Item 1. Report to Shareholders
T. Rowe Price Equity Index 500 Portfolio
- --------------------------------------------------------------------------------
June 30, 2004
Certified Semiannual Report
This report is certified under the Sarbanes-Oxley Act of 2002, which requires
that public companies, including mutual funds, affirm that the information
provided in their annual and semiannual shareholder reports fully and fairly
represents their financial position.
Financial Highlights
T. Rowe Price Equity Index 500 Portfolio
Certified Semiannual Report
(Unaudited)
For a share outstanding throughout each period
---------------------------------------------------------
6 Months Year 12/29/00
Ended Ended Through
6/30/04 12/31/03 12/31/02 12/31/01
NET ASSET VALUE
Beginning of period $ 8.47 $ 6.70 $ 8.73 $ 10.00
Investment activities
Net investment
income (loss) 0.05 0.10 0.09 0.08
Net realized and
unrealized gain
(loss) 0.22 1.78 (2.03) (1.27)
Total from
investment
activities 0.27 1.88 (1.94) (1.19)
Distributions
Net investment
income (0.05) (0.11) (0.09) (0.08)
NET ASSET VALUE
End of period $ 8.69 $ 8.47 $ 6.70 $ 8.73
----------------------------------------------------------
Ratios/Supplemental Data
Total return^ 3.19% 28.27% (22.29)% (11.82)%
Ratio of total
expenses to
average net assets 0.40%! 0.40% 0.40% 0.40%
Ratio of net
investment income
(loss) to average
net assets 1.21%! 1.37% 1.21% 0.98%
Portfolio turnover
rate 18.3%! 40.8% 43.7% 32.6%
Net assets, end of
period (in
thousands) $ 4,801 $ 3,887 $ 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.
Portfolio of Investments (1)
T. Rowe Price Equity Index 500 Portfolio
Certified Semiannual Report
June 30, 2004 (Unaudited)
Shares/$ Par Value
(Cost and value in $ 000s)
COMMON STOCKS 98.8%
CONSUMER DISCRETIONARY 10.9%
Auto Components 0.2%
Johnson Controls 80 4
Delphi 240 2
Dana 70 1
Cooper Tire 40 1
Goodyear Tire & Rubber* 70 1
Visteon 50 1
10
Automobiles 0.7%
Ford Motor 810 13
GM 240 11
Harley-Davidson 140 9
33
Distributors 0.1%
Genuine Parts 70 3
3
Hotels, Restaurants & Leisure 1.4%
McDonald's 540 14
Carnival 270 13
Starbucks * 180 8
International Game Technology 140 5
Starwood Hotels & Resorts
Worldwide, Class B 120 5
Yum! Brands * 140 5
Marriott, Class A 90 5
Harrah's Entertainment 60 3
Hilton 170 3
Darden Restaurants 105 2
Wendy's 50 2
65
Household Durables 0.6%
Fortune Brands 80 6
Pulte 60 3
Leggett & Platt 110 3
Newell Rubbermaid 120 3
Centex 50 2
Stanley Works 50 2
Whirlpool 30 2
KB Home 20 2
Snap-On 40 1
Black & Decker 20 1
Maytag 40 1
American Greetings, Class A * 30 1
27
Internet & Catalog Retail 0.5%
eBay * 280 26
26
Leisure Equipment & Products 0.2%
Eastman Kodak 160 4
Mattel 190 4
Brunswick 40 2
Hasbro 60 1
11
Media 3.5%
Time Warner * 1,955 34
Comcast, Class A * 1,013 28
Viacom, Class B 780 28
Disney 850 22
Gannett 120 10
Clear Channel Communications 270 10
McGraw-Hill 90 7
Omnicom 90 7
Tribune 140 6
Univision Communications
Class A * 150 5
New York Times, Class A 80 3
Knight-Ridder 40 3
Interpublic Group * 150 2
Dow Jones 40 2
