<PAGE> 1
TABLE OF CONTENTS
<TABLE>
<S> <C>
President's Letter...................... 2
Performance Summary..................... 5
NYLIAC Corporate Sponsored Variable
Universal Life Separate Account - I
Statement of Assets and Liabilities..... 6
Statement of Operations................. 8
Statement of Changes in Total Equity.... 10
Notes to Financial Statements........... 13
MainStay VP Series Fund, Inc.
Chairman's Letter....................... 25
MacKay-Shields Financial Corporation
Adviser's Report...................... 26
Madison Square Advisor's, Inc. Adviser's
Report................................ 28
Portfolio Managers' Comments............ 29
Glossary................................ 52
Capital Appreciation Portfolio.......... 56
Cash Management Portfolio............... 60
Convertible Portfolio................... 65
Government Portfolio.................... 71
High Yield Corporate Bond Portfolio..... 75
International Equity Portfolio.......... 86
Total Return Portfolio.................. 93
Value Portfolio......................... 101
Bond Portfolio.......................... 105
Growth Equity Portfolio................. 109
Indexed Equity Portfolio................ 114
Notes to Financial Statements........... 125
The Semi-Annual Reports for the
Portfolios listed below follow:
Alger American Small Capitalization
Portfolio
Calvert Social Balanced Portfolio
Fidelity Variable Insurance Products
Fund II Contrafund Portfolio
Fidelity Variable Insurance Products
Fund Equity-Income Portfolio
Janus Aspen Series Balanced Portfolio
and Janus Aspen Series Worldwide
Growth Portfolio
Morgan Stanley Dean Witter Emerging
Markets Equity Portfolio
</TABLE>
1
<PAGE> 2
LETTER FROM THE PRESIDENT
- --------------------------------------------------------------------------------
To the Owners of NYLIAC Corporate Sponsored Variable Universal Life Policies:
I am pleased to present the unaudited NYLIAC Corporate Sponsored Variable
Universal Life Semi-Annual Report for the six-month period ended June 30, 1999.
NYLIAC Corporate Sponsored Variable Universal Life Separate Account-I serves as
the Separate Account for the NYLIAC CSVUL policies.
The Semi-Annual Report contains valuable financial information including
mid-year performance data and Separate Account financial statements for each of
the 18 Investment Divisions that are available with our NYLIAC CSVUL policies.
This book also contains the following Semi-Annual Reports:
<TABLE>
<S> <C>
MainStay VP Series Fund, Inc. Fidelity Variable Insurance Products Fund II
The Alger American Fund Janus Aspen Series
Calvert Variable Series, Inc. Morgan Stanley Dean Witter Universal Funds, Inc.
Fidelity Variable Insurance Products Fund
</TABLE>
LIFE INSURANCE PROTECTION WITH A VARIETY OF INVESTMENT OPTIONS
The investment options offered in the NYLIAC CSVUL policies consist of 18
Investment Divisions and the Fixed Account. As a CSVUL policyowner, you benefit
from the experience and professional management of leading investment advisors
who work on your behalf. The extensive selection of diversified investment
offerings gives you flexibility in customizing a policy to suit your individual
investment style. Please refer to the CSVUL Prospectus for complete descriptions
of the Investment Divisions. The following is our view of the current and
anticipated economic conditions that may affect the performance of the
Investment Divisions.
ECONOMIC ENVIRONMENT MID-YEAR REVIEW
Growth remained quite robust in the first half of 1999, while inflation picked
up a bit. This, along with an easing of the Asian crisis, prompted a back-up in
bond yields by more than a full percentage point and a quarter point rise in the
Federal Reserve's target for the Federal Funds rate.
Real Gross Domestic Product (GDP) grew at an annual rate of 4.3% in the first
quarter, as surging consumer spending, housing, capital spending, and government
purchases more than made up for a further deterioration in the trade balance.
Second quarter growth slowed noticeably to a 2.3% pace. Consumer spending
moderated, but buoyed by record low unemployment and a still rising stock
market, exceeded income to create a negative savings rate.
Inflation began to pick up a bit as oil and other commodity prices rebounded
from severely depressed levels and the dollar stopped rising against the yen.
Consumer prices spiked in April, as temporary disinflationary forces reversed,
but were unchanged in May and June. The Consumer Price Index (CPI)(1) in June
was up 2.0% from a year ago, vs. just 1.6% in December.
Over the rest of the year, the economy is expected to continue slowing to a more
sustainable pace, as a temporary spurt in income from record tax refunds
subsides and a slowdown in construction spending in response to higher mortgage
rates spreads to housing-related consumer durables. The Asian crisis has
subsided, and many countries are showing signs of recovery, but economic
conditions remain quite weak in Japan, Europe, and Latin America. As a result,
the trade balance is expected to remain a net drag on the U.S. economy until
next year.
The unemployment rate, which declined from 4.7% to 4.3% last year, was unchanged
during the first half of 1999 and should begin to rise again as the economy
slows. This should help moderate any further rise in inflation. Strong
productivity growth, during the first half of 1999, should also help by reducing
the amount of slowing required.
The Federal Reserve made the smallest possible monetary policy tightening move
in June, raising its target Federal Funds rate by a quarter of a percentage
point, while leaving its discount rate unchanged. At the same time, it shifted
its bias from tightening to neutral, indicating that it believes it is just as
likely to ease as to
2
<PAGE> 3
tighten in the near future. If the economy slows as expected in the second half
of the year, the Federal Reserve may not have to do much further tightening any
more over the rest of the year. If so, Treasury bond yields should end the year
well below 6.0% after backing up to 6.2% in June.
The stock market continued its spectacular advance in the first half of the
year, with the Dow Jones Industrial Average(2) returning 20.5%, following an
18.1% gain in 1998. The S&P 500 Index(3) achieved a total return of 12.4% for
the same period, after showing a larger 28.6% gain in 1998. Corporate earnings
growth has rebounded from last year's miserable performance in response to
strong productivity growth in the U.S. and signs of recovering economic
conditions and currencies abroad. This appears to have nullified any negative
impact on the stock market from rising bond yields.
Over the rest of the year, the stock market dynamics should be favorable if
growth slows as expected and Federal Reserve tightening is mild. On the other
hand, historically high valuations provide a good reason for investors to be
cautious.
FUNDING YOUR VARIABLE LIFE INSURANCE POLICY
As part of your long-term financial plan or corporate strategy, NYLIAC's CSVUL
product offers permanent life insurance protection with a variety of investment
options. One of the attractive features of your CSVUL policy is that a premium
payment schedule can be selected that is flexible enough to meet your needs.
The policy's fees and charges are deducted from the cash value, and your life
insurance coverage will remain in effect as long as your cash surrender value is
sufficient to cover these deductions. In order to help optimize potential
investment results for the future, you may increase your planned premium
payments or make additional, unplanned premium payments.
A higher level of premium funding may maximize the policy's investment potential
and reduce the likelihood that your policy will terminate due to lower than
anticipated investment performance, which could result in the cash surrender
value being insufficient to cover the required monthly deductions. Your
registered representative can assist you in evaluating the effects of different
premium funding levels so that you can make an informed choice.
NYLIAC CSVUL SEPARATE ACCOUNT-I PERFORMANCE
During the first six months of 1999, positive investment returns were realized
in 13 of the 18 Investment Divisions of NYLIAC Variable Universal Life Separate
Account-I. Please refer to the performance summary on the following page for
details(4). The following 9 funds experienced double-digit total returns for
this period:
<TABLE>
<S> <C>
MainStay VP Growth Equity Fidelity VIP II Contrafund(5)
MainStay VP High Yield Corporate Bond Fidelity VIP Equity-Income(5)
MainStay VP Indexed Equity Janus Aspen Series Balanced
MainStay VP Value Janus Aspen Series Worldwide Growth
Alger American Small Capitalization
</TABLE>
YEAR 2000 READINESS
Year 2000, or Y2K, refers to a problem that computer systems could encounter at
the turn of the century in misinterpreting a two-digit reference to the year
(e.g., "00" could be interpreted as 1900 instead of 2000), which could cause a
computer to malfunction. NYLIAC, and its parent company New York Life Insurance
Company,
3
<PAGE> 4
have made this issue a top priority and developed a comprehensive century change
strategy. Our internal systems have been upgraded and tested and we continue to
monitor changes to existing systems as well as new additions to maintain our
preparedness. We are in communication with our primary third party providers of
goods and services and continue to monitor their Y2K readiness. To prepare for
the unexpected, and to keep our operations running smoothly, our business
contingency plans are being refined.
Thank you for making us "The Company You Keep(R)".
