T. Rowe Price Equity Income Portfolio
Semiannual Report
June 30, 1996
Dear Investor
The equity market and your fund generated strong returns during the first half
of 1996. Continued good earnings growth and solid investor demand fueled the
advance. Individual investors provided a source of liquidity that contributed
significantly to the market's positive tone, which was particularly notable in
view of the weakness in the fixed income markets.
Performance Review
Your fund performed well in an extremely healthy environment. As shown in the
table, your fund's returns were about as we would have expected in this type
of market: about in line with the average of similarly managed funds but
somewhat behind the returns of the unmanaged Standard & Poor's 500 Stock Index
for both the 6- and 12-month periods ended June 30, 1996. Please keep in mind
that our conservative investment approach often lags broad market indices in
unusually robust markets.
Performance Comparison
Periods Ended 6/30/96 6 Months 12 Months
_________ _________
Equity Income Portfolio 7.60% 25.20%
S&P 500 10.10 26.00
Lipper Equity Income Funds Average 7.65 22.09
First Half Distributions
On June 25, your Board of Trustees declared a second quarter dividend of $0.11
per share, bringing your 1996 income distributions to $0.21 per share. The
second quarter distribution was paid on June 27 to shareholders of record on
June 25. The fund also paid a long-term capital gain distribution of $0.01 at
the end of January.
Portfolio Strategy
So far in 1996, the equity market has been characterized by strong investor
preference for high-growth companies and by scorn for interest rate-sensitive
stocks and most fixed income securities. Bond market weakness spilled over
into the utility sector, leading to disappointing returns for utility stocks
during the past six months. Because of improved valuations, we added
incremental investments in several telephone companies and established new
positions in PECO Energy and Public Service Enterprise. We also added to other
existing holdings in the sector such as Unicom.
Financial stocks were another area we found attractive since our last
report. We capitalized on price weakness in American General by taking a
significant position. The company is a broadly diversified financial services
firm with interests in annuities, consumer finance, and traditional life
insurance. In addition, we made new investments in Fleet Financial Group, a
large New England banking concern, and Salomon, the well-known investment
banking firm. We also continued to favor depressed cyclical stocks such as
Georgia-Pacific and Reynolds Metals. The latter is of particular interest: a
new chief executive has been named, and we found the prospect of new
management plus the undervalued share price to be an alluring combination.
On the sales side of the ledger, we eliminated or reduced several
positions, which are listed in the Major Portfolio Changes table following
this letter. The sales were made in stocks that had generated profits for
shareholders, where we felt there was limited upside potential from current
levels. These included Monsanto and Sears.
Chart 1 - Security Diversification pie chart
The Security Diversification pie chart above shows that we had 86% of
total fund assets invested in stocks on June 30, compared with 80% at the end
of December 1995.
Summary and Outlook
Shareholders have benefited from a nearly perfect investment environment for
stocks during the past 18 months, characterized by solid earnings growth, low
inflation, generally supportive interest rates, and enthusiastic investor
sentiment. The rise in interest rates during the first six months of 1996 has
clouded the picture to some extent, posing a challenge for further stock
market advances in the near term.
At this sta of the economic cycle, with GDP growing at a rate that has
trigred fears of accelerating inflation in some quarters, a correction in the
overall market would not be unexpected. However, in virtually any environment,
we expect to find attractive investments to make on your behalf.
As always, we appreciate your continued confidence and support.
Respectfully submitted,
Brian C. Rogers
President and Chairman of the Investment Advisory Committee
July 19, 1996
Twenty-Five Largest Holdings
June 30, 1996
Percent of
Company Net Assets
___________________________________ ___________
GE 1.9%
Atlantic Richfield 1.7
Exxon 1.6
Chase Manhattan 1.4
Mellon Bank 1.4
Pharmacia & Upjohn 1.4
Texaco 1.3
SmithKline Beecham 1.2
American Home Products 1.2
DuPont 1.2
General Mills 1.1
Wells Fargo 1.1
Georgia-Pacific 1.1
Warner-Lambert 1.1
Union Camp 1.1
American General 1.0
Royal Dutch Petroleum 1.0
Eli Lilly 1.0
Quaker Oats 1.0
Dun & Bradstreet 1.0
Chevron 1.0
Ciba-Geigy 1.0
J.P. Morgan 1.0
Philip Morris 1.0
American Express 1.0
Total 29.8%
Average Annual Compound Total Return
This table shows how the fund would have performed each year if its actual (or
cumulative) returns for the periods shown had been earned at a constant rate.
