented fifth straight year, our results are likely to lag. Maintaining an
investment discipline is easy when market trends flow your way, but when they
don't, it can be tempting to make modifications based on recent events. However,
we see no reason to overturn a strategy that has served investors well over
time. We like what we own and continue to find attractive securities to
purchase. Our holdings should have good potential for gain even if the future is
gloomier than anticipated. In closing, we'd like to thank each of you for your
investment in the fund and confidence in T. Rowe Price.
Respectfully submitted,
/s/ Richard P. Howard
Richard P. Howard
President and Chairman of the Investment Advisory Committee
January 19, 1999
7
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
- -----------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
CONTRIBUTIONS TO THE CHANGE IN NET ASSET VALUE PER SHARE
6 Months Ended 12/31/98
Ten Best Contributors
- ---------------------------------------------------------
Philip Morris 8c
.........................................................
Loews * 7
.........................................................
Corning 4
.........................................................
Willis-Corroon ** 3
.........................................................
Niagara Mohawk 3
.........................................................
Smith & Nephew 2
.........................................................
U.S. Cellular 2
.........................................................
Unicom 2
.........................................................
Hanson PLC 2
.........................................................
Time Warner 2
- ---------------------------------------------------------
Total 35c
Ten Worst Contributors
- ---------------------------------------------------------
Rouse -6c
.........................................................
Newmont Mining 5
.........................................................
Amerada Hess 5
.........................................................
Murphy Oil 5
.........................................................
Polaroid 4
.........................................................
Reebok 4
.........................................................
New York Times 4
.........................................................
Chris-Craft 3
.........................................................
Petrie Stores Liquidation Trust 3
.........................................................
Texaco 3
- ---------------------------------------------------------
Total -42c
12 Months Ended 12/31/98
Ten Best Contributors
- ---------------------------------------------------------
Niagara Mohawk 13c
.........................................................
Grand Metropolitan 9
.........................................................
Union Texas Petroleum 8
.........................................................
Time Warner ** 7
.........................................................
Genentech 7
.........................................................
Washington Post 6
.........................................................
Unicom 6
.........................................................
Waste Management 5
.........................................................
FirstEnergy/Cleveland Electric 5
.........................................................
Automatic Data Processing ** 5
- ---------------------------------------------------------
Total 71c
Ten Worst Contributors
- ---------------------------------------------------------
Newmont Mining -9c
.........................................................
Polaroid 6
.........................................................
Murphy Oil 5
.........................................................
Rouse 5
.........................................................
Amerada Hess 5
.........................................................
Reebok 4
.........................................................
Petrie Stores Liquidation Trust 3
.........................................................
Loews 3
.........................................................
Toys "R" Us 3
.........................................................
Inco 3
- ---------------------------------------------------------
Total -46c
* Position added
** Position eliminated
8
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
- ----------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
PERFORMANCE CONTRIBUTIONS
Cents-Per-Share Percent of
6 Months Ended 12/31/98 Contribution Net Assets
Sector 12/31/98 12/31/98
- ---------------------------------------------------------------------------
Basic Materials -9c 8%
...........................................................................
Business Services and Transportation - 4
...........................................................................
Capital Equipment - -
...........................................................................
Consumer Cyclicals -6 5
...........................................................................
Consumer Nondurables 9 7
...........................................................................
Consumer Services -15 16
...........................................................................
Energy -21 10
...........................................................................
Financial 9 10
...........................................................................
Process Industries -1 7
...........................................................................
Technology 1 1
...........................................................................
Utilities 9 11
...........................................................................
U.S. Government/Options -1 12
...........................................................................
Miscellaneous -1 1
...........................................................................
Reserves and Income 23 8
- ---------------------------------------------------------------------------
Total Portfolio -3c 100%
9
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
- ----------------------
Portfolio Highlights
- --------------------------------------------------------------------------------
TWENTY-FIVE LARGEST HOLDINGS
Percent of
Net Assets
12/31/98
- ---------------------------------------------------------------------
Tennessee Valley Authority 6.2%
.....................................................................