/s/ Federick J. Sievert
Frederick J. Sievert
President
New York Life Insurance and Annuity Corporation
(A Delaware Corporation)
(1) The Consumer Price Index (CPI) is a commonly used measure of the rate of
inflation.
(2) The Dow Jones Industrial Average is a trademark of, and the property of, Dow
Jones and Co., Inc. The DJIA Index is a price-weighted average of 30
actively traded blue chip stocks, primarily industrials, but also financial,
leisure, and other service-oriented firms.
(3) "Standard and Poor's 500 Composite Stock Price Index(R)" and "S&P 500(R)"
are registered trademarks of The McGraw-Hill Companies, Inc. The product is
not sponsored, endorsed, sold or promoted by Standard & Poor's Corporation.
The S&P 500 is an unmanaged index considered generally representative of the
U.S. stock market. Results assume the reinvestment of all income and capital
gains distributions.
(4) Past performance is not indicative of future results.
(5) VIP and VIP II refer to Variable Insurance Products Fund and Variable
Insurance Products Fund II.
4
<PAGE> 5
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
CORPORATE SPONSORED VARIABLE UNIVERSAL LIFE
SUMMARY OF SEPARATE ACCOUNT AVERAGE ANNUAL TOTAL RETURN PERFORMANCE*
PERIOD ENDING JUNE 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT DIVISIONS 1 3 6 1 SINCE INCEPTION
-------------------- MONTH MONTHS MONTHS YTD YEAR INCEPTION DATE
----- ------ ------ ------ ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
MainStay VP Bond -0.49% -1.58% -2.22% -2.22% 1.88% 2.51% 10/01/97
MainStay VP Capital Appreciation 7.99% 2.31% 7.14% 7.14% 23.95% 15.23% 10/01/97
MainStay VP Cash Management** 0.35% 0.94% 1.91% 1.91% 4.13% 3.02% 10/01/97
MainStay VP Convertible N/A*** N/A*** N/A*** N/A*** N/A*** N/A*** 10/01/97
MainStay VP Government -0.31% -0.79% -2.16% -2.16% 2.03% 2.80% 10/01/97
MainStay VP Growth Equity 4.39% 6.14% 12.47% 12.47% 22.10% 12.75% 10/01/97
MainStay VP High Yield Corporate Bond 0.03% 3.74% 10.24% 10.24% 6.92% 3.95% 10/01/97
MainStay VP Indexed Equity 5.51% 6.79% 11.77% 11.77% 21.80% 13.93% 10/01/97
MainStay VP International Equity 3.62% 0.58% 1.07% 1.07% 4.58% 4.26% 10/01/97
MainStay VP Total Return N/A*** N/A*** N/A*** N/A*** N/A*** N/A*** 10/01/97
MainStay VP Value 1.76% 13.41% 13.75% 13.75% -3.82% -3.92% 10/01/97
Alger American Small Capitalization 10.01% 12.34% 12.94% 12.94% 14.73% 11.44% 10/01/97
Calvert Social Balanced 3.92% 0.81% 4.78% 4.78% 10.23% 7.06% 10/01/97
Fidelity VIP II Contrafund 5.35% 5.31% 10.87% 10.87% 23.01% 16.37% 10/01/97
Fidelity VIP Equity -- Income 4.18% 10.22% 12.31% 12.31% 13.02% 6.18% 10/01/97
Janus Aspen Series Balanced 3.32% 3.20% 11.68% 11.68% 27.23% 18.20% 10/01/97
Janus Aspen Series Worldwide Growth 6.46% 5.38% 12.36% 12.36% 13.65% 12.01% 10/01/97
Morgan Stanley Dean Witter Emerging
Markets Equity N/A*** N/A*** N/A*** N/A*** N/A*** N/A*** 10/01/97
</TABLE>
* The values shown are unaudited.
** An investment in the MainStay VP Cash Management Investment Division is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. Although the MainStay VP Cash Management Investment
Division seeks to preserve the value of your investment at $1.00 per unit,
it is possible to lose money.
*** No performance information is shown for the MainStay VP Convertible,
MainStay VP Total Return and the Morgan Stanley Emerging Markets Equity
Investment Divisions because as of 6/30/99, the Separate Account had no
money invested in these Investment Divisions.
Past performance is no guarantee of future results. Due to current market
volatility, the current performance may be less than the figures shown. The
investment return and the accumulation value of your policy will fluctuate so
that your contract, when surrendered, may be worth more or less than the
original cost. Performance reflects the percentage change for the period shown
with capital gains and dividends reinvested.
Performance reflects the deduction of the policy's current mortality and expense
risk charge of .70% for policy years one through ten and total fund operating
expenses. However, it does not reflect the policy fees or charges. These include
the cost of insurance, surrender charges, monthly contract charges, sales
expense charges, and premium and federal tax charges. Had these expenses been
deducted, total returns would have been lower.
NYLIAC assumed a portion of the expenses for the MainStay VP Convertible and the
MainStay VP International Equity Investment Divisions until 12/31/98. This
expense limitation was in effect until 12/31/97 for the MainStay VP High Yield
Corporate Bond and MainStay VP Value Investment Divisions. In addition, Janus
Capital Corporation has agreed to reduce the advisory fee for the Janus Aspen
Series Balanced and the Janus Aspen Series Worldwide Growth Investment Divisions
and Morgan Stanley Dean Witter Investment Management Inc. has voluntarily waived
receipt of the advisory fee and agreed to reimburse the Morgan Stanley Dean
Witter Emerging Markets Equity Portfolio to the extent that the Total Fund
Annual Expenses of the Portfolio exceed 1.75%. Had these expenses not been
assumed or reduced, the total returns for these Investment Divisions would have
been lower.
For additional information, including illustrations which reflect guaranteed
minimum cost of insurance rates, please consult the prospectus.
DISTRIBUTED BY NYLIFE DISTRIBUTORS INC., MEMBER NASD
51 MADISON AVENUE, NEW YORK, NY 10010
5
<PAGE> 6
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
CAPITAL CASH MAINSTAY VP
APPRECIATION MANAGEMENT GOVERNMENT
<S> <C> <C> <C>
------------------------------------------------
ASSETS:
Investment at net asset value......................... $ 33,252,137 $ 61,756 $ 12,257
LIABILITIES:
Liability to New York Life Insurance and Annuity
Corporation for mortality and expense risk
charges............................................. 54,871 94 20
------------ ------------ ------------
Total equity...................................... $ 33,197,266 $ 61,662 $ 12,237
============ ============ ============
TOTAL EQUITY REPRESENTED BY:
Equity of Policyowners:
Variable accumulation units outstanding: 2,591,175;
58,533; 1,166; 3,763; 1,500,596; 8,076; 36,351;
2,788,731, respectively........................... $ 33,197,266 $ 61,662 $ 12,237
============ ============ ============
Variable accumulation unit value.................... $ 12.81 $ 1.05 $ 10.50
============ ============ ============
Identified Cost of Investment........................... $ 32,981,623 $ 61,756 $ 12,380
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
ALGER
MAINSTAY VP AMERICAN CALVERT
INDEXED SMALL SOCIAL
EQUITY CAPITALIZATION BALANCED
<S> <C> <C> <C>
------------------------------------------------
ASSETS:
Investment at net asset value......................... $116,894,498 $ 8,484 $ 2,774
LIABILITIES:
Liability to New York Life Insurance and Annuity
Corporation for mortality and expense risk
charges............................................. 193,002 15 5
------------ ------------ ------------
Total equity...................................... $116,701,496 $ 8,469 $ 2,769
============ ============ ============
TOTAL EQUITY REPRESENTED BY:
Equity of Policyowners:
Variable accumulation units outstanding: 9,291,350;
701; 246; 1,985; 80,928; 537,899; 2,902,
respectively...................................... $116,701,496 $ 8,469 $ 2,769
============ ============ ============
Variable accumulation unit value.................... $ 12.56 $ 12.09 $ 11.27
============ ============ ============
Identified Cost of Investment........................... $112,744,978 $ 7,795 $ 2,663
============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
6
<PAGE> 7
NYLIAC CSVUL SEPARATE ACCOUNT-I
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP MAINSTAY VP
HIGH YIELD INTERNATIONAL MAINSTAY VP MAINSTAY VP GROWTH
CORPORATE BOND EQUITY VALUE BOND EQUITY
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
$ 40,328 $ 16,168,355 $ 75,485 $ 380,189 $ 34,454,167
62 26,669 183 578 57,036
------------ ------------ ------------ ------------ ------------
$ 40,266 $ 16,141,686 $ 75,302 $ 379,611 $ 34,397,131
============ ============ ============ ============ ============
$ 40,266 $ 16,141,686 $ 75,302 $ 379,611 $ 34,397,131
============ ============ ============ ============ ============
$ 10.70 $ 10.76 $ 9.32 $ 10.44 $ 12.33
============ ============ ============ ============ ============
$ 40,008 $ 16,037,708 $ 69,003 $ 395,996 $ 33,255,696
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN
FIDELITY FIDELITY JANUS ASPEN SERIES
VIP II VIP SERIES WORLDWIDE
CONTRAFUND EQUITY-INCOME BALANCED GROWTH
<S> <C> <C> <C> <C>
-----------------------------------------------------------------
$ 25,920 $ 900,338 $ 7,217,101 $ 35,439
45 1,663 11,664 55
------------ ------------ ------------ ------------
$ 25,875 $ 898,675 $ 7,205,437 $ 35,384
============ ============ ============ ============
