Semiannual Report
June 30, 2000
New America Growth Portfolio
Invest With Confidence(registered trademark)
T. Rowe Price
This report is authorized for distri-
bution only to those who have received a
copy of the portfolio's prospectus.
T. Rowe Price Investment Services, Inc.,
Distributor
Dear Investor
The stock market was extraordinarily volatile in the first half of 2000. In the
first quarter, momentum carried the hottest stocks and sectors of late 1999 to
stratospheric levels. But the onset of spring brought a correction in these
stocks, with the Nasdaq Composite falling 13% in the second quarter and Internet
stocks falling even more steeply. More reasonably priced stocks came to the fore
during the sell-off. However, technology stocks surged again at the end of the
period, recouping some of their losses. Most major indices ended the first half
lower, as did your portfolio.
Performance Comparison
--------------------------------------------------------------------------------
Periods Ended 6/30/00 6 Months 12 Months
--------------------------------------------------------------------------------
New America
Growth Portfolio -1.64% -0.12%
S&P 500 Stock Index -0.43 7.24
Lipper Variable Annuity
Underlying Growth
Funds Average 3.29 20.83
The New America Growth Portfolio's 1.64% loss for the period was roughly
comparable to the decline of the Standard & Poor's 500 Stock Index but
trailed the 3.29% gain of our Lipper peer group average, as shown in the
table. Our six-month shortfall against the Lipper category can be
attributed to poor performance in the first quarter, as technology stocks
soared and the fund remained significantly underweighted in the sector due
to our objective as a services sector fund. For the 12 months, the
portfolio's underperformance again reflected our underweighting in
technology for most of the period.
Effective May 1, the New America Growth Portfolio revised its investment
program, as approved by shareholders on April 19. The new objective is to
invest in sectors that we believe offer the most growth potential in the
years ahead rather than to focus primarily on service companies. It is
encouraging to note that during the second quarter, as we realigned our
portfolio, the portfolio began to perform more like a broad-based growth
fund and slightly exceeded the return of the Lipper Variable Annuity
Underlying Growth Funds Average. While the average growth fund declined in
the second quarter, we expect that our new emphasis on a variety of
fast-growing sectors will improve absolute and relative performance over
the long run. Despite the portfolio's underperformance in the last few
years as the services sector lost ground to technology stocks, our
long-term record remains strong. Since inception on March 31, 1994, the
portfolio has gained 191.70% (18.69% annualized).
In the last couple of reports we lamented that only a handful of stocks and
sectors were responsible for the vast majority of the market's gains. In
the first half of 2000, the market began to broaden in many respects.
First, mid-cap stocks outperformed large-cap stocks as the S&P MidCap Index
rose nearly 9% and was the best-performing major index. Second, a much
broader group of sectors led the market in the second quarter as the Nasdaq
declined. Whereas technology stocks led almost to the exclusion of all else
over the last several years, in the second quarter there was strength in
health care, business services, and even financial services. This was
reflected in your fund's better relative performance in the first half
compared with our performance over the past year. A continuation of this
broadening should be beneficial to the New America Growth Portfolio, as we
continue to invest in both large- and mid-cap stocks and in a broader set
of industries than most other growth funds, which focus primarily on
technology.
Even with all the volatility of the first half, growth stocks still
outperformed value stocks in the period. The Russell 1000 Growth Index rose
4.23% while the Russell 1000 Value Index fell 4.23%.
MARKET ENVIRONMENT
Early in the first half, it seemed as though the market's pattern of the
past few years would continue indefinitely - companies with high
anticipated revenue growth were rewarded with ever-higher valuations
without much regard to profitability. Leadership was narrow, with
technology stocks significantly outpacing the broader market. The
tech-heavy Nasdaq Composite rose more than 12% in the first quarter on top
of its phenomenal rise in 1999. But with persistent and increasingly
aggressive rate hikes by the Federal Reserve, mounting inflationary
pressures, and unsustainably high valuations, the high-flying tech stocks
began to wobble before plummeting in April and May.
Contributing to the market's newfound sobriety was the collapse of several
high-profile dot-coms and growing evidence that without continued
equity-market financing, many more would soon use up the capital raised
during the boom years. Internet stocks lost nearly a quarter of their value
in the second quarter. Many small- and mid-capitalization Internet stocks
fell 60% to 70% from their recent highs. Once the Internet stocks began to
unravel, investors also began to question valuations in other technology
sectors. Concern about the impact of weak markets on the earnings of major
investment banks hurt that group briefly, but heavy merger-and-acquisition
activity boosted the stocks of asset management companies. Late in the
period, initial signs of a slowdown in consumer spending helped cause more
volatility in the markets, as investors balanced the prospect of an end to
Fed rate hikes with the likelihood that earnings of economically sensitive
companies - such as retailers - would suffer.
