Item 1. Report to Shareholders
T. Rowe Price Equity Index 500 Portfolio
Certified Financials
Financial Highlights
- --------------------------------------------------------------------------------
T. Rowe Price Equity Index 500 Portfolio
Certified Financials
(Unaudited)
For a share outstanding throughout each period
--------------------------------------------------
6 Months Year 12/29/00
Ended Ended Through
6/30/03 12/31/02 12/31/01
- --------------------------------------------------------------------------------
NET ASSET VALUE
Beginning of period $ 6.70 $ 8.73 $ 10.00
Investment activities
Net investment
income (loss) 0.04 0.09 0.08
Net realized and
unrealized gain (loss) 0.73 (2.03) (1.27)
Total from
investment activities 0.77 (1.94) (1.19)
Distributions
Net investment income (0.04) (0.09) (0.08)
NET ASSET VALUE
End of period $ 7.43 $ 6.70 $ 8.73
--------------------------------------------------------
Ratios/Supplemental Data
Total return^ 11.53% (22.29)% (11.82)%
Ratio of total expenses to
average net assets 0.40%! 0.40% 0.40%
Ratio of net investment
income (loss) to average
net assets 1.37%! 1.21% 0.98%
Portfolio turnover rate 26.1%! 43.7% 32.6%
Net assets, end of period
(in thousands) $ 5,263 $ 4,475 $ 5,011
^ 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.
! Annualized
The accompanying notes are an integral part of these financial statements.
Statement of Net Assets
- --------------------------------------------------------------------------------
T. Rowe Price Equity Index 500 Portfolio
Certified Financials
June 30, 2003 (Unaudited)
Shares Value
- --------------------------------------------------------------------------------
In thousands
Common Stocks 97.7%
CONSUMER DISCRETIONARY 10.3%
Auto Components 0.2%
Johnson Controls 40 $ 4
Delphi 310 3
Dana 70 1
Cooper Tire 40 1
Visteon 80 0
Goodyear Tire & Rubber 100 0
9
Automobiles 0.5%
Ford Motor 1,050 12
GM 310 11
Harley-Davidson 160 6
29
Distributors 0.1%
Genuine Parts 100 3
3
Hotels, Restaurants & Leisure 1.1%
McDonald's 710 16
Carnival 310 10
International Game Technology * 60 6
Starbucks * 220 5
Marriott, Class A 120 5
Yum! Brands * 150 4
Starwood Hotels & Resorts
Worldwide, REIT 120 3
Hilton 210 3
Harrah's Entertainment * 60 2
Darden Restaurants 105 2
Wendys 50 2
58
Household Durables 0.5%
Newell Rubbermaid 160 5
Fortune Brands 80 4
Centex 40 3
Leggett & Platt 110 2
Black & Decker 50 2
Whirlpool 30 2
Pulte 30 2
Stanley Works 50 2
KB Home 20 1
Snap-On 40 1
Maytag 40 1
American Greetings, Class A * 30 $ 1
Tupperware 20 0
26
Internet & Catalog Retail 0.3%
e-Bay * 160 17
17
Leisure Equipment & Products 0.2%
Eastman Kodak 160 4
Mattel 230 4
Hasbro 90 2
Brunswick 40 1
11
Media 3.9%
Viacom, Class B * 970 42
AOL Time Warner * 2,455 39
Comcast, Class A * 1,263 38
Disney 1,120 22
Clear Channel Communications * 340 14
Gannett 140 11
Tribune 180 9
McGraw-Hill 110 7
Omnicom 90 6
Univision Communications, Class A * 120 4
New York Times, Class A 80 4
Interpublic Group 220 3
Knight-Ridder 40 3
Dow Jones 40 2
Meredith 30 1
205
Multiline Retail 1.0%
Target 500 19
Kohl's * 170 9
Sears 160 5
Federated Department Stores 110 4
Family Dollar Stores 100 4
May Department Stores 160 4