Loews 5.7
.....................................................................
Amerada Hess 4.1
.....................................................................
FirstEnergy/Cleveland Electric 3.4
.....................................................................
Rouse 3.1
- ---------------------------------------------------------------------
Washington Post 3.0
.....................................................................
Niagara Mohawk 2.8
.....................................................................
Homestake Mining 2.4
.....................................................................
Times Mirror 2.3
.....................................................................
Inco 2.0
- ---------------------------------------------------------------------
New York Times 1.8
.....................................................................
Chris-Craft 1.8
.....................................................................
Philip Morris 1.8
.....................................................................
U.S. Cellular LYONs 1.7
.....................................................................
Lonrho Africa 1.6
- ---------------------------------------------------------------------
MacMillan Bloedel 1.6
.....................................................................
Murphy Oil 1.5
.....................................................................
Chiron 1.5
.....................................................................
Kemper 1.5
.....................................................................
Texaco 1.4
- ---------------------------------------------------------------------
Great Lakes Chemical 1.4
.....................................................................
Newmont Mining 1.4
.....................................................................
Union Pacific Capital Trust 1.4
.....................................................................
Kansas City Power & Light 1.3
.....................................................................
France Telecom 1.1
- ---------------------------------------------------------------------
Total 57.8%
10
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
- ------------------------
Performance Comparison
- --------------------------------------------------------------------------------
This chart shows the value of a hypothetical $10,000 investment in the fund over
the past 10 fiscal year periods or since inception (for funds lacking 10-year
records). The result is compared with a broad-based average or index. The index
return does not reflect expenses, which have been deducted from the fund's
return.
CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
As of 12/31/98
[LINE GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
Date MCSI EAFE Index Emerging Markets Stock Fund
12/31/88 $10,000 $10,000
12/31/89 $13,169 $12,142
12/31/90 $12,760 $11,990
12/31/91 $16,647 $14,579
12/31/92 $17,916 $15,944
12/31/93 $19,721 $18,441
12/31/94 $19,982 $19,141
12/31/95 $27,491 $23,461
12/31/96 $33,803 $27,407
12/31/97 $45,081 $31,847
12/31/98 $57,958 $33,686
- --------------------------------------
Average Annual Compound Total Return
- --------------------------------------------------------------------------------
This table shows how the fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
Periods Ended 12/31/98 1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------
Capital Appreciation Fund 5.77% 12.82% 12.81% 12.91%
.......................................................................
Investment return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
11
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
- ----------------------
Financial Highlights For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Year
Ended
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
NET ASSET VALUE
Beginning of period $ 14.71 $ 14.47 $ 13.67 $ 12.10 $ 12.66
................................................
Investment activities
Net investment income 0.49 0.50 0.60 0.43 0.35
Net realized and
unrealized gain (loss) 0.34 1.82 1.70 2.30 0.13
................................................
Total from
investment activities 0.83 2.32 2.30 2.73 0.48
................................................
Distributions
Net investment income (0.50) (0.50) (0.60) (0.44) (0.35)
Net realized gain (1.82) (1.58) (0.90) (0.72) (0.69)
................................................
Total distributions (2.32) (2.08) (1.50) (1.16) (1.04)
................................................
NET ASSET VALUE
End of period $ 13.22 $ 14.71 $ 14.47 $ 13.67 $ 12.10
------------------------------------------------
Ratios/Supplemental Data
Total return(+) 5.77% 16.20% 16.82% 22.57% 3.80%
................................................................................
Ratio of expenses to
average net assets 0.62% 0.64% 0.76% 0.97% 1.10%
................................................................................
Ratio of net investment
income to average
net assets 3.04% 3.17% 4.07% 3.28% 2.91%
................................................................................
Portfolio turnover rate 52.6% 48.3% 44.2% 47.0% 43.6%
................................................................................
Net assets, end of period
(in millions) $ 1,004 $ 1,060 $ 960 $ 864 $ 655
................................................................................
(+) 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.