Meredith 30 2
169
Multiline Retail 1.0%
Target 400 17
Kohl's * 140 6
J.C. Penney 140 5
Federated Department Stores 90 4
Sears 90 3
May Department Stores 120 3
Family Dollar Stores 100 3
Dollar General 150 3
Nordstrom 60 3
Dillards, Class A 30 1
Big Lots * 40 1
49
Specialty Retail 2.3%
Home Depot 1,030 36
Lowe's 330 17
GAP 400 10
Best Buy 140 7
Staples 220 7
TJX 230 6
Bed Bath & Beyond * 130 5
The Limited 220 4
AutoZone * 50 4
Office Depot * 160 3
RadioShack 80 2
Autonation * 130 2
Tiffany 60 2
Sherwin-Williams 50 2
Circuit City Stores 130 2
Toys "R" Us * 100 2
Boise Cascade 30 1
112
Textiles, Apparel, & Luxury Goods 0.4%
Nike, Class B 100 8
Jones Apparel Group 80 3
V.F. 60 3
Liz Claiborne 60 2
Reebok 40 1
17
Total Consumer Discretionary 522
CONSUMER STAPLES 11.0%
Beverages 2.7%
Coca-Cola 1,070 54
PepsiCo 752 41
Anheuser-Busch 340 18
Coca-Cola Enterprises 180 5
Pepsi Bottling Group 150 5
Brown-Forman, Class B 60 3
Coors, Class B 30 2
128
Food & Staples Retailing 3.4%
Wal-Mart 1,960 104
Walgreen 450 16
Sysco 290 10
CVS 200 8
Costco Wholesale 200 8
Kroger * 340 6
Safeway * 180 5
Albertson's 160 4
Supervalu 50 2
Winn-Dixie 60 1
164
Food Products 1.2%
General Mills 170 8
Sara Lee 330 8
Kellogg 180 7
ConAgra 250 7
Heinz 170 7
Wrigley 100 6
Archer-Daniels-Midland 303 5
Campbell Soup 180 5
Hershey Foods 100 5
McCormick 60 2
60
Household Products 2.0%
Procter & Gamble 1,160 63
Kimberly-Clark 220 15
Colgate-Palmolive 230 13
Clorox 80 4
95
Personal Products 0.6%
Gillette 460 19
Avon Products 220 10
Alberto Culver, Class B 15 1
30
Tobacco 1.1%
Altria Group 890 45
R.J. Reynolds Tobacco 60 4
UST 60 2
51
Total Consumer Staples 528
ENERGY 6.5%
Energy Equipment & Services 0.9%
Schlumberger 220 14
Baker Hughes 170 6
Halliburton 200 6
Transocean, Class C * 160 5
BJ Services * 80 4
Noble Drilling * 60 2
Nabors Industries * 50 2
Rowan * 40 1
40
Oil & Gas 5.6%
Exxon Mobil 2,950 131
ChevronTexaco 477 45
ConocoPhillips 310 24
Occidental Petroleum 170 8
Apache 178 8
Devon Energy 100 7
Burlington Resources 180 6
Marathon Oil 160 6
Anadarko Petroleum 100 6
Valero Energy 70 5
Unocal 100 4
Amerada Hess 40 3
Kinder Morgan 50 3
Williams Companies 230 3
Sunoco 40 3
EOG Resources 40 2
Kerr-McGee 40 2
El Paso Energy 271 2
Ashland 40 2
270
Total Energy 310
FINANCIALS 19.8%
Capital Markets 2.6%
Morgan Stanley 480 25
Merrill Lynch 420 23
Goldman Sachs Group 220 21
Bank of New York 350 10
Lehman Brothers 110 8
State Street 130 6
Charles Schwab 600 6
Franklin Resources 110 6
Mellon Financial 180 5
Bear Stearns 50 4
Northern Trust 90 4
E*TRADE Group * 170 2
Federated Investors, Class B 60 2
Janus Capital Group 100 2
124
Commercial Banks 6.1%
Bank of America 912 77
Wells Fargo 750 43
Bank One 510 26
Wachovia 580 26
U.S. Bancorp 847 23
Fifth Third Bancorp 267 14
BB&T 270 10
National City 280 10
SunTrust 110 7
PNC Financial Services Group 120 6
SouthTrust 150 6
KeyCorp 170 5
Regions Financial 130 5
M & T Bank 50 4
Marshall & Ilsley 110 4
Charter One Financial 89 4
North Fork Bancorporation 100 4
AmSouth Bancorporation 140 4
