Form N-CSRS T. Rowe Price Equity For: Jun 30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF
REGISTERED
MANAGEMENT INVESTMENT COMPANIES

 
 

Investment Company Act File Number:
811-07639

T. Rowe Price Equity Funds, Inc.

(Exact
name of registrant as specified in charter)
 
100
East Pratt Street, Baltimore, MD 21202

(Address of principal executive offices)
 
David
Oestreicher
100
East Pratt Street, Baltimore, MD 21202

(Name
and address of agent for service)

 

Registrant’s telephone number, including area code: (410) 345-2000
 
 
Date of fiscal year end: December 31
 
 
Date of reporting period: June 30, 2022

Item 1. Reports to Shareholders

(a) Report pursuant to Rule 30e-1.

T. Rowe Price Semiannual Report

Institutional Small-Cap Stock Fund

June 30, 2022

T. ROWE PRICE INSTITUTIONAL SMALL-CAP STOCK FUND

HIGHLIGHTS

The Institutional Small-Cap Stock Fund underperformed the Russell 2000 Index in the first half of 2022, a challenging environment
as investors digested the ramifications of Russia’s invasion of Ukraine, elevated inflation exacerbated by rising commodity prices, and
Federal Reserve interest rate increases starting in mid-March.
 
Compared with the benchmark, the consumer discretionary, industrials and business services, and energy sectors were the largest
detractors from performance, while holdings in health care and communication services added value.
 
Sector weights are driven by bottom-up stock selection, as opposed to the macroeconomic environment or specific sector themes.
During the period, we added to some long-term holdings that have come under pressure recently and continued to seek out
companies that are solving hard problems, believing that they will be successful regardless of the macro environment.
 
Many questions remain regarding the direction of the economy, and while we cannot say that we’ve reached the bottom of this sell-off,
we maintain conviction in our investment process, remain focused on identifying the advantaged companies across our universe that
offer relative value, and believe that our fundamental and patient approach will provide strong long-term results.

Log in to your account at troweprice.com for
more information.

*Certain mutual fund accounts that are assessed an annual account service fee can also save money by switching to e-delivery.

Market Commentary

Dear Investor

Major stock and bond indexes produced sharply negative results during the first half of 2022 as investors contended with persistently
high inflation, tightening financial conditions, and slowing growth.

After reaching an all-time high on January 3, the S&P 500 Index
finished the period down about 20%, the worst first half of a calendar year for the index since 1970. Double-digit losses were common
in equity markets around the globe, and bond investors also faced a historically tough environment amid a sharp rise in interest rates.

Value shares outperformed growth stocks as equity investors turned risk averse and rising rates put downward pressure on growth stock
valuations. Emerging markets stocks held up somewhat better than shares in developed markets due to the strong performance of some oil-exporting
countries. Meanwhile, the U.S. dollar strengthened during the period, which weighed on returns for U.S. investors in international securities.

Within the S&P 500, energy was the only bright spot, gaining more than 30% as oil prices jumped in response to Russia’s invasion
of Ukraine and the ensuing commodity supply crunch. Typically defensive shares, such as utilities, consumer staples, and health care,
finished in negative territory but held up relatively well. The consumer discretionary, communication services, and information technology
sectors were the weakest performers. Shares of some major retailers fell sharply following earnings misses driven in part by overstocked
inventories.

Inflation remained the leading concern for investors throughout the period. Despite hopes in 2021 that the problem was transitory,
and later expectations that inflation would peak in the spring, headline consumer prices continued to grind higher throughout the first
half of 2022. The war in Ukraine exacerbated already existing supply chain problems, and other factors, such as the impact of the fiscal
and monetary stimulus enacted during the pandemic and strong consumer demand, also pushed prices higher. The May consumer price index
report (the last to be issued during our reporting period) showed prices increasing 8.6% over the 12-month period, the largest jump since
late 1981.

In response, the Federal Reserve, which at the end of 2021 had forecast that only three 25-basis-point (0.25 percentage point)
rate hikes would be necessary in all of 2022, rapidly shifted in a hawkish direction and executed three rate increases in the first six
months of the year. The policy moves included hikes of 25, 50, and 75 basis points—the largest single increase since 1994—increasing
the central bank’s short-term lending benchmark from near zero to a target range of 1.50% to 1.75% by the end of June. In addition,
the Fed ended the purchases of Treasuries and agency mortgage-backed securities that it had begun to support the economy early in the
pandemic and started reducing its balance sheet in June.

Longer-term bond yields also increased considerably as the Fed tightened monetary
policy, with the yield on the benchmark 10-year U.S. Treasury note reaching 3.49% on June 14, its highest level in more than a decade.
(Bond prices and yields move in opposite directions.) Higher mortgage rates led to signs of cooling in the housing market.

The economy
continued to add jobs during the period, and other indicators pointed to a slowing but still expanding economy. However, the University
of Michigan consumer sentiment index dropped in June to its lowest level since records began in 1978 as higher inflation expectations
undermined confidence.

Looking ahead, investors are likely to remain focused on whether the Fed can tame inflation without sending the
economy into recession, a backdrop that could produce continued volatility. We believe this environment makes skilled active management
a critical tool for identifying risks and opportunities, and our investment teams will continue to use fundamental research to identify
companies that can add value to your portfolio over the long term.

Thank you for your continued confidence in T. Rowe Price.

Sincerely,

Robert Sharps
CEO and
President

Management’s Discussion of Fund Performance

INVESTMENT OBJECTIVE

The fund seeks to provide long-term capital growth by
investing primarily in stocks of small companies.

