Annual Report
December 31, 1997
New America Growth Portfolio
This report is authorized for distribution only to those who
have received a copy of the portfolio's prospectus.
T. Rowe Price Investment Services, Inc., Distributor
T. Rowe Price
New America Growth
Portfolio
Annual Report
December 31, 1997
Dear Investor
The bull market continued to roar ahead in the second half of
1997 despite a short but severe correction in October, triggered
by serious financial and economic problems sweeping throughout
Asia. The market recovered strongly by year-end, however,
finishing 1997 with a full-year gain of 33.36%. This marked
three consecutive years of annual gains in excess of 20%-a first
in this century. The market's compound average annual returns
over the past 5- and 10-year periods of 20.3% and 18.1%,
respectively, are also the highest such returns in this century.
The largest-capitalization blue chip companies were the market
leaders while smaller and mid-size companies showed lesser
returns. Against this backdrop, the New America Growth Portfolio
returned 11.18% and 21.12%, respectively, for the 6- and
12-month periods, outperforming the S&P 500 and the average
growth fund for the latest six months, but underperforming both
for the full year due to a weak first half.
Performance Comparison
Periods Ended 12/31/97 6 Months 12 Months
____________________________________________________
New America
Growth Portfolio 11.18% 21.12%
S&P 500 10.58 33.36
Lipper Variable Annuity
Underlying Growth Funds
Average* 10.30 25.36
* The portfolio was inadvertently excluded by Lipper in
calculating these average returns.
Year-End Distributions
The fund's Board of Directors declared a capital gain
distribution of $0.05 per share, consisting of a short-term gain
of $0.02 and a long-term gain of $0.03. The distribution was
paid on December 30 to shareholders of record on December 26.
Market Environment
Investors benefited from an ideal combination of economic and
financial conditions in 1997. The domestic economy experienced
another year of strong growth, making 1997 the seventh
consecutive year of expansion-a near-record. Corporate profits
showed another strong gain. Earnings for S&P 500 companies have
now grown well over 150% from their 1991 low in the aftermath of
the last recession. This strong earnings growth has been a
leading contributor to the bull market of the 1990s.
The political backdrop in Washington also proved to be positive
for Wall Street in 1997. Partly due to the bipartisan balanced
budget agreement but primarily due to strong tax receipts from
the booming economy, the federal budget deficit in 1997 was
sharply lower than forecast, and there is a strong possibility
that the U.S. might have its first budget surplus since 1969 in
the current fiscal year. Also, Congress and the President passed
a bill reducing the tax rate on certain long-term capital gains
for the first time since 1981.
Despite the continued strength in the domestic economy, there
are virtually no signs of a pickup in inflation. In fact, the
consumer price index rose just 1.7% in 1997, its lowest annual
rate of increase since 1986. In response to the benign inflation
environment, interest rates on long-term government bonds fell
close to a full percentage point in 1997, ending the year below
6%. In early January, yields on 30-year Treasury bonds fell to
5.70%, the lowest such rate since the bonds were introduced in
1977.
The only negative overhanging the stock market was the spreading
economic and financial crisis in Asia during the second half. As
investors in the U.S. woke up to the possibility that Asia's
economic problems could hurt growth in the U.S. in 1998, the
stock market experienced a sharp but short 10% correction during
the fourth quarter. The market recovered at year-end, but
concern over the fallout from Asia's problems is the primary
uncertainty for investors entering 1998.
The stock market's advance in 1997 was concentrated in an
increasingly narrow group of large-cap blue chip companies.
Small and mid-size company stocks lagged the S&P 500 by a wide
margin. Even within the S&P 500, the average stock gained less
than 25%, with just 10% of the stocks in the S&P 500 accounting
for over half the gain for the year.
Growth stocks turned in a mixed performance but generally
underperformed for the year. Cyclicals led in the first half due
to the strong economy, and financial stocks in the second half
due to declining interest rates. Your fund's program focuses on
noncyclical growth companies in domestic service businesses and
emphasizes many faster-growing, mid-size companies. These stocks
trailed the market in the first half but performed better in the
second half as investors began to worry more about the growth
prospects of cyclicals and the foreign exposure of
multinationals. Your fund has a relatively small exposure to
companies operating outside the U.S.