$ 25,875 $ 898,675 $ 7,205,437 $ 35,384
============ ============ ============ ============
$ 13.03 $ 11.10 $ 13.40 $ 12.19
============ ============ ============ ============
$ 21,921 $ 803,858 $ 5,824,866 $ 34,849
============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
7
<PAGE> 8
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
CAPITAL CASH MAINSTAY VP
APPRECIATION MANAGEMENT GOVERNMENT
<S> <C> <C> <C>
------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend income......................................... $ -- $ 1,151 $ --
Mortality and expense risk charges...................... (53,109) (177) (39)
---------- ---------- ----------
Net investment income (loss)........................ (53,109) 974 (39)
---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS):
Proceeds from sale of investments....................... 93,387 1,628 633
Cost of investments sold................................ (75,848) (1,628) (620)
---------- ---------- ----------
Net realized gain (loss) on investments............. 17,539 -- 13
Realized gain distribution received..................... -- -- --
Change in unrealized appreciation (depreciation)
on investments........................................ 222,596 -- (202)
---------- ---------- ----------
Net gain (loss) on investments...................... 240,135 -- (189)
---------- ---------- ----------
Increase (decrease) attributable to funds of New
York Life Insurance and Annuity Corporation
retained by Separate Account.......................... (2,386) (1) --
---------- ---------- ----------
Net increase (decrease) in total equity resulting
from operations................................... $ 184,640 $ 973 $ (228)
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
ALGER
MAINSTAY VP AMERICAN CALVERT
INDEXED SMALL SOCIAL
EQUITY CAPITALIZATION BALANCED
<S> <C> <C> <C>
------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend income......................................... $ -- $ -- $ --
Mortality and expense risk charges...................... (188,493) (24) (8)
---------- ---------- ----------
Net investment income (loss)........................ (188,493) (24) (8)
---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS):
Proceeds from sale of investments....................... 346,960 371 184
Cost of investments sold................................ (293,195) (416) (179)
---------- ---------- ----------
Net realized gain (loss) on investments............. 53,765 (45) 5
Realized gain distribution received..................... 677,380 932 --
Change in unrealized appreciation (depreciation)
on investments........................................ 4,079,365 114 115
---------- ---------- ----------
Net gain on investments............................. 4,810,510 1,001 120
---------- ---------- ----------
Decrease attributable to funds of New
York Life Insurance and Annuity Corporation
retained by Separate Account.......................... (6,380) (2) --
---------- ---------- ----------
Net increase in total equity resulting
from operations................................... $4,615,637 $ 975 $ 112
========== ========== ==========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
8
<PAGE> 9
NYLIAC CSVUL SEPARATE ACCOUNT-I
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP MAINSTAY VP
HIGH YIELD INTERNATIONAL MAINSTAY VP MAINSTAY VP GROWTH
CORPORATE BOND EQUITY VALUE BOND EQUITY
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
$ 84 $ 67,803 $ -- $ 10 $ --
(70) (27,640) (182) (1,084) (56,691)
---------- ---------- ---------- ---------- ----------
14 40,163 (182) (1,074) (56,691)
---------- ---------- ---------- ---------- ----------
379 57,710 573 6,783 117,170
(393) (55,042) (511) (6,886) (106,076)
---------- ---------- ---------- ---------- ----------
(14) 2,668 62 (103) 11,094
-- -- -- 33 --
873 116,279 6,480 (5,879) 1,193,707
---------- ---------- ---------- ---------- ----------
859 118,947 6,542 (5,949) 1,204,801
---------- ---------- ---------- ---------- ----------
(1) 12 (2) (1) (1,521)
---------- ---------- ---------- ---------- ----------
$ 872 $ 159,122 $ 6,358 $ (7,024) $1,146,589
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN
FIDELITY FIDELITY JANUS ASPEN SERIES
VIP II VIP SERIES WORLDWIDE
CONTRAFUND EQUITY-INCOME BALANCED GROWTH
<S> <C> <C> <C> <C>
-----------------------------------------------------------------
$ 95 $ 5,735 $ 74,419 $ 65
(78) (2,606) (20,920) (53)
---------- ---------- ---------- ----------
17 3,129 53,499 12
---------- ---------- ---------- ----------
1,086 26,102 111,691 298
(908) (26,154) (91,523) (275)
---------- ---------- ---------- ----------
178 (52) 20,168 23
696 12,677 -- --
1,444 98,135 611,125 584
---------- ---------- ---------- ----------
2,318 110,760 631,293 607
---------- ---------- ---------- ----------
(4) (134) (1,365) (2)
---------- ---------- ---------- ----------
$ 2,331 $ 113,755 $ 683,427 $ 617
========== ========== ========== ==========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
9
<PAGE> 10
STATEMENT OF CHANGES IN TOTAL EQUITY
For the six months ended June 30, 1999 (Unaudited)
and for the period March 27, 1998 (Commencement of Investments)
through December 31, 1998
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
CAPITAL CASH
APPRECIATION MANAGEMENT
------------------------------ ------------------------------
1999 1998 1999 1998
-------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE IN TOTAL EQUITY:
Operations:
Net investment income (loss)........................ $ (53,109) $ (763) $ 974 $ 1,108
Net realized gain (loss) on investments............. 17,539 33 -- --
Realized gain distribution received................. -- 3,223 -- --
Change in unrealized appreciation (depreciation) on
investments....................................... 222,596 47,918 -- --
Increase (decrease) attributable to funds of
New York Life Insurance and Annuity
Corporation retained by Separate Account.......... (2,386) (82) (1) (1)
------------ ------------ ------------ ------------
Net increase (decrease) in total equity
resulting from operations....................... 184,640 50,329 973 1,107
------------ ------------ ------------ ------------
Contributions and withdrawals:
Policyowners' premium payments...................... 106,005 202,881 14,405 26,274
Cost of insurance................................... (93,271) (8,151) (1,462) (1,757)
Net transfers from Fixed Account.................... 32,649,749 105,084 -- 22,122
------------ ------------ ------------ ------------
Net contributions and withdrawals................. 32,662,483 299,814 12,943 46,639
------------ ------------ ------------ ------------
Increase in total equity........................ 32,847,123 350,143 13,916 47,746
TOTAL EQUITY:
Beginning of period................................. 350,143 -- 47,746 --
------------ ------------ ------------ ------------
End of period....................................... $ 33,197,266 $ 350,143 $ 61,662 $ 47,746
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
BOND GROWTH EQUITY
------------------------------ ------------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
-------------------------------------------------------
INCREASE IN TOTAL EQUITY:
Operations:
Net investment income (loss)........................ $ (1,074) $ 14,284 $ (56,691) $ 1,093
Net realized gain (loss) on investments............. (103) 672 11,094 (1,032)
Realized gain distribution received................. 33 7,525 -- 30,785
Change in unrealized appreciation (depreciation) on
investments....................................... (5,879) (9,927) 1,193,707 4,765
Decrease attributable to funds of
New York Life Insurance and Annuity
Corporation retained by Separate Account.......... (1) (12) (1,521) (79)
------------ ------------ ------------ ------------
Net increase (decrease) in total equity resulting
from operations................................. (7,024) 12,542 1,146,589 35,532
------------ ------------ ------------ ------------
Contributions and withdrawals:
Policyowners' premium payments...................... 97,693 193,447 420,786 1,610
Cost of insurance................................... (5,759) (7,428) (115,241) (32,484)
Net transfers from Fixed Account.................... -- 96,140 32,529,180 411,159
------------ ------------ ------------ ------------
Net contributions and withdrawals................. 91,934 282,159 32,834,725 380,285
------------ ------------ ------------ ------------
Increase in total equity........................ 84,910 294,701 33,981,314 415,817
TOTAL EQUITY:
Beginning of period................................. 294,701 -- 415,817 --
------------ ------------ ------------ ------------
End of period....................................... $ 379,611 $ 294,701 $ 34,397,131 $ 415,817
============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
10
<PAGE> 11
NYLIAC CSVUL SEPARATE ACCOUNT-I
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