Dollar General 190 3
J.C. Penney 140 2
Nordstrom 60 1
Big Lots * 70 1
Dillards, Class A 60 1
53
Specialty Retail 2.2%
Home Depot 1,270 42
Lowe's 420 18
GAP 470 $ 9
Best Buy * 180 8
Bed Bath & Beyond * 150 6
TJX 300 6
Staples * 260 5
The Limited 290 4
AutoZone * 50 4
Autonation * 200 3
Tiffany 90 3
Office Depot * 160 2
Sherwin-Williams 80 2
Radio Shack 80 2
Toys "R" Us * 130 2
Circuit City Stores 130 1
117
Textiles, Apparel, & Luxury Goods 0.3%
Nike, Class B 150 8
Jones Apparel Group * 80 2
Liz Claiborne 60 2
V. F. 60 2
Reebok * 40 2
16
Total Consumer Discretionary 544
CONSUMER STAPLES 11.1%
Beverages 2.7%
Coca-Cola 1,370 64
PepsiCo 932 41
Anheuser-Busch 470 24
Coca-Cola Enterprises 250 5
Pepsi Bottling Group 150 3
Brown-Forman, Class B 30 2
Coors, Class B 30 1
140
Food & Staples Retailing 3.7%
Wal-Mart 2,450 131
Walgreen 550 16
Sysco 360 11
Costco Wholesale * 240 9
Kroger * 410 7
CVS 200 6
Safeway * 250 5
Albertson's 200 4
Supervalu 80 2
Winn-Dixie 90 1
192
Food Products 1.2%
General Mills 210 $ 10
Sara Lee 430 8
Kellogg 220 8
Wrigley 130 7
ConAgra 290 7
Heinz 180 6
Hershey Foods 80 6
Campbell Soup 220 5
Archer-Daniels-Midland 343 4
McCormick 100 3
64
Household Products 1.9%
Procter & Gamble 710 63
Colgate-Palmolive 300 18
Kimberly-Clark 290 15
Clorox 110 5
101
Personal Products 0.5%
Gillette 560 18
Avon 130 8
Alberto Culver, Class B 40 2
28
Tobacco 1.1%
Altria Group 1,160 53
UST 90 3
R.J. Reynolds Tobacco 60 2
58
Total Consumer Staples 583
ENERGY 5.4%
Energy Equipment & Services 0.7%
Schlumberger 320 15
Baker Hughes 170 6
Halliburton 240 6
BJ Services * 100 4
Transocean * 160 3
Nabors Industries * 80 3
Noble Drilling * 60 2
Rowan * 40 1
40
Oil & Gas 4.7%
Exxon Mobil 3,730 134
ChevronTexaco 577 42
ConocoPhillips 380 21
Occidental Petroleum 210 7
Devon Energy 130 $ 7
Burlington Resources 120 6
Anadarko Petroleum 140 6
Apache 89 6
Marathon Oil 170 4
Unocal 130 4
EOG Resources 70 3
Amerada Hess 40 2
Kerr-McGee 40 2
Sunoco 40 1
Ashland 40 1
246
Total Energy 286
FINANCIALS 19.0%
Capital Markets 3.2%
J.P. Morgan Chase 1,110 38
Morgan Stanley 600 26
Merrill Lynch 470 22
Goldman Sachs Group 260 22
Bank of New York 430 12
Lehman Brothers 140 9
Charles Schwab 740 7
Mellon Financial 250 7
State Street 170 7
Northern Trust 130 5
Franklin Resources 130 5
Bear Stearns 50 4
Janus Capital Group 130 2
Federated Investors, Class B 60 2
168
Commercial Banks 6.0%
Bank of America 810 64
Wells Fargo 930 47
Wachovia 750 30
U.S. Bancorp 1,127 28
Bank One 650 24
Fifth Third Bancorp 307 18
FleetBoston Financial 570 17
National City 350 12
SunTrust 160 10
BB&T 270 9
PNC Financial Services Group 150 7
KeyCorp 240 6
Comerica 110 5
SouthTrust 180 5
Regions Financial 130 $ 4
AmSouth 180 4
Synovus Financial 180 4
Charter One Financial 119 4
North Fork Bancorporation 100 3
Marshall & Ilsley 110 3
Union Planters 105 3
First Tennessee National 60 3
Huntington Bancshares 120 2
Zions Bancorp 40 2
314
Consumer Finance 1.1%
American Express 720 30
MBNA 705 15
SLM Corporation 210 8
Capital One Financial 120 6
Providian Financial * 150 1
60
Diversified Financial Services 2.5%
Citigroup 2,840 121
Principal Financial Group 180 6
Moody's 70 4
131
Insurance 4.1%
American International Group 1,411 78