Portfolio Review
The leading contributor to fund performance in both the second
half of 1997 and the full year was Cendant, our largest holding
at year-end. Cendant is a new name but is really an old friend.
It was formed by the December 1997 merger between CUC
International and HFS, both previous holdings of the fund. CUC
is a consumer membership services company providing its millions
of customers discounts on purchases of electronics, autos,
travel, dining, and many other consumer items. HFS is a
franchiser of lodging (Howard Johnson, Ramada, Days Inn, and
others), real estate brokerage (Century 21 and Coldwell Banker),
and rental cars (Avis). The result is a powerful marketing
company with outstanding growth prospects.
Financial stocks, an area we boosted sharply in 1996, were among
the fund's top performers in both the second half and full year,
benefiting from the unusual combination of a robust economy and
lower interest rates. With only a few exceptions, our financial
services stocks were extremely strong, including ACE Limited in
the insurance sector, Norwest in banking, and Franklin Resources
in the mutual fund area.
Another rewarding area was media and communications, where cable
TV operator Comcast, cellular telephone provider AirTouch
Communications, and outdoor advertising sign owner Outdoor
Systems were all strong contributors. Also, several retailers
such as General Nutrition and Costco Companies provided
well-above-average returns to the fund.
Not all areas were winners, however. In the second half, in the
computer services area, leading credit card processor First Data
and bank and financial services processor BISYS Group declined
due to earnings shortfalls. Health care was another difficult
area. Vencor, a specialty hospital/nursing home operator,
declined sharply in the second half after disclosing an
unexpected slowdown in its growth. PhyCor came under pressure
after entering into a merger agreement (abandoned after
year-end) with another physician practice management company
that investors viewed skeptically. Restaurant company Boston
Chicken was the worst contributor for the year due to
operational and financial concerns. We sold our position during
the third quarter, avoiding substantial additional losses over
the remainder of the year.
We made several significant changes in our sector weightings in
the second half as noted in the accompanying table. We boosted
our consumer services position considerably, primarily adding to
our media/communications services holdings. New portfolio
additions included WorldCom and MCI in telecommunications
services, Paging Network in the paging area, and Sinclair
Broadcast Group in the TV station ownership business. To make
room for these new holdings, we pared back our business services
holdings in the health care, energy service, and distribution
areas.
Sector Diversification
12/31/96 6/30/97 12/31/97
___________________________________________________________
Financial Services 20% 19% 19%
Consumer Services 30 31 43
Business Services 41 40 32
Reserves 9 10 6
___________________________________________________________
Total 100% 100% 100%
Portfolio characteristics remain vibrant. We continue to expect
our companies to show an average of 20% annual earnings growth
over the next five years, more than 50% faster than the growth
expected for the S&P 500. Our companies generally pay very
limited dividends in order to be able to maintain their
above-average growth rates; the recent capital gains tax rate
reduction makes this policy potentially more tax-efficient for
shareholders than receiving dividend income. The fund's average
P/E ratio remains at a modest premium to the S&P 500 P/E despite
the substantially higher growth prospects of our portfolio.
Portfolio Characteristics
New America
As of 12/31/97 Growth Portfolio S&P 500
___________________________________________________________
Earnings Growth Rate
Estimated Next 5 Years* 20.0% 13.0%
Profitability-Return on
Equity Latest 12 Months 19.2 21.6
Dividend Yield on Stocks 0.3 1.6
P/E Ratio (Based on Next 12
Months' Estimated Earnings) 20.8X 19.1X
*Earnings forecasts are based on T. Rowe Price research and are
in no way indicative of future investment returns.
Outlook
On the surface, economic and financial conditions entering 1998
remain strong. Economic growth and corporate profits are
healthy; inflation rates and bond yields are at record lows.