FUND COMMENTARY

How did the fund perform in the last six months?

The Institutional Small-Cap Stock Fund returned -24.78% for
the six-month period ended June 30, 2022. The fund
underperformed the Russell 2000 Index but outperformed the
Lipper Small-Cap Growth Funds Index. (Past performance cannot guarantee future results.)

What factors influenced the fund’s performance?

Major U.S. stock indexes declined considerably in the first
half of 2022 as investors digested the ramifications of Russia’s
invasion of Ukraine, elevated inflation exacerbated by rising
commodity prices, and Federal Reserve interest rate increases
starting in mid-March. Indeed, the period was the worst
ever start to the year for the Russell 2000 Index. In this
environment, our growth tilt was a hindrance, as some of
our larger names were hit hard by multiple compression and
disappointing earnings results. Consumer discretionary
holdings weighed most heavily on relative results, while
stock selection in industrials and business services and an
underweight allocation to energy also proved detrimental.
On the positive side, our holdings in health care and
communication services added value.

In consumer discretionary, significant supply chain disruption
constrained production targets and pressured shares of electric
vehicle manufacturer Rivian Automotive. The company has
reaffirmed the revised guidance it provided during its fourth-quarter
earnings call. We believe there is upside from reset
expectations, and while some growing pains and near-term
headwinds may persist, our long-term outlook remains intact.
We like the company’s experienced management team, its
focus on profitable market segments, and its positioning as a
beneficiary of the secular trend of electrification. Headwinds
from the omicron variant of the coronavirus and a mix shift
toward a higher volume of contact lens sales, which hurt
margins, sent shares of omnichannel vision care provider
Warby Parker lower. We believe Warby Parker is a best-in-class
company with leading technology, exceptional customer service, and vast opportunity for growth as brand awareness
increases. (Please refer to the portfolio of investments for a
complete list of holdings and the amount each represents in
the portfolio.)

In industrials and business services, conservative forward
guidance weighed on shares of SiteOne Landscape Supply
despite strong results. Concerns regarding decelerating growth
following a pandemic-driven pull forward in demand and the
effect of rising interest rates on home renovations also
dampened investor enthusiasm. We maintain a favorable
long-term view of the company and its ability to consolidate
within a fragmented landscape distribution market.

Our underweight allocation to energy detracted from relative
results. Energy stocks produced extraordinary gains, surging
with oil and natural gas prices, as many nations sanctioned
Russia and made efforts to reduce reliance on Russian energy
exports because of its invasion of Ukraine.

Conversely, our holdings in health care contributed to relative
performance. Shares of Argenx, an antibody platform
company, climbed on strong sales for its lead asset, Vyvgart
(efgartigimod), which was recently approved by the Food
and Drug Administration for the treatment of generalized
myasthenia gravis in adult patients who are anti-acetylcholine
receptor antibody positive. Additionally, the first of two pivotal
phase three studies for the approval of Vyvgart in immune
thrombocytopenia was successful. We believe there is a large
commercial opportunity for the drug given expansion into
several additional indications for the drug. Shares of Medicaid
managed care company Molina Healthcare pulled back but
outperformed many sector peers. The company reported solid
results reflecting strong execution in the core business offset
by pandemic-related cost headwinds. We believe that Molina
will continue to make progress in its operational turnaround
and expand its presence via tuck-in acquisitions.

In communication services, shares of dating app operator
Bumble held up better than many sector peers. The Bumble
app generated significant payer growth, strengthening its
position as the second most popular dating app in the world.
Shares of Zynga, a mobile and PC game developer of free-to-play
casual games, spiked on the announcement that it would
be acquired at a substantial premium by fellow video game
developer Take-Two Interactive Software.

How is the fund positioned?

Sector weights are driven by bottom-up stock selection, as
opposed to the macroeconomic environment or specific sector
themes. During the period, we added to some long-term
holdings that have come under pressure recently and continued
to seek out companies that are solving hard problems,
believing that they will be successful regardless of the macro
environment. Trades spanned the sectors, from our largest
relative overweight (consumer discretionary) to the largest
relative underweight (real estate).

The consumer discretionary sector has an eclectic assortment
of businesses, including retailers, media companies,
homebuilders, hotels, and restaurants. Across these diverse
businesses, we are interested in companies with solid
management teams, differentiated products with the ability to
gain market share, geographic expansion opportunities, and
strong balance sheets. We believe these companies have a
stronger chance to weather slow economic times than
competitors and should outperform during an economic
expansion. Top trades within the sector included a new
position in Farfetch, an increase to our holding in Bright
Horizons Family Solutions, and the elimination of Capri
Holdings. Farfetch is the leading technology platform for the
global luxury fashion industry. The company is a beneficiary
of the growth of the luxury market and the shift to online
shopping and is relatively insulated from the threat of Amazon,
in our view. We bought shares of worksite child-care services
company Bright Horizons Family Solutions on weakness.
Shares have been pressured by the ongoing global disruption
of operations brought about by the coronavirus pandemic and
the perception that a shift to a work-from-home/hybrid work
model would decrease demand for on-site child-care. However,
we believe the growing complexity in child-care, given new
work dynamics, benefits an industry leader like Bright
Horizons, especially its fast-growing backup care segment.
Capri Holdings is a global fashion and accessories group that
owns the Michael Kors, Versace, and Jimmy Choo brands.
Recent fallout at the senior management level weakened our
conviction in the name.