Periods Ended June 30, 1996
Since Inception
1 Year 3/31/94
_______ ________________
25.20% 21.64%
Investment return and principal value represent past performance and will
vary. Shares may be worth more or less at redemption than at original
purchase.
Total returns do not include charges imposed by your insurance company's
separate account. If these were included, performance would have been lower.
Major Portfolio Changes
Six Months Ended June 30, 1996
Listed in descending order of size
LARGEST PURCHASES (10)
____________________________________________________________
GE
Atlantic Richfield
Exxon
Georgia-Pacific
General Mills
Mellon Bank
American General
Quaker Oats
Texaco
Chase Manhattan
LARGEST SALES (10)
____________________________________________________________
Loews*
Monsanto*
Dayton-Hudson*
Sears*
Tandy*
Schering-Plough*
CPC International*
SmithKline Beecham
Beneficial*
Clorox*
* Position eliminated
Chart 2 - Performance Comparison
Statement of Net Assets
T. Rowe Price Equity Income Portfolio / June 30, 1996 (Unaudited)
In thousands
Value
Common Stocks - 85.8%
FINANCIAL - 17.2%
BANK AND TRUST - 9.4%
7,570 shs. BANC ONE . . . . . . . . . . . . $ 257
6,400 Bank of Boston . . . . . . . . . 317
3,800 Bankers Trust New York . . . . . 281
10,304 Chase Manhattan. . . . . . . . . 728
9,100 Fleet Financial Group. . . . . . 396
5,800 J. P. Morgan . . . . . . . . . . 491
12,500 Mellon Bank. . . . . . . . . . . 712
4,000 Mercantile Bankshares. . . . . . 102
7,800 National City. . . . . . . . . . 274
7,400 PNC Bank . . . . . . . . . . . . 220
15,400 S-E-Banken (SEK) . . . . . . . . 123
7,400 U. S. Bancorp. . . . . . . . . . 267
2,366 Wells Fargo. . . . . . . . . . . 565
4,733
INSURANCE - 3.3%
14,500 American General . . . . . . . . 527
4,400 Hilb, Rogal and Hamilton . . . . 61
5,700 Provident. . . . . . . . . . . . 211
2,900 SAFECO . . . . . . . . . . . . . 103
5,100 St. Paul Companies . . . . . . . 273
2,000 UNUM . . . . . . . . . . . . . . 125
11,500 USF&G. . . . . . . . . . . . . . 188
14,600 Willis-Corroon ADR . . . . . . . 173
1,661
FINANCIAL SERVICES - 4.5%
10,900 American Express . . . . . . . . 486
11,300 Fannie Mae . . . . . . . . . . . 379
6,500 H&R Block. . . . . . . . . . . . 212
5,400 Sallie Mae . . . . . . . . . . . 400
8,500 Salomon. . . . . . . . . . . . . 374
9,050 Travelers Group. . . . . . . . . 413
2,264
Total Financial 8,658
UTILITIES - 11.2%
TELEPHONE - 4.8%
8,800 ALLTEL . . . . . . . . . . . . . 271
7,550 BCE. . . . . . . . . . . . . . . 298
3,900 Bell Atlantic. . . . . . . . . . 249
9,500 BellSouth. . . . . . . . . . . . 402
10,500 GTE. . . . . . . . . . . . . . . 470
3,900 Pacific Telesis. . . . . . . . . 132
3,800 SBC Communications . . . . . . . 187
5,000 Southern New England
Telecommunications. . . . . . . 210
6,750 U S WEST Communications. . . . . 215
2,434
ELECTRIC UTILITIES - 6.4%
6,100 shs. BGE. . . . . . . . . . . . . . . $ 173
16,000 Centerior Energy . . . . . . . . 118
6,650 Dominion Resources . . . . . . . 266
3,512 DQE. . . . . . . . . . . . . . . 97
8,800 Edison International . . . . . . 155
12,400 Entergy. . . . . . . . . . . . . 352
3,800 Florida Progress . . . . . . . . 132