Valuation levels, while high by historical standards, are quite
justifiable given the low rate of inflation and the current
level of interest rates. The number one concern for investors
entering the new year is fallout from Asia. Already, the Asian
turmoil has led to increased market volatility and a decline in
the stock market in early January. The recent decoupling of the
U.S. stock and bond markets-stocks declining while bond prices
rise-suggests that investors are worried that the Asia situation
will lead to a downturn in corporate profits here and a serious
risk of deflation.
While the indirect effects of the Asian downturn on the U.S.
corporate sector will become clearer in coming months, we
believe the New America Growth Portfolio is more protected than
the market as a whole. The fund owns no manufacturers and,
therefore, has limited exposure to a drop in foreign demand for
U.S. goods or to an increase in foreign competition stemming
from weak Asian currencies. Our portfolio of high-growth,
domestic service businesses in areas such as financial services,
retailing, media and entertainment, health care, and computer
services has a very minor foreign component to sales and
earnings. In a more uncertain economic environment, we believe
investors will be attracted to these more assured, above-average
growth businesses. Portfolio valuations are not out of line, and
we are optimistic that the fund will continue to deliver
attractive long-term returns to shareholders over time.
Respectfully submitted,
John H. Laporte
President
Brian W. H. Berghuis
Executive Vice President
January 26, 1998
Portfolio Highlights
Contributions to the Change in Net Asset Value Per Share
6 Months Ended 12/31/97
Ten Best Contributors
_____________________________________________
Cendant 34(cents)
Comcast 18
AirTouch Communications 15
ACE Limited 13
Cardinal Health 12
UNUM 11
Outdoor Systems 11
Franklin Resources 11
Norwest 11
Costco Companies 10
_____________________________________________
Total 146(cents)
Ten Worst Contributors
_____________________________________________
First Data - 18(cents)
Vencor 16
Cole National 14
BISYS Group 6
Green Tree Financial** 6
Fairfax Financial 5
La Quinta Inns 5
PETsMART** 4
PhyCor 4
Extended Stay America 4
_____________________________________________
Total - 82(cents)
12 Months Ended 12/31/97
Ten Best Contributors
_____________________________________________
Cendant 39(cents)
Franklin Resources 33
General Nutrition 28
Comcast 23
ACE Limited 22
Costco Companies 19
Norwest 18
AirTouch Communications 18
UNUM 17
Outdoor Systems* 16
_____________________________________________
Total 233(cents)
* Position added
** Position eliminated
Ten Worst Contributors
_____________________________________________
Boston Chicken** - 22(cents)
Mercury Finance** 20
Employee Solutions* 14
Scholastic** 12
Corporate Express 12
Green Tree Financial** 8
First Data 8
Ikon Office Solutions 8
Republic Industries 7
Paging Network* 7
_____________________________________________
Total - 118(cents)
Twenty-Five Largest Holdings
Percent of
Net Assets
12/31/97
_____________________________________________
Cendant 5.5%
Franklin Resources 3.2
Comcast 2.6
Service Corp. International 2.6
UNUM 2.3
USA Waste Services 2.2
AirTouch Communications 2.2
Cardinal Health 2.2
ACE Limited 2.0
Freddie Mac 2.0
General Nutrition 1.9
Quorum Health Group 1.9
Norwest 1.8
Carnival 1.8
Costco Companies 1.7
Interim Services 1.7
First Data 1.7
Outback Steakhouse 1.6
La Quinta Inns 1.6
Catalina Marketing 1.5
Circuit City Stores 1.5
Disney 1.5
SunGard Data Systems 1.5
Outdoor Systems 1.5
Household International 1.5
_____________________________________________
Total 51.5%
Performance Comparison
This chart shows the value of a hypothetical $10,000 investment
in the fund over the past 10 fiscal year periods or since
inception (for funds lacking 10-year records). The result is
compared with a broad-based average or index. The index return
does not reflect expenses, which have been deducted from the
fund's return.