Marsh & McLennan 290 15
Allstate 390 14
MetLife 370 10
Prudential Financial 300 10
Travelers Property Casualty, Class B 558 9
Progressive Corporation 120 9
AFLAC 270 8
XL Capital, Class A 80 7
Hartford Financial Services Group 130 7
Chubb 100 6
John Hancock Financial Services 170 5
Loews 110 5
ACE Limited 130 4
St. Paul Companies 120 4
Lincoln National 110 4
Aon 160 4
Cincinnati Financial 90 3
AMBAC 50 3
MBIA 65 3
Jefferson Pilot 65 3
Torchmark 70 3
SAFECO 70 $ 2
UnumProvident 120 2
218
Real Estate 0.4%
Equity Office Properties, REIT 230 6
Equity Residential, REIT 160 4
Simon Property Group, REIT 100 4
Plum Creek Timber 100 3
Apartment Investment
& Management, Class A, REIT 50 2
19
Thrifts & Mortgage Finance 1.7%
Fannie Mae 550 37
Washington Mutual 525 22
Freddie Mac 380 19
Golden West Financial 70 6
Countrywide Financial 70 5
MGIC Investment 50 2
91
Total Financials 1,001
HEALTH CARE 14.0%
Biotechnology 1.2%
Amgen * 693 46
MedImmune * 140 5
Chiron * 110 5
Genzyme * 100 4
Biogen * 90 4
64
Health Care Equipment & Supplies 1.8%
Medtronic 670 32
Boston Scientific * 210 13
Baxter International 330 9
Stryker 110 8
Guidant 160 7
St. Jude Medical * 110 6
Becton, Dickinson 140 6
Zimmer Holdings * 103 5
Biomet 150 4
Applied Biosystems Group - Applera 110 2
Waters Corporation * 70 2
C. R. Bard 20 1
Millipore * 30 1
Bausch & Lomb 30 1
97
Health Care Providers & Services 1.7%
UnitedHealth Group 320 $ 16
Cardinal Health 250 16
HCA 290 9
WellPoint Health Networks * 90 8
Anthem * 80 6
McKesson HBOC 160 6
Aetna 90 6
AmerisourceBergen 70 5
CIGNA 70 3
Quest Diagnostics * 50 3
Tenet Healthcare * 255 3
Health Management, Class A 130 2
IMS Health 130 2
Manor Care * 60 2
Humana * 90 1
Quintiles Transnational * 60 1
HealthSouth * 210 0
89
Pharmaceuticals 9.3%
Pfizer 4,414 151
Johnson & Johnson 1,618 84
Merck 1,260 76
Eli Lilly 600 41
Abbott Laboratories 870 38
Wyeth 740 34
Bristol-Myers Squibb 1,070 29
Schering-Plough 810 15
Forest Laboratories * 200 11
Allergan 60 4
Watson Pharmaceuticals * 50 2
King Pharmaceuticals * 123 2
487
Total Health Care 737
INDUSTRIALS & BUSINESS SERVICES 9.7%
Aerospace & Defense 1.6%
United Technologies 260 18
Boeing 460 16
Honeywell International 460 12
Lockheed Martin 250 12
Northrop Grumman 112 10
General Dynamics 100 7
Raytheon 210 7
Rockwell Collins 90 2
Goodrich 70 2
86
Air Freight & Logistics 1.0%
UPS, Class B 630 $ 40
Fedex 160 10
Ryder System 40 1
51
Airlines 0.2%
Southwest Airlines 420 7
Delta 80 1
8
Building Products 0.2%
Masco 270 6
American Standard * 40 3
9
Commercial Services & Supplies 0.9%
Cendant * 560 10
Waste Management 320 8
Apollo Group, Class A * 100 6
Pitney Bowes 130 5
H&R Block 110 5
Cintas 90 3
Avery Dennison 50 3
Robert Half International * 100 2
R.R. Donnelley 70 2
Equifax 70 2
Deluxe Corp. 30 1
Allied Waste Industries * 120 1
Hudson Highland Group * 5 0
48
Construction & Engineering 0.0%
Fluor 40 1
McDermott International * 30 0
1
Electrical Equipment 0.3%
Emerson Electric 240 12
Rockwell Automation 90 2
Cooper Industries 50 2
American Power Conversion * 110 2
Power-One * 50 1
Thomas & Betts * 20 0
19
Industrial Conglomerates 4.0%
GE 5,470 157
3M 220 29
Tyco International 1,115 21
