Fund has Outperformed S&P 500 with Lower Market Volatility
BALTIMORE, Jan. 16 /PRNewswire-FirstCall/ -- The T. Rowe Price Capital
Appreciation Fund - which returned 14.5% in 2006 - once again posted a
positive calendar year return, making it the only domestic equity or
balanced fund tracked by either Morningstar or Lipper to provide a gain for
each of the past 16 years. In the Morningstar and Lipper universes, 881 and
651 domestic equity or balanced funds, respectively, had a 16-year track
record as of December 31, 2006.
Moreover, during this 16-year period, the Fund outperformed the S&P 500
stock index with an annualized return of 13.1% compared with 11.8% for the
index. The Fund has also outperformed the broader market index since its
inception June 30, 1986 and on average has had lower volatility than the
index as measured by standard deviation. It has had only one year of
negative returns since inception. Of course, past performance cannot
guarantee future results and the fund is subject to market risk, including
the possible loss of principal.
The Fund, which is managed as a conservative, value-oriented fund,
typically invests 60% to 65% of its assets in stocks with the remaining
assets invested in convertible securities, bonds, cash, and foreign
securities.
"One of the things that distinguishes the Capital Appreciation Fund and
defines our investment approach is our flexible portfolio management," says
Jeff Arricale, co-manager of the Fund. "We often have found that the most
attractive portion of a company's capital structure may not be a common
stock. In many cases, a bond or convertible has a better risk/reward
profile. So we can go where we believe the value is."
"What we are doing is trying to marry the very best of quantitative
research, qualitative research, and fundamental analysis, and then select
the best securities across the capital structure," says David Giroux,
co-manager of the Fund. "What that ends up achieving is equity-like returns
without equity-like risk. Over time we have done that, and we hope to
continue to give investors nice upside participation in good markets while
preserving our clients' capital in down markets."
The Fund's positive return streak and investment approach has been
sustained over the years by several managers. Prior to Messrs. Arricale and
Giroux, who became co-managers in July 2006, the Fund was managed by
Stephen Boesel from August 2001 to June 2006 and by Rich Howard from
January 1989 to July 2001.
The Fund had annualized total returns of 12.2% for both the 5- and
10-year periods ended December 31, 2006, respectively. Figures include
changes in principal value, reinvested dividends, and capital gain
distributions.
Founded in 1937, Baltimore-based T. Rowe Price (Nasdaq: TROW) is a
global investment management firm with $308.1 billion in assets under
management as of September 30, 2006. The firm provides a broad array of
mutual funds, sub-advisory services, and separate account management for
individual and institutional investors, financial intermediaries, and
retirement plans. T. Rowe Price's disciplined, risk-aware investment
approach focuses on diversification, style consistency, and fundamental
research.
Current performance may be lower or higher than the quoted past
performance, which cannot guarantee future results. Share price, principal
value, and return will vary, and you may have a gain or loss when you sell
your shares. To obtain the most recent month-end performance or to request
a prospectus, which includes investment objectives, risks, fees, expenses,
and other information that you should read and consider carefully before
investing, please call 1-800-638-5660 or go to http://www.troweprice.com.
T. Rowe Price Investment Services, Inc., distributor.
SOURCE T. Rowe Price
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Related links:
http://www.troweprice.com
CONTACT:
Brian Lewbart, +1-410-345-2242; Steven
Norwitz, +1-410-345-2124; or Robert Benjamin, +1-410-345-2205,
all of T. Rowe Price
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