While growth seems to be moderating due to the Fed's tighter monetary
policy, we do not appear to be headed for a recession. The economy
continues to expand, unemployment remains low, and consumer confidence is
still at relatively high levels. In fact, a mild slowdown might be a
welcome relief, as it could ease wage pressures and overall inflation,
which are generally very negative for the stock market.
PORTFOLIO REVIEW
Changes in sector weightings were significant over the last six months
because of the portfolio's new investment objective. The largest additions
to the portfolio were in technology and health care, while the fund's
exposure to consumer services, business services, and financial services
declined materially. Two of our important new holdings, JDS Uniphase and
SDL, provide components for optical networks. The optical group is one of
the fastest-growing in the economy as major communications companies are
finding that increases in semiconductor processing speeds are not enough to
keep up with the world's insatiable demand for bandwidth. (Bandwidth is a
measure of data transmission capacity.) Optical communications devices use
light, rather than electrical impulses, to move voice and data through a
network. As many shareholders may remember from high school physics,
nothing is faster than light. Another significant new holding is Ariba, a
software company that is helping to change the way businesses communicate
and transact with each other. While the business-to-consumer sector
received most of the attention during the initial wave of Internet
enthusiasm, the size of the business-to-business market is many times
larger in terms of the number of transactions as well as the total value of
the sales. Ariba has the opportunity to stand in the middle of a lot of
transactions and profit both from selling software to the exchange
participants and from transaction fees for value-added services. Health
care companies added in the period included pharmaceutical companies such
as Pfizer, as well as biotechnology companies such as MedImmune and
Genentech.
Our biggest sale was U.S. Foodservice, a large distributor to the
restaurant industry that was acquired at a more than 40% premium by Dutch
company Ahold. As a result, U.S. Foodservice was also the second-best
contributor to the fund for the six-month period. Most of the other
reductions in the portfolio were made to fund the purchase of the names
just mentioned, as well as other new holdings.
Positive contributors to the portfolio came from each of our major sectors.
Although a financial services company - asset manager Waddell & Reed
Financial - was the largest contributor to the portfolio for the first six
months, business services and health care were the top contributing
sectors. In business services, in addition to U.S. Foodservice, Paychex and
Apollo Group were also strong performers. Paychex is the leading payroll
processor for small businesses and one of the longest-held securities in
the portfolio. Apollo Group is a leading private education company that
focuses on the working adult. In addition to its traditional
bricks-and-mortar business, Apollo Group is also one of the largest
companies participating in "distance education" through the Internet.
While existing holdings in business services were stalwarts during the
first half, we also added eight new pharmaceutical and biotechnology stocks
during the period, each of which aided results. The health care sector's
best performer in the first half was the combination of Pfizer and
Warner-Lambert, which merged to form the largest, and what we believe will
be the world's fastest-growing, pharmaceutical company. The research and
development performed by the new Pfizer will exceed $5 billion. The
second-best contributor in the health care sector was Abgenix, a
biotechnology company that discovers and develops fully human antibodies
through its proprietary technology. Antibodies are proteins produced by the
immune system to protect the body from infection. Abgenix licenses this
technology to pharmaceutical companies who use it to develop new drugs.
Sector Diversification
---------------------------------------------------------------------------
6/30/99 12/31/99 6/30/00
---------------------------------------------------------------------------
Business Services 30.1% 25.1% 22.2%
Consumer Services 27.8 23.8 14.2
Financial 14.6 10.0 8.4
Health Care 2.8 1.9 6.9
Media Services 23.0 26.2 20.7
Technology -- 3.5 20.9
Reserves 1.7 9.5 6.7
---------------------------------------------------------------------------
Total 100% 100% 100%
Media services was the worst-performing sector, primarily due to weakness
in both broadcasting and wireless communications. Both groups are among the
largest weightings in the fund, and both have been stellar performers over
the last few years. Specifically, AT&T Liberty Media, which has appreciated
several fold since its inclusion in the fund, was weak during the period.