3,500 General Public Utilities . . . . 123
10,000 Pacific Gas and Electric . . . . 232
15,400 PacifiCorp . . . . . . . . . . . 343
15,000 PECO Energy. . . . . . . . . . . 390
9,200 Public Service Enterprise. . . . 252
13,200 Southern Company . . . . . . . . 325
8,500 Unicom . . . . . . . . . . . . . 237
3,195
Total Utilities 5,629
CONSUMER NONDURABLES - 19.3%
BEVERAGES - 1.3%
5,700 Anheuser-Busch . . . . . . . . . 428
6,100 Brown-Forman (Class B) . . . . . 244
672
FOOD PROCESSING - 4.1%
10,600 General Mills. . . . . . . . . . 578
13,700 Heinz. . . . . . . . . . . . . . 416
14,300 McCormick. . . . . . . . . . . . 314
15,200 Quaker Oats. . . . . . . . . . . 519
6,600 Sara Lee . . . . . . . . . . . . 214
2,041
HOSPITAL SUPPLIES/HOSPITAL MANAGEMENT - 1.9%
9,500 Abbott Laboratories. . . . . . . 414
4,900 Bausch & Lomb. . . . . . . . . . 208
7,600 Baxter International . . . . . . 359
981
PHARMACEUTICALS - 6.9%
10,100 American Home Products . . . . . 607
405 Ciba-Geigy (CHF) . . . . . . . . 494
8,000 Eli Lilly. . . . . . . . . . . . 520
15,392 Pharmacia & Upjohn . . . . . . . 683
11,300 SmithKline Beecham ADR . . . . . 614
9,900 Warner-Lambert . . . . . . . . . 545
3,463
MISCELLANEOUS CONSUMER PRODUCTS - 5.1%
9,800 American Brands. . . . . . . . . 444
2,200 Armstrong World. . . . . . . . . 127
8,100 Grand Metropolitan ADR . . . . . 217
4,700 Philip Morris. . . . . . . . . . 489
4,800 RJR Nabisco. . . . . . . . . . . 149
8,200 shs. Tambrands. . . . . . . . . . . . $ 335
3,300 Unilever N.V. ADR. . . . . . . . 479
9,300 UST. . . . . . . . . . . . . . . 318
2,558
Total Consumer Nondurables 9,715
CONSUMER SERVICES - 4.7%
GENERAL MERCHANDISERS - 1.2%
7,500 J.C. Penney. . . . . . . . . . . 394
4,500 May Department Stores. . . . . . 197
591
SPECIALTY MERCHANDISERS - 0.1%
4,800 Fleming Companies. . . . . . . . 69
ENTERTAINMENT AND LEISURE - 0.7%
6,900 Reader's Digest (Class A). . . . 294
1,200 Reader's Digest (Class B). . . . 47
341
MEDIA AND COMMUNICATIONS - 2.7%
8,200 Dun & Bradstreet . . . . . . . . 512
3,800 Gannett. . . . . . . . . . . . . 269
6,500 McGraw-Hill. . . . . . . . . . . 297
6,250 * U S WEST Media . . . . . . . . . 114
4,600 Vodafone ADR . . . . . . . . . . 170
1,362
Total Consumer Services 2,363
CONSUMER CYCLICALS - 4.8%
AUTOMOBILES AND RELATED - 1.2%
3,500 Eaton. . . . . . . . . . . . . . 205
4,600 Ford Motor . . . . . . . . . . . 149
2,300 Genuine Parts. . . . . . . . . . 105
1,900 TRW. . . . . . . . . . . . . . . 171
630
BUILDING AND REAL ESTATE - 1.9%
13,200 DeBartolo Realty, REIT . . . . . 213
3,500 General Growth Properties, REIT. 84
3,600 Rouse. . . . . . . . . . . . . . 93
15,500 Simon Property Group, REIT . . . 380
5,000 Weingarten Realty Investors, REIT 194
964
MISCELLANEOUS CONSUMER DURABLES - 1.7%
11,300 Corning. . . . . . . . . . . . . 434
5,200 Eastman Kodak. . . . . . . . . . 404
838
Total Consumer Cyclicals 2,432
TECHNOLOGY - 1.0%
ELECTRONIC SYSTEMS - 0.8%
1,400 shs. General Signal . . . . . . . . . $ 53
6,800 Honeywell. . . . . . . . . . . . 370
423
OFFICE AUTOMATION - 0.2%
2,300 Pitney Bowes . . . . . . . . . . 110
Total Technology 533
CAPITAL EQUIPMENT - 3.2% . . . . . . . . . . . .