Within real estate investment trusts (REITs), we tend to invest
in firms with sound management teams and reasonably
valued, high-quality, long-term assets in favorable locations.
We added a position in DigitalBridge, a REIT and investment
manager with ownership interests in a variety of digital
infrastructure assets and companies. We have a favorable view
of the company’s leadership and its ability to source and
acquire high-quality real estate assets benefiting from secular
tailwinds. We also initiated a position in Terreno Realty, a
company that largely focuses on warehouse and flex space in
six major coastal markets that are key locations in the global
supply chain. We believe it stands to benefit from its quality
assets in attractive locations and continued expansion via
strategic asset purchases. Shares of student housing company
American Campus and industrial REIT PS Business Parks
both spiked on the announcement that they would be acquired
by Blackstone Group, and we exited our positions.

What is portfolio management’s outlook?

Many questions remain regarding the direction of the
economy given the Federal Reserve’s commitment to fighting
inflation despite the potential hindrance to economic growth.
Geopolitical tensions remain strained, and in the U.S.,
primaries have begun for what will likely be a contentious
November election. While we monitor macroeconomic factors,
we do not make top-down adjustments to the portfolio in
response. Although we cannot say that we’ve reached the
bottom of this sell-off, we maintain conviction in our
investment process, remain focused on identifying the
advantaged companies across our universe that offer relative
value, and believe that our fundamental and patient approach
will provide strong long-term results.

The views expressed reflect the opinions of T. Rowe Price as of the
date of this report and are subject to change based on changes in
market, economic, or other conditions. These views are not
intended to be a forecast of future events and are no guarantee of
future results.

RISKS OF INVESTING IN THE INSTITUTIONAL
SMALL-CAP STOCK FUND

Stocks generally fluctuate in value more than bonds and may
decline significantly over short time periods. There is a chance
that stock prices overall will decline because stock markets
tend to move in cycles, with periods of rising and falling
prices. The value of a stock in which the fund invests may
decline due to general weakness in the U.S. stock market, such
as when the U.S. financial markets decline, or because of
factors that affect a particular company or industry.

Because the fund may hold stocks with either growth or value
characteristics, it could underperform other stock funds that
take a strictly growth or value approach to investing when one
style is currently in favor. Growth stocks tend to be more
volatile than the overall stock market and can have sharp price
declines as a result of earnings disappointments. Value stocks
carry the risk that the market will not recognize their intrinsic
value or that they are actually appropriately priced at a
low level.

Because the fund invests primarily in securities issued by
small-cap companies, it is likely to be more volatile than a
fund that focuses on securities issued by larger companies.
Small companies often have less experienced management,
narrower product lines, more limited financial resources, and
less publicly available information than larger companies. In
addition, smaller companies are typically more sensitive to
changes in overall economic conditions, and their securities
may be difficult to trade.

BENCHMARK INFORMATION

Note: Portions of the mutual fund
information contained in this report was supplied by Lipper, a Refinitiv Company, subject to the following: Copyright 2022 © Refinitiv.
All rights reserved. Any copying, republication or redistribution of Lipper content is expressly prohibited without the prior written
consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Note: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2022.
FTSE Russell is a trading name of certain of the LSE Group companies. Russell® is a trade mark of the relevant LSE Group
companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant
LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions
in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data
from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote,
sponsor or endorse the content of this communication. The LSE Group is not responsible for the formatting or configuration of this material
or for any inaccuracy in T. Rowe Price’s presentation thereof.

Note: The S&P 500 Index is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”)
and has been licensed for use by T. Rowe Price. Standard & Poor’s® and S&P® are registered trademarks
of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”); Dow Jones® is a registered
trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); T. Rowe Price is not sponsored, endorsed, sold or promoted by
SPDJI, Dow Jones, S&P, or their respective affiliates, and none of such parties make any representation regarding the advisability of
investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index.

GROWTH OF $1 MILLION

This table shows the value of a hypothetical $1 million 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 include a broad-based market index and may
also include 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.

AVERAGE ANNUAL COMPOUND TOTAL RETURN

FUND EXPENSE EXAMPLE

As a mutual fund shareholder, you may incur two types of costs:
(1) transaction costs, such as redemption fees or sales loads, and
(2) ongoing costs, including management fees, distribution and service
(12b-1) fees, and other fund expenses. The following example is intended
to help you understand your ongoing costs (in dollars) of investing in the
fund and to compare these costs with the ongoing costs of investing in
other mutual funds. The example is based on an investment of $1,000
invested at the beginning of the most recent six-month period and held for
the entire period.

Actual Expenses

The first line of the following table (Actual) provides information about
actual account values and actual expenses. You may use the information
on this line, together with your account balance, to estimate the expenses
that you paid over the period. Simply divide your account value by $1,000
(for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number on the first line under the heading
“Expenses Paid During Period” to estimate the expenses you paid on your
account during this period.

Hypothetical Example for Comparison Purposes

The information on the second line of the table (Hypothetical) is based on
hypothetical account values and expenses derived from the fund’s actual
expense ratio and an assumed 5% per year rate of return before expenses
(not the fund’s actual return). You may compare the ongoing costs of
investing in the fund with other funds by contrasting this 5% hypothetical
example and the 5% hypothetical examples that appear in the shareholder
reports of the other funds. The hypothetical account values and expenses
may not be used to estimate the actual ending account balance or
expenses you paid for the period.