New America Growth
As of 12/31/97
Lipper Variable
New America Annuity Underlying
Growth S&P 500 Growth Funds
Portfolio Stock Index Average
3/31/94 $ 10,000 $ 10,000 $ 10,000
12/94 10,100 10,532 10,209
12/95 15,260 14,489 13,492
12/96 18,325 17,816 16,271
12/97 22,195 23,760 20,604
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.
New America Growth Portfolio
Periods Ended 12/31/97
Since Inception
1 Year 3 Years Inception Date
_________________________________________________________
21.12% 30.01% 23.66% 3/31/94
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.
Financial Highlights
T. Rowe Price New America Growth Portfolio
For a share outstanding throughout each period
__________________________________________________________
Year 3/31/94
Ended Through
12/31/97 12/31/96 12/31/95 12/31/94
NET ASSET VALUE
Beginning of
period $ 17.67 $ 15.23 $ 10.10 $ 10.00
Investment activities
Net investment
income - 0.04 0.03 0.01
Net realized and
unrealized
gain (loss) 3.73 2.94 5.12 0.09
Total from
investment
activities 3.73 2.98 5.15 0.10
Distributions
Net investment
income - (0.04) (0.02) -
Net realized
gain (0.05) (0.50) - -
Total distri-
butions (0.05) (0.54) (0.02) -
NET ASSET VALUE
End of period $ 21.35 $ 17.67 $ 15.23 $ 10.10
_______________________________________
Ratios/Supplemental Data
Total return 21.12% 20.09% 51.10% 1.00%
Ratio of expenses to
average net assets 0.85% 0.85% 0.85% 0.85%!
Ratio of net investment
income to average
net assets 0.02% 0.18% 0.23% 0.15%!
Portfolio turnover
rate 37.3% 27.2% 54.5% 81.0%!
Average commission
rate paid $ 0.0463 $ 0.0524 - -
Net assets, end
of period
(in thousands) $ 96,991 $ 60,241 $ 12,304 $ 2,028
! Annualized.
The accompanying notes are an integral part of these financial
statements.
Statement of Net Assets
T. Rowe Price New America Growth Portfolio
December 31, 1997
Shares/Par Value
In thousands
Common Stocks 93.7%
FINANCIAL SERVICES 18.0%
Bank and Trust 1.8%
Norwest 46,000 $ 1,777
1,777
Insurance 6.8%
ACE Limited 20,000 1,930
MGIC Investment 22,000 1,463
UICI * 28,600 1,003
UNUM 41,000 2,229
6,625
Investment Services 3.2%
Franklin Resources 35,500 3,086
3,086
Other Financial Services 6.2%
Fairfax Financial (CAD) * 4,000 896
Fannie Mae 22,000 1,255
Freddie Mac 46,000 1,929
Household International 11,500 1,467
Money Store 19,800 416
The CIT Group (Class A) * 1,100 35
5,998
Total Financial Services 17,486
CONSUMER SERVICES 42.7%
Retailing/General Merchandisers 4.1%
Costco Companies * 38,000 1,695
Kohl's * 12,500 852
Safeway * 22,000 1,391
3,938
Retailing/Specialty Merchandisers 9.0%
AutoZone * 50,000 1,450
Circuit City Stores 42,000 1,494
Cole National (Class A) * 44,000 1,317
General Nutrition * 55,000 1,866
Home Depot 23,500 1,384
Republic Industries * 28,000 653
Republic Industries *+ 11,000 256
Tommy Hilfiger * 9,400 330
8,750
Entertainment and Leisure 7.6%
Carnival (Class A) ADR 32,000 1,772
Disney 15,000 1,486
Extended Stay America * 45,000 $ 560
Extended Stay America *+ 30,000 373
Hilton 28,200 839
La Quinta Inns 80,000 1,545
Mirage Resorts * 31,900 726
Vail Resorts * 4,100 106
7,407
Media/Communication Services 12.2%
AirTouch Communications * 51,000 2,120