Textron 60 2
209
Machinery 1.1%
Illinois Tool Works 160 $ 11
Caterpillar 180 10
Deere 140 6
PACCAR 75 5
Danaher 70 5
Ingersoll-Rand, Class A 90 4
Dover 120 4
Parker Hannifin 70 3
ITT Industries 40 3
Eaton 30 2
Navistar * 50 2
Pall 60 1
Cummins Engine 20 1
Crane 20 0
57
Road & Rail 0.4%
Union Pacific 140 8
Burlington Northern Santa Fe 220 6
Norfolk Southern 210 4
CSX 120 4
22
Trading Companies & Distributors 0.0%
W. W. Grainger 40 2
2
Total Industrials & Business Services 512
INFORMATION TECHNOLOGY 15.2%
Communications Equipment 2.2%
Cisco Systems * 3,880 65
QUALCOMM 440 16
Motorola 1,270 12
Corning * 700 5
Lucent Technologies * 2,160 4
JDS Uniphase * 860 3
CIENA * 360 2
Scientific-Atlanta 70 2
Comverse Technology * 100 2
Avaya * 230 1
Tellabs * 220 1
ADC Telecommunications * 570 1
Andrew * 60 1
115
Computer & Peripherals 3.6%
IBM 940 $ 77
Dell Computer * 1,400 45
Hewlett-Packard 1,627 35
EMC * 1,200 12
Sun Microsystems * 1,800 8
Lexmark International, Class A * 80 6
Apple Computer * 200 4
Network Appliance * 180 3
NCR * 50 1
Gateway * 170 1
192
Electronic Equipment & Instruments 0.4%
Agilent Technologies * 260 5
Molex 110 3
Jabil Circuit * 110 2
Solectron * 490 2
Sanmina-SCI * 270 2
Thermo Electron * 80 2
Symbol Technologies 120 1
Tektronix * 60 1
PerkinElmer 70 1
19
Internet Software & Services 0.2%
Yahoo! * 320 11
Monster Worldwide * 70 1
12
IT Services 1.2%
First Data 420 18
Automatic Data Processing 330 11
Paychex 210 6
Electronic Data Systems 260 6
SunGard Data Systems * 170 4
Computer Sciences * 110 4
Concord EFS * 280 4
Fiserv * 90 3
Sabre Holdings, Class A 90 2
Unisys * 170 2
Convergys * 90 2
62
Office Electronics 0.1%
Xerox * 380 4
4
Semiconductor & Semiconductor
Equipment 3.1%
Intel 3,630 75
Texas Instruments 950 17
Applied Materials * 890 14
Analog Devices * 210 $ 7
Maxim Integrated Products 180 6
Linear Technology 170 5
KLA-Tencor * 110 5
Xilinx * 160 4
Micron Technology * 340 4
Altera * 220 4
Broadcom, Class A * 140 4
Novellus Systems * 90 3
National Semiconductor * 100 2
QLogic * 40 2
NVIDIA * 80 2
Teradyne * 100 2
LSI Logic * 210 2
Advanced Micro Devices * 200 1
PMC-Sierra * 90 1
Applied Micro Circuits * 160 1
161
Software 4.4%
Microsoft 5,840 150
Oracle * 2,890 35
Computer Associates 300 7
VERITAS Software * 230 7
Intuit * 120 5
Electronic Arts * 70 5
Symantec * 100 4
Adobe Systems 120 4
PeopleSoft * 180 3
Siebel Systems * 280 3
BMC Software * 140 2
Citrix Systems * 100 2
Compuware * 270 2
Mercury Interactive * 40 1
Novell * 270 1
Autodesk 50 1
Parametric Technology * 180 0
232
Total Information Technology 797
MATERIALS 2.5%
Chemicals 1.4%
DuPont 540 22
Dow Chemical 498 15
Praxair 100 6
Air Products and Chemicals 130 5
PPG Industries 100 5
Rohm & Haas 130 4
Ecolab 140 $ 4
Monsanto 140 3
International Flavors & Fragrances 60 2
Sigma Aldrich 30 2
Engelhard 60 2
Eastman Chemical 30 1
Hercules * 70 1
Great Lakes Chemical 20 0
72
Construction Materials 0.1%
Vulcan Materials 70 3
3
Containers & Packaging 0.1%
Sealed Air * 40 2
Pactiv * 90 2
Bemis 30 1
Ball 20 1
Temple-Inland 20 1
7
Metals & Mining 0.5%
Alcoa 450 11
Newmont Mining 210 7
Freeport McMoRan Copper
Gold, Class B 90 2
Phelps Dodge * 50 2
Nucor 30 1
USX-U.S. Steel Group 60 1