MAINSTAY VP HIGH YIELD INTERNATIONAL MAINSTAY VP
GOVERNMENT CORPORATE BOND EQUITY VALUE
--------------------------- --------------------------- --------------------------- ---------------------------
1999 1998 1999 1998 1999 1998 1999 1998
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (39) $ 366 $ 14 $ 408 $ 40,163 $ 7,413 $ (182) $ --
13 31 (14) (6) 2,668 (229) 62 (29)
-- -- -- 14 -- -- -- --
(202) 79 873 (554) 116,279 14,368 6,480 2
-- -- (1) -- 12 (71) (2) --
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(228) 476 872 (138) 159,122 21,481 6,358 (27)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
3,465 3,943 592 420 269,218 195,556 363 319
(600) (648) (363) (171) (56,845) (19,904) (573) (112)
-- 5,829 34,448 4,606 15,307,849 265,209 68,897 77
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
2,865 9,124 34,677 4,855 15,520,222 440,861 68,687 284
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
2,637 9,600 35,549 4,717 15,679,344 462,342 75,045 257
9,600 -- 4,717 -- 462,342 -- 257 --
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 12,237 $ 9,600 $ 40,266 $ 4,717 $ 16,141,686 $ 462,342 $ 75,302 $ 257
============ ============ ============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
ALGER
MAINSTAY VP AMERICAN CALVERT FIDELITY
INDEXED SMALL SOCIAL VP II
EQUITY CAPITALIZATION BALANCED CONTRAFUND
--------------------------- --------------------------- --------------------------- ---------------------------
1999 1998 1999 1998 1999 1998 1999 1998
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (188,493) $ 4,776 $ (24) $ (14) $ (8) $ 36 $ 17 $ (43)
53,765 (129) (45) (95) 5 -- 178 15
677,380 6,801 932 220 -- 91 696 --
4,079,365 70,155 114 575 115 (5) 1,444 2,555
(6,380) (153) (2) (1) -- -- (4) (2)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
4,615,637 81,450 975 685 112 122 2,331 2,525
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
550,888 243,408 2,035 2,686 1,013 1,459 6,529 8,723
(345,015) (46,439) (352) (400) (178) (228) (1,023) (1,171)
111,068,025 533,542 -- 2,840 -- 469 -- 7,961
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
111,273,898 730,511 1,683 5,126 835 1,700 5,506 15,513
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
115,889,535 811,961 2,658 5,811 947 1,822 7,837 18,038
811,961 -- 5,811 -- 1,822 -- 18,038 --
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$116,701,496 $ 811,961 $ 8,469 $ 5,811 $ 2,769 $ 1,822 $ 25,875 $ 18,038
============ ============ ============ ============ ============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
11
<PAGE> 12
STATEMENT OF CHANGES IN TOTAL EQUITY (CONTINUED)
For the six months ended June 30, 1999 (Unaudited)
and for the period March 27, 1998 (Commencement of Investments)
through December 31, 1998
<TABLE>
<CAPTION>
FIDELITY JANUS ASPEN
VIP SERIES
EQUITY-INCOME BALANCED
-------------------------- --------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
-----------------------------------------------
INCREASE IN TOTAL EQUITY:
Operations:
Net investment income (loss)............................ $ 3,129 $ (1,898) $ 53,499 $ 53,057
Net realized gain (loss) on investments................. (52) (2,048) 20,168 (48,641)
Realized gain distribution received..................... 12,677 -- -- 1,640
Change in unrealized appreciation (depreciation) on
investments........................................... 98,135 (1,654) 611,125 781,110
Decrease attributable to funds of
New York Life Insurance and Annuity
Corporation retained by Separate Account.............. (134) (28) (1,365) (1,199)
---------- ---------- ---------- ----------
Net increase (decrease) in total equity resulting from
operations.......................................... 113,755 (5,628) 683,427 785,967
---------- ---------- ---------- ----------
Contributions and withdrawals:
Policyowners' premium payments.......................... 423,374 6,244 1,146,609 3,476,276
Cost of insurance....................................... (24,543) (31,373) (91,543) (85,847)
Net transfers from Fixed Account........................ -- 416,846 -- 1,290,548
---------- ---------- ---------- ----------
Net contributions and withdrawals..................... 398,831 391,717 1,055,066 4,680,977
---------- ---------- ---------- ----------
Increase in total equity............................ 512,586 386,089 1,738,493 5,466,944
TOTAL EQUITY:
Beginning of period..................................... 386,089 -- 5,466,944 --
---------- ---------- ---------- ----------
End of period........................................... $ 898,675 $ 386,089 $7,205,437 $5,466,944
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN
SERIES
WORLDWIDE
GROWTH
--------------------------
1999 1998
<S> <C> <C>
---------------------
INCREASE IN TOTAL EQUITY:
Operations:
Net investment income................................... $ 12 $ 3
Net realized gain (loss) on investments................. 23 (3)
Realized gain distribution received..................... -- 1
Change in unrealized appreciation (depreciation) on
investments........................................... 584 6
Decrease attributable to funds of
New York Life Insurance and Annuity
Corporation retained by Separate Account.............. (2) --
---------- ----------
Net increase in total equity resulting from
operations.......................................... 617 7
---------- ----------
Contributions and withdrawals:
Policyowners' premium payments.......................... 416 233
Cost of insurance....................................... (297) (94)
Net transfers from Fixed Account........................ 34,448 54
---------- ----------
Net contributions and withdrawals..................... 34,567 193
---------- ----------
Increase in total equity............................ 35,184 200
TOTAL EQUITY:
Beginning of period..................................... 200 --
---------- ----------
End of period........................................... $ 35,384 $ 200
========== ==========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
12
<PAGE> 13
NYLIAC CSVUL SEPARATE ACCOUNT-I
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-- Organization and Accounting Policies:
- --------------------------------------------------------------------------------
NYLIAC Corporate Sponsored Variable Universal Life Separate Account-I ("CSVUL
Separate Account-I") was established on May 24, 1996, under Delaware law by New
York Life Insurance and Annuity Corporation ("NYLIAC"), a wholly- owned
subsidiary of New York Life Insurance Company. Investments into CSVUL Separate
Account-I commenced on March 27, 1998. The CSVUL Separate Account-I policies are
designed for Group or Sponsored arrangements who seek lifetime insurance
protection and flexibility with respect to premium payments and death benefits.
The policies are distributed by NYLIFE Distributors Inc. and sold by registered
representatives of broker-dealers who have entered into dealer agreements with
NYLIFE Distributors Inc. NYLIFE Distributors Inc. is a wholly-owned subsidiary
of NYLIFE Inc., which is a wholly-owned subsidiary of New York Life Insurance
Company. CSVUL Separate Account-I is registered under the Investment Company Act
of 1940, as amended, as a unit investment trust.
The assets of CSVUL Separate Account-I are invested in the shares of the
MainStay VP Series Fund, Inc., the Alger American Fund, the Calvert Variable
Series, Inc. (formerly, "Acacia Capital Corporation"), the Fidelity Variable
Insurance Products Fund II, the Fidelity Variable Insurance Products Fund, the
Janus Aspen Series and the Morgan Stanley Dean Witter Universal Funds, Inc.
(formerly, "Morgan Stanley Universal Funds, Inc.") (collectively, "Funds").
These assets are clearly identified and distinguished from the other assets and
liabilities of New York Life Insurance and Annuity Corporation.
CSVUL Separate Account-I offers the following eighteen variable Investment
Divisions, with their respective fund portfolios, for Policyowners to invest
premium payments: MainStay VP Capital Appreciation, MainStay VP Cash Management,
MainStay VP Convertible, MainStay VP Government, MainStay VP High Yield
Corporate Bond, MainStay VP International Equity, MainStay VP Total Return,
MainStay VP Value, MainStay VP Bond, MainStay VP Growth Equity, MainStay VP
Indexed Equity, Alger American Small Capitalization, Calvert Social Balanced
(formerly "Calvert Socially Responsible"), Fidelity VIP II Contrafund, Fidelity
VIP Equity-Income, Janus Aspen Series Balanced, Janus Aspen Series Worldwide
Growth and Morgan Stanley Dean Witter Emerging Markets Equity (formerly, Morgan
Stanley Emerging Markets Equity). As of June 30, 1999 no investments have been
made in the following Investment Divisions: MainStay VP Convertible, MainStay VP
Total Return, and Morgan Stanley Dean Witter Emerging Markets Equity. Each
Investment Division of CSVUL Separate Account-I will invest exclusively in the
corresponding Eligible Portfolio.