CBS 7,200 212
Comcast (Class A Special) 80,000 2,522
MCI 15,400 660
Outdoor Systems * 38,250 1,468
Paging Network * 70,000 755
Sinclair Broadcast
Group (Class A) 26,000 1,204
Tele-Comm Liberty Media
(Series A) * 27,500 999
Tribune 18,500 1,152
WorldCom 25,000 757
11,849
Restaurants/Food Distribution 1.7%
Outback Steakhouse * 55,000 1,591
1,591
Personal Services 8.1%
Cendant * 156,085 5,365
Service Corp. International 68,000 2,512
7,877
Total Consumer Services 41,412
BUSINESS SERVICES 32.4%
Health Care Services 3.7%
PhyCor * 40,000 1,081
Quorum Health Group * 70,000 1,837
Vencor * 28,800 704
3,622
Distribution Services 4.3%
Cardinal Health 28,000 2,104
Corporate Express * 101,800 1,314
Ikon Office Solutions 27,000 759
4,177
Computer Services 8.0%
Acxiom * 60,000 1,147
Affiliated Computer Services
(Class A) * 41,000 1,079
BISYS Group * 38,000 $ 1,268
First Data 56,000 1,638
Galileo International 41,000 1,133
SunGard Data Systems * 47,700 1,479
7,744
Environmental Services 2.2%
USA Waste Services * 55,000 2,159
2,159
Other Business Services 9.2%
AccuStaff * 48,500 1,115
ADVO * 43,000 838
Catalina Marketing * 32,500 1,503
COREStaff * 51,500 1,371
Employee Solutions * 16,600 73
Interim Services * 65,000 1,682
Paychex 22,900 1,164
Viking Office Products * 55,000 1,208
8,954
Energy Services 5.0%
BJ Services * 9,000 648
Camco International 15,500 987
Schlumberger 10,000 805
Smith International * 19,000 1,166
Western Atlas 16,000 1,184
4,790
Total Business Services 31,446
Miscellaneous Common Stocks 0.6% 563
Total Common Stocks (Cost
$68,579) 90,907
Short-Term Investments 6.0%
Money Market Funds 6.0%
Reserve Investment Fund
5.84% # 5,821,447 5,822
Total Short-Term Investments
(Cost $5,822) 5,822
Total Investments in Securities
99.7% of Net Assets (Cost $74,401) $ 96,729
Other Assets Less Liabilities 262
NET ASSETS $ 96,991
_________
Net Assets Consist of:
Accumulated net realized gain/loss -
net of distributions 49
Net unrealized gain (loss) 22,328
Paid-in-capital applicable to 4,542,699
shares of $0.0001 par value
capital stock outstanding;
1,000,000,000 shares of the
corporation authorized 74,614
NET ASSETS $ 96,991
_________
NET ASSET VALUE PER SHARE $ 21.35
_________
* Non-income producing
+ Securities contain some restrictions as to public
resale-total of such securities at year-end amounts to
0.65% of net assets.
# Seven-day yield
ADR American Depository Receipt
CAD Canadian dollar
T. Rowe Price New America Growth Portfolio
December 31, 1997
The accompanying notes are an integral part of these financial
statements.
Statement of Operations
T. Rowe Price New America Growth Portfolio
In thousands
Year
Ended
12/31/97
Investment Income
Income
Interest $ 428
Dividend 256
Total income 684
Expenses
Investment management and
administrative 671
Net investment income 13
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 71
Foreign currency transactions (6)
Net realized gain (loss) 65
Change in net unrealized gain
or loss on securities 15,691
Net realized and unrealized gain (loss) 15,756
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 15,769
_________
The accompanying notes are an integral part of these financial
statements.