You should also be aware that the expenses shown in the table highlight
only your ongoing costs and do not reflect any transaction costs, such as
redemption fees or sales loads. Therefore, the second line of the table is
useful in comparing ongoing costs only and will not help you determine the
relative total costs of owning different funds. To the extent a fund charges
transaction costs, however, the total cost of owning that fund is higher.

Unaudited

The accompanying notes are an integral part of these financial statements.

June 30, 2022 (Unaudited)

The accompanying notes are an integral part of these financial statements.

June 30, 2022 (Unaudited)

The accompanying notes are an integral part of these financial statements.

Unaudited

The accompanying notes are an integral part of these financial statements.

Unaudited

The accompanying notes are an integral part of these financial statements.

Unaudited

NOTES TO FINANCIAL STATEMENTS

T. Rowe Price Equity Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act). The
Institutional Small-Cap Stock Fund (the fund) is a diversified, open-end management investment company established by the
corporation. The fund seeks to provide long-term capital growth by investing primarily in stocks of small companies.

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation The
fund is an investment company and follows accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting
Standards Codification
Topic 946 (ASC 946). The accompanying financial statements were prepared in accordance with accounting principles
generally accepted in the United States of America (GAAP), including, but not limited to, ASC 946. GAAP requires the use of estimates
made by management. Management believes that estimates and valuations are appropriate; however, actual results may differ from those
estimates, and the valuations reflected in the accompanying financial statements may differ from the value ultimately realized upon sale
or maturity.

Investment Transactions,
Investment Income, and Distributions
Investment transactions are accounted for on the trade date
basis. Income and expenses are recorded on the accrual basis. Realized gains and losses are reported on the identified cost basis.
Income tax-related interest and penalties, if incurred, are recorded as income tax expense. 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. Earnings on investments recognized as partnerships for federal income tax
purposes reflect the tax character of such earnings. Distributions from REITs are initially recorded as dividend income and, to the
extent such represent a return of capital or capital gain for tax purposes, are reclassified when such information becomes available.
Non-cash dividends, if any, are recorded at the fair market value of the asset received. Distributions to shareholders are recorded on the
ex-dividend date. Income distributions, if any, are declared and paid annually. A capital gain distribution may also be declared and paid
by the fund annually.

Currency Translation Assets, including investments, and liabilities denominated in foreign currencies are translated into U.S. dollar
values each day at the prevailing exchange rate, using the mean of the bid and asked prices of such currencies against U.S. dollars as
provided by an outside pricing service. Purchases and sales of securities, income, and expenses are translated into U.S. dollars at the
prevailing exchange rate on the respective date of such transaction. The effect of changes in foreign currency exchange rates on realized
and unrealized security gains and losses is not bifurcated from the portion attributable to changes in market prices.

In-Kind Subscriptions Under certain circumstances, and when considered to be in the best interest of all shareholders, the fund may
accept portfolio securities rather than cash as payment for the purchase of fund shares (in-kind subscription). For financial reporting
and tax purposes, the cost basis of contributed securities is equal to the market value of the securities on the date of contribution.
In-kind subscriptions result in no gain or loss and no tax consequences for the fund. During the six months ended June 30, 2022, the
fund accepted $20,089,000 of in-kind subscriptions, all of which were from other T. Rowe Price funds.

Capital Transactions Each investor’s interest in the net assets of the fund is represented by fund shares. The fund’s net asset value
(NAV) per share is computed at the close of the New York Stock Exchange (NYSE), normally 4 p.m. ET, each day the NYSE is open for
business. However, the NAV per share may be calculated at a time other than the normal close of the NYSE if trading on the NYSE is
restricted, if the NYSE closes earlier, or as may be permitted by the SEC. Purchases and redemptions of fund shares are transacted at the
next-computed NAV per share, after receipt of the transaction order by T. Rowe Price Associates, Inc., or its agents.

Indemnification In the normal course of business, the fund may provide indemnification in connection with its officers and directors,
service providers, and/or private company investments. The fund’s maximum exposure under these arrangements is unknown;
however, the risk of material loss is currently considered to be remote.

NOTE 2 – VALUATION

Fair Value The fund’s financial instruments are valued at the close of the NYSE and are reported at fair value, which GAAP defines
as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. The T. Rowe Price Valuation Committee (the Valuation Committee) is an internal committee that has been
delegated certain responsibilities by the fund’s Board of Directors (the Board) to ensure that financial instruments are appropriately
priced at fair value in accordance with GAAP and the 1940 Act. Subject to oversight by the Board, the Valuation Committee develops
and oversees pricing-related policies and procedures and approves all fair value determinations. Specifically, the Valuation Committee
establishes policies and procedures used in valuing financial instruments, including those which cannot be valued in accordance with
normal procedures or using pricing vendors; determines pricing techniques, sources, and persons eligible to effect fair value pricing
actions; evaluates the services and performance of the pricing vendors; oversees the pricing process to ensure policies and procedures
are being followed; and provides guidance on internal controls and valuation-related matters. The Valuation Committee provides
periodic reporting to the Board on valuation matters.