Synovus Financial 140 4
Comerica 60 3
First Horizon National 60 3
Zions Bancorp 40 3
Union Planters 75 2
Huntington Bancshares 90 2
295
Consumer Finance 1.3%
American Express 580 30
MBNA 565 15
SLM Corporation 210 8
Capital One Financial 90 6
Providian Financial * 140 2
61
Diversified Financial Services 3.2%
Citigroup 2,300 107
J.P. Morgan Chase 910 35
Principal Financial Group 180 6
Moody's 70 5
153
Insurance 4.5%
American International Group 1,171 83
Allstate 320 15
MetLife 330 12
Saint Paul Companies 288 12
Prudential 230 11
Marsh & McLennan 220 10
AFLAC 230 9
Hartford Financial Services 130 9
Progressive Corporation 70 6
ACE 130 5
Loews 90 5
Lincoln National 110 5
Chubb 70 5
Aon 150 4
XL Capital 50 4
MBIA 65 4
Ambac 50 4
Jefferson Pilot 65 3
SAFECO 70 3
Cincinnati Financial 63 3
Torchmark 40 2
UnumProvident 120 2
216
Real Estate 0.4%
Simon Property Group, REIT 100 5
Equity Office Properties, REIT 160 4
ProLogis Trust, REIT 100 3
Equity Residential, REIT 90 3
Plum Creek Timber, REIT 70 2
Apartment Investment & Management
REIT, Class A 50 2
19
Thrifts & Mortgage Finance 1.7%
Fannie Mae 410 29
Freddie Mac 290 18
Washington Mutual 385 15
Countrywide Financial 139 10
Golden West Financial 70 8
MGIC Investment 50 4
84
Total Financials 952
HEALTH CARE 13.0%
Biotechnology 1.1%
Amgen * 583 32
Biogen Idec * 133 8
Genzyme * 100 5
Chiron * 90 4
MedImmune * 110 2
Applied Biosystems Group - Applera 80 2
53
Health Care Equipment & Supplies 2.2%
Medtronic 530 26
Boston Scientific * 380 16
Zimmer Holdings * 103 9
Baxter International 260 9
Stryker 160 9
Guidant 130 7
St. Jude Medical * 90 7
Biomet 120 5
Becton, Dickinson 100 5
Waters Corporation * 70 4
C. R. Bard 40 2
Bausch & Lomb 30 2
Hospira * 69 2
Millipore * 30 2
105
Health Care Providers & Services 2.0%
UnitedHealth Group 280 17
Cardinal Health 180 13
HCA 220 9
WellPoint Health Networks * 60 7
Caremark RX * 200 7
Aetna 60 5
CIGNA 70 5
Anthem * 50 5
Medco * 115 4
Quest Diagnostics 50 4
McKesson 120 4
IMS Health 130 3
Health Management 130 3
Tenet Healthcare * 215 3
AmerisourceBergen 40 2
Express Scripts * 30 2
Manor Care 60 2
Humana * 60 1
96
Pharmaceuticals 7.7%
Pfizer 3,374 116
Johnson & Johnson 1,318 74
Merck 970 46
Eli Lilly 490 34
Abbott Laboratories 690 28
Wyeth 590 21
Bristol-Myers Squibb 840 21
Schering-Plough 640 12
Forest Laboratories * 160 9
Allergan 60 5
Mylan Laboratories 130 3
King Pharmaceuticals * 123 1
Watson Pharmaceuticals * 50 1
371
Total Health Care 625
INDUSTRIALS & BUSINESS SERVICES 11.2%
Aerospace & Defense 1.9%
United Technologies 220 20
Boeing 390 20
Honeywell International 370 14
General Dynamics 100 10
Lockheed Martin 180 9
Raytheon 210 7
Northrop Grumman 124 7
Rockwell Collins 90 3
Goodrich 70 2
92
Air Freight & Logistics 1.0%
UPS, Class B 490 37
Fedex 130 11
Ryder System 40 1
49
Airlines 0.1%
Southwest Airlines 350 6
Delta * 50 0
6
Building Products 0.2%
Masco 200 6
American Standard * 120 5
11
Commercial Services & Supplies 1.1%
Cendant 450 11
Waste Management 250 8
Apollo Group, Class A * 70 6
H&R Block 90 4
Cintas 90 4