Liberty Media, a tracking stock of AT&T, is a portfolio of companies
including those in cable, interactive TV, and the Internet. In addition,
AMFM, a large owner of radio stations, was weak in the first half due to
concern that a slowdown in dot-com advertising would hurt the growth of the
overall advertising market. AMFM will soon merge with Clear Channel to
create the largest out-of-home advertising company with nearly 900 radio
stations and 450,000 outdoor ad displays. The consumer sector was also
weak, because of rising rates and worries about the slowing economy. Home
Depot, the world's largest home improvement retailer, was the worst
performer during the first half.
Other positions initiated over the past six months include Nextel
Communications, Cisco Systems, and Macromedia. Nextel is a national
wireless telephone provider with a unique focus on the high-value business
market. Nextel also generates significant positive cash flow, unlike some
of the other large wireless players. Cisco, of course, is the leading
global supplier of networking solutions for the Internet and enterprise
networks. It is the dominant player in almost all of its markets and is
making significant inroads selling its equipment in the telecommunications
marketplace as telecom networks evolve from voice to data. Finally,
Macromedia is a software company that allows Web designers to develop rich
media Web sites. As broadband Internet access increases, companies will be
looking to fill those pipes with a richer experience than traditional
static Web pages offer. Macromedia's Dreamweaver has dominant market share
and is becoming the de facto standard for Web developers. Macromedia is not
only growing rapidly but also generating strong earnings per share and cash
flow.
OUTLOOK
Although it is certainly more fun to invest in a market where the sky's the
limit, we are encouraged by investors' new-found skepticism about Internet
and technology stock valuations. We have written in many reports that
although fundamentals appear very robust in many areas of technology, in
the end stock prices must be supported by future earnings and cash flows.
Many stocks are trading well above their intrinsic values. Though we have
changed the fund's investment objective, we remain adamant that we will not
abandon our valuation discipline. As such, your portfolio is still
underweighted in technology compared with all the major growth indexes even
though our exposure has grown from 4% six months ago to about 21% at this
writing. By contrast, the S&P 500 technology weighting is closer to 30%,
and many growth indexes have weightings approaching or exceeding 40%. As we
said in our last letter, we will not chase performance, but will look for
opportune times to increase our technology weighting. The volatility in the
second quarter gave us our first opportunity.
The economy continues to look healthy, but there are signs that the Fed's
attempts to engineer a slowdown are beginning to succeed. Inflation is
still in check, but the increase in energy prices is having an impact and,
with unemployment still at 4%, there is some cause for concern about rising
wages. Both the housing and retail sectors have cooled off in recent
months, and more companies are announcing earnings disappointments. We will
be watching closely for clues as to whether a soft landing or a crash
landing lies ahead for the economy. Currently, the signs are encouraging.
The outlook for the New America Growth Portfolio remains bright. The fund
still owns a strong stable of service companies that generate high levels
of recurring revenues. Additionally, we have added some very exciting new
companies with strong growth prospects, as we detailed in this report. Over
the next several months, the portfolio will continue to take the shape of a
more traditional growth fund. Because of our earlier service-sector
orientation, we historically lacked exposure to sectors that make up more
than 40% of the S&P 500 and more than 50% of major growth indexes. These
under-owned sectors were primarily in technology, including software,
hardware, semiconductors, and communications equipment, as well as in
health care, including pharmaceuticals, biotechnology, and medical products
and devices. Although some of these stocks bring more volatility
individually, we believe the added diversification through new industry
sectors, combined with the additional growth potential, will benefit
shareholders in the long term.
Respectfully submitted,
Marc L. Baylin
Chairman of the Investment Advisory Committee
July 21, 2000
Portfolio Highlights
Twenty-Five Largest Holdings
Percent of
Net Assets
6/30/00
--------------------------------------------------------------------------------
Infinity Broadcasting 3.1%
AMFM 3.1
AT&T Liberty Media 2.9
Ceridian 2.3
Morgan Stanley Dean Witter 2.2
Waddell & Reed Financial 2.2
Western Wireless 2.2
Catalina Marketing 2.2
Family Dollar Stores 2.0
Comcast 1.9
Concord EFS 1.8
Freddie Mac 1.8
Affiliated Computer Services 1.8
Home Depot 1.8
WorldCom 1.7
TJX 1.7
Pfizer 1.7
First Data 1.7
NOVA Corporation 1.6
Vodafone AirTouch 1.6
Nextel Communications 1.5
Viad 1.5
Circuit City Stores 1.5
Ariba 1.4
Schlumberger 1.4
--------------------------------------------------------------------------------
Total 48.6%
Note: Table excludes reserves.