Various valuation techniques and inputs are used to determine the fair value of financial instruments. GAAP establishes the following
fair value hierarchy that categorizes the inputs used to measure fair value:

Level 1 – quoted prices (unadjusted) in active markets for identical financial instruments that the fund can access at the reporting date

Level 2 – inputs other than Level 1 quoted prices that are observable, either directly or indirectly (including, but not limited to, quoted
prices for similar financial instruments in active markets, quoted prices for identical or similar financial instruments in
inactive markets, interest rates and yield curves, implied volatilities, and credit spreads)

Level 3 – unobservable inputs (including the fund’s own assumptions in determining fair value)

Observable inputs are developed using market data, such as publicly available information about actual events or transactions, and
reflect the assumptions that market participants would use to price the financial instrument. Unobservable inputs are those for which
market data are not available and are developed using the best information available about the assumptions that market participants
would use to price the financial instrument. GAAP requires valuation techniques to maximize the use of relevant observable inputs and
minimize the use of unobservable inputs. When multiple inputs are used to derive fair value, the financial instrument is assigned to the
level within the fair value hierarchy based on the lowest-level input that is significant to the fair value of the financial instrument. Input
levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level but rather the degree of
judgment used in determining those values.

Valuation Techniques Equity securities, including exchange-traded funds, listed or regularly traded on a securities exchange or in the
over-the-counter (OTC) market are valued at the last quoted sale price or, for certain markets, the official closing price at the time the
valuations are made. OTC Bulletin Board securities are valued at the mean of the closing 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 closing bid and asked prices for domestic securities and the
last quoted sale or closing price for international securities.

The last quoted prices of non-U.S. equity securities may be adjusted to reflect the fair value of such securities at the close of the NYSE, if
the fund determines that developments between the close of a foreign market and the close of the NYSE will affect the value of some or
all of its portfolio securities. Each business day, the fund uses information from outside pricing services to evaluate and, if appropriate,
decide whether it is necessary to adjust quoted prices to reflect fair value by reviewing a variety of factors, including developments
in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that
represent foreign securities and baskets of foreign securities. The fund uses outside pricing services to provide it with quoted prices
and information to evaluate or adjust those prices. The fund cannot predict how often it will use quoted prices and how often it will
determine it necessary to adjust those prices to reflect fair value.

Investments in mutual funds are valued at the mutual fund’s closing NAV per share on the day of valuation. Assets and liabilities other
than financial instruments, including short-term receivables and payables, are carried at cost, or estimated realizable value, if less, which
approximates fair value.

Investments for which market quotations or market-based valuations are not readily available or deemed unreliable are valued at
fair value as determined in good faith by the Valuation Committee, in accordance with fair valuation policies and procedures. The
objective of any fair value pricing determination is to arrive at a price that could reasonably be expected from a current sale. Financial
instruments fair valued by the Valuation Committee are primarily private placements, restricted securities, warrants, rights, and other
securities that are not publicly traded. Factors used in determining fair value vary by type of investment and may include market or
investment specific considerations. The Valuation Committee typically will afford greatest weight to actual prices in arm’s length
transactions, to the extent they represent orderly transactions between market participants, transaction information can be reliably
obtained, and prices are deemed representative of fair value. However, the Valuation Committee may also consider other valuation
methods such as market-based valuation multiples; a discount or premium from market value of a similar, freely traded security of the
same issuer; discounted cash flows; yield to maturity; or some combination. Fair value determinations are reviewed on a regular basis
and updated as information becomes available, including actual purchase and sale transactions of the investment. Because any fair value
determination involves a significant amount of judgment, there is a degree of subjectivity inherent in such pricing decisions, and fair
value prices determined by the Valuation Committee could differ from those of other market participants.

Valuation Inputs The following table summarizes the fund’s financial instruments, based on the inputs used to determine their fair
values on June 30, 2022 (for further detail by category, please refer to the accompanying Portfolio of Investments):

Following is a reconciliation of the fund’s Level 3 holdings for the six months ended June 30, 2022. Gain (loss) reflects both realized
and change in unrealized gain/loss on Level 3 holdings during the period, if any, and is included on the accompanying Statement
of Operations. The change in unrealized gain/loss on Level 3 instruments held at June 30, 2022, totaled $(22,831,000) for the six
months ended June 30, 2022.

In accordance with GAAP, the following table provides quantitative information about significant unobservable inputs used to
determine the fair valuations of the fund’s Level 3 assets, by class of financial instrument. Because the Valuation Committee considers a
wide variety of factors and inputs, both observable and unobservable, in determining fair values, the unobservable inputs presented do
not reflect all inputs significant to the fair value determination.

NOTE 3 – OTHER INVESTMENT TRANSACTIONS

Consistent with its investment objective,
the fund engages in the following practices to manage exposure to certain risks and/or to enhance performance. The investment objective,
policies, program, and risk factors of the fund are described more fully in the fund’s prospectus and Statement of Additional Information.

Restricted Securities The fund invests in securities that are subject to legal or contractual restrictions on resale. Prompt sale
of such securities at an acceptable price may be difficult and may involve substantial delays and additional costs.

Securities Lending The fund may lend its securities to approved borrowers to earn additional income. Its securities lending activities
are administered by a lending agent in accordance with a securities lending agreement. Security loans generally do not have stated maturity
dates, and the fund may recall a security at any time. The fund receives collateral in the form of cash or U.S. government securities.
Collateral is maintained over the life of the loan in an amount not less than the value of loaned securities; any additional collateral
required due to changes in security values is delivered to the fund the next business day. Cash collateral is invested in accordance
with investment guidelines approved by fund management. Additionally, the lending agent indemnifies the fund against losses resulting
from borrower default. Although risk is mitigated by the collateral and indemnification, the fund could experience a delay in recovering
its securities and a possible loss of income or value if the borrower fails to return the securities, collateral investments decline
in value, and the lending agent fails to perform. Securities lending revenue consists of earnings on invested collateral and borrowing
fees, net of any rebates to the borrower, compensation to the lending agent, and other administrative costs. In accordance with GAAP,
investments made with cash collateral are reflected in the accompanying financial statements, but collateral received in the form of
securities is not. At June 30, 2022, there were no securities on loan.