Pitney Bowes 90 4
Avery Dennison 50 3
R.R. Donnelley 70 3
Robert Half International 70 2
Allied Waste Industries * 150 2
Equifax 70 2
Deluxe Corporation 30 1
50
Construction & Engineering 0.0%
Fluor 40 2
2
Electrical Equipment 0.5%
Emerson Electric 200 13
Rockwell Automation 90 3
Cooper Industries, Class A 50 3
American Power Conversion 80 2
Power-One * 50 1
Thomas & Betts 20 0
22
Industrial Conglomerates 4.5%
GE 4,720 153
3M 360 32
Tyco International 845 28
Textron 60 4
217
Machinery 1.4%
Illinois Tool Works 130 13
Caterpillar 140 11
Danaher 140 7
Deere 90 6
Parker Hannifin 70 4
Ingersoll-Rand, Class A 60 4
PACCAR 67 4
Eaton 60 4
Dover 90 4
ITT Industries 40 3
Navistar * 50 2
Pall 60 2
Cummins Engine 20 1
Crane 20 1
66
Road & Rail 0.4%
Union Pacific 110 7
Burlington Northern Santa Fe 150 5
Norfolk Southern 170 4
CSX 90 3
19
Trading Companies & Distributors 0.1%
W. W. Grainger 40 2
2
Total Industrials & Business Services 536
INFORMATION TECHNOLOGY 16.9%
Communications Equipment 3.1%
Cisco Systems * 3,040 72
QUALCOMM 360 26
Motorola 1,060 19
Corning * 600 8
Lucent Technologies * 1,860 7
Avaya * 190 3
Scientific-Atlanta 70 3
JDS Uniphase * 620 2
Comverse Technology * 100 2
Tellabs * 180 2
Andrew * 60 1
ADC Telecommunications * 420 1
QLogic * 40 1
CIENA * 250 1
148
Computers & Peripherals 3.5%
IBM 760 67
Dell * 1,130 40
Hewlett-Packard 1,357 29
EMC * 1,030 12
Sun Microsystems * 1,400 6
Apple Computer * 160 5
Lexmark International, Class A * 50 5
Network Appliance * 140 3
NCR * 50 2
Gateway * 160 1
170
Electronic Equipment & Instruments 0.5%
Agilent Technologies * 220 6
Molex 80 3
Thermo Electron * 80 3
Solectron * 380 2
Sanmina-SCI * 230 2
Jabil Circuit * 80 2
Symbol Technologies 120 2
PerkinElmer 70 1
Tektronix 30 1
22
Internet Software & Services 0.5%
Yahoo! * 590 21
Monster Worldwide * 70 2
23
IT Services 1.2%
First Data 375 17
Automatic Data Processing 260 11
Paychex 170 6
Electronic Data Systems 220 4
Computer Sciences * 90 4
Affiliated Computer Services
Class A * 70 4
Fiserv * 90 4
SunGard Data Systems * 130 3
Unisys * 160 2
Sabre Holdings 60 2
Convergys * 90 1
58
Office Electronics 0.1%
Xerox * 340 5
5
Semiconductor & Semiconductor
Equipment 3.6%
Intel 2,920 81
Texas Instruments 750 18
Applied Materials * 790 16
Analog Devices 170 8
Maxim Integrated Products 140 7
Broadcom, Class A * 140 7
Xilinx 160 5
Linear Technology 130 5
KLA-Tencor * 90 4
National Semiconductor * 200 4
Micron Technology * 270 4
Altera * 150 3
Advanced Micro Devices * 160 3
Novellus Systems * 60 2
NVIDIA * 80 2
Teradyne * 70 2
LSI Logic * 170 1
PMC-Sierra * 90 1
Applied Micro Circuits * 130 1
174
Software 4.4%
Microsoft 4,770 136
Oracle * 2,290 27
Electronic Arts * 140 8
Computer Associates 260 7
Symantec * 130 6
VERITAS Software * 190 5
Adobe Systems 90 4
Intuit * 100 4
PeopleSoft * 170 3
Siebel Systems * 210 2
Autodesk 50 2
Mercury Interactive * 40 2
BMC Software * 100 2
Novell * 170 2
Citrix Systems * 70 2
Compuware * 170 1
Parametric Technology * 80 0
213
Total Information Technology 813
MATERIALS 3.0%