ELECTRICAL EQUIPMENT - 2.5%
10,900 GE . . . . . . . . . . . . . . . 943
4,700 Hubbell (Class B). . . . . . . . 311
1,254
MACHINERY - 0.7%
7,567 Cooper Industries. . . . . . . . 314
1,400 TRINOVA. . . . . . . . . . . . . 47
361
Total Capital Equipment 1,615
BUSINESS SERVICES AND TRANSPORTATION - 2.2%
TRANSPORTATION SERVICES - 0.6%
5,550 Alexander & Baldwin. . . . . . . 134
2,800 PHH. . . . . . . . . . . . . . . 160
294
MISCELLANEOUS BUSINESS SERVICES - 0.5%
3,800 Deluxe Corp. . . . . . . . . . . 135
2,800 GATX . . . . . . . . . . . . . . 135
270
RAILROADS - 1.1%
3,700 Conrail. . . . . . . . . . . . . 246
4,300 Union Pacific. . . . . . . . . . 300
546
Total Business Services and Transportation 1,110
ENERGY - 10.8%
ENERGY SERVICES - 1.0%
3,111 * Cooper Cameron . . . . . . . . . 136
5,500 McDermott International. . . . . 115
7,100 Witco. . . . . . . . . . . . . . 244
495
GAS TRANSMISSION - 0.1%
4,400 TransCanada PipeLines. . . . . . 65
INTEGRATED PETROLEUM - DOMESTIC - 3.7%
7,400 Atlantic Richfield . . . . . . . 877
3,900 British Petroleum ADR. . . . . . 417
2,900 shs. Pennzoil . . . . . . . . . . . . $ 134
3,910 Sun Company. . . . . . . . . . . 118
14,700 USX-Marathon . . . . . . . . . . 296
1,842
INTEGRATED PETROLEUM - INTERNATIONAL - 6.0%
8,550 Chevron. . . . . . . . . . . . . 504
9,300 Exxon. . . . . . . . . . . . . . 808
3,100 Mobil. . . . . . . . . . . . . . 348
5,900 Repsol ADR . . . . . . . . . . . 205
3,400 Royal Dutch Petroleum ADR. . . . 523
7,800 Texaco . . . . . . . . . . . . . 654
3,042
Total Energy 5,444
PROCESS INDUSTRIES - 9.0%
DIVERSIFIED CHEMICALS - 1.5%
2,300 Dow Chemical . . . . . . . . . . 175
7,400 DuPont . . . . . . . . . . . . . 585
760
SPECIALTY CHEMICALS - 3.3%
6,000 3M . . . . . . . . . . . . . . . 414
7,700 Betz Laboratories. . . . . . . . 338
2,200 Crompton & Knowles . . . . . . . 37
5,900 Great Lakes Chemical . . . . . . 367
7,700 Lubrizol . . . . . . . . . . . . 234
9,100 Nalco Chemical . . . . . . . . . 286
1,676
PAPER AND PAPER PRODUCTS - 3.1%
4,000 Consolidated Papers. . . . . . . 208
8,500 International Paper. . . . . . . 314
6,600 James River. . . . . . . . . . . 174
4,450 Kimberly-Clark . . . . . . . . . 344
10,900 Union Camp . . . . . . . . . . . 531
1,571
FOREST PRODUCTS - 1.1%
7,800 Georgia-Pacific. . . . . . . . . 554
Total Process Industries 4,561
BASIC MATERIALS - 1.4%
METALS - 0.8%
7,300 Reynolds Metals. . . . . . . . . 380
MINING - 0.6%
6,249 Newmont Mining . . . . . . . . . 309
Total Basic Materials 689
CONGLOMERATES - 0.5%
81,100 shs. LONRHO (GBP) . . . . . . . . . . $ 233
Total Conglomerates 233