Initial premium payments received are allocated to NYLIAC's General Account
until 20 days after the policy delivery date. Thereafter, premium payments will
be allocated to the Investment Divisions of CSVUL Separate Account-I in
accordance with the Policyowner's instructions. In addition, the Policyowner has
the option to transfer amounts between the Investment Divisions of CSVUL
Separate Account-I and the Fixed Account of New York Life Insurance and Annuity
Corporation.
No Federal income tax is payable on investment income or capital gains of
CSVUL Separate Account-I under current Federal income tax law.
Security Valuation--The investments are valued at the net asset value of
shares of the respective Fund portfolios.
Security Transactions--Realized gains and losses from security transactions
are reported on the identified cost basis. Security transactions are accounted
for as of the date the securities are purchased or sold (trade date).
Distributions Received--Dividend income and capital gain distributions are
recorded on the ex-dividend date and reinvested in the corresponding portfolio.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 2--Investments (in 000's):
- --------------------------------------------------------------------------------
At June 30, 1999, the investments of CSVUL Separate Account-I are as follows:
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
CAPITAL CASH MAINSTAY VP
APPRECIATION MANAGEMENT GOVERNMENT
<S> <C> <C> <C>
------------------------------------------------------
Number of shares......................................... 1,010 62 1
Identified cost*......................................... $ 32,982 $ 62 $ 12
</TABLE>
<TABLE>
<CAPTION>
ALGER
MAINSTAY VP AMERICAN CALVERT
INDEXED SMALL SOCIAL
EQUITY CAPITALIZATION BALANCED
<S> <C> <C> <C>
------------------------------------------------------
Number of shares......................................... 4,050 -- 1
Identified cost*......................................... $112,745 $ 8 $ 3
</TABLE>
* The cost stated also represents the aggregate cost for Federal income tax
purposes.
Investment activity for the six months ended June 30, 1999, was as follows:
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
CAPITAL CASH MAINSTAY VP
APPRECIATION MANAGEMENT GOVERNMENT
<S> <C> <C> <C>
------------------------------------------------------
Purchases................................................ $ 32,755 $ 16 $ 3
Proceeds from sales...................................... 93 2 1
</TABLE>
<TABLE>
<CAPTION>
ALGER
MAINSTAY VP AMERICAN CALVERT
INDEXED SMALL SOCIAL
EQUITY CAPITALIZATION BALANCED
<S> <C> <C> <C>
------------------------------------------------------
Purchases................................................ $112,295 $ 3 $ 1
Proceeds from sales...................................... 347 -- --
</TABLE>
14
<PAGE> 15
NYLIAC CSVUL SEPARATE ACCOUNT-I
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP MAINSTAY VP
HIGH YIELD INTERNATIONAL MAINSTAY VP MAINSTAY VP GROWTH
CORPORATE BOND EQUITY VALUE BOND EQUITY
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------
3 1,291 5 29 1,293
$ 40 $16,038 $ 69 $ 396 $33,256
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN
FIDELITY FIDELITY JANUS ASPEN SERIES
VIP II VIP SERIES WORLDWIDE
CONTRAFUND EQUITY-INCOME BALANCED GROWTH
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------
1 33 289 1
$ 22 $ 804 $ 5,825 $ 35
</TABLE>
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP MAINSTAY VP
HIGH YIELD INTERNATIONAL MAINSTAY VP MAINSTAY VP GROWTH
CORPORATE BOND EQUITY VALUE BOND EQUITY
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------
$ 35 $15,644 $ 69 $ 98 $32,950
-- 58 1 7 117
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN
FIDELITY FIDELITY JANUS ASPEN SERIES
VIP II VIP SERIES WORLDWIDE
CONTRAFUND EQUITY-INCOME BALANCED GROWTH
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------
$ 7 $ 442 $ 1,221 $ 35
1 26 112 --
</TABLE>
15
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 3--Mortality and Expense Risk Charges:
- --------------------------------------------------------------------------------
CSVUL Separate Account-I is charged for the mortality and expense risks assumed
by New York Life Insurance and Annuity Corporation. These charges are made daily
at an annual rate of .70% of the daily net asset value of each Investment
Division for policy years one through ten. For policy years eleven and later, an
annual rate of .30% is deducted. New York Life Insurance and Annuity Corporation
may increase these charges in the future up to a maximum annual rate of .90%.
The amounts of these charges retained in the Investment Divisions represent
funds of New York Life Insurance and Annuity Corporation. Accordingly, New York
Life Insurance and Annuity Corporation participates in the results of each
Investment Division ratably with the Policyowners.
- --------------------------------------------------------------------------------
NOTE 4 --Distribution of Net Income:
- --------------------------------------------------------------------------------
CSVUL Separate Account-I does not expect to declare dividends to Policyowners
from accumulated net investment income and realized gains. The income and gains
are distributed to Policyowners as part of withdrawals of amounts (in the form
of surrenders, death benefits or transfers) in excess of the net premium
payments.
16
<PAGE> 17
NYLIAC CSVUL SEPARATE ACCOUNT-I
(THIS PAGE INTENTIONALLY LEFT BLANK)
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 5-- Cost to Policyowners (in 000's):
- --------------------------------------------------------------------------------
At June 30, 1999, the cost to Policyowners for accumulation units outstanding,
with adjustments for net investment income (loss), market appreciation
(depreciation) and deduction for expenses is as follows:
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
CAPITAL CASH MAINSTAY VP
APPRECIATION MANAGEMENT GOVERNMENT
<S> <C> <C> <C>
--------------------------------------------------------
Cost to Policyowners (net of withdrawals)............. $ 33,080 $ 65 $ 13
Sales charges......................................... (18) (2) --
Cost of insurance..................................... (101) (3) (1)
Accumulated net investment income (loss).............. (54) 2 --
Accumulated net realized gain on investments and
realized gain distributions received................ 21 -- --
Unrealized appreciation (depreciation) on
investments......................................... 271 -- --
Decrease attributable to funds of
New York Life Insurance and Annuity
Corporation retained by Separate Account............ (2) -- --
-------- -------- --------
Net amount applicable to Policyowners................. $ 33,197 $ 62 $ 12
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
ALGER
MAINSTAY VP AMERICAN CALVERT
INDEXED SMALL SOCIAL
EQUITY CAPITALIZATION BALANCED
<S> <C> <C> <C>
--------------------------------------------------------
Cost to Policyowners (net of withdrawals)............. $112,442 $ 7 $ 3
Sales charges......................................... (47) -- --
Cost of insurance..................................... (391) (1) --
Accumulated net investment income (loss).............. (184) -- --
Accumulated net realized gain (loss) on investments
and realized gain distributions received............ 738 1 --
Unrealized appreciation (depreciation) on
investments......................................... 4,150 1 --
Decrease attributable to funds of
New York Life Insurance and Annuity
Corporation retained by Separate Account............ (7) -- --
-------- -------- --------
Net amount applicable to Policyowners................. $116,701 $ 8 $ 3
======== ======== ========
</TABLE>
18
<PAGE> 19
NYLIAC CSVUL SEPARATE ACCOUNT-I
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP MAINSTAY VP
HIGH YIELD INTERNATIONAL MAINSTAY VP MAINSTAY VP GROWTH
CORPORATE BOND EQUITY VALUE BOND EQUITY
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
$ 41 $ 16,065 $ 70 $ 405 $ 33,389
-- (27) -- (17) (25)
(1) (77) (1) (13) (148)
-- 48 -- 13 (56)
-- 2 -- 8 41
-- 131 6 (16) 1,198
... -- -- -- -- (2)
-------- -------- -------- -------- --------
$ 40 $ 16,142 $ 75 $ 380 $ 34,397
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN
FIDELITY FIDELITY JANUS ASPEN SERIES
VIP II VIP SERIES WORLDWIDE
CONTRAFUND EQUITY-INCOME BALANCED GROWTH
<S> <C> <C> <C> <C>
-----------------------------------------------------------------
$ 24 $ 872 $ 6,182 $ 34
(1) (25) (269) --
(2) (56) (177) --
-- 1 107 --
1 11 (27) --
4 96 1,392 1
-- -- (3) --
-------- -------- -------- --------
$ 26 $ 899 $ 7,205 $ 35
======== ======== ======== ========
</TABLE>
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 6--Unit Transactions (in 000's):
- --------------------------------------------------------------------------------
Transactions in accumulation units for the six months ended June 30, 1999 and