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
December 31, 1998
- -------------------------
Statement of Net Assets Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Common Stocks 51.2%
FINANCIAL 7.2%
Bank and Trust 0.2%
Bank fuer International Zahlung (CHF) 288 $ 1,834
................................................................................
1,834
..............
Insurance 5.1%
Loews 455,000 44,704
................................................................................
Unitrin 93,000 6,638
................................................................................
51,342
..............
Financial Services 1.9%
Fund American Enterprises 64,500 9,034
................................................................................
Leucadia National 320,000 10,080
................................................................................
19,114
..............
Total Financial 72,290
..............
UTILITIES 7.2%
Electric Utilities 7.2%
FirstEnergy 720,000 23,445
................................................................................
Kansas City Power & Light 425,000 12,590
................................................................................
Nevada Power 54,500 1,417
................................................................................
Niagara Mohawk * 1,630,000 26,284
................................................................................
Unicom 220,000 8,484
................................................................................
Total Utilities 72,220
..............
CONSUMER NONDURABLES 4.5%
Food Processing 0.6%
McCormick 175,000 5,912
................................................................................
5,912
..............
Hospital Supplies/Hospital Management 0.9%
Smith & Nephew (GBP) 2,875,000 8,741
................................................................................
8,741
..............
Pharmaceuticals 0.2%
Schering-Plough 40,000 2,210
................................................................................
2,210
..............
13
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Health Care Services 0.4%
Aetna 55,000 $ 4,324
................................................................................
4,324
..............
Miscellaneous Consumer Products 2.4%
A. T. Cross (Class A) 108,000 581
................................................................................
Philip Morris 340,000 18,190
................................................................................
Reebok * 325,000 4,834
................................................................................
23,605
..............
Total Consumer Nondurables 44,792
..............
CONSUMER SERVICES 10.0%
General Merchandisers 0.5%
J.C. Penney 100,000 4,687
................................................................................
4,687
..............
Specialty Merchandisers 1.2%
Nine West * 10,000 156
................................................................................
Petrie Stores Liquidation Trust * 2,585,000 5,412
................................................................................
Toys "R" Us * 360,000 6,075
................................................................................
11,643
..............
Entertainment and Leisure 1.1%
Circus Circus * 510,000 5,833
................................................................................
Reader's Digest (Class A) 130,000 3,275
................................................................................
Reader's Digest (Class B) 81,300 1,961
................................................................................
11,069
..............
Media and Communications 7.2%
Chris-Craft * 385,000 18,552
................................................................................
Meredith 150,000 5,681
................................................................................
New York Times (Class A) 535,000 18,558
................................................................................
Washington Post (Class B) 52,000 30,053
................................................................................
72,844
..............
Total Consumer Services 100,243
..............
CONSUMER CYCLICALS 1.3%
Miscellaneous Consumer Durables 1.3%
Corning 215,000 9,675
................................................................................
Polaroid 210,000 3,924
................................................................................
Total Consumer Cyclicals 13,599
..............
14
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
CAPITAL EQUIPMENT 0.1%
Electrical Equipment 0.1%
Exide 75,000 $ 1,219
................................................................................
Total Capital Equipment 1,219
..............
BUSINESS SERVICES AND TRANSPORTATION 1.2%
Transportation Services 0.6%
Overseas Shipholding Group 340,000 5,461
................................................................................
5,461
..............
Railroads 0.6%
Canadian Pacific 325,000 6,135
................................................................................
6,135
..............
Total Business Services and Transportation 11,596
..............
ENERGY 9.7%
Exploration and Production 1.0%
Mitchell Energy & Development (Class A) 20,000 229
................................................................................
Mitchell Energy & Development (Class B) 810,000 9,416
................................................................................
9,645
..............
Integrated Petroleum - Domestic 7.3%
Amerada Hess 825,000 41,044
................................................................................
Atlantic Richfield 110,000 7,178
................................................................................
Kerr-McGee 65,000 2,486
................................................................................
Murphy Oil 365,000 15,056
................................................................................
Oryx Energy * 263,000 3,534
................................................................................
Unocal 140,000 4,086
................................................................................
73,384
..............
