Item 1. Report to Shareholders
T. Rowe Price Mid-Cap Growth Portfolio
Certified Financials
Financial Highlights
T. Rowe Price Mid-Cap Growth Portfolio
Certified Financials
(Unaudited)
For a share outstanding throughout each period
________________________________________________________________
Mid-Cap Growth
shares 6 Months Year
Ended Ended
6/30/03 12/31/02 12/31/01 12/31/00 12/31/99 12/31/98
NET ASSET VALUE
Beginning of
period $ 14.38 $ 18.26 $ 18.43 $ 17.46 $ 14.27 $ 11.88
Investment activities
Net investment
income (loss) (0.03) (0.08) (0.05) -- -- (0.01)
Net realized
and unrealized
gain (loss) 2.64 (3.80) (0.12) 1.29 3.37 2.61
Total from investment
activities 2.61 (3.88) (0.17) 1.29 3.37 2.60
Distributions
Net realized
gain -- -- -- (0.32) (0.18) (0.21)
NET ASSET VALUE
End of period $ 16.99 $ 14.38 $ 18.26 $ 18.43 $ 17.46 $ 14.27
-------- -------- -------- -------- -------- --------
Ratios/Supplemental Data
Total return^ 18.15% (21.25)% (0.92)% 7.41% 23.73% 22.08%
Ratio of total
expenses to
average net
assets 0.85%! 0.85% 0.85% 0.85% 0.85% 0.85%
Ratio of net
investment income
(loss) to average
net assets (0.48)%! (0.48)% (0.29)% (0.01)% 0.01% (0.11)%
Portfolio turnover
rate 36.3%! 33.7% 41.8% 46.3% 48.1% 47.8%
Net assets, end
of period (in
thousands) $371,556 $298,288 $350,094 $311,604 $127,228 $ 29,911
^ 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 Mid-Cap Growth Portfolio
Certified Financials
(Unaudited)
For a share outstanding
throughout each period
______________________________
Mid-Cap Growth-II shares 6 Months 4/30/02
Ended Through
6/30/03 12/31/02
NET ASSET VALUE
Beginning of period $ 14.36 $ 17.87
Investment activities
Net investment income (loss) (0.03) (0.02)
Net realized and unrealized gain (loss) 2.62 (3.49)
Total from investment activities 2.59 (3.51)
NET ASSET VALUE
End of period $ 16.95 $ 14.36
--------------- ---------------
Ratios/Supplemental Data
Total return^ 18.04% (19.64)%
Ratio of total expenses to average net assets 1.10%! 1.10%!
Ratio of net investment income (loss)to average
net assets (0.73)%! (0.63)%!
Portfolio turnover rate 36.3%! 33.7%
Net assets, end of period (in thousands) $ 10,848 $ 3,988
^ 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 Mid-Cap Growth Portfolio
Certified Financials
June 30, 2003 (Unaudited)
Shares Value
In thousands
Common Stocks 94.5%
CONSUMER DISCRETIONARY 15.3%
Hotels, Restaurants & Leisure 2.4%
The Cheesecake Factory * 80,400 $ 2,886
Fairmont Hotels 102,300 2,394
Starbucks * 152,900 3,749
9,029
Household Durables 0.5%
Garmin * 48,000 1,914
1,914
Leisure Equipment & Products 1.0%
Brunswick 151,000 3,778
3,778
Media 3.5%
Catalina Marketing * 150,700 2,660
Cox Radio, Class A * 119,000 2,750
Lamar Advertising, Class A * 44,600 1,570
Rogers Communications, Class B 157,000 2,520
Scholastic * 59,100 1,760
Scripps, Class A 13,000 1,153
Westwood One * 30,000 1,018
13,431
Multiline Retail 2.5%
99 Cents Only Stores * 25,000 858
Dollar Tree Stores * 141,000 4,474
Family Dollar Stores 108,000 4,120
9,452
Specialty Retail 4.7%
Best Buy * 115,600 5,077
O'Reilly Automotive * 95,200 3,179
Ross Stores 87,000 3,719
Weight Watchers * 66,000 3,002
Williams-Sonoma * 106,000 3,095
18,072
Textiles, Apparel, & Luxury Goods 0.7%
Coach * 57,000 2,835
2,835
Total Consumer Discretionary 58,511
CONSUMER STAPLES 1.9%
Beverages 0.4%
Cott * 79,700 1,649
1,649
Food & Staples Retailing 1.0%
Whole Foods Market * 83,000 3,945
3,945
Personal Products 0.5%
Estee Lauder, Class A 50,000 1,676
1,676
Total Consumer Staples 7,270
ENERGY 6.9%
Energy Equipment & Services 4.7%
BJ Services * 135,000 5,044
Cooper Cameron * 50,000 2,519
Diamond Offshore Drilling 160,000 3,358
FMC Technologies * 143,000 3,010
Smith International * 114,700 4,214
18,145
Oil & Gas 2.2%
Devon Energy 73,106 3,904
Murphy Oil 35,000 1,841
XTO Energy 125,000 2,514
8,259
Total Energy 26,404
FINANCIALS 7.5%
Capital Markets 4.0%
Charles Schwab 150,000 1,514
Eaton Vance 70,000 2,212
Franklin Resources 50,000 1,953
Investor's Financial Services 51,000 1,480
Legg Mason 37,400 2,429
Waddell & Reed Financial
Class A 214,000 5,493
15,081
Commercial Banks 0.2%
Silicon Valley Bancshares * 27,000 643
643
Diversified Financial Services 0.6%
Principal Financial Group 75,000 2,419