Total Miscellaneous Common Stocks 251
Total Common Stocks (Cost $40,599) 43,233
Convertible Bonds - 0.2%
$100,000 Liberty Property, 8.00%, 7/1/01. 103
Total Convertible Bonds (Cost $99) 103
Corporate Bonds - 1.0%
150,000 B. F. Saul REIT, Sr. Secured Notes,
11.625%, 4/1/02 . . . . . . . . 154
25,000 Coca-Cola Bottling Group, Sr. Sub. Notes,
9.00%, 11/15/03 . . . . . . . . 25
200,000 El Paso Electric, 1st Mtg. Notes,
8.90%, 2/1/06 . . . . . . . . . 196
150,000 Hills Stores, Sr. Notes,
12.50%, 7/1/03 (144a) . . . . . 147
Total Corporate Bonds (Cost $531) 522
U.S. Government Obligations/Agencies -3.7%
U.S. Treasury Bonds
500,000 6.00%, 2/15/26. . . . . . . . . 443
20,000 6.25%, 8/15/23. . . . . . . . . 18
U.S. Treasury Notes
250,000 5.625%, 2/15/06 . . . . . . . . 232
400,000 5.75%, 8/15/03. . . . . . . . . 381
20,000 5.875%, 2/15/04 . . . . . . . . 19
25,000 6.125%, 7/31/96 . . . . . . . . 25
700,000 6.50%, 5/31/01. . . . . . . . . 701
20,000 7.375%, 11/15/97. . . . . . . . 20
Total U.S. Government Obligations/Agencies
(Cost $1,847) 1,839
Short-Term Investments - 9.9%
COMMERCIAL PAPER - 9.9%
1,000,000 Asset Securitization Cooperative,
5.34%, 7/8/96 . . . . . . . . . 999
1,000,000 Falcon Asset Securitization,
5.42%, 7/25/96. . . . . . . . . 996
1,002,426 Investments in Commercial Paper
through a joint account
5.49 - 5.68%, 7/1/96. . . . . . 1,003
$1,000,000 Statoil (Den NorskeStats Oljeselskap),
5.37%, 7/22/96. . . . . . . . . $ 997
1,000,000 Western Australian Treasury,
5.38%, 8/1/96 . . . . . . . . . 995
Total Short-Term Investments (Cost $4,990) 4,990
Total Investments in Securities - 100.6% of
Net Assets (Cost $48,066) 50,687
Other Assets Less Liabilities . . . . . . . . . (313)
NET ASSETS . . . . . . . . . . . . . . . . $ 50,374
Net Assets Consist of:
Accumulated net investment income -
net of distributions . . . . . . . . . . . . . $ 12
Accumulated net realized gain/loss -
net of distributions . . . . . . . . . . . . . 367
Net unrealized gain (loss) . . . . . . . . . . . 2,621
Paid-in-capital applicable to 3,601,704 shares of
$0.0001 par value capital stock outstanding;
1,000,000,000 shares of the Corporation authorized 47,374
NET ASSETS . . . . . . . . . . . . . . . . $ 50,374
NET ASSET VALUE PER SHARE. . . . . . . . . . . . $ 13.99
* Non-income producing
REIT Real Estate Investment Trust
144a Security was purchased pursuant to Rule 144a under the Securities
Act of 1933 and may not be resold subject to that rule except to
qualified institutional buyers - total of such securities at
period-end amounts to .29% of net assets.