Integrated Petroleum - International 1.4%
Texaco 270,000 14,276
................................................................................
14,276
..............
Total Energy 97,305
..............
15
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
PROCESS INDUSTRIES 7.2%
Specialty Chemicals 3.2%
Great Lakes Chemical 355,000 $ 14,200
................................................................................
Imperial Chemical ADR 225,000 7,861
................................................................................
Octel * + 765,000 10,615
................................................................................
32,676
..............
Forest Products 3.1%
Domtar 1,225,000 7,197
................................................................................
Georgia Pac Timber 80,000 1,905
................................................................................
MacMillan Bloedel 1,600,000 15,800
................................................................................
Weyerhaeuser 115,000 5,843
................................................................................
30,745
..............
Building and Construction 0.9%
Hanson ADR 135,000 5,265
................................................................................
Johns Manville 245,000 4,027
................................................................................
9,292
..............
Total Process Industries 72,713
..............
BASIC MATERIALS 2.7%
Mining 2.7%
................................................................................
Bougainville Copper (AUD) 1,000,000 110
................................................................................
Homestake Mining 860,000 7,901
................................................................................
Lonrho (GBP) 800,000 4,360
................................................................................
Lonrho Africa (GBP) 575,000 516
................................................................................
Newmont Mining 780,000 14,089
................................................................................
Total Basic Materials 26,976
..............
Total Miscellaneous Common Stocks 0.1% 1,042
..............
Total Common Stocks (Cost $438,317) 513,995
..............
Preferred Stocks 3.7%
Cleveland Electric, (Series L), $1.88 Adj. 60,000 6,053
................................................................................
Cleveland Electric, (Series R), 8.80% 1,000 1,065
................................................................................
Cleveland Electric, (Series S), $90 3,000 3,195
................................................................................
Entergy-GSU (Series B) 36,330 1,826
................................................................................
Kemper, (Series E) 280,000 14,560
................................................................................
Niagara Mohawk, (Series A), Adj. 14,000 357
................................................................................
16
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Niagara Mohawk, (Series B), Adj. 24,625 $ 609
................................................................................
Niagara Mohawk, (Series C), Adj. 16,000 407
................................................................................
Miscellaneous Preferred Stocks 829
................................................................................
Total Preferred Stocks (Cost $25,306) 28,901
..............
Convertible Preferred Stocks 3.2%
Rouse (Series B), $3.00 520,000 22,555
................................................................................
Sealed Air (Series A), $2.00 75,100 3,858
................................................................................
Union Pacific Capital Trust, 6.25%, (144a) 125,000 5,809
................................................................................
Union Pacific Capital Trust, 6.25% 175,000 8,132
................................................................................
Total Convertible Preferred Stocks (Cost $42,063) 40,354
..............
Convertible Bonds 21.4%
Centocor, 4.75%, 2/15/05 $ 2,150,000 2,314
................................................................................
Chiron, (144a), 1.90%, 11/17/00 14,625,000 14,708
................................................................................
Clear Channel Communications, 2.625%, 4/1/03 2,000,000 2,158
................................................................................
Exide, (144a), 2.90%, 12/15/05 2,660,000 1,563
................................................................................
France Telecom, 2.00%, 1/1/04 11,000,000 11,124
................................................................................
Hilton Hotels, 5.00%, 5/15/06 8,250,000 7,600
................................................................................
Homestake Mining,
................................................................................
5.50%, 6/23/00 3,050,000 2,882
.............................................................................
Sub. Deb., (144a) 5.50%, 6/23/00 14,020,000 13,249
................................................................................
Inco, Deb. Notes,
................................................................................
5.75%, 7/1/04 19,500,000 16,819
.............................................................................
7.75%, 3/15/16 3,200,000 2,880
................................................................................
Loews, 3.125%, 9/15/07 15,000,000 12,183
................................................................................
LONRHO Finance, 6.00%, 2/27/04 GBP 8,000,000 11,464
................................................................................
Marriott International, LYONs, Zero Coupon, 3/25/11 $ 10,000,000 6,592
................................................................................