Chemicals 1.6%
DuPont 440 20
Dow Chemical 428 17
PPG Industries 90 6
Praxair 140 6
Rohm & Haas 130 5
Air Products and Chemicals 100 5
Monsanto 110 4
Ecolab 110 3
International Flavors & Fragrances 60 2
Engelhard 60 2
Sigma Aldrich 30 2
Eastman Chemical 30 1
Hercules * 70 1
Great Lakes Chemical 20 1
75
Construction Materials 0.0%
Vulcan Materials 40 2
2
Containers & Packaging 0.2%
Sealed Air * 40 2
Bemis 60 2
Pactiv * 60 2
Ball 20 1
Temple-Inland 20 1
8
Metals & Mining 0.7%
Alcoa 380 13
Newmont Mining 200 8
Phelps Dodge * 50 4
Freeport McMoRan Copper Gold 90 3
Nucor 30 2
USX-U.S. Steel Group 60 2
Worthington Industries 60 1
Allegheny Technologies 30 1
34
Paper & Forest Products 0.5%
International Paper 220 10
Weyerhaeuser 100 6
Georgia-Pacific 150 6
MeadWestvaco 78 2
Louisiana Pacific 50 1
25
Total Materials 144
TELECOMMUNICATION SERVICES 3.4%
Diversified Telecommunication Services 2.8%
Verizon Communications 1,230 45
SBC Communications 1,480 36
BellSouth 810 21
Sprint 685 12
Alltel 130 7
AT&T 354 5
Qwest Communications
International * 740 3
Centurytel 50 1
Citizens Communications * 110 1
131
Wireless Telecommunication Services 0.6%
AT&T Wireless * 1,157 17
Nextel Communications, Class A * 500 13
30
Total Telecommunication Services 161
TRUSTS & MUTUAL FUNDS 0.5%
Trusts & Mutual Funds 0.5%
SPDR Trust 210 24
Total Trusts & Mutual Funds 24
UTILITIES 2.6%
Electric Utilities 1.8%
Southern Company 320 9
Exelon 280 9
American Electric Power 190 6
PG&E * 210 6
FirstEnergy 153 6
TXU 140 6
Entergy 100 6
FPL Group 70 4
PPL 90 4
Consolidated Edison 100 4
Progress Energy 90 4
Ameren 90 4
CINergy 100 4
DTE Energy 90 4
Edison International 140 3
XCEL Energy 170 3
Pinnacle West Capital 50 2
CenterPoint Energy 150 2
Teco Energy 90 1
Allegheny Energy * 70 1
CMS Energy * 70 1
89
Gas Utilities 0.1%
KeySpan 70 2
NiSource 100 2
Peoples Energy 20 1
NICOR 20 1
6
Multi-Utilities & Unregulated Power 0.7%
Duke Energy 410 8
Dominion Resources 130 8
Constellation Energy Group 100 4
Sempra Energy 110 4
Public Service Enterprise 90 3
AES * 290 3
Calpine * 190 1
Dynegy, Class A * 160 1
32
Total Utilities 127
Total Common Stocks (Cost $4,343) 4,742
SHORT-TERM INVESTMENTS 1.5%
U.S. Treasury Obligations 0.6%
U.S. Treasury Bills
1.03%, 7/15/04 ++ 30,000 30
30
Money Market Fund 0.9%
T. Rowe Price Reserve Investment
Fund, 1.16% # 42,122 42
42
Total Short-Term Investments
(Cost $72) 72
Total Investments in Securities
100.3% of Net Assets (Cost $4,415) $ 4,814
---------------
Futures Contracts
($000s)
Contract Unrealized
Expiration Value Gain (Loss)
---------- -------- -----------
Long, 1 S&P 500 EMINI Index
contracts $13 par of 1.03%
U.S. Treasury Bills
pledged as initial margin 9/04 $ 57 $ 1
Net payments (receipts) of
variation margin to date (1)
Variation margin receivable
(payable) on open futures
contracts -
(1) Denominated in U.S. dollars unless otherwise noted
# 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, 2004
REIT Real Estate Investment Trust
The accompanying notes are an integral part of these financial statements.