Other Purchases and sales of portfolio securities
other than short-term and U.S. government securities aggregated $713,396,000 and $825,310,000, respectively, for the six months ended
June 30, 2022.

NOTE 4 – 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. Distributions
determined in accordance with federal income 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 but 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 the date of this report.

The fund intends to retain realized gains to the extent of available capital loss carryforwards. Net realized capital losses may be carried
forward indefinitely to offset future realized capital gains. As of December 31, 2021, the fund had $3,390,000 of available capital
loss carryforwards.

At June 30, 2022, the cost of investments for federal income tax purposes was $3,642,735,000. Net unrealized gain aggregated
$888,883,000 at period-end, of which $1,328,187,000 related to appreciated investments and $439,304,000 related to
depreciated investments.

NOTE 5 – FOREIGN TAXES

The fund is subject to foreign income taxes imposed by certain countries in which it invests. Additionally, capital gains realized upon
disposition of securities issued in or by certain foreign countries are subject to capital gains tax imposed by those countries. All taxes
are computed in accordance with the applicable foreign tax law, and, to the extent permitted, capital losses are used to offset capital
gains. Taxes attributable to income are accrued by the fund as a reduction of income. Current and deferred tax expense attributable to
capital gains is reflected as a component of realized or change in unrealized gain/loss on securities in the accompanying financial statements.
To the extent that the fund has country specific capital loss carryforwards, such carryforwards are applied against net unrealized gains
when determining the deferred tax liability. Any deferred tax liability incurred by the fund is included in either Other liabilities or
Deferred tax liability on the accompanying Statement of Assets and Liabilities.

NOTE 6 – RELATED PARTY TRANSACTIONS

The fund is managed by T. Rowe Price Associates, Inc. (Price Associates), a wholly owned subsidiary of T. Rowe Price Group, Inc.
(Price Group). Price Associates has entered into a sub-advisory agreement(s) with one or more of its wholly owned subsidiaries, to
provide investment advisory services to the fund. The investment management agreement between the fund and Price Associates
provides for an annual investment management fee equal to 0.65% of the fund’s average daily net assets. The fee is computed daily and
paid monthly.

In addition, the fund has entered into service agreements with Price Associates and a wholly owned subsidiary of Price Associates, each
an affiliate of the fund (collectively, Price). Price Associates provides certain accounting and administrative services to the fund.
T. Rowe Price Services, Inc. provides shareholder and administrative services in its capacity as the fund’s transfer and dividend-disbursing agent. For the six months ended June 30, 2022, expenses incurred pursuant to these service agreements were $53,000 for Price
Associates and $3,000 for T. Rowe Price Services, Inc. All amounts due to and due from Price, exclusive of investment management fees
payable, are presented net on the accompanying Statement of Assets and Liabilities.

The fund may invest its cash reserves in certain open-end management investment companies managed by Price Associates and
considered affiliates of the fund: the T. Rowe Price Government Reserve Fund or the T. Rowe Price Treasury Reserve Fund, organized
as money market funds, or the T. Rowe Price Short-Term Fund, a short-term bond fund (collectively, the Price Reserve Funds). The
Price Reserve Funds are offered as short-term investment options to mutual funds, trusts, and other accounts managed by Price
Associates or its affiliates and are not available for direct purchase by members of the public. Cash collateral from securities lending, if
any, is invested in the T. Rowe Price Government Reserve Fund; prior to December 13, 2021, the cash collateral from securities lending
was invested in the T. Rowe Price Short-Term Fund. The Price Reserve Funds pay no investment management fees.

The fund may participate in securities purchase and sale transactions with other funds or accounts advised by Price Associates (cross
trades), in accordance with procedures adopted by the fund’s Board and Securities and Exchange Commission rules, which require,
among other things, that such purchase and sale cross trades be effected at the independent current market price of the security.
During the six months ended June 30, 2022, the fund had no purchases or sales cross trades with other funds or accounts advised by
Price Associates.

Price Associates has voluntarily agreed to reimburse the fund from its own resources on a monthly basis for the cost of investment
research embedded in the cost of the fund’s securities trades and for the cost of brokerage commissions embedded in the cost of the
fund’s foreign currency transactions. These agreements may be rescinded at any time. For the six months ended June 30, 2022, these
reimbursements amounted to $281,000, which is included in Net realized gain (loss) on Securities in the Statement of Operations.

NOTE 7 – OTHER MATTERS

Unpredictable events such as environmental or natural disasters, war, terrorism, pandemics, outbreaks of infectious diseases, and
similar public health threats may significantly affect the economy and the markets and issuers in which a fund invests. Certain events
may cause instability across global markets, including reduced liquidity and disruptions in trading markets, while some events may
affect certain geographic regions, countries, sectors, and industries more significantly than others, and exacerbate other pre-existing
political, social, and economic risks. Since 2020, a novel strain of coronavirus (COVID-19) has resulted in disruptions to global business
activity and caused significant volatility and declines in global financial markets. In February 2022, Russian forces entered Ukraine and
commenced an armed conflict leading to economic sanctions being imposed on Russia and certain of its citizens, creating impacts on
Russian-related stocks and debt and greater volatility in global markets. These are recent examples of global events which may have an
impact on the fund’s performance, which could be negatively impacted if the value of a portfolio holding were harmed by these and
such other events. Management is actively monitoring the risks and financial impacts arising from these events.

