Item 1. Report to Shareholders
T. Rowe Price New America Growth Portfolio
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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 New America Growth Portfolio
Certified Semiannual Report
(Unaudited)
For a share outstanding throughout each period
------------------------------------------------------------------
6 Months Year
Ended Ended
6/30/04 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
NET ASSET VALUE
Beginning
of period $ 17.55 $ 12.99 $ 18.12 $ 20.91 $ 26.18 $ 24.74
Investment
activities
Net investment
income (loss) (0.02) (0.03) (0.05) (0.04) (0.04) (0.07)
Net realized
and unrealized
gain (loss) 0.90 4.59 (5.08) (2.44) (2.64) 3.10
Total from
investment
activities 0.88 4.56 (5.13) (2.48) (2.68) 3.03
Distributions
Net realized
gain -- -- -- (0.31) (2.59) (1.59)
NET ASSET VALUE
End of
period $ 18.43 $ 17.55 $ 12.99 $ 18.12 $ 20.91 $ 26.18
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Ratios/
Supplemental Data
Total
return^ 5.01% 35.10% (28.31)% (11.84)% (10.62)% 12.75%
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 (0.24)%! (0.20)% (0.29)% (0.20)% (0.18)% (0.30)%
Portfolio
turnover
rate 48.1%! 64.2% 62.7% 56.4% 89.2% 42.1%
Net assets,
end of
period (in
thousands) $ 70,911 $ 70,847 $ 55,871 $ 90,282 $108,835 $125,974
^ 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 New America Growth Portfolio
Certified Semiannual Report
June 30, 2004 (Unaudited)
Shares Value
- --------------------------------------------------------------------------------
(Cost and value in $ 000s)
Common Stocks 98.0%
CONSUMER DISCRETIONARY 15.4%
Automobiles 2.0%
Harley-Davidson 22,900 1,419
1,419
Hotels, Restaurants & Leisure 2.3%
International Game Technology 33,200 1,281
PF Chang's China Bistro * 8,400 346
1,627
Media 6.0%
EchoStar Communications
Class A * 20,800 640
Getty Images * 19,700 1,182
Liberty Media, Class A * 72,100 648
Scripps, Class A 9,500 997
Viacom, Class B 22,201 793
4,260
Multiline Retail 1.7%
Family Dollar Stores 39,100 1,190
1,190
Specialty Retail 3.4%
PETsMART 35,300 1,145
Ross Stores 15,300 409
Staples 29,700 871
2,425
Total Consumer Discretionary 10,921
CONSUMER STAPLES 2.9%
Food & Staples Retailing 2.9%
Sysco 26,650 956
Wal-Mart 19,400 1,023
Whole Foods Market 1,100 105
Total Consumer Staples 2,084
ENERGY 5.3%
Energy Equipment & Services 5.3%
Baker Hughes 24,825 935
Cooper Cameron * 13,000 633
Diamond Offshore Drilling 33,250 792
Smith International * 24,400 1,361
Total Energy 3,721
FINANCIALS 11.2%
Capital Markets 5.4%
Eaton Vance 9,100 348
Franklin Resources 8,400 421
Goldman Sachs Group 8,750 824
Investor's Financial Services 6,800 296
Lehman Brothers 6,100 459
Morgan Stanley 8,100 428
State Street 15,200 745
Waddell & Reed Financial
Class A 15,800 349
3,870
Consumer Finance 0.7%
SLM Corporation 12,600 510
510
Diversified Financial Services 1.8%
Citigroup 15,300 711
Principal Financial Group 16,000 557
1,268
Insurance 2.1%
American International Group 14,500 1,034
Saint Paul Companies 11,163 452
1,486
Real Estate 0.3%
St. Joe 4,800 190
190
Thrifts & Mortgage Finance 0.9%
Radian Group 13,300 637
637
Total Financials 7,961
HEALTH CARE 17.0%
Biotechnology 3.8%
Amgen * 17,900 977
Biogen Idec * 2,900 183
Cephalon * 8,750 473
Genentech * 1,200 67
Genzyme * 2,200 104
Gilead Sciences * 9,600 643
Neurocrine Biosciences * 2,700 140
OSI Pharmaceuticals * 1,500 106
2,693
Health Care Equipment & Supplies 3.8%
Biomet 10,600 471
Boston Scientific * 11,800 505
Dentsply International 5,750 299
Guidant 3,200 179
Medtronic 23,600 1,150
Stryker 1,600 88
2,692
Health Care Providers & Services 4.9%
Anthem * 4,900 439
Laboratory Corporation of
America * 24,700 981
Omnicare 17,200 736
Quest Diagnostics 5,300 450
UnitedHealth Group 13,300 828
3,434
Pharmaceuticals 4.5%
Eli Lilly 4,200 294
Forest Laboratories * 15,600 883
IVAX * 19,500 468
Johnson & Johnson 9,500 529
Pfizer 30,500 1,046
3,220
Total Health Care 12,039
INDUSTRIALS & BUSINESS SERVICES 13.3%
Aerospace & Defense 1.6%
Lockheed Martin 22,700 1,182
1,182
Air Freight & Logistics 4.0%
C.H. Robinson Worldwide 3,900 179
Expeditors International of
Washington 14,300 707
UPS, Class B 25,800 1,939
2,825
Airlines 0.2%
Southwest Airlines 9,500 159
159
Commercial Services & Supplies 5.8%
Apollo Group, Class A * 6,500 574
ChoicePoint * 46,600 2,128
Consolidated Graphics * 8,300 365
Education Management * 31,700 1,042
4,109
Industrial Conglomerates 1.7%
GE 36,600 1,186
1,186
Total Industrials & Business Services 9,461
INFORMATION TECHNOLOGY 27.5%
Communications Equipment 2.8%
Cisco Systems * 57,150 1,355
Juniper Networks * 7,700 189
QLogic * 8,400 223
Research In Motion * 3,000 205
1,972
Computer & Peripherals 2.8%
Dell * 54,900 1,967
1,967
Electronic Equipment & Instruments 1.3%
CDW 14,200 905
905
Internet Software & Services 0.8%
InterActiveCorp * 19,028 574
574
IT Services 5.9%
Affiliated Computer Services
Class A * 18,200 963
Certegy 22,700 881
First Data 14,800 659
Fiserv * 18,700 727
SunGard Data Systems * 38,000 988
4,218
Semiconductor & Semiconductor Equipment 4.8%
Intel 23,600 652
Intersil Holding, Class A 41,700 903
Maxim Integrated Products 9,200 482
Microchip Technology 16,400 517
Novellus Systems * 15,300 481
Xilinx 10,700 357
3,392
Software 9.1%
Adobe Systems 12,100 563
Cadence Design Systems * 23,200 339
