Item 1. Report to Shareholders
T. Rowe Price Blue Chip Growth Portfolio
Certified Financials
Financial Highlights
T. Rowe Price Blue Chip Growth Portfolio
Certified Financials
(Unaudited)
For a share outstanding throughout each period
- --------------------------------------------------------------------------------
Blue Chip Growth shares 6 Months Year 12/29/00
Ended Ended Through
6/30/03 12/31/02 12/31/01
NET ASSET VALUE
Beginning of period $ 6.54 $ 8.61 $ 10.00
Investment activities
Net investment income (loss) -- 0.01 0.01
Net realized and
unrealized gain (loss) 0.88 (2.07) (1.39)
Total from
investment activities 0.88 (2.06) (1.38)
Distributions
Net investment income -- (0.01) (0.01)
NET ASSET VALUE
End of period $ 7.42 $ 6.54 $ 8.61
----------- --------------- ---------------
Ratios/Supplemental Data
Total return^ 13.46% (23.93)% (13.73)%
Ratio of total expenses to
average net assets 0.85%! 0.85% 0.85%
Ratio of net investment
income (loss) to average
net assets 0.15%! 0.14% 0.14%
Portfolio turnover rate 33.4%! 39.9% 42.2%
Net assets, end of period
(in thousands) $ 15,974 $ 7,134 $ 6,030
^ 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.
Financial Highlights
T. Rowe Price Blue Chip Growth Portfolio
Certified Financials
(Unaudited)
For a share outstanding
throughout each period
- --------------------------------------------------------------------------------
Blue Chip Growth-II shares 6 Months 4/30/02
Ended Through
6/30/03 12/31/02
NET ASSET VALUE
Beginning of period $ 6.53 $ 7.97
Investment activities
Net realized and
unrealized gain (loss) 0.87 (1.43)
Distributions
Net investment income -- (0.01)
NET ASSET VALUE
End of period $ 7.40 $ 6.53
--------------- ---------------
Ratios/Supplemental Data
Total return^ 13.32% (17.94)%
Ratio of total expenses to
average net assets 1.10%! 1.10%!
Ratio of net investment
income (loss) to average
net assets (0.10)%! --
Portfolio turnover rate 33.4%! 39.9%
Net assets, end of period
(in thousands) $ 93 $ 82
^ 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.
Portfolio of Investments
T. Rowe Price Blue Chip Growth Portfolio
Certified Financials
June 30, 2003 (Unaudited)
Shares Value
- --------------------------------------------------------------------------------
In thousands
COMMON STOCKS 79.0%
CONSUMER DISCRETIONARY 12.4%
Automobiles 0.4%
Harley-Davidson 1,600 $ 64
64
Hotels, Restaurants & Leisure 1.2%
Carnival 2,600 85
International Game Technology * 500 51
MGM Mirage * 200 7
Starbucks * 1,800 44
187
Media 7.5%
AOL Time Warner * 6,900 111
Clear Channel Communications * 4,900 208
Comcast, Class A, Special * 4,850 140
Disney 2,300 45
Echostar Communications Class A * 3,500 121
Liberty Media, Class A * 6,384 74
Omnicom 1,090 78
Scripps, Class A 800 71
Univision Communications Class A * 2,900 88
Viacom, Class B * 5,951 260
1,196
Multiline Retail 1.5%
Kohl's * 1,700 87
Target 4,170 158
245
Specialty Retail 1.8%
Best Buy * 1,650 72
Home Depot 6,400 212
Weight Watchers * 200 9
293
Total Consumer Discretionary 1,985
CONSUMER STAPLES 4.6%
Beverages 1.6%
Coca-Cola 3,150 146
PepsiCo 2,510 112
258
Food & Staples Retailing 1.4%
Sysco 1,700 $ 51
Wal-Mart 3,160 170
221
Food Products 0.2%
Campbell Soup 200 5
General Mills 800 38
43
Household Products 0.6%
Colgate-Palmolive 900 52
Procter & Gamble 500 45
97
Personal Products 0.4%
Estee Lauder, Class A 1,000 33
Gillette 900 29
62
Tobacco 0.4%
Altria Group 1,350 61
61
Total Consumer Staples 742
ENERGY 3.0%
Energy Equipment & Services 2.5%
Baker Hughes 3,570 120
BJ Services * 2,140 80
Schlumberger 2,900 138