Portfolio Highlights
Contributions to the Change in Net Asset Value Per Share
--------------------------------------------------------------------------------
6 Months Ended 6/30/00
Ten best contributors
--------------------------------------------------------------------------------
Waddell & Reed Financial 29(cents)
U.S. Foodservice *** 26
Paychex 14
Apollo Group 14
ADVO 14
SDL * 13
3Com ** 11
SFX Entertainment 11
Ariba * 10
Safeway 10
--------------------------------------------------------------------------------
Total 152(cents)
TEN WORST CONTRIBUTORS
--------------------------------------------------------------------------------
Home Depot - 20(cents)
Affiliated Computer Services 16
AT&T Liberty Media 14
Liberate Technologies * 13
E.piphany ** 11
Internet Capital Group ** 10
AMFM 10
Western Wireless 10
Charter Communications ** 10
Galileo International 9
--------------------------------------------------------------------------------
Total - 123(cents)
12 Months Ended 6/30/00
Ten best contributors
--------------------------------------------------------------------------------
VoiceStream Wireless 101(cents)
Western Wireless 41
AT&T Liberty Media 28
Waddell & Reed Financial 27
Outdoor Systems *** 25
Morgan Stanley Dean Witter 23
Paychex 20
AMFM 19
U.S. Foodservice *** 18
ADVO 17
--------------------------------------------------------------------------------
Total 319(cents)
TEN WORST CONTRIBUTORS
--------------------------------------------------------------------------------
Waste Management ** - 48
Office Depot 36
Galileo International 36
Associates First Capital ** 28
Affiliated Computer Services 22
Freddie Mac 18
Sylvan Learning Systems ** 18
Kroger ** 17
Premier Parks ** 16
Republic Services 15
--------------------------------------------------------------------------------
Total - 254(cents)
* Position added
** Position eliminated
*** Acquired by another company
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 benchmarks, which may include a
broad-based market index and a peer group average or index. Market indexes do
not include expenses, which are deducted from fund returns as well as mutual
fund averages and indexes.
New America Growth Portfolio
--------------------------------------------------------------------------------
As of 6/30/00
Lipper Variable
New America Annuity
Growth S&P 500 Underlying Growth
Portfolio Stock Index Funds Average
3/31/94 10,000 10,000 10,000
6/94 9,670 10,042 9,733
6/95 12,504 12,660 12,114
6/96 17,326 15,952 14,990
6/97 19,964 21,487 18,928
6/98 25,990 27,968 24,457
6/99 29,205 34,333 29,355
6/30/00 29,170 36,820 34,896
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 6/30/00
Since Inception
1 Year 3 Years 5 Years Inception Date
--------------------------------------------------------------------------------
-0.12% 13.47% 18.46% 18.69% 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
(Unaudited)
For a share outstanding throughout each period
----------------------------------------------------
6 Months Year
Ended Ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
NET ASSET VALUE
Beginning of period 26.18 24.74 21.35 $ 17.67 $ 15.23 $ 10.10
Investment activities
Net investment incom (0.03) (0.07) (0.08) -- 0.04 0.03
Net realized and
unrealized gain
(loss) (0.40) 3.10 3.97 3.73 2.94 5.12
Total from
investment
activities (0.43) 3.03 3.89 3.73 2.98 5.15
Distributions
Net investment income -- -- -- -- (0.04) (0.02)
Net realized gain -- (1.59) (0.50) (0.05) (0.50) --
Total distributions -- (1.59) (0.50) (0.05) (0.54) (0.02)
NET ASSET VALUE
End of period $ 25.75 $ 26.18 $ 24.74 $ 21.35 $ 17.67 $ 15.23
----------------------------------------------------------
Ratios/Supplemental Data
Total
return(diamond) (1.64)% 12.75% 18.51% 21.12% 20.09% 51.10%
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 (0.28)%! (0.30)% (0.34)% 0.02% 0.18% 0.23%
Portfolio
turnover rate 97.2%! 42.1% 46.0% 37.3% 27.2% 54.5%
Net assets,
end of period
(in thousands) $118,805 $125,974 $118,989 $ 96,991 $ 60,241 $ 12,304
(diamond) Total return reflects the rate that an investor would have earned on
an investment in the fund during each period, assuming reinvestment
of all distributions.
! Annualized
The accompanying notes are an integral part of these financial statements.