INFORMATION ON PROXY VOTING POLICIES, PROCEDURES, AND RECORDS

A description of the policies and procedures used by T. Rowe Price funds to determine how to vote proxies relating to portfolio securities is
available in each fund’s Statement of Additional Information. You may request this document by calling 1-800-225-5132 or by accessing the
SEC’s website, sec.gov.

The description of our proxy voting policies and procedures is also available on our corporate website. To access it, please visit the
following Web page:

https://www.troweprice.com/corporate/us/en/utility/policies.html

Scroll down to the section near the bottom of the page that says, “Proxy Voting Guidelines.” Click on the links in the shaded box.

Each fund’s most recent annual proxy voting record is available on our website and through the SEC’s website. To access it through
T. Rowe Price, visit the website location shown above, and scroll down to the section near the bottom of the page that says, “Proxy Voting
Records.” Click on the Proxy Voting Records link in the shaded box.

HOW TO OBTAIN QUARTERLY PORTFOLIO HOLDINGS

The fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of
each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s reports on Form N-PORT are available electronically on the SEC’s
website (sec.gov). In addition, most T. Rowe Price funds disclose their first and third fiscal quarter-end holdings on troweprice.com.

APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT AND SUBADVISORY AGREEMENT

Each year, the fund’s Board of Directors (Board) considers the continuation of the investment management agreement (Advisory Contract)
between the fund and its investment adviser, T. Rowe Price Associates, Inc. (Adviser), as well as the investment subadvisory agreement
(Subadvisory Contract) that the Adviser has entered into with T. Rowe Price Investment Management, Inc. (Subadviser), on behalf of the fund,
which became effective on March 7, 2022. In that regard, at a meeting held on March 7–8, 2022 (Meeting), the Board, including all of the
fund’s independent directors, approved the fund’s Advisory Contract and Subadvisory Contract. At the Meeting, the Board considered the
factors and reached the conclusions described below relating to the selection of the Adviser and Subadviser and the approval of the Advisory
Contract and Subadvisory Contract. The independent directors were assisted in their evaluation of the Advisory Contract and Subadvisory
Contract by independent legal counsel from whom they received separate legal advice and with whom they met separately.

In providing information to the Board, the Adviser was guided by a detailed set of requests for information submitted by independent legal
counsel on behalf of the independent directors. In considering and approving the Advisory Contract and Subadvisory Contract, the Board
considered the information it believed was relevant, including, but not limited to, the information discussed below. The Board considered not
only the specific information presented in connection with the Meeting but also the knowledge gained over time through interaction with the
Adviser and Subadviser about various topics. The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics
and materials and considers factors that are relevant to its annual consideration of the renewal of the T. Rowe Price funds’ advisory contracts,
including performance and the services and support provided to the funds and their shareholders.

Services Provided by the Adviser and Subadviser

The Board considered the nature, quality, and extent of the services provided to the fund by the Adviser and the services that will be
provided by the Subadviser effective March 7, 2022. These services included, but were not limited to, directing the fund’s investments in
accordance with its investment program and the overall management of the fund’s portfolio, as well as a variety of related activities such as
financial, investment operations, and administrative services; compliance; maintaining the fund’s records and registrations; and shareholder
communications. The Board also reviewed the background and experience of the Adviser’s and Subadviser’s senior management teams
and investment personnel involved in the management of the fund, as well as the Adviser’s compliance record. The Board noted that the
Subadvisory Contract authorizes the Subadviser, subject to oversight by the Adviser, to have investment discretion with respect to all or a
portion of the fund’s portfolio. However, there will be information barriers between investment personnel of the Adviser and Subadviser that
restrict the sharing of certain information, such as investment research, trading, and proxy voting. The Board concluded that it was satisfied
with the nature, quality, and extent of the services provided by the Adviser and to be provided by the Subadviser.

Investment Performance of the Fund
The Board took into account discussions with the Adviser and reports that it receives throughout the year relating to fund performance. In
connection with the Meeting, the Board reviewed the fund’s total returns for various periods through December 31, 2021, and compared
these returns with the performance of a peer group of funds with similar investment programs and a wide variety of other previously agreed-upon
comparable performance measures and market data, including relative performance information as of September 30, 2021, supplied
by Broadridge, which is an independent provider of mutual fund data.

On the basis of this evaluation and the Board’s ongoing review of investment results, and factoring in the relative market conditions during
certain of the performance periods, the Board concluded that the fund’s performance was satisfactory.

Costs, Benefits, Profits,
and Economies of Scale

The Board reviewed detailed information regarding the revenues received by the Adviser under the Advisory Contract and other direct and
indirect benefits that the Adviser (and its affiliates) may have realized from its relationship with the fund. In considering soft-dollar
arrangements pursuant to which research may be received from broker-dealers that execute the fund’s portfolio transactions, the Board
noted that the Adviser bears the cost of research services for all client accounts that it advises, including the T. Rowe Price funds. The Board
received information on the estimated costs incurred and profits realized by the Adviser from managing the T. Rowe Price funds. The Board
also reviewed estimates of the profits realized from managing the fund in particular, and the Board concluded that the Adviser’s profits were
reasonable in light of the services provided to the fund.