McKesson, Sub. Deb. Notes, 4.50%, 3/1/04 3,250,000 2,941
................................................................................
Motorola, Zero Coupon, 9/27/13 5,100,000 3,799
................................................................................
National Semiconductor, 6.50%, 10/1/02 7,520,000 6,561
................................................................................
News America, Gtd. Notes, Zero Coupon, 3/11/13 4,745,000 2,737
................................................................................
Nine West, 5.50%, 7/15/03 5,725,000 4,517
................................................................................
Ogden, Sub. Deb. Notes, 5.75%, 10/20/02 600,000 572
................................................................................
Oryx Energy, 7.50%, 5/15/14 850,000 848
................................................................................
Peninsular & Orient, 7.25%, 5/19/03 GBP 1,100,000 2,024
................................................................................
17
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Pep Boys, Sub. Notes,
Lyons, (144a), Zero Coupon, 9/20/11 $ 5,000,000 $ 2,600
.............................................................................
4.00%, 9/1/99 5,000,000 4,925
................................................................................
Phycor, 4.50%, 2/15/03 6,700,000 4,154
................................................................................
Potomac Electric Power, Deb. Notes, 5.00%, 9/1/02 7,850,000 7,614
................................................................................
Roche Holdings, LYONs, (144a), Zero Coupon, 5/6/12 12,000,000 6,420
................................................................................
Rouse, 5.75%, 7/23/02 8,150,000 8,405
................................................................................
Teck, 3.75%, 7/15/06 10,000,000 6,525
................................................................................
Thomas Nelson, (144a), 5.75%, 11/30/99 2,100,000 2,108
................................................................................
Times Mirror, Zero Coupon, 4/15/17 51,100,000 23,314
................................................................................
U.S. Cellular, LYONs, Zero Coupon, 6/15/15 42,000,000 17,380
................................................................................
Miscellaneous Convertible Bonds 2,164
................................................................................
Total Convertible Bonds (Cost $212,453) 215,144
..............
Corporate Bonds 1.4%
Bellsouth Telecommunications, Deb. Notes
5.85%, 11/15/45 7,000,000 7,080
................................................................................
Miscellaneous Corporate Bonds 6,593
................................................................................
Total Corporate Bonds (Cost $13,036) 13,673
..............
U.S. Government Obligations/
Agencies 13.8%
Federal National Mortgage Assn.
MTN, 5.37%, 2/7/01 5,000,000 5,046
.........................................................................
6.375%, 1/16/02 5,000,000 5,189
................................................................................
Tennessee Valley Authority
5.88%, 4/1/36 32,000,000 33,320
.........................................................................
5.98%, 4/1/36 10,000,000 10,250
.........................................................................
6.235%, 7/15/45 18,400,000 18,987
................................................................................
U.S. Treasury Notes
5.50%, 2/28/99 25,000,000 25,030
.........................................................................
5.875%, 2/15/00 25,000,000 25,325
.........................................................................
6.125%, 7/31/00 2,000,000 2,045
.........................................................................
6.25%, 4/30 - 10/31/01 8,000,000 8,322
.........................................................................
6.75%, 5/31/99 5,000,000 5,041
................................................................................
Total U.S. Government Obligations/
Agencies (Cost $136,600) 138,555
..............
18
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
Shares/Par Value
- --------------------------------------------------------------------------------
In thousands
Options Purchased 0.1%
Clear Channel Communications
Put, 1/16/99 @ $55.00 224 $ 64
.........................................................................
Put, 1/16/99 @ $60.00 76 49
................................................................................
IBM, Put, 1/16/99 @ $130.00 250 1
................................................................................
Pharmacia & Upjohn, Put, 1/16/99 @ $50.00 250 6
................................................................................
Reebok, Put, 1/16/99 @ $35.00 250 506
................................................................................
Schering Plough, Put, 2/20/99 @ $52.50 500 81
................................................................................
Time Warner, Put, 3/20/99 @ $50.00 700 48
................................................................................
Worldcom, Put, 1/16/99 @ $55.00 250 2
................................................................................