Allegheny Technologies 130 1
Worthington Industries 60 1
26
Paper & Forest Products 0.4%
International Paper 260 9
Weyerhaeuser 120 6
Georgia-Pacific 150 3
MeadWestvaco 108 3
Boise Cascade 30 1
Louisiana Pacific * 50 1
23
Total Materials 131
TELECOMMUNICATION SERVICES 3.6%
Diversified Telecommunication Services 3.1%
Verizon Communications 1,510 60
SBC Communications 1,820 47
BellSouth 1,020 27
AT&T 434 8
Alltel 170 $ 8
Sprint 510 7
Qwest Communications
International * 950 5
Centurytel 80 3
Citizens Communications * 150 2
167
Wireless Telecommunication Services 0.5%
AT&T Wireless * 1,487 12
Nextel Communications, Class A * 540 10
Sprint PCS * 570 3
25
Total Telecommunication Services 192
TRUSTS & MUTUAL FUNDS 4.1%
Trusts & Mutual Funds 4.1%
S&P Depository Receipts Trust
Series I 2,200 215
Total Trusts & Mutual Funds 215
UTILITIES 2.8%
Electric Utilities 2.2%
Southern Company 380 12
Dominion Resources 170 11
Exelon 170 10
Entergy 130 7
FPL Group 100 7
FirstEnergy 163 6
Progress Energy 140 6
American Electric Power 200 6
Consolidated Edison 120 5
Public Service Enterprise 120 5
PG&E * 210 4
TXU 180 4
Ameren 90 4
PPL 90 4
CINergy 100 4
DTE Energy 90 3
Constellation Energy Group 100 3
XCEL Energy 210 3
Edison International * 170 3
Pinnacle West Capital 50 2
CenterPoint Energy 160 1
Teco Energy 90 1
Allegheny Energy 70 1
CMS Energy 70 $ 1
113
Gas Utilities 0.2%
Sempra Energy 110 3
Kinder Morgan 50 3
NiSource 140 3
KeySpan 70 2
Peoples Energy 20 1
NICOR 20 1
13
Multi-Utilities & Unregulated Power 0.4%
Duke Energy 480 9
Williams Companies 430 3
El Paso Energy 341 3
AES * 290 2
Calpine * 200 1
Dynegy, Class A * 260 1
Mirant * 201 1
20
Total Utilities 146
Total Common Stocks (Cost $6,064) 5,144
Short-Term Investments 2.9%
U.S. Government Obligations 0.6%
U.S. Treasury Bills, 0.869%, 12/18/03 ** 30,000 30
30
Money Market Funds 2.3%
T. Rowe Price Reserve
Investment Fund, 1.16% # 123,327 123
123
Total Short-Term Investments (Cost $153) 153
Value
- --------------------------------------------------------------------------------
In thousands
Total Investments in Securities
100.6% of Net Assets (Cost $6,217) $ 5,297
Futures Contracts
Contract Unrealized
Expiration Value Gain (Loss)
----------- ----------- -----------
In thousands
Long, 3 S&P 500
E-mini contracts
$15,000 of U.S.
Treasury Bills
pledged as
initial margin 9/03 $ 146 $ (1)
Net payments (receipts)
of variation
margin to date 1
Variation margin
receivable (payable)
on open futures
contracts --
Other Assets Less
Liabilities (34)
NET ASSETS $ 5,263
-----------
Net Assets Consist of:
Undistributed
net investment
income (loss) $ 4
Undistributed net
realized gain (loss) (346)
Net unrealized
gain (loss) (921)
Paid-in-capital
applicable to
708,131 shares
of $0.0001 par
value capital
stock outstanding;
1,000,000,000 shares
of the Corporation
authorized 6,526
NET ASSETS $ 5,263
-----------
NET ASSET VALUE
PER SHARE $ 7.43
-----------
# Seven-day yield
* Non-income producing
** All or a portion of this security is pledged to cover margin requirements
on futures contracts at June 30, 2003.
REIT Real Estate Investment Trust
The accompanying notes are an integral part of these financial statements.