Statement of Assets and Liabilities
T. Rowe Price Equity Index 500 Portfolio
Certified Semiannual Report
June 30, 2004 (Unaudited)
(In thousands except shares and per share amounts)
Assets
Investments in securities, at value (cost $4,415) $ 4,814
Other assets 17
Total assets 4,831
Liabilities
Total liabilities 30
NET ASSETS $ 4,801
--------------------
Net Assets Consist of:
Undistributed net realized gain (loss) $ (1,050)
Net unrealized gain (loss) 400
Paid-in-capital applicable to 552,397 shares of
$0.0001 par value capital stock outstanding;
1,000,000,000 shares of the Corporation authorized 5,451
NET ASSETS $ 4,801
--------------------
NET ASSET VALUE PER SHARE $ 8.69
--------------------
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price Equity Index 500 Portfolio
Certified Semiannual Report
(Unaudited)
($ 000s)
6 Months
Ended
6/30/04
Investment Income (Loss)
Dividend income $ 37
Investment management and administrative expense 9
Net investment income (loss) 28
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities (24)
Futures 7
Net realized gain (loss) (17)
Change in net unrealized gain (loss)
Securities 130
Futures (4)
Change in net unrealized gain (loss) 126
Net realized and unrealized gain (loss) 109
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 137
--------------------
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 Semiannual Report
(Unaudited)
($ 000s)
6 Months Year
Ended Ended
6/30/04 12/31/03
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $ 28 $ 57
Net realized gain (loss) (17) (825)
Change in net unrealized gain (loss) 126 1,836
Increase (decrease) in net assets
from operations 137 1,068
Distributions to shareholders
Net investment income (28) (60)
Capital share transactions *
Shares sold 1,336 1,673
Distributions reinvested 28 60
Shares redeemed (559) (3,329)
Increase (decrease) in net assets from
capital share transactions 805 (1,596)
Net Assets
Increase (decrease) during period 914 (588)
Beginning of period 3,887 4,475
End of period $ 4,801 $ 3,887
-------------------------------------
(Including undistributed net investment
income of $0 at 6/30/04 and $0 at
12/31/03)
*Share information
Shares sold 155 231
Distributions reinvested 3 8
Shares redeemed (65) (448)
Increase (decrease) in shares outstanding 93 (209)
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price Equity Index 500 Portfolio
Certified Semiannual Report
June 30, 2004 (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
portfolio 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
The fund values its investments and computes its net asset value per share 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, except for OTC
Bulletin Board securities, which are valued at the mean of the latest bid and
asked prices. 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 asked prices. Debt securities with original
maturities of less than one year are valued at amortized cost in local currency,
which approximates fair value when combined with accrued interest.