Total Options Purchased (Cost $1,835) 757
..............
Short-Term Investments 5.7%
Money Market Funds 5.7%
Reserve Investment Fund, 5.42% # 57,206,897 57,207
................................................................................
Total Short-Term Investments (Cost $57,207) 57,207
..............
19
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
Value
- --------------------------------------------------------------------------------
In thousands
Total Investments in Securities
100.5% of Net Assets (Cost $926,817) $ 1,008,586
Other Assets Less Liabilities (4,888)
.............
NET ASSETS $ 1,003,698
-------------
Net Assets Consist of:
Accumulated net investment income - net of distributions $ (301)
Accumulated net realized gain/loss - net of distributions 14,413
Net unrealized gain (loss) 81,767
Paid-in-capital applicable to 75,901,527 shares of no par
value capital stock outstanding; unlimited shares authorized 907,819
.............
NET ASSETS $ 1,003,698
-------------
NET ASSET VALUE PER SHARE $ 13.22
-------------
# Seven-day yield
+ Affiliated company
* Non-income producing
ADR American Depository Receipt
LYONs Liquid Yield Option Notes
MTN Medium term note
144a Security was purchased pursuant to Rule 144a under the Securities Act of
1933 and may not be resold subject to that rule except to qualified
institutional buyers -- total of such securities at period-end amounts to
4.63% of net assets.
AUD Australian dollar
CHF Swiss franc
GBP British sterling
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
- -------------------------
Statement of Operations
- --------------------------------------------------------------------------------
In thousands
Year
Ended
12/31/98
Investment Income
Income
Interest $ 25,236
Dividend 13,376
.............
Total income 38,612
.............
Expenses
Investment management 3,939
Shareholder servicing 2,283
Custody and accounting 143
Prospectus and shareholder reports 118
Registration 69
Legal and audit 13
Trustees 9
Miscellaneous 6
.............
Total expenses 6,580
.............
Net investment income 32,032
.............
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 124,799
Foreign currency transactions (191)
.............
Net realized gain (loss) 124,608
.............
Change in net unrealized gain or loss
Securities (97,065)
Other assets and liabilities
denominated in foreign currencies (1)
.............
Change in net unrealized gain or loss (97,066)
.............
Net realized and unrealized gain (loss) 27,542
.............
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 59,574
-------------
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
- ------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
In thousands
Year
Ended
12/31/98 12/31/97
Increase (Decrease) in Net Assets
Operations
Net investment income $ 32,032 $ 32,081
Net realized gain (loss) 124,608 91,200
Change in net unrealized gain or loss (97,066) 29,451
.........................
Increase (decrease) in net assets from operations 59,574 152,732
.........................
Distributions to shareholders
Net investment income (32,873) (31,906)
Net realized gain (119,687) (100,813)
.........................
Decrease in net assets from distributions (152,560) (132,719)
.........................
Capital share transactions *
Shares sold 250,691 233,817
Distributions reinvested 148,934 129,454
Shares redeemed (362,823) (283,344)
.........................
Increase (decrease) in net assets from capital
share transactions 36,802 79,927
.........................
Net Assets
Increase (decrease) during period (56,184) 99,940
Beginning of period 1,059,882 959,942
.........................
End of period $1,003,698 $1,059,882
-------------------------
*Share information
Shares sold 16,549 15,107
Distributions reinvested 11,361 8,903
Shares redeemed (24,044) (18,316)
.........................
Increase (decrease) in shares outstanding 3,866 5,694
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
December 31, 1998
- -------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Capital Appreciation Fund, (the fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company and commenced operations on June 30, 1986.
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles for the investment company
industry; these principles may require the use of estimates by fund
management.
Valuation Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price on the day the
valuations are made. A security which is listed or traded on more than one
exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Listed securities not traded on a
particular day and securities regularly traded in the over-the-counter
market are valued at the mean of the latest bid and asked prices. Other
equity securities are valued at a price within the limits of the latest bid
and asked prices deemed by the Board of Trustees, or by persons delegated
by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and are
valued at a price deemed best to reflect fair value as quoted by dealers
who make markets in these securities or by an independent pricing service.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation. In the absence of a last
sale price, purchased options are valued at the mean of the latest bid and
asked prices.