2,419
Insurance 2.2%
AMBAC 18,000 1,193
Nationwide Financial Services
Class A 80,000 2,600
Protective Life 80,000 2,140
Willis Group Holdings 79,000 2,429
8,362
Thrifts & Mortgage Finance 0.5%
Radian Group 56,000 $ 2,052
2,052
Total Financials 28,557
HEALTH CARE 20.5%
Biotechnology 5.5%
Affymetrix * 44,000 867
Alkermes * 88,000 946
Amylin Pharmaceuticals * 68,000 1,489
Cephalon * 64,600 2,659
Gilead Sciences * 84,000 4,669
Human Genome Sciences * 96,000 1,221
IDEC Pharmaceuticals * 50,000 1,700
MedImmune * 87,000 3,164
Millennium Pharmaceuticals * 106,000 1,667
Neurocrine Biosciences * 25,000 1,248
Protein Design Labs * 55,000 769
Vertex Pharmaceuticals * 50,000 730
21,129
Health Care Equipment & Supplies 1.9%
Apogent Technologies * 102,000 2,040
Cytyc * 49,000 515
Invitrogen * 20,000 767
St. Jude Medical * 35,000 2,013
Waters Corporation * 63,700 1,856
7,191
Health Care Providers & Services 9.3%
AmerisourceBergen 48,000 3,329
Anthem * 70,000 5,400
Davita * 97,000 2,598
Health Management, Class A 176,000 3,247
Laboratory Corporation of
America * 124,000 3,739
Manor Care * 142,900 3,574
Omnicare 247,800 8,373
Triad Hospitals * 63,000 1,564
WellChoice * 47,000 1,376
Wellpoint Health Networks * 30,000 2,529
35,729
Pharmaceuticals 3.8%
Andrx * 159,000 3,164
Barr Laboratories * 67,500 4,421
IVAX * 114,000 2,035
Teva Pharmaceutical ADR 86,700 4,936
14,556
Total Health Care 78,605
INDUSTRIALS & BUSINESS SERVICES 15.2%
Aerospace & Defense 3.0%
Alliant Techsystems * 78,800 $ 4,091
L-3 Communications Holdings * 45,000 1,957
Rockwell Collins 213,200 5,251
11,299
Air Freight & Logistics 0.7%
Expeditors International of
Washington 79,000 2,736
2,736
Airlines 0.1%
JetBlue Airways * 13,000 550
550
Building Products 0.9%
American Standard * 45,000 3,327
3,327
Commercial Services & Supplies 6.4%
Apollo Group, Class A * 31,000 1,915
ChoicePoint * 160,900 5,554
Education Management * 46,300 2,462
Hewitt Associates, Class A * 101,000 2,378
Manpower 114,900 4,262
Robert Half International * 202,000 3,826
Viad 183,700 4,113
24,510
Industrial Conglomerates 1.0%
Roper Industries 101,000 3,757
3,757
Machinery 2.9%
Danaher 60,000 4,083
ITT Industries 70,000 4,582
Oshkosh Truck, Class B 40,000 2,373
11,038
Trading Companies & Distributors 0.2%
Fastenal 17,000 577
MSC Industrial Direct, Class A * 10,000 179
756
Total Industrials & Business Services 57,973
INFORMATION TECHNOLOGY 23.4%
Communications Equipment 1.0%
Harris 126,000 $ 3,786
3,786
Computer & Peripherals 1.7%
Diebold 60,500 2,616
Lexmark International, Class A * 18,000 1,274
Seagate Technology 149,000 2,630
6,520
Electronic Equipment & Instruments 2.2%
CDW * 69,200 3,169
Celestica * 126,000 1,986
Jabil Circuit * 90,000 1,989
Molex, Class A 51,000 1,182
8,326
Internet Software & Services 3.0%
Expedia, Class A * 25,000 1,909
InterActiveCorp * 80,000 3,166
Monster Worldwide * 126,000 2,486
VeriSign * 284,500 3,935
11,496
IT Services 7.8%
Affiliated Computer Services
Class A * 75,000 3,430
BearingPoint * 297,000 2,866
BISYS Group * 129,000 2,370
Ceridian * 205,000 3,479
Certegy * 143,900 3,993
DST Systems * 115,000 4,370
Fiserv * 85,000 3,027
Iron Mountain * 111,000 4,117
SunGard Data Systems * 87,000 2,254
29,906
Semiconductor & Semiconductor
Equipment 4.0%
Intersil Holding, Class A * 106,000 2,821
KLA-Tencor * 45,300 2,106
Maxim Integrated Products 40,000 1,368
Microchip Technology 153,400 3,778
Novellus Systems * 60,000 2,197
QLogic * 28,000 1,353
Semtech * 111,000 1,581
15,204
Software 3.7%
Adobe Systems 90,900 $ 2,915
Informatica * 68,500 473
Intuit * 50,000 2,226
Mercury Interactive * 50,000 1,931
Network Associates * 117,200 1,486
PeopleSoft * 112,000 1,970
Siebel Systems * 64,000 611
Synopsys * 21,000 1,299
VERITAS Software * 51,000 1,462
14,373
Total Information Technology 89,611
MATERIALS 1.9%
Chemicals 1.0%
Potash Corp./Saskatchewan 63,100 4,038
4,038
Metals & Mining 0.9%
Newmont Mining 101,000 3,279
3,279
Total Materials 7,317
TELECOMMUNICATION SERVICES 1.8%
Wireless Telecommunication Services 1.8%
Nextel Communications
Class A * 235,700 4,261
Triton PCS Holdings, Class A * 110,000 556
Western Wireless, Class A * 165,800 1,912
Total Telecommunication Services 6,729
Total Miscellaneous Common Stocks 0.1% 531