Statement of Net Assets
T. Rowe Price New America Growth Portfolio
June 30, 2000 (Unaudited)
Shares Value
--------------------------------------------------------------------------------
In thousands
Common Stocks 93.3%
CONSUMER SERVICES 14.2%
Retailing/General Merchandisers 3.9%
Costco Wholesale * 33,000 1,090
Family Dollar Stores 124,000 2,426
Safeway * 24,000 1,083
4,599
Retailing/Specialty Merchandisers 6.3%
Circuit City Stores 52,000 1,726
CVS 30,000 1,200
Home Depot 42,000 2,097
Office Depot * 63,000 394
TJX 109,200 2,047
7,464
Entertainment and Leisure 0.7%
SFX Entertainment (Class A) * 19,500 884
884
Personal Services 2.2%
Apollo Group (Class A) * 48,000 1,342
Avis Group Holdings * 65,000 1,219
2,561
Restaurants 1.1%
Outback Steakhouse * 46,000 1,346
1,346
Total Consumer Services 16,854
BUSINESS SERVICES 21.7%
Computer Services 12.3%
Affiliated Computer Services (Class A) * 64,500 2,133
Ceridian * 113,000 2,719
Concord EFS * 84,000 2,184
First Data 40,000 1,985
Galileo International 44,000 918
NOVA Corporation * 68,300 1,908
Paychex 32,000 1,344
SunGard Data Systems * 46,900 1,454
14,645
Energy Services 2.5%
Schlumberger 22,500 1,679
Smith International * 17,000 1,238
2,917
Other Business Services 4.0%
Republic Services (Class A) * 86,000 1,376
TMP Worldwide * 14,900 1,099
Viad 65,000 1,771
Viant * 16,000 475
4,721
Marketing Services 2.9%
ADVO * 20,000 840
Catalina Marketing * 25,500 2,601
3,441
Total Business Services 25,724
FINANCIAL 8.3%
Investment Services 6.2%
E*TRADE * 91,000 1,499
Goldman Sachs Group 6,000 569
Morgan Stanley Dean Witter 32,000 2,664
Waddell & Reed Financial
(Class B) 90,000 2,616
7,348
Other Financial 2.1%
Fannie Mae 8,000 418
Freddie Mac 53,000 2,146
2,564
Total Financial 9,912
TECHNOLOGY 20.3%
E-Commerce 5.5%
America Online * 25,000 1,319
Ariba * 17,500 1,716
Commerce One * 3,800 173
Digex * 12,000 816
e-bay * 5,500 298
Priceline.com * 11,500 436
Softbank (JPY) 1,800 244
Verisign * 4,750 838
Yahoo! * 5,000 619
6,459
Software & Services 5.8%
BMC Software * 30,500 1,112
Intuit * 19,000 785
Liberate Technologies * 13,500 396
Macromedia * 13,800 1,334
Microsoft * 8,250 660
Oracle * 10,000 840
Peregrine Systems * 30,000 1,044
VERITAS Software * 6,750 763
6,934
Computer 1.9%
Dell Computer * 17,000 839
Jabil Circuit * 14,000 695
Solectron * 16,000 670
2,204
Communications Equipment 5.2%
Cisco Systems * 23,500 1,493
E-Tek Dynamics * 1,750 462
JDS Uniphase * 9,750 1,168
LM Ericsson (Class B) ADR 34,000 681
Nokia ADR 14,500 724
Nortel Networks 11,500 785
SDL * 3,000 856
6,169
Semiconductors 1.9%
Altera * 6,500 662
Analog Devices * 8,000 608
PMC-Sierra * 1,500 266
Texas Instruments 11,000 756
2,292
Total Technology 24,058
MEDIA SERVICES 20.7%
Broadcasting 8.1%
AMFM * 53,000 3,657
Comcast (Class A Special)* 55,000 2,229
Infinity Broadcasting
(Class A) * 102,000 3,717
9,603
Other Media Services 3.7%
American Tower Systems
(Class A) * 4,500 188
AT&T Liberty Media Group * 140,000 3,395
Crown Castle International * 22,000 802
4,385
Telecom Services 8.9%
Nextel Communications * 29,500 1,804
NEXTLINK Communications * 21,000 796
Vodafone AirTouch ADR 44,500 1,844
VoiceStream Wireless * 13,000 1,512
Western Wireless * 48,000 2,614
WorldCom * 45,000 2,066
10,636
Total Media Services 24,624
HEALTH CARE 6.9%
Health Care Services 1.2%
Omnicare 113,000 1,024
Wellpoint Health Networks * 6,000 435
1,459
Pharmaceuticals 5.7%
Abegenix * 9,900 1,186
enentech * 6,750 1,161
MedImmune * 13,500 999
Pfizer 42,250 2,028
Pharmacia 26,900 1,390
6,764
Total Health Care 8,223
Total Miscellaneous Common Stocks 1.2% 1,473
Total Common Stocks (Cost $81,066) 110,868
SHORT-TERM INVESTMENTS 6.9%
Money Market Funds 6.9%
Reserve Investment Fund 6.68% # 8,172,256 8,172
Total Short-Term Investments
(Cost $8,172) 8,172
Total Investments in Securities
100.2% of Net Assets (Cost $89,238) 119,040
Other Assets Less Liabilities (235)
NET ASSETS 118,805
-------
Net Assets Consist of:
Accumulated net investment income -
net of distributions (161)
Accumulated net realized gain/loss -
net of distributions 12,948
Net unrealized gain (loss) 29,802
Paid-in-capital applicable to
4,613,215 shares of $0.0001 par
value capital stock outstanding;
1,000,000,000 shares of the
Corporation authorized 76,216
NET ASSETS 118,805
-------
NET ASSET VALUE PER SHARE 25.75
-----
# Seven-day yield
* Non-income producing
ADR American Depository Receipt
JPY Japanese yen
The accompanying notes are an integral part of these financial statements.