Smith International * 2,000 73
411
Oil & Gas 0.5%
Exxon Mobil 2,060 74
74
Total Energy 485
FINANCIALS 19.0%
Capital Markets 5.9%
Bank of New York 2,600 75
Charles Schwab 5,230 53
Franklin Resources 800 31
Goldman Sachs Group 1,400 117
Legg Mason 900 58
Mellon Financial 4,890 136
Merrill Lynch 3,200 149
Morgan Stanley 2,220 95
Northern Trust 2,100 $ 88
State Street 3,600 142
944
Commercial Banks 2.9%
Bank of America 2,700 213
U.S. Bancorp 5,200 128
Wells Fargo 2,540 128
469
Consumer Finance 1.0%
American Express 1,280 53
SLM Corporation 2,600 102
155
Diversified Financial Services 3.3%
Citigroup 12,430 532
532
Insurance 4.4%
AMBAC 1,200 79
American International Group 4,210 232
Hartford Financial Services Group 1,900 96
Marsh & McLennan 3,300 169
Progressive Corporation 600 44
Travelers Property Casualty Class A 5,656 90
710
Thrifts & Mortgage Finance 1.5%
Fannie Mae 2,400 162
Freddie Mac 1,670 85
247
Total Financials 3,057
HEALTH CARE 15.0%
Biotechnology 1.7%
Amgen * 2,900 193
MedImmune * 1,900 69
262
Health Care Equipment & Supplies 1.2%
Boston Scientific * 1,400 85
Medtronic 1,440 69
St. Jude Medical * 300 17
Stryker 300 21
192
Health Care Providers & Services 4.1%
AmerisourceBergen 400 28
Cardinal Health 1,125 72
HCA 200 $ 7
UnitedHealth Group 8,300 417
Wellpoint Health Networks * 1,700 143
667
Pharmaceuticals 8.0%
Abbott Laboratories 3,100 136
Allergan 200 15
Biovail * 2,300 108
Eli Lilly 900 62
Forest Labs * 1,700 93
Johnson & Johnson 3,600 186
Pfizer 16,148 552
Wyeth 3,000 137
1,289
Total Health Care 2,410
INDUSTRIALS & BUSINESS SERVICES 5.8%
Aerospace & Defense 0.1%
General Dynamics 300 22
22
Air Freight & Logistics 0.4%
UPS, Class B 1,000 64
64
Commercial Services & Supplies 1.3%
Apollo Group, Class A * 2,500 155
Cendant * 2,800 51
206
Industrial Conglomerates 2.7%
3M 100 13
GE 8,070 231
Tyco International 10,130 192
436
Machinery 1.3%
Danaher 2,950 201
201
Total Industrials & Business Services 929
INFORMATION TECHNOLOGY 15.7%
Communications Equipment 2.0%
Cisco Systems * 14,850 248
Nokia ADR 3,170 52
QUALCOMM 800 29
329
Computer & Peripherals 1.3%
Dell Computer * 4,930 $ 158
IBM 200 16
Lexmark International Class A * 500 35
209
Internet Software & Services 1.7%
InterActiveCorp * 4,100 162
Yahoo! * 3,200 105
267
IT Services 4.0%
Accenture, Class A * 3,100 56
Affiliated Computer Services Class A * 2,700 124
First Data 7,780 322
Fiserv * 1,900 68
Paychex 1,300 38
SunGard Data Systems * 1,400 36
644
Semiconductor & Semiconductor
Equipment 3.2%
Analog Devices * 3,400 118
Applied Materials * 4,820 77
Intel 2,700 56
KLA-Tencor * 900 42
Maxim Integrated Products 4,000 137
QLogic * 1,000 48
Texas Instruments 1,700 30
Xilinx * 240 6
514
Software 3.5%
Adobe Systems 800 26
Intuit * 1,200 53
Microsoft 16,120 413
Symantec * 1,100 48
VERITAS Software * 500 14
554
Total Information Technology 2,517
TELECOMMUNICATION SERVICES 2.3%
Wireless Telecommunication Services 2.3%
Nextel Communications Class A * 7,000 127
Vodafone ADR 12,430 $ 244
Total Telecommunication Services 371
Total Miscellaneous
Common Stocks 1.2% 201
Total Common Stocks (Cost $12,048) 12,697
Short-Term Investments 3.3%
Money Market Fund 3.3%
T. Rowe Price Reserve Investment Fund
1.16% # 528,120 528
Total Short-Term
Investments (Cost $528) 528
Total Investments in Securities
82.3% of Net Assets (Cost $12,576) $13,225
Other Assets Less Liabilities 2,842
NET ASSETS $16,067
-------
# Seven-day yield
* Non-income producing
ADR American Depository Receipts
The accompanying notes are an integral part of these financial statements.