Statement of Changes in Net Assets
T. Rowe Price New America Growth Portfolio
In thousands
Year
Ended
12/31/97 12/31/96
Increase (Decrease) in Net Assets
Operations
Net investment income $ 13 $ 65
Net realized gain (loss) 65 637
Change in net unrealized
gain or loss 15,691 5,130
Increase (decrease) in net
assets from operations 15,769 5,832
Distributions to shareholders
Net investment income - (92)
Net realized gain (227) (765)
Decrease in net assets
from distributions (227) (857)
Capital share transactions*
Shares sold 36,823 51,507
Distributions reinvested 227 857
Shares redeemed (15,842) (9,492)
Increase (decrease) in net
assets from capital
share transactions 21,208 42,872
Net equalization - 90
Net Assets
Increase (decrease) during period 36,750 47,937
Beginning of period 60,241 12,304
End of period $ 96,991 $ 60,241
_____________________
*Share information
Shares sold 1,964 3,117
Distributions reinvested 11 52
Shares redeemed (842) (568)
Increase (decrease) in
shares outstanding 1,133 2,601
The accompanying notes are an integral part of these financial
statements.
Notes to Financial Statements
T. Rowe Price New America Growth Portfolio
December 31, 1997
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Equity Series, Inc. (the corporation) is
registered under the Investment Company Act of 1940. The New
America Growth 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.
The accompanying financial statements are prepared in accordance
with generally accepted accounting principles for the investment
company industry; these principles may require the use of
estimates by fund management.
Valuation Equity securities listed or regularly traded on a
securities exchange are valued at the last quoted sales price on
the day 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 not traded on a particular day and
securities 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.
Investments in mutual funds are valued at the closing net asset
value per share of the mutual fund on the day of valuation.
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.
Assets and liabilities 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.
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.
Effective January 1, 1997, the fund discontinued its practice of
equalization. The results of operations and net assets were not
affected by this change.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other
than short-term securities, aggregated $47,216,000
and $26,638,000, respectively, for the year ended December 31,
1997.
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.
In order for the fund's capital accounts and distributions to
shareholders to reflect the tax character of certain
transactions, the following reclassifications were made during
the year ended December 31, 1997. The results of operations and
net assets were not affected by the increases/(decreases) to
these accounts.
Undistributed net investment income $ (13,000)
Undistributed net realized gain 13,000
At December 31, 1997, the aggregate cost of investments for
federal income tax and financial reporting purposes was
$74,401,000, and net unrealized gain aggregated $22,328,000, of
which $24,564,000 related to appreciated investments and
$2,236,000 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 $56,000 was
payable at December 31, 1997. 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.
The fund may invest in the Reserve Investment Fund and
Government Reserve Investment Fund (collectively, the Reserve
Funds), open-end management investment companies managed by T.
Rowe Price Associates, Inc. The Reserve Funds are offered as
cash management options only to mutual funds and other accounts
managed by T. Rowe Price and 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 year ended December 31, 1997, totaled $125,000 and
are reflected as interest income in the accompanying Statement
of Operations.
Tax Information (Unaudited) for the Tax Year Ended 12/31/97
Report of Independent Accountants
We are providing this information as required by the Internal
Revenue Code. The amounts shown may differ from those elsewhere
in this report because of differences between tax and financial
reporting requirements.
The fund's distributions to shareholders included:
o $53,000 from short-term capital gains, and
o $161,000 from long-term capital gains; of which $161,000 was
subject to the 28% rate gains category.
For corporate shareholders, 100% of the fund's distributed
income and short-term capital gains qualified for the
dividends-received deduction.
To the Board of Directors of T. Rowe Price Equity Series, Inc.
and Shareholders of New America Growth Portfolio
In our opinion, the accompanying statement of net assets and the
related statements of operations and of changes in net assets
and the financial highlights present fairly, in all material
respects, the financial position of New America Growth Portfolio
(one of the portfolios constituting T. Rowe Price Equity Series,
Inc., hereafter referred to as the "Fund") at December 31, 1997,
and the results of its operations, the changes in its net assets
and the financial highlights for each of the fiscal periods
presented, in conformity with generally accepted accounting
principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is
to express an opinion on these financial statements based on our
audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December
31, 1997 by correspondence with custodians and, where
appropriate, the application of alternative auditing procedures
for unsettled security transactions, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
January 21, 1998
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to those who
have received a copy of the portfolio's prospectus.
T. Rowe Price Investment Services, Inc., Distributor
TRP652 (12/97)
K15-050 12/31/97