Intuit * 28,600 1,103
Jack Henry & Associates 30,600 615
Mercury Interactive * 16,450 820
Microsoft 62,800 1,794
Red Hat * 7,600 175
SAP ADR 19,900 832
Symantec * 5,400 236
6,477
Total Information Technology 19,505
MATERIALS 0.5%
Metals & Mining 0.5%
Nucor 4,200 322
Total Materials 322
TELECOMMUNICATION SERVICES 2.8%
Wireless Telecommunication Services 2.8%
Nextel Communications
Class A * 28,700 765
Vodafone ADR 28,800 636
Western Wireless, Class A * 20,500 593
Total Telecommunication Services 1,994
Total Miscellaneous Common Stocks 2.1% 1,488
Total Common Stocks (Cost $55,054) 69,496
Short-Term Investments 2.1%
Money Market Fund 2.1%
T. Rowe Price Reserve Investment
Fund, 1.16% # 1,476,514 1,477
Total Short-Term Investments
(Cost $1,477) 1,477
Total Investments in Securities
100.1% of Net Assets (Cost $56,531) $70,973
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(1) Denominated in U.S. dollars unless otherwise noted
# 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 New America Growth Portfolio
Certified Semiannual Report
June 30, 2004 (Unaudited)
(In thousands except shares and per share amounts)
Assets
Investments in securities, at value ($56,531) $70,973
Other assets 292
Total assets 71,265
Liabilities
Total liabilities 354
NET ASSETS $ 70,911
--------------------
Net Assets Consist of:
Undistributed net investment income (loss) $ (83)
Undistributed net realized gain (loss) (12,214)
Net unrealized gain (loss) 14,442
Paid-in-capital applicable to 3,847,290 shares of
$0.0001 par value capital stock outstanding;
1,000,000,000 shares of the Corporation authorized 68,766
NET ASSETS $ 70,911
--------------------
NET ASSET VALUE PER SHARE $ 18.43
--------------------
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price New America Growth Portfolio
Certified Semiannual Report
(Unaudited)
($ 000s)
6 Months
Ended
6/30/04
Investment Income (Loss)
Dividend income $ 215
Investment management and administrative expense 298
Net investment income (loss) (83)
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on securities 4,685
Change in net unrealized gain (loss) on securities (1,105)
Net realized and unrealized gain (loss) 3,580
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 3,497
--------------------
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price New America Growth 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) $ (83) $ (122)
Net realized gain (loss) 4,685 572
Change in net unrealized gain (loss) (1,105) 17,485
Increase (decrease) in net assets
from operations 3,497 17,935
Capital share transactions *
Shares sold 4,433 11,585
Shares redeemed (7,866) (14,544)
Increase (decrease) in net assets from capital
share transactions (3,433) (2,959)
Net Assets
Increase (decrease) during period 64 14,976
Beginning of period 70,847 55,871
End of period $ 70,911 $ 70,847
-------------------------------------
(Including undistributed net investment
income (loss) of $(83) at 6/30/04 and $0
at 12/31/03)
*Share information
Shares sold 245 774
Shares redeemed (436) (1,036)
Increase (decrease) in shares outstanding (191) (262)
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
T. Rowe Price New America Growth 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 New America Growth Portfolio
(the fund), a diversified, open-end management investment company, is one
portfolio established by the corporation and commenced operations on March 31,
1994. The fund seeks to provide long-term growth of capital by investing
primarily in the common stocks of companies operating in sectors T. Rowe Price
believes will be the fastest growing in the United States. 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 or, for certain markets, the official closing 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 for domestic securities and the last quoted sale price for
international securities.
Investments in mutual funds are valued at the mutual fund's closing net asset
value per share 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 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. 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. Distributions to shareholders are recorded on the
ex-dividend date. Income distributions are declared and paid on an annual 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
Purchases and sales of portfolio securities, other than short-term securities,
aggregated $16,793,000 and $20,431,000, 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 $16,899,000 of unused
capital loss carryforwards, of which $7,026,000 expire in 2009, $9,662,000
expire in 2010, and $211,000 expire in 2011.
At June 30, 2004, the cost of investments for federal income tax purposes was
$56,531,000. Net unrealized gain aggregated $14,442,000 at period-end, of which
$15,579,000 related to appreciated investments and $1,137,000 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, 2004, $70,000 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 $4,000.
T. Rowe Price New America Growth Portfolio
Certified Semiannual Report
Information on Proxy Voting
- --------------------------------------------------------------------------------
A description of the policies and procedures that the T. Rowe Price New America
Growth 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