Total Common Stocks (Cost $299,922) 361,508
Short-Term Investments 6.9%
Money Market Fund 6.9%
T. Rowe Price Government
Reserve Investment
Fund, 1.01% # 26,205,938 26,206
Total Short-Term Investments
(Cost $26,206) 26,206
Value
- --------------------------------------------------------------------------------
In thousands
Total Investments in Securities
101.4% of Net Assets (Cost $326,128) $ 387,714
Other Assets Less Liabilities (5,310)
NET ASSETS $ 382,404
----------
Net Assets Consist of:
Undistributed net investment income (loss) $ (775)
Undistributed net realized gain (loss) (53,144)
Net unrealized gain (loss) 61,586
Paid-in-capital applicable to
22,508,130 shares of $0.0001 par
value capital stock outstanding;
1,000,000,000 shares of the
Corporation authorized 374,737
NET ASSETS $ 382,404
----------
NET ASSET VALUE PER SHARE
Mid-Cap Growth Portfolio shares
($371,556,194/21,868,181
shares outstanding) $ 16.99
----------
Mid-Cap Growth Portfolio-II shares
($10,847,807/639,949
shares outstanding) $ 16.95
----------
# Seven-day yield
* Non-income producing
ADR American Depository Receipts
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price Mid-Cap Growth Portfolio
Certified Financials
(Unaudited) In thousands
6 Months
Ended
6/30/03
Investment Income (Loss)
Income
Dividend $ 497
Income distributions from mutual funds 84
Total income 581
Expenses
Investment management and administrative 1,348
Distribution - Mid-Cap Growth-II shares 8
Total Expenses 1,356
Net investment income (loss) (775)
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities (897)
Change in unrealized gain (loss) on securities 58,089
Net realized and unrealized gain (loss) 57,192
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 56,417
----------
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price Mid-Cap 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) $ (775) $ (1,562)
Net realized gain (loss) (897) (22,725)
Change in net unrealized gain (loss) 58,089 (56,143)
Increase (decrease) in net assets from
operations 56,417 (80,430)
Capital share transactions *
Shares sold
Mid-Cap Growth shares 38,234 77,226
Mid-Cap Growth-II shares 6,472 5,274
Shares redeemed
Mid-Cap Growth shares (20,030) (48,621)
Mid-Cap Growth-II shares (965) (1,267)
Increase (decrease) in net assets from
capital share transactions 23,711 32,612
Net Assets
Increase (decrease) during period 80,128 (47,818)
Beginning of period 302,276 350,094
End of period $ 382,404 $ 302,276
--------------- ---------------
*Share information
Shares sold
Mid-Cap Growth shares 2,519 4,696
Mid-Cap Growth-II shares 427 365
Shares redeemed
Mid-Cap Growth shares (1,397) (3,123)
Mid-Cap Growth-II shares (65) (87)
Increase (decrease) in shares outstanding 1,484 1,851
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price Mid-Cap 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 Mid-Cap 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 appreciation by investing in mid-cap stocks with potential for
above-average earnings growth. 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: Mid-Cap Growth Portfolio (Mid-Cap Growth Class) offered since
December 31, 1996, and Mid-Cap Growth Portfolio-II, offered since April 30,
2002. Mid-Cap Growth-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.
Class Accounting
Mid-Cap Growth-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 an annual basis. Capital gain distributions, if any,
are declared and paid by the fund, typically on an 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 $71,433,000 and $56,059,000, 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, $4,830,000 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 $47,417,000 of unused capital loss
carryforwards, of which $23,036,000 expire in 2009 and $24,381,000 expire in
2010.
At June 30, 2003, the cost of investments for federal income tax purposes was
$326,128,000. Net unrealized gain aggregated $61,586,000 at period-end, of which
$81,716,000 related to appreciated investments and $20,130,000 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, $294,000 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 $84,000.
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