for the period March 27, 1998 (Commencement of Investments) through December 31,
1998, were as follows:
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
CAPITAL CASH MAINSTAY VP
APPRECIATION MANAGEMENT GOVERNMENT
------------- ------------- -------------
1999 1998 1999 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------
Units issued on premium payments............. 9 20 14 26 -- --
Units redeemed on cost of insurance.......... (8) (1) (1) (2) -- --
Units issued on net transfers from
Fixed Account.............................. 2,561 10 -- 22 -- 1
----- ----- ----- ----- ----- -----
Net increase............................... 2,562 29 13 46 -- 1
Units outstanding, beginning of period....... 29 -- 46 -- 1 --
----- ----- ----- ----- ----- -----
Units outstanding, end of period............. 2,591 29 59 46 1 1
===== ===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
ALGER
MAINSTAY VP AMERICAN CALVERT
INDEXED SMALL SOCIAL
EQUITY CAPITALIZATION BALANCED
------------- --------------- -------------
1999 1998 1999 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C>
-----------------------------------------------
Units issued on premium payments............. 48 24 -- -- -- --
Units redeemed on cost of insurance.......... (28) (5) -- -- -- --
Units issued on net transfers from
Fixed Account.............................. 9,199 53 -- 1 -- --
----- ----- ----- ----- ----- -----
Net increase............................... 9,219 72 -- 1 -- --
Units outstanding, beginning of period....... 72 -- 1 -- -- --
----- ----- ----- ----- ----- -----
Units outstanding, end of period............. 9,291 72 1 1 -- --
===== ===== ===== ===== ===== =====
</TABLE>
20
<PAGE> 21
NYLIAC CSVUL SEPARATE ACCOUNT-I
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP MAINSTAY VP
HIGH YIELD INTERNATIONAL MAINSTAY VP MAINSTAY VP GROWTH
CORPORATE BOND EQUITY VALUE BOND EQUITY
--------------- ------------- ------------- ------------- -------------
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------
-- -- 26 20 -- -- 9 20 40 --
-- -- (5) (2) -- -- (1) (1) (10) (3)
4 -- 1,437 25 8 -- -- 9 2,721 41
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
4 -- 1,458 43 8 -- 8 28 2,751 38
-- -- 43 -- -- -- 28 -- 38 --
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
4 -- 1,501 43 8 -- 36 28 2,789 38
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN
FIDELITY FIDELITY JANUS ASPEN SERIES
VIP II VIP SERIES WORLDWIDE
CONTRAFUND EQUITY-INCOME BALANCED GROWTH
------------- ------------- ------------- -------------
1999 1998 1999 1998 1999 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------
-- 1 44 1 89 339 -- --
-- -- (2) (3) (7) (8) -- --
-- 1 -- 41 -- 125 3 --
----- ----- ----- ----- ----- ----- ----- -----
-- 2 42 39 82 456 3 --
2 -- 39 -- 456 -- -- --
----- ----- ----- ----- ----- ----- ----- -----
2 2 81 39 538 456 3 --
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
21
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 7--Selected Per Unit Data+:
- --------------------------------------------------------------------------------
The following table presents selected per accumulation unit income and capital
changes (for an accumulation unit outstanding throughout each period) with
respect to each Investment Division of CSVUL Separate Account-I:
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
CAPITAL CASH
APPRECIATION MANAGEMENT
----------------- -----------------
1999(b) 1998(a) 1999(b) 1998(a)
<S> <C> <C> <C> <C>
-------------------------------------
Unit value, beginning of period............................. $11.96 $10.00 $ 1.03 $ 1.00
Net investment income (loss)................................ (0.05) (0.05) 0.02 0.04
Net realized and unrealized gains (losses) on security
transactions and realized capital gain distributions
received (includes the effect of capital share
transactions)............................................. 0.90 2.01 -- (0.01)
------ ------ ------ ------
Unit value, end of period................................... $12.81 $11.96 $ 1.05 $ 1.03
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
GROWTH INDEXED
EQUITY EQUITY
----------------- -----------------
1999(b) 1998(a) 1999(b) 1998(a)
<S> <C> <C> <C> <C>
-------------------------------------
Unit value, beginning of period............................. $10.97 $10.00 $11.24 $10.00
Net investment income (loss)................................ (0.05) 0.04 (0.05) 0.11
Net realized and unrealized gains (losses) on security
transactions and realized capital gain distributions
received (includes the effect of capital share
transactions)............................................. 1.41 0.93 1.37 1.13
------ ------ ------ ------
Unit value, end of period................................... $12.33 $10.97 $12.56 $11.24
====== ====== ====== ======
</TABLE>
+ Per unit data based on average monthly units outstanding during the period.
(a) For the period March 27, 1998 (Commencement of Investments) through December
31, 1998.
(b) For the six months ended June 30, 1999.
22
<PAGE> 23
NYLIAC CSVUL SEPARATE ACCOUNT-I
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAINSTAY VP MAINSTAY VP
MAINSTAY VP HIGH YIELD INTERNATIONAL MAINSTAY VP MAINSTAY VP
GOVERNMENT CORPORATE BOND EQUITY VALUE BOND
----------------- ----------------- ----------------- ----------------- -----------------
1999(b) 1998(a) 1999(b) 1998(a) 1999(b) 1998(a) 1999(b) 1998(a) 1999(b) 1998(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------
$10.73 $10.00 $ 9.71 $10.00 $10.64 $10.00 $ 8.20 $10.00 $10.68 $10.00
(0.04) 0.53 0.01 0.87 0.06 0.29 (0.05) -- (0.04) 0.75
(0.19) 0.20 0.98 (1.16) 0.06 0.35 1.17 (1.80) (0.20) (0.07)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
$10.50 $10.73 $10.70 $ 9.71 $10.76 $10.64 $ 9.32 $ 8.20 $10.44 $10.68
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
ALGER
AMERICAN CALVERT FIDELITY FIDELITY
SMALL SOCIAL VIP II VIP
CAPITALIZATION BALANCED CONTRAFUND EQUITY-INCOME
----------------- ----------------- ----------------- -----------------
1999(b) 1998(a) 1999(b) 1998(a) 1999(b) 1998(a) 1999(b) 1998(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------
$10.70 $10.00 $10.75 $10.00 $11.76 $10.00 $ 9.89 $10.00
(0.04) (0.07) (0.04) 0.35 0.01 (0.07) 0.05 (0.07)
1.43 0.77 0.56 0.40 1.26 1.83 1.16 (0.04)
------ ------ ------ ------ ------ ------ ------ ------
$12.09 $10.70 $11.27 $10.75 $13.03 $11.76 $11.10 $ 9.89
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
23
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 7--Selected Per Unit Data+ (Continued):
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JANUS ASPEN
JANUS ASPEN SERIES
SERIES WORLDWIDE
BALANCED GROWTH
----------------- -----------------
1999(b) 1998(a) 1999(b) 1998(a)
<S> <C> <C> <C> <C>
-------------------------------------
Unit value, beginning of period............................. $11.99 $10.00 $10.85 $10.00
Net investment income....................................... 0.11 0.29 0.01 0.32
Net realized and unrealized gains (losses) on security
transactions and realized capital gain distributions
received (includes the effect of capital share
transactions)............................................. 1.30 1.70 1.33 0.53
------ ------ ------ ------
Unit value, end of period................................... $13.40 $11.99 $12.19 $10.85
====== ====== ====== ======
</TABLE>
+ Per unit data based on average monthly units outstanding during the period.
(a) For the period March 27, 1998 (Commencement of Investments) through December
31, 1998.
(b) For the six months ended June 30, 1999.
24
<PAGE> 25
- --------------------------------------------------------------------------------
To Policyowners:
The assets of NYLIAC Variable Annuity Separate Account-I, NYLIAC Variable
Annuity Separate Account-II, NYLIAC Variable Annuity Separate Account-III,
NYLIAC Variable Universal Life Separate Account-I, NYLIAC Corporate Sponsored
Variable Universal Life Separate Account-I, New York Life Insurance and Annuity
Corporation MFA Separate Account-I, New York Life Insurance and Annuity
Corporation MFA Separate Account-II and New York Life Insurance and Annuity
Corporation VLI Separate Account are invested in shares of MainStay VP Series
Fund, Inc. In addition, the assets of NYLIAC Variable Annuity Separate
Account-I, NYLIAC Variable Annuity Separate Account-II, NYLIAC Variable Annuity
Separate Account-III, NYLIAC Variable Universal Life Separate Account-I and
NYLIAC Corporate Sponsored Variable Universal Life Separate Account-I may be
invested in shares of the Alger American Fund, the Calvert Variable Series,
Inc., Fidelity Variable Insurance Products Fund, Fidelity Variable Insurance
Products Fund II, the Janus Aspen Series, MFS Variable Insurance Trust, Morgan
Stanley Dean Witter Universal Funds, Inc., T. Rowe Price Equity Series, Inc.,
and Van Eck Worldwide Insurance Trust, which are not affiliated with MainStay VP
Series Fund, Inc. or NYLIAC and any of its subsidiaries.