Investments in mutual funds are valued at the mutual fund's closing net asset
value per share 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 the T. Rowe Price Valuation Committee,
established by the fund's Board of Directors.
Investment Transactions, Investment Income, and Distributions
Income and expenses are recorded on the accrual basis. Premiums and discounts on
debt securities are amortized for financial reporting purposes. Dividends
received from mutual fund investments are reflected as dividend income; capital
gain distributions are reflected as realized gain/loss. Dividend income and
capital gain distributions are recorded on the ex-dividend date. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on the identified cost basis. Payments ("variation margin") made or
received 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 other assets
and other liabilities, respectively, and in the change in net unrealized gain or
loss in the accompanying financial statements. Distributions to shareholders are
recorded on the ex-dividend date. Income distributions are declared and paid on
a quarterly basis. Capital gain distributions, if any, are declared and paid by
the fund, typically on an annual basis.
Other
In the normal course of business, the fund enters into contracts that provide
general indemnifications. The fund's maximum exposure under these arrangements
is dependent on claims that may be made against the fund in the future and,
therefore, cannot be estimated; however, based on experience, the risk of
material loss from such claims is considered remote.
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, 2004, 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 $1,306,000 and $409,000, respectively, for the six months ended June
30, 2004.
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 under Subchapter M of the
Internal Revenue Code 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. Financial
records are not adjusted for temporary differences. 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, 2004.
The fund intends to retain realized gains to the extent of available capital
loss carryforwards. As of December 31, 2003, the fund had $1,028,000 of unused
capital loss carryforwards, of which $26,000 expire in 2009, $183,000 expire in
2010, and $819,000 expire in 2011.
At June 30, 2004, the cost of investments for federal income tax purposes was
$4,415,000. Net unrealized gain aggregated $400,000 at period-end, of which
$623,000 related to appreciated investments and $223,000 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, 2004, $13,000 was payable
under the agreement.
The fund may invest in the T. Rowe Price Reserve Investment Fund and the 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 to mutual funds, trusts,
and other accounts managed by Price Associates and/or its affiliates, and are
not available for direct purchase by members of the public. The Reserve Funds
pay no investment management fees. During the six months ended June 30, 2004,
dividend income from the Reserve Funds totaled $1,000.
T. Rowe Price Equity Index 500 Portfolio
Certified Semiannual Report
Information on Proxy Voting
- --------------------------------------------------------------------------------
A description of the policies and procedures that the T. Rowe Price Equity Index
500 Portfolio uses to determine how to vote proxies relating to portfolio
securities is available, without charge, upon request by calling 1-800-225-5132.
It also appears in the fund's Statement of Additional Information (Form 485B),
which can be found on the SEC's Web site, www.sec.gov.
Item 2. Code of Ethics.
A code of ethics, as defined in Item 2 of Form N-CSR, applicable to its
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions is filed as an
exhibit to the registrant's annual Form N-CSR. No substantive amendments were
approved or waivers were granted to this code of ethics during the registrant's
most recent fiscal half-year.
Item 3. Audit Committee Financial Expert.
Disclosure required in registrant's annual Form N-CSR.
Item 4. Principal Accountant Fees and Services.
Disclosure required in registrant's annual Form N-CSR.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Not applicable. The complete schedule of investments is included in Item 1 of
this Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 10. 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 11. Exhibits.
(a)(1) The registrant's code of ethics pursuant to Item 2 of Form N-CSR is filed
with the registrant's annual Form N-CSR.
(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.
(3) Written solicitation to repurchase securities issued by closed-end
companies: not applicable.
(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 16, 2004
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 16, 2004
By: /s/ Joseph A. Carrier
Joseph A. Carrier
Principal Financial Officer
Date: August 16, 2004