Statement of Operations
Unaudited
T. Rowe Price New America Growth Portfolio
In thousands
6 Months
Ended
6/30/00
Investment Income (Loss)
Income
Interest 172
Dividend 163
Total income 335
Expenses
Investment management and administrative 496
Net investment income (loss) (161)
Realized and Unrealized Gain (Loss)
Net realized gain (loss)
Securities 8,569
Foreign currency transactions (11)
Net realized gain (loss) 8,558
Change in net unrealized gain or loss on securities (10,610)
Net realized and unrealized gain (loss) (2,052)
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS (2,213)
------
The accompanying notes are an integral part of these financial statements.
Statement of Changes in Net Assets
Unaudited
T. Rowe Price New America Growth Portfolio
In thousands
6 Months Year
Ended Ended
6/30/00 12/31/99
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) (161) (350)
Net realized gain (loss) 8,558 10,435
Change in net unrealized
gain or loss (10,610) 4,336
Increase (decrease) in
net assets from operations (2,213) 14,421
Distributions to shareholders
Net realized gain -- (7,210)
Capital share transactions *
Shares sold 13,959 22,622
Distributions reinvested -- 7,210
Shares redeemed (18,915) (30,058)
Increase (decrease) in net
assets from capital
share transactions (4,956) (226)
Net Assets
Increase (decrease) during period (7,169) 6,985
Beginning of period 125,974 118,989
End of period 118,805 125,974
--------------------
*Share information
Shares sold 552 893
Distributions reinvested -- 297
Shares redeemed (751) (1,187)
Increase (decrease) in
shares outstanding (199) 3
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
Unaudited
T. Rowe Price New America Growth Portfolio
June 30, 2000
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price Equity Series Fund, 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 fund seeks to achieve 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.
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.
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.
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.
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.
NOTE 2 - INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than short-term
securities, aggregated $54,579,000 and $55,701,000, respectively, for the
six months ended June 30, 2000.
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, 2000, the cost of investments for federal income tax purposes
was substantially the same as for financial reporting and totaled
$89,238,000. Net unrealized gain aggregated $29,802,000 at period-end, of
which $35,056,000 related to appreciated investments and $5,254,000 to
depreciated investments.
T. Rowe Price New America Growth Portfolio
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 $108,000 was payable at June 30, 2000. 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 six months ended
June 30, 2000, totaled $172,000 and are reflected as interest income in the
accompanying Statement of Operations.
T. Rowe Price New America Growth Portfolio
Annual Meeting Results
The T. Rowe Price New America Growth Portfolio held an annual meeting on
April 19, 2000, to ratify the Board of Directors' selection of
PricewaterhouseCoopers L.L.P. as the fund's independent accountants and to
approve a change in the fund's investment objective.
The results of voting were as follows (by number of shares):
For PricewaterhouseCoopers L.L.P.
as independent accountants:
Affirmative: 4,513,789.789
Against: 42,760.260
Abstain: 120,270.114
Total: 4,676,820.163
For a change in the fund's investment objective:
Affirmative: 4,483,960.204
Against: 74,753.449
Abstain: 118,106.510
Total: 4,676,820.163