At the Annual Meeting of the Board of Directors of the Fund held on November 17,
1998, executive officers of the Fund were elected. On May 19, 1999, a dividend
distribution was paid to NYLIAC Variable Annuity Separate Account-I, NYLIAC
Variable Annuity Separate Account-II, NYLIAC Variable Annuity Separate
Account-III, NYLIAC Variable Universal Life Separate Account-I, NYLIAC Corporate
Sponsored Variable Universal Life Separate Account-I, New York Life Insurance
and Annuity Corporation MFA Separate Account-I, New York Life Insurance and
Annuity Corporation MFA Separate Account-II and New York Life Insurance and
Annuity Corporation VLI Separate Account as the sole shareholders of record of
MainStay VP Series Fund, Inc.
The financial information included herein as of June 30, 1999, and for the
period then ended, is taken from the records of the Fund without examination by
independent accountants who do not express an opinion thereon.
/s/ Richard M. Kernan Jr.
Chairman of the Board
and Chief Executive Officer
MAINSTAY VP SERIES FUND, INC.
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MAINSTAY VP SERIES FUND, INC. PORTFOLIOS
MACKAY-SHIELDS FINANCIAL CORPORATION
ADVISER'S REPORT
Market Overview
For the past several years many investors have taken advantage of stellar
returns provided by domestic large capitalization growth stocks. Through the
first quarter of 1999, it appeared that the best performing investments were
large capitalization, high multiple issues. In fact, generally, the larger and
more expensive, the better. Most dramatically, Internet-related investments
posted triple-digit returns even though many of these companies did not have
earnings. However, market sentiment forced a dramatic rotation out of these
domestic large growth stocks in the second quarter. Instead, many traditional
industrial and cyclical issues which were significantly undervalued and had
grossly underperformed over the past several years posted the best results.
Money managers investing in those parts of the markets benefited their
portfolios handsomely. The second quarter of 1999 provided confirmation that it
can be imprudent to chase hot-performing investment vehicles, whether they are
mutual funds or individual stocks.
Various market indices confirmed this market trend. The S&P 500(1) returned
7.06% in the second quarter, similar to the 7.07% return of the Lipper(2)
average growth fund. The Dow Jones Industrial Average(3) rose to the
unprecedented 10000 level during the first quarter of 1999 and the DJIA Index
advanced 12.53% during the second quarter. The Russell 2000(4) (representative
of small-capitalization stocks) rose 15.55%, during the second quarter, not far
ahead of the average small capitalization fund which returned 15.36%. According
to Lipper, the average active equity growth fund during the second quarter of
1999 returned 10.16%, with 69% of these funds beating the S&P 500. This compares
with only 25.7% of active equity growth funds, which outperformed the S&P 500
during the first quarter of 1999.
While the stock market continued its positive run, the bond market saw interest
rates rise, and hence, prices decline. (Bond prices generally move inversely
with interest rates.) According to Lipper, the benchmark 30-year U.S. Treasury
bond ended the first quarter generally yielding 5.62% but rose to 6.00% by the
end of the second quarter. Correspondingly, the price declined from $94.61 at
the end of the first quarter to $89.71 by June 30, 1999. The average U.S.
taxable bond fund declined 0.27% in the second quarter, while the average
long-term corporate and long-term U.S. Treasury bond funds fared more poorly,
declining 1.41% and 1.46%, respectively, according to Lipper.
On the international front, stock markets were mixed in the first quarter with
Europe (-5%), underperforming Japan (+12%) and Emerging Markets (+12.4%) in U.S.
dollar terms. According to Lipper, international funds, with Pacific or Emerging
Market exposure, posted the most positive results relative to all international
fund categories in the second quarter. Europe posted the weakest second quarter
result, with the average European Securities mutual fund returning 1.02%.
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Looking forward, we believe that the market may experience some volatility in
the months ahead. Investors may need to tread cautiously when chasing returns
and a disciplined and appropriate asset allocation plan might be the best course
to follow.
Ravi Akhoury
Chairman and Chief Executive Officer
MacKay-Shields Financial Corporation
(1) "Standard and Poor's 500 Composite Stock Price Index(R)" and "S&P 500(R)"
are registered trademarks of The McGraw-Hill Companies, Inc. The product is
not sponsored, endorsed, sold or promoted by Standard & Poor's Corporation.
The S&P 500 is an unmanaged index considered generally representative of the
U.S. stock market. Results assume the reinvestment of all income and capital
gains distributions.
(2) Lipper Analytical Services, Inc. is an independent monitor of mutual fund
performance.
(3) The Dow Jones Industrial Average is a trademark of, and the property of, Dow
Jones and Co., Inc. The DJIA Index is a price-weighted average of 30
actively traded blue chip stocks, primarily industrials, but also including
financial, leisure, and other service-oriented firms.
(4) The Russell 2000 Growth Index measures the performance of those companies in
the Russell 2000 with higher price-to-book ratios and higher forecasted
earnings growth values. The Index is unmanaged, does not reflect fees or
expenses, and is not available for direct investment.
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<PAGE> 28
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MADISON SQUARE ADVISORS, INC.
ADVISER'S REPORT
Market Overview
The first half of 1999 has been a period of rising global economic confidence.
Asian economies stabilized while U.S. corporate earnings displayed impressive
growth. U.S. economic leadership continued to be recognized globally as
illustrated by the strength of the dollar against the Euro.
The U.S. stock market reached historically high levels during the first half of
the year. Market gains were somewhat moderated by rising interest rates that
accompanied the acceleration in earnings growth and inflation fears. The
prospect of stronger economic growth and Asian recovery enabled the rebound of
cyclical industries such as energy, paper, and chemicals.
Meanwhile, continued top and bottom-line growth in technology and communications
has enabled the leading companies in this sector to enjoy expanded valuation
multiples. The stock market has also been bolstered by continued merger and
acquisition activity.
Market experience in the bond market was not as favorable. Rising interest rates
associated with accelerated economic growth and fears of potential Federal
Reserve tightening produced negative returns in most fixed income sectors. In
addition, investor appetite for credit risk remained relatively low in the face
of strong corporate new issue supply. As a result, the mortgage-backed sector
turned in the best relative performance within the investment grade fixed income
market as higher rates reduced prepayment fears.
Looking forward, we maintain a positive outlook for the stock market given the
impressive growth and, in our view, earnings quality of the leading
corporations. Our outlook for the fixed income market is stable. Caveats to this
picture would be a major upward shift in interest rates due to inflation or
pressure on the dollar. Comments from our portfolio managers follow.
Jean E. Hoysradt
President, Madison Square Advisors, Inc.
Senior Vice President
in Charge of the Investment Department,
New York Life Insurance Company
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<PAGE> 29
MAINSTAY VP CAPITAL APPRECIATION PORTFOLIO
MARKET RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
For several years, domestic growth stocks have shown extraordinary strength. In
April of 1999, however, improving prospects for a world economic recovery turned
the U.S. stock market's focus from growth to value stocks. Cyclical issues
selling at low valuations drew the attention of many investors because they
believed the earnings of these stocks might accelerate in that environment. When
the Federal Reserve Board announced in May that it was likely to raise interest
rates, highly valued growth stocks came under considerable pressure.
By mid-June, fears began to ease about the possibility of multiple interest-rate
hikes to control inflation. On June 30, 1999, the Federal Reserve Board raised
the targeted Federal Funds rate by a quarter of a percent -- a move that was
well anticipated by the market. The Federal Reserve also shifted to a neutral
stance, which the stock market took as positive news.
PORTFOLIO RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
For the first six months of 1999, the MainStay VP Capital Appreciation Portfolio
returned 7.51%. While the Portfolio outperformed the S&P 500(1) during the month
of June, the comeback was not enough to offset weaknesses in April and May. As a
result, the Portfolio underperformed the 13.75% return of the average Lipper
Variable Products(2) capital appreciation portfolio for the six months ended
June 30, 1999.
The Portfolio's underperformance resulted largely from the market's movement
away from defensive sectors, such as pharmaceuticals and supermarkets, where the
Portfolio was overweighted -- and the market's preference for sectors that were
underrepresented in the Portfolio, such as capital goods and energy.