Statement of Operations
- --------------------------------------------------------------------------------
T. Rowe Price Equity Index 500 Portfolio
- --------------------------------------------------------------------------------
Certified Financials
(Unaudited)
In thousands
6 Months
Ended
6/30/03
- --------------------------------------------------------------------------------
Investment Income (Loss)
Income
Dividend $ 40
Income distributions from mutual funds 1
Total income 41
Investment management and administrative expense 9
Net investment income (loss) 32
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (154)
Futures 16
Net realized gain (loss) (138)
Change in net unrealized gain (loss) on securities 641
Net realized and unrealized gain (loss) 503
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 535
----------
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
T. Rowe Price Equity Index 500 Portfolio
- --------------------------------------------------------------------------------
Certified Financials
(Unaudited)
In thousands
6 Months Year
Ended Ended
6/30/03 12/31/02
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 32 $ 59
Net realized gain (loss) (138) (165)
Change in net unrealized gain (loss) 641 (1,120)
Increase (decrease) in net
assets from operations 535 (1,226)
Distributions to shareholders
Net investment income (29) (59)
Capital share transactions *
Shares sold 870 4,944
Distributions reinvested 28 59
Shares redeemed (616) (4,254)
Increase (decrease) in net
assets from capital
share transactions 282 749
Net Assets
Increase (decrease) during period 788 (536)
Beginning of period 4,475 5,011
End of period $ 5,263 $ 4,475
-------------------------------------
*Share information
Shares sold 128 601
Distributions reinvested 4 8
Shares redeemed (92) (515)
Increase (decrease) in
shares outstanding 40 94
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
- --------------------------------------------------------------------------------
T. Rowe Price Equity Index 500 Portfolio
- --------------------------------------------------------------------------------
Certified Financials
June 30, 2003 (Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Equity Series, Inc. (the corporation) is registered under the
Investment Company Act of 1940 (the 1940 Act). The Equity Index 500
Portfolio (the fund), a diversified, open-end management investment
company, is one of the portfolios established by the corporation and
commenced operations on December 29, 2000. The fund seeks to match the
performance of the Standard & Poor's 500 Stock Index(RT). Shares of the
fund are currently offered only through certain insurance companies as an
investment medium for both variable annuity contracts and variable life
insurance policies.
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
Investments are valued 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 at the
time the valuations are made. 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 ask prices.
Short-term debt securities are valued at amortized cost, which approximates
fair value when combined with accrued interest.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation. Financial futures
contracts are valued at closing settlement prices.
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 or under the supervision of the
officers of the fund, as authorized by the Board of Directors.
Premiums and Discounts
Premiums and discounts on debt securities are amortized for financial
reporting 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. Payments ("variation margin") made or received by the fund to settle
the daily fluctuations in the value of futures contracts are recorded as
unrealized gains or losses until the contracts are closed. Unrealized gains
and losses on futures contracts are included in Change in net unrealized
gain or loss in the accompanying financial statements.
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.
Futures Contracts
During the six months ended June 30, 2003, the fund was a party to futures
contracts, which provide for the future sale by one party and purchase by
another of a specified amount of a specific financial instrument at an
agreed upon price, date, time, and place. Risks arise from possible
illiquidity of the futures market and from movements in security values.
Other
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $817,000 and $591,000, respectively, for the six
months ended June 30, 2003.
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 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. Temporary
differences are not adjusted. 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, 2003.
The fund intends to retain realized gains to the extent of available
capital loss carryforwards. As of December 31, 2002, the fund had $209,000
of unused capital loss carryforwards, of which $26,000 expire in 2009, and
$183,000 expire in 2010.
At June 30, 2003, the cost of investments for federal income tax purposes
was $6,217,000. Net unrealized loss aggregated $921,000 at period-end, of
which $233,000 related to appreciated investments and $1,154,000 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 and administrative agreement between the fund and the
manager provides for an all-inclusive annual fee equal to 0.40% of the
fund's average daily net assets. The fee is computed daily and paid
monthly. The agreement provides that investment management, shareholder
servicing, transfer agency, accounting, and custody services are provided
to the fund, and interest, taxes, brokerage commissions, directors' fees
and expenses, and extraordinary expenses are paid directly by the fund. At
June 30, 2003, $8,000 was payable under the agreement.
The fund may invest in the T. Rowe Price Reserve Investment Fund and 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 only
to mutual funds, trusts, and other accounts managed by Price Associates
and/or 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 six months ended June 30, 2003, totaled $1,000.
Item 2. Code of Ethics.
Not required at this time.
Item 3. Audit Committee Financial Expert.
Not required at this time.
Item 4. Principal Accountant Fees and Services.
Not required at this time.
Item 5. Audit Committee of Listed Registrants.
Not required at this time.
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. [Reserved]
Item 9. 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 10. Exhibits.
(a)(1) Not required at this time.
(a)(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.
(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 Equity Series, Inc.
By /s/ James S. Riepe
James S. Riepe
Principal Executive Officer
Date August 22, 2003
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 22, 2003
By /s/ Joseph A. Carrier
Joseph A. Carrier
Principal Financial Officer
Date August 22, 2003