CHF Swiss franc
GBP British sterling
SEK Swedish krona
The accompanying notes are an integral part of these financial statements.
Statement of Operations
T. Rowe Price Equity Income Portfolio / Six Months Ended June 30, 1996
(Unaudited)
In thousands
INVESTMENT INCOME
Income
Dividend . . . . . . . . . . . . . . . . . . . $ 435
Interest . . . . . . . . . . . . . . . . . . . 172
_________
Total income . . . . . . . . . . . . . . . . . 607
_________
Expenses
Investment management and administrative . . . 130
_________
Net investment income. . . . . . . . . . . . . . 477
_________
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on securities . . . . . 367
Change in net unrealized gain or loss on securities 1,197
_________
Net realized and unrealized gain (loss). . . . . 1,564
_________
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 2,041
_________
_________
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
T. Rowe Price Equity Income Portfolio (Unaudited)
In thousands
Six Months Ended Year Ended
June 30, 1996December 31, 1995
__________________________________
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income . . . . . $ 477 $ 195
Net realized gain (loss). . . . 367 59
Change in net unrealized
gain or loss. . . . . . . . . . 1,197 1,398
__________ __________
Increase (decrease) in net
assets from operations. . . . . 2,041 1,652
__________ __________
Distributions to shareholders
Net investment income . . . . . (602) (243)
Net realized gain . . . . . . . (14) (55)
__________ __________
Decrease in net assets
from distributions. . . . . . . (616) (298)
__________ __________
Capital share transactions*
Shares sold . . . . . . . . . . 39,367 12,026
Distributions reinvested. . . . 616 298
Shares redeemed . . . . . . . . (5,829) (1,266)
__________ __________
Increase (decrease) in net
assets from capital
share transactions. . . . . . . 34,154 11,058
__________ __________
Net equalization . . . . . . . . 137 55
__________ __________
NET ASSETS
Increase (decrease) during period35,716 12,467
Beginning of period. . . . . . . 14,658 2,191
__________ __________
End of period. . . . . . . . . . $50,374 $14,658
__________ __________
__________ __________
*Share information
Shares sold . . . . . . . . . . 2,873 978
Distributions reinvested. . . . 44 25
Shares redeemed . . . . . . . . (425) (103)
__________ __________
Increase (decrease) in
shares outstanding. . . . . . . 2,492 900
__________ __________
__________ __________
The accompanying notes are an integral part of these financial statements.
Notes To Financial Statements
T. Rowe Price Equity Income Portfolio/June 30, 1996 (Unaudited)
Note 1 - Significant Accounting Policies
T. Rowe Price Equity Series, Inc. (the corporation) is registered under the
Investment Company Act of 1940. The Equity Income Portfolio (the fund), a
diversified, open-end management investment company, is one of the portfolios
established by the corporation and commenced operations on March 31, 1994. The
shares of the fund are currently being offered only to separate accounts of
certain insurance companies as an investment medium for both variable annuity
contracts and variable life insurance policies.
Valuation Equity securities listed or regularly traded on a securities
exchange are valued at the last quoted sales price at the time the valuations
are made. A security which 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 that are not traded on a particular day
and securities that are regularly traded in the over-the-counter market are
valued at the mean of the latest bid and asked prices. Other equity securities
are valued at a price within the limits of the latest bid and asked prices
deemed by the Board of Directors, or by persons delegated by the Board, best
to reflect fair value.
Debt securities are generally traded in the over-the-counter market and
are valued at a price deemed best to reflect fair value as quoted by dealers
who make markets in these securities or by an independent pricing service.