The Board also considered whether the fund benefits under the fee levels set forth in the Advisory Contract or otherwise from any economies
of scale realized by the Adviser. Under the Advisory Contract, the fund pays a fee to the Adviser for investment management services based
on the fund’s average daily net assets and the fund pays its own expenses of operations. Under the Subadvisory Contract, the Adviser may
pay the Subadviser up to 60% of the advisory fees that the Adviser receives from the fund. Assets of the fund are included in the calculation
of the group fee rate, which serves as a component of the management fee for many other T. Rowe Price funds and declines at certain asset levels based on the combined average net assets of most of the T. Rowe Price funds (including the fund). Although the fund does not have a
group fee component to its management fee, its assets are included in the calculation because certain resources utilized to operate the fund
are shared with other T. Rowe Price funds. The fund’s shareholders also benefit from potential economies of scale through a decline in
certain operating expenses as the fund grows in size. The Board concluded that the advisory fee structure for the fund provided for a
reasonable sharing of benefits from any economies of scale and that the advisory fee structure continued to be appropriate.

Fees and Expenses
The Board was provided with information regarding industry trends in management fees and expenses. Among other things, the Board
reviewed data for peer groups that were compiled by Broadridge, which compared: (i) contractual management fees, actual management fees,
nonmanagement expenses, and total expenses of the fund with a group of competitor funds selected by Broadridge (Expense Group) and
(ii) actual management fees, nonmanagement expenses, and total expenses of the fund with a broader set of funds within the Lipper investment
classification (Expense Universe). The Board considered the fund’s contractual management fee rate, actual management fee rate (which
reflects the management fees actually received from the fund by the Adviser after any applicable waivers, reductions, or reimbursements),
operating expenses, and total expenses (which reflect the net total expense ratio of the fund after any waivers, reductions, or reimbursements) in
comparison with the information for the Broadridge peer groups. Broadridge generally constructed the peer groups by seeking the most
comparable funds based on similar investment classifications and objectives, expense structure, asset size, and operating components and
attributes and ranked funds into quintiles, with the first quintile representing the funds with the lowest relative expenses and the fifth quintile
representing the funds with the highest relative expenses. The information provided to the Board by Broadridge in comparison to small-cap
growth funds indicated that the fund’s contractual management fee ranked in the first quintile (Expense Group), the fund’s actual management
fee rate ranked in the first quintile (Expense Group) and second quintile (Expense Universe), and the fund’s total expenses ranked in the first
quintile (Expense Group and Expense Universe). In addition, at the request of the Adviser, Broadridge compared the fund against peer groups
consisting of small-cap core funds. That information provided to the Board indicated that the fund’s contractual management fee ranked in the
second quintile (Expense Group), the fund’s actual management fee rate ranked in the second quintile (Expense Group and Expense Universe),
and the fund’s total expenses ranked in the first quintile (Expense Group and Expense Universe).

The Board also reviewed the fee schedules for other investment portfolios with similar mandates that are advised or subadvised by the
Adviser and its affiliates, including separately managed accounts for institutional and individual investors; subadvised funds; and other
sponsored investment portfolios, including collective investment trusts and pooled vehicles organized and offered to investors outside the
United States. Management provided the Board with information about the Adviser’s responsibilities and services provided to subadvisory
and other institutional account clients, including information about how the requirements and economics of the institutional business are
fundamentally different from those of the proprietary mutual fund business. The Board considered information showing that the Adviser’s
mutual fund business is generally more complex from a business and compliance perspective than its institutional account business and
considered various relevant factors, such as the broader scope of operations and oversight, more extensive shareholder communication
infrastructure, greater asset flows, heightened business risks, and differences in applicable laws and regulations associated with the Adviser’s
proprietary mutual fund business. In assessing the reasonableness of the fund’s management fee rate, the Board considered the differences
in the nature of the services required for the Adviser to manage its mutual fund business versus managing a discrete pool of assets as a
subadviser to another institution’s mutual fund or for an institutional account and that the Adviser generally performs significant additional
services and assumes greater risk in managing the fund and other T. Rowe Price funds than it does for institutional account clients, including
subadvised funds.

On the basis of the information provided and the factors considered, the Board concluded that the fees paid by the fund under the Advisory
Contract are reasonable.

Approval of the Advisory Contract and Subadvisory
Contract

As noted, the Board approved the continuation of the Advisory Contract and Subadvisory Contract. No single factor was considered in
isolation or to be determinative to the decision. Rather, the Board concluded, in light of a weighting and balancing of all factors considered,
that it was in the best interests of the fund and its shareholders for the Board to approve the continuation of the Advisory Contract and
Subadvisory Contract (including the fees to be charged for services thereunder).

Item 1. (b) Notice pursuant to Rule 30e-3.

Not applicable.

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. Investments.

(a) Not applicable. The complete schedule of investments is included in Item 1 of this Form N-CSR.

(b) Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders.

There has been no change to the procedures by which shareholders may recommend nominees to the registrant’s board of directors.

Item 11. 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 change in the registrant’s internal control over
financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting.

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

Not applicable.

Item 13. 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 Funds, Inc.

By       /s/
David Oestreicher
David Oestreicher
Principal Executive
Officer     
 
Date       August 17, 2022

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/
David Oestreicher
David Oestreicher
Principal Executive
Officer     
 
Date       August 17, 2022
 
 
By /s/ Alan S. Dupski
Alan S. Dupski
Principal Financial Officer
 
Date August 17, 2022



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