For purposes of determining the fund's net asset value per share, the U.S.
dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of
such currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair
value as determined in good faith by or under the supervision of the
officers of the fund, as authorized by the Board of Trustees.
23
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
Affiliated Companies As defined by the Investment Company Act of 1940, an
affiliated company is one in which the fund owns at least 5% of the
outstanding voting securities.
Currency Translation Assets and liabilities are translated into U.S.
dollars at the prevailing exchange rate at the end of the reporting period.
Purchases and sales of securities and income and expenses are translated
into U.S. dollars at the prevailing exchange rate on the dates of such
transactions. The effect of changes in foreign exchange rates on realized
and unrealized security gains and losses is reflected as a component of
such gains and losses.
Premiums and Discounts Premiums and discounts on debt securities are
amortized for both financial reporting and tax purposes.
Other Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses
are reported on the identified cost basis. Dividend income and
distributions to shareholders are recorded by the fund on the ex-dividend
date. Income and capital gain distributions are determined in accordance
with federal income tax regulations and may differ from those determined in
accordance with generally accepted accounting principles.
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.
Options Call and put options give the holder the right to purchase or sell,
respectively, a security at a specified price on a certain date. Risks
arise from possible illiquidity of the options market and from movements in
security values. Options are reflected in the accompanying Statement of Net
Assets at market value.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $495,926,000 and $532,021,000, respectively, for the
year ended December 31, 1998.
24
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
NOTE 3 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the fund intends to
continue to qualify as a regulated investment company and distribute all of
its taxable income.
At December 31, 1998, the cost of investments for federal income tax
purposes was substantially the same as for financial reporting and totaled
$926,817,000. Net unrealized gain aggregated $81,769,000 at period end, of
which $137,049,000 related to appreciated investments and $55,280,000 to
depreciated investments.
NOTE 4 - RELATED PARTY TRANSACTIONS
The investment management agreement between the fund and T. Rowe Price
Associates, Inc. (the manager) provides for an annual investment management
fee, of which $536,000 was payable at December 31, 1998. The fee is
computed daily and paid monthly, and consists of an individual fund fee
equal to 0.30% of average daily net assets and a group fee. The group fee
is based on the combined assets of certain mutual funds sponsored by the
manager or Rowe Price-Fleming International, Inc. (the group). The group
fee rate ranges from 0.48% for the first $1 billion of assets to 0.30% for
assets in excess of $80 billion. At December 31, 1998, and for the year
then ended, the effective annual group fee rate was 0.32%. The fund pays a
pro-rata share of the group fee based on the ratio of its net assets to
those of the group.
Additionally, through October 31, 1998, the management fee was subject to a
performance adjustment dependent upon the investment performance of the
fund as compared to the Standard & Poor's 500 Stock Index over a running
36-month period, as set forth in the investment management agreement.
Pursuant to the investment management agreement, performance adjustments
were eliminated effective November 1, 1998. For the year ended December 31,
1998, performance adjustments decreased management fees by $2,605,000.
In addition, the fund has entered into agreements with the manager and two
wholly owned subsidiaries of the manager, pursuant to which the fund
receives certain other services. The manager computes the daily share price
and maintains the financial records of the fund. T. Rowe Price Services,
Inc. is the fund's transfer and dividend disbursing agent and provides
shareholder and administrative services to the fund. T. Rowe Price
Retirement Plan Services, Inc. provides
25
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
subaccounting and recordkeeping services for certain retirement accounts
invested in the fund. The fund incurred expenses pursuant to these related
party agreements totaling approximately $2,015,000 for the year ended
December 31, 1998, of which $187,000 was payable at period-end.
The fund may invest in the Reserve Investment Fund and Government Reserve
Investment Fund (collectively, the Reserve Funds), open-end management
investment companies managed by T. Rowe Price Associates, Inc. The Reserve
Funds are offered as cash management options only to mutual funds and other
accounts managed by T. Rowe Price and its affiliates and are not available
to the public. The Reserve Funds pay no investment management fees.