REPOSITIONING THE PORTFOLIO'S HOLDINGS
During the second quarter of 1999, we reduced the Portfolio's exposure to
defensive groups by selling Eli Lilly and Monsanto shares in May and reducing
the Portfolio's positions in Kroger and Safeway supermarkets in June. Eli Lilly
and Safeway were among the Portfolio's worst-performing investments in the
second quarter. These sales allowed the Portfolio to pursue more productive
investments.
We added several stocks to the Portfolio during the reporting period, including
shares of consumer electronics retailer Circuit City Stores and communications
companies Omnicom Group, ALLTEL, and Time Warner -- all of which made positive
contributions to performance.
Significant sales during the first half of the year included McKesson HBOC, a
leading drug distributor, and Waste Management, a pollution-control company,
both of which suffered from weakening fundamentals. Fortunately, both stocks
were sold before major earnings disappointments were announced. We also sold
shares of Service Corp. International at a loss when an earnings shortfall
caused a major setback for this funeral and cemetery company.
We reduced the Portfolio's financial holdings to a slightly underweighted
position by selling Conseco (insurance) and SouthTrust (banking). As interest
rates rose in April and May, we further reduced the Portfolio's financial
holdings to a more underweighted position by selling Fannie Mae (mortgages). The
net impact of these sales for the quarter was neutral.
TECHNOLOGY PLAYS A LEADING ROLE
Throughout the first half of the year, the Portfolio remained overweighted in
technology stocks, which were particularly strong performers. With strong demand
for its Internet-related products and services, Sun Microsystems rose 65% during
the first half of 1999 and had the greatest positive impact on performance.
Cisco Systems, EMC, and Microsoft were other technology companies that
contributed positively to the Portfolio's performance, with returns ranging from
30% to 40% for the first half of the year. Despite technology's general advance,
however, software and service provider Compuware declined substantially on Y2K
concerns, with a negative impact on the Portfolio's performance.
Tyco International, a diversified manufacturing and service company, also showed
strong performance during the first half of 1999. The company benefited from its
impeccable record of acquisitions and the market's focus on capital goods
stocks.
At the end of June, the Portfolio was overweighted in consumer staples and
health care, which had a negative impact on performance, as these sectors lagged
the market. Underweighting the basic materials, capital goods, communication
services, and energy sectors also hurt performance, as these groups advanced.
The Portfolio's
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<PAGE> 30
overweighted position in technology and underweighted position in utilities had
a positive impact, as the former sector advanced and the latter underperformed.
LOOKING AHEAD
We believe that consumer confidence, stable interest rates, and a recovering
world economy suggests a positive outlook for U.S. corporate profits. While we
believe inflation will remain a concern, as of the end of this reporting period
it appears to be benign. We believe the economy will continue to grow at a
slower pace during the second half of the year, which may be positive for stocks
in general and growth stocks in particular. Whatever the markets bring, the
Portfolio will continue to seek long-term growth of capital, with dividend
income, if any, as an incidental consideration.
Rudolph C. Carryl
Edmund C. Spelman
Portfolio Managers
MacKay-Shields Financial Corporation
(1) "Standard and Poor's 500 Composite Stock Price Index(R)" and "S&P 500(R)"
are registered trademarks of The McGraw-Hill Companies, Inc. The product is
not sponsored, endorsed, sold or promoted by Standard & Poor's Corporation.
The S&P 500 is an unmanaged index considered generally representative of the
U.S. stock market. Results assume the reinvestment of all income and capital
gains distributions.
(2) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
Total returns for the Portfolio shown indicate past performance and are not
indicative of future results. Investment return and principal value will
fluctuate so that shares, upon redemption, may be worth more or less than their
original cost. These results do not reflect any deduction of sales charges,
mortality and expense charges, contract charges, or administrative charges.
Please refer to the Performance Summary for returns reflective of these charges.
30
<PAGE> 31
MAINSTAY VP CASH MANAGEMENT PORTFOLIO
MARKET RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
The first half of 1999 saw a shift in the Federal Reserve Board's interest rate
policy. During the first four months of the year, the Federal Reserve maintained
a neutral bias on interest rates as inflation remained benign even as the
economy continued to grow strongly. As economic growth started accelerating in
Asia and the U.S. economy showed no signs of slowing, interest rates rose as
investors felt that the Federal Reserve would have to raise rates. In May, the
Federal Reserve shifted its stance to a bias toward raising interest rates. At
the end of June, it raised the target rate for Federal Funds to 5%, while
leaving the discount rate unchanged at 4.5%.
Since the beginning of the year, the rate on one-year U.S. Treasury bills rose
nearly half a percent to 5.06% on June 30, 1999, while the rate on twelve-month
LIBOR(1) rose three-quarters of a percent to 5.84% over the same period. These
rising rates affected the yields available on both domestic and international
money market instruments.
PORTFOLIO RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
For the six months ended June 30, 1999, the Portfolio returned 2.26%, exceeding
the 2.21% return of the average Lipper(2) Variable Products money market
portfolio over the same period.
PORTFOLIO MATURITY
During the first half of the year, the maturity of the Portfolio ranged from
fifty-five to seventy-nine days. Interest rates rose in February as investors
believed that the Federal Reserve would raise interest rates to restrain the
rate of economic growth. We believed that the Federal Reserve would remain on
hold and we lengthened the maturity of the Portfolio to seventy-nine days. As
May approached, we became defensive and let the maturity of the Portfolio drift
downward to sixty days.
In late May, interest rates rose and we viewed this as another opportunity to
extend the maturity of the Portfolio, anticipating that the Federal Reserve
would be unlikely to raise rates as much as it lowered them in 1998. The
Portfolio's performance benefited from our decisions on the maturity of the
Portfolio.
HIGH CREDIT QUALITY AND LIQUIDITY
The Portfolio continued to invest only in first-tier securities, or generally
those money market instruments in the highest rating category. The Portfolio did
not invest in any second-tier securities nor did it invest in split-rated issues
(those rated in the highest rating category by one credit rating agency and in
the second-highest rating category by another). Investments included bank
certificates of deposit (CDs), commercial paper, floating rate notes, and
asset-backed commercial paper. The Portfolio did not invest in securities
containing embedded put and call options. The concentration on the highest
quality and more liquid securities helped manage the Portfolio's risk.
SECTOR ALLOCATION
During the reporting period, the Portfolio focused its investments on securities
of banks and bank holding companies and those of finance, brokerage, and
industrial companies. To lengthen the maturity of the Portfolio, we increased
the Portfolio's allocation to CDs by purchasing one-year CDs issued by the
largest and very highly rated European banks. The steepness of the yield curve
made the yields in the one-year sector far more attractive than shorter
maturities on the curve. Securities issued by the European banks also offered a
slightly higher yield.
LOOKING FORWARD
At its June 30, 1999 meeting, the Federal Reserve raised the target rate for
Federal Funds to 5% and moved to a neutral stance regarding the future direction
of interest rates. The Portfolio is positioned accordingly. As the interest rate
outlook changes, we will make appropriate adjustments to the Portfolio.
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<PAGE> 32
During the second half of 1999, the Portfolio intends to remain focused on
quality as it seeks as high a level of current income as is considered
consistent with the preservation of capital and liquidity.
Edward Munshower
Claude Athaide
Portfolio Managers
MacKay-Shields Financial Corporation
(1) LIBOR is the London Interbank Offered Rate, or the rate the most
credit-worthy international banks dealing in Eurodollars charge each other
for large loans.
(2) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
Total returns for the Portfolio shown indicate past performance and are not
indicative of future results. Investment return and principal value will
fluctuate so that shares, upon redemption, may be worth more or less than their
original cost. These results do not reflect any deduction of sales charges,
mortality and expense charges, contract charges, or administrative charges.
Please refer to the Performance Summary for returns reflective of these charges.
Though an investment in a money market portfolio is generally considered to be
protected from market risk, this investment is neither insured nor guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the Portfolio seeks to preserve the value of your investment, it is
possible to lose money by investing in this Portfolio.
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MAINSTAY VP CONVERTIBLE PORTFOLIO
MARKET RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
Convertible securities are typically correlated with the small- and mid-cap
stock and high-yield bond markets. In the first half of 1999, a rebounding
global economy, solid domestic economic growth, tame inflation, and strong
earnings moved most stocks higher. While stocks of the largest of the
large-capitalization companies continued to enjoy high prices and strong
performance, the valuation disparity between these stocks and the rest of the
market narrowed somewhat in April, when value stocks and the small-cap market
dramatically outperformed large-cap issues and growth stocks. In the second
quarter of 1999, the Russell 2000 Growