Actually, Rich Howard was fund manager of PRWCX until August 1, 2001 when he turned the fund over to Stephen Boesel. Although subsequent fund managers have done a credible job, Howard was one of a kind and is mostly responsible for the awesome historical record and reputation for capital preservation that PRWCX enjoys today. His knowledge and acumen for investing in convertible securities probably rivals that of the legendary John Calamos. It was a sad day when Howard left the TRP firm.

Here is a link to his final commentary: Rich Howard Farewell

Here's a cut/paste of the last few paragraphs, my favorites.

CAUTION, SECURITIES ANALYSTS AT WORK

     The great  stock  market  crash of 1929 and the  economic  depression  that
followed provided a stimulus to systematize security analysis.  Such fundamental
subjects  as  asset-class  differentiation,  the  impact of  economic  forces on
corporate  results,  and the interplay of balance  sheets and income  statements
began to be studied  in a rigorous  manner.  The major  role of  psychology  and
related  behavior  in  securities  markets  was  also  recognized.  Speculators,
investors,  brokers,  insiders,  managers,  outside experts,  and government all
brought motivation to their decisions and roles.

     By the 1970s,  when I became a chartered  financial  analyst  (CFA),  there
totaled fewer than 5,000  analysts so qualified,  but the  profession,  with its
significant body of knowledge,  was truly launched.  The securities industry has
steadily  evolved--a recent full disclosure  ruling,  which attempts to give all
investors  equal  access to all  information,  has been a  notable  development.
However,  perhaps  the  biggest  change I see is the sheer  number  of  analysts
themselves. This year alone over 86,000 hopefuls (including my son) took the CFA
exams!

     Many,  of  course,  will  search  for the  truth,  driven  by  intellectual
curiosity,  professional pride, and honest greed. Some also are lazy. Instead of
developing  a rigorous  understanding  of the  elements  that go into  corporate
earnings, lesser analysts simply look at the bottom line itself and seek out the
honey  pot  of  high  earnings  growth.  Many  corporate  managements  recognize
and--even worse--embrace this glossed-over view, allowing their reported results
to be  manipulated  to generate  the rosiest  possible  output at the expense of
common sense. Huge companies exposed to the vagaries of the world economy simply
do not grow their earnings  consistently  at 12% quarter after  quarter.  Yet by
reporting such numbers--even if misleading and basically dishonest--managers can
be lauded and paid handsome  bonuses while watching  their shares  accorded high
valuations.  Security analysis has gone from evaluating corporate performance to
dictating what is often reported as performance. When and how this will change I
don't know--but reality remains reality and eventually it will assert itself.

We continue to consider the economy,  interest rates,  and stock valuations
as the bare  necessities in the outlook for financial  markets and your fund. As
usual,  there are many positives and negatives related to these building blocks,
but it's always important to remember the obvious.  The time to buy is when most
other  investors  want to sell,  and they want to sell when they perceive a poor
outlook.  This sort of  discipline  is what  allows an  investor to qualify as a
"rightful owner," as defined by Mr. Baruch.

     The economy seems a particular negative going into the second half of 2001.
Its weakness,  exacerbated  by a drastic  drop-off in technology  spending,  has
significantly  contributed  to  poor  corporate  earnings  performance.  Vicious
competition  has hurt areas  burdened with  excessive  overcapacity.  Historical
experience suggests that sometime in the next 12 months,  perhaps even tomorrow,
the economy will start turning up. Of course,  once it does and people recognize
the  change,  it may be too late to  benefit--equity  prices  will  probably  be
significantly above their lows.

              ..............................................

                        The time to buy is when most
                        other investors want to sell,
                       and they want to sell when they
                           perceive a poor outlook.

              ..............................................

     Interest rates are a strong positive.  Rate cuts reduce corporate  expenses
by billions,  boosting earnings.  Lower rates also heighten investor interest in
equities over fixed-income securities.  Furthermore, the Fed's easy-money policy
is probably not over.  Stock market  valuation  significantly  improved over the
past 18 months.  It is, however,  still not  particularly  good.  Comparisons to
historic average  price/earnings  ratios,  book values,  and dividend yields all
suggest that stocks remain expensive.  Some of this higher valuation makes sense
given the steady  decline of  inflation  over the past 20  years--but  even that
positive is  two-sided.  Inflation  is not likely to fall much from  today's low
level, and it might well go up.

     Investor  psychology,  while not one of my three primary  outlook  factors,
seems especially  important today.  Disappointing  stock market returns over the
last 15 months have caused the public to dramatically  slow its buying of mutual
funds. If, however,  disappointment  leads to a loss of faith in future returns,
we might expect outright redemptions. That's when you find yourself facing not a
Winnie-the-Pooh sort of bear market, but a grizzly.

Given the above  discussion,  you should not be surprised that we expect an
unexciting  stock market going forward.  Of course,  this was also my conclusion
six months ago and,  while  largely  correct,  it didn't  prevent your fund from
performing  well. We have used  sensible  criteria to choose what we own, and we
understand what we own. We have a quality  organization  that supports our work.
We face the uncertain future with confidence.

A PERSONAL NOTE
---------------

     After 12-1/2 years as your  portfolio  manager,  I will be turning over the
Capital  Appreciation  Fund to Stephen W.  Boesel on August 1, 2001.  Steve is a
well-seasoned  veteran whose cautious style and talents are appropriate for this
fund.  As for myself,  a career  change is in order--one  that  (mercifully  for
investors) will not involve developing  shareholder  reports with themes such as
bears, pilots,  sailors, or other assorted topics. In closing, I'd like to thank
each of you for your investment in the fund and the confidence thereby expressed
in T. Rowe Price.

Respectfully submitted,

/s/

Richard P. Howard