Short-term debt securities are valued at their cost which, when combined with
accrued interest, approximates fair value.
For purposes of determining the fund's net asset value per share, the
U.S. dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Currency Translation Assets and liabilities are translated into U.S. dollars
at the prevailing exchange rate at the end of the reporting period. Purchases
and sales of securities and income and expenses are translated into U.S.
dollars at the prevailing exchange rate on the dates of such transactions. The
effect of changes in foreign exchange rates on realized and unrealized
security gains and losses is reflected as a component of such gains and
losses.
Premiums and Discounts
Premiums and discounts on debt securities are amortized for both financial
reporting and tax 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. Income and
capital gain distributions are determined in accordance with federal income
tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. The fund follows the practice of
equalization under which undistributed net investment income per share is
unaffected by fund shares sold or redeemed.
Note 2 - Investment Transactions
Commercial Paper Joint Account The fund, and other affiliated funds, may
transfer uninvested cash into a commercial paper joint account, the daily
aggregate balance of which is invested in high-grade commercial paper. All
securities purchased by the joint account satisfy the fund's criteria as to
quality, yield, and liquidity.
Other Purchases and sales of portfolio securities, other than short-term
securities, aggregated $33,985,000 and $1,985,000, respectively, for the six
months ended June 30, 1996.
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 all of
its taxable income.
At June 30, 1996, the aggregate cost of investments for federal income
tax and financial reporting purposes was $48,066,000, and net unrealized gain
aggregated $2,621,000, of which $2,964,000 related to appreciated investments
and $343,000 to depreciated investments.
Note 4 - Related Party Transactions
The investment management and administrative agreement between the fund and T.
Rowe Price Associates, Inc. (the manager) provides for an all-inclusive annual
fee, of which $20,000 was payable at June 30, 1996. The fee, computed daily
and paid monthly, is equal to 0.85% of the fund's average daily net assets.
Pursuant to the agreement, investment management, shareholder servicing,
transfer agency, accounting, and custody services are provided to the fund,
and interest, taxes, brokerage commissions, and extraordinary expenses are
paid directly by the fund.
Financial Highlights
T. Rowe Price Equity Income Portfolio (Unaudited)
For a share outstanding throughout each period
__________________________________________
Six Months Year March 31, 1994
Ended Ended to
June 30, 1996Dec. 31, 1995Dec. 31, 1994
________________________ ____________
NET ASSET VALUE,
BEGINNING OF PERIOD. . . . $ 13.21 $ 10.42 $ 10.00
______ ______ ______
Investment activities
Net investment income . . 0.21 0.44 0.30
Net realized and unrealized
gain (loss) . . . . . . . 0.79 3.05 0.41
______ ______ ______
Total from investment
activities. . . . . . . . 1.00 3.49 0.71
______ ______ ______
Distributions
Net investment income . . (0.21) (0.44) (0.29)
Net realized gain . . . . (0.01) (0.26) -
______ ______ ______
Total distributions . . . (0.22) (0.70) (0.29)
______ ______ ______
NET ASSET VALUE, END OF PERIOD$13.99 $13.21 10.42
______ ______ ______
______ ______ ______
RATIOS / SUPPLEMENTAL DATA
Total return . . . . . . . 7.60% 34.76% 7.15%
Ratio of expenses to average
net assets . . . . . . . . 0.85%! 0.85% 0.85%!
Ratio of net investment income
to average net assets. . . 3.12%! 3.61% 3.88%!
Portfolio turnover rate. . 14.6%! 10.1% 21.3%!
Average commission rate paid$0.0427 - -
Net assets,
end of period
(in thousands) . . . . . . $50,374 $14,658 $2,191
!Annualized.
Chart 1 - Security Diversification pie chart showing total fund assets:
reserves 9%, bonds 5%, and stocks 86% as of 6/30/96.
Chart 2 - Performance Comparison showing the cumulative growth of $10,000
invested in the Equity Income Portfolio from inception (3/31/94) compared with
$10,000 invested in a broad-based index over the same period.