Statement of Assets and Liabilities
T. Rowe Price Blue Chip Growth Portfolio
Certified Financials
(Unaudited) June 30, 2003
In thousands
Assets
Investments in securities, at value (cost $12,576) $ 13,225
Receivable from shares sold 3,204
Other assets 25
Total assets 16,454
Liabilities
Total liabilities 387
NET ASSETS $ 16,067
--------------------
Net Assets Consist of:
Undistributed net investment income (loss) $ 7
Undistributed net realized gain (loss) (1,464)
Net unrealized gain (loss) 649
Paid-in-capital applicable to 2,164,522 shares of
$0.0001 par value capital stock outstanding;
1,000,000,000 shares of the Corporation authorized 16,875
NET ASSETS $ 16,067
--------------------
NET ASSET VALUE PER SHARE
Blue Chip Growth shares
($15,974,017/2,151,956 shares outstanding) $ 7.42
Blue Chip Growth-II shares
($93,028/12,566 shares outstanding) $ 7.40
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price Blue Chip Growth Portfolio
Certified Financials
(Unaudited)
In thousands
6 Months
Ended
6/30/03
Investment Income (Loss)
Income
Dividend $ 43
Income distributions from mutual funds 2
Total income 45
Investment management and administrative expense 38
Net investment income (loss) 7
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities (471)
Change in net unrealized gain (loss) on securities 1,727
Net realized and unrealized gain (loss) 1,256
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 1,263
--------------------
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price Blue Chip Growth 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) $ 7 $ 8
Net realized gain (loss) (471) (488)
Change in net unrealized gain (loss) 1,727 (1,100)
Increase (decrease) in net assets
from operations 1,263 (1,580)
Distributions to shareholders
Net investment income
Blue Chip Growth shares -- (11)
Capital share transactions *
Shares sold
Blue Chip Growth shares 8,945 3,678
Blue Chip Growth-II shares -- 100
Distributions reinvested
Blue Chip Growth shares -- 11
Shares redeemed
Blue Chip Growth shares (1,357) (1,012)
Increase (decrease) in net assets from
capital share transactions 7,588 2777
Net Assets
Increase (decrease) during period 8,851 1,186
Beginning of period 7,216 6,030
End of period $ 16,067 $ 7,216
--------------- ---------------
*Share information
Shares sold
Blue Chip Growth shares 1,267 523
Blue Chip Growth-II shares -- 13
Distributions reinvested
Blue Chip Growth shares -- 2
Shares redeemed
Blue Chip Growth shares (206) (134)
Increase (decrease) in shares outstanding 1,061 404
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price Blue Chip Growth 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 Blue Chip Growth Portfolio
(the fund) is a diversified, open-end management investment company and is one
of the portfolios established by the corporation. The fund seeks to provide
long-term capital growth. Income is a secondary objective. 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 fund has two classes of shares: Blue Chip Growth Portfolio, offered since
December 29, 2000, and Blue Chip Growth Portfolio-II, offered since April 30,
2002. Blue Chip Growth Portfolio-II sells its shares only through financial
intermediaries, which it compensates for distribution and certain administrative
services under a Board-approved Rule 12b-1 plan. Each class has exclusive voting
rights on matters related solely to that class, separate voting rights on
matters that relate to both classes, and, in all other respects, the same rights
and obligations as the other class.
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, or official
closing price for certain markets, 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 for domestic securities and the last quoted sale price
for international securities.
Investments in mutual funds are valued at the closing net asset value per share
of the mutual fund on the day of valuation.
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.
Most foreign markets close before the NYSE. Develop-ments that could affect the
values of securities that occur between the close of a foreign market and the
close of the NYSE normally will not be reflected in security valuations.
However, if such developments are so significant that they will, in the judgment
of the officers of the fund, clearly and materially affect the value of
securities, the previous closing prices may be adjusted to reflect the fair
value of the securities as of the close of the NYSE, as determined in good faith
by or under the supervision of the officers of the fund, as authorized by the
Board of Directors.
Currency Translation
Assets, including investments, and liabilities denominated in foreign currencies
are translated into U.S. dollar values each day at the prevailing exchange rate,
using the mean of the bid and ask prices of such currencies against U.S. dollars
as quoted by a major bank. Purchases and sales of securities, income, and
expenses are translated into U.S. dollars at the prevailing exchange rate on the
date of the transaction. The effect of changes in foreign currency exchange
rates on realized and unrealized security gains and losses is reflected as a
component of such gains and losses.
Class Accounting
Blue Chip Growth Portfolio-II pays distribution and administrative expenses in
the form of Rule 12b-1 fees, in an amount not exceeding 0.25% of the class's
average net assets. Management and administrative fee expense, investment
income, and realized and unrealized gains and losses are allocated to the
classes based upon the relative daily net assets of each class. Income
distributions are declared and paid by each class on annual basis.
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.
Note 2 - Investment Transactions
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $5,950,000 and $1,513,000, 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.
For tax purposes, the fund has elected to treat net capital losses realized
between November 1 and December 31 of each year as occurring on the first day of
the following tax year; consequently, $50,000 of realized losses recognized for
financial reporting purposes in the year ended December 31, 2002 were recognized
for tax purposes on January 1, 2003. Further, the fund intends to retain
realized gains to the extent of available capital loss carryforwards. As of
December 31, 2002, the fund had $943,000 of unused capital loss carryforwards,
of which $452,000 expire in 2009, and $491,000 expire in 2010.
At June 30, 2003, the cost of investments for federal income tax purposes was
$12,576,000. Net unrealized gain aggregated $649,000 at period-end, of which
$1,014,000 related to appreciated investments and $365,000 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 0.85% 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, $13,000 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 $2,000.
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