Distributions from the Reserve Funds to the fund for the year ended
December 31, 1998, totaled $5,365,000 and are reflected as interest income
in the accompanying Statement of Operations.
26
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
- -----------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of
T. Rowe Price Capital Appreciation Fund
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position
of T. Rowe Price Capital Appreciation Fund (the "Fund") at December 31,
1998, and the results of its operations, the changes in its net assets and
the financial highlights for each of the fiscal periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities at December 31, 1998 by correspondence
with custodians, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
January 21, 1999
27
<PAGE>
T. Rowe Price Capital Appreciation Fund
- --------------------------------------------------------------------------------
- -------------------------------------------------------------
Tax Information (Unaudited) for the Tax Year Ended 12/31/98
- --------------------------------------------------------------------------------
We are providing this information as required by the Internal Revenue Code. The
amounts shown may differ from those elsewhere in this report because of
differences between tax and financial reporting requirements.
The fund's distributions to shareholders included:
. $13,810,000 from short-term capital gains,
. $105,877,000 from long-term capital gains, subject to the 20% rate gains
category.
For corporate shareholders, $11,812,000 of the fund's distributed income and
short-term capital gains qualified for the dividends-received deduction.
28
<PAGE>
T. Rowe Price Shareholder Services
- --------------------------------------------------------------------------------
Investment Services And Information
KNOWLEDGEABLE SERVICE REPRESENTATIVES
By Phone 1-800-225-5132 Available Monday through Friday from
8 a.m. to 10 p.m. ET and weekends from 8:30 a.m. to 5 p.m. ET.
In Person Available in T. Rowe Price Investor Centers.
ACCOUNT SERVICES
Checking Available on most fixed income funds ($500 minimum).
Automatic Investing From your bank account or paycheck.
Automatic Withdrawal Scheduled, automatic redemptions.
Distribution Options Reinvest all, some, or none of your distributions.
Automated 24-Hour Services Including Tele*Access(R) and the T. Rowe Price
Web site on the Internet. Address: www.troweprice.com
BROKERAGE SERVICES*
Individual Investments Stocks, bonds, options, precious metals, and other
securities at a savings over full-service commission rates.
INVESTMENT INFORMATION
Combined Statement Overview of all your accounts with T. Rowe Price.
Shareholder Reports Fund managers' reviews of their strategies and results.
T. Rowe Price Report Quarterly investment newsletter discussing markets and
financial strategies.
Performance Update Quarterly review of all T. Rowe Price fund results.
Insights Educational reports on investment strategies and financial
markets.
Investment Guides Asset Mix Worksheet, College Planning Kit, Diversifying
Overseas: A Guide to International Investing, Personal Strategy Planner,
Retirees Financial Guide, and Retirement Planning Kit.
* T. Rowe Price Brokerage is a division of T. Rowe Price Investment
Services, Inc., Member NASD/SIPC.
29
<PAGE>
For yield, price, last transaction, current balance, or to conduct transactions,
24 hours, 7 days a week, call Tele*Access(R): 1-800-638-2587 toll free
For assistance with your existing fund account, call: Shareholder Service Center
1-800-225-5132 toll free 410-625-6500 Baltimore area
To open a brokerage account or obtain information, call: 1-800-638-5660 toll
free
Internet address: www.troweprice.com
T. Rowe Price Associates
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Capital
Appreciation Fund.
Investor Centers:
101 East Lombard St.
Baltimore, MD 21202
T. Rowe Price
Financial Center
10090 Red Run Blvd.
Owings Mills, MD 21117
Farragut Square
900 17th Street, N.W.
Washington, D.C. 20006
ARCO Tower
31st Floor
515 South Flower St.
Los Angeles, CA 90071
4200 West Cypress St.
10th Floor
Tampa, FL 33607
[LOGO OF T. ROWE PRICE APPEARS HERE]
T. Rowe Price Investment Services, Inc., Distributor. F72-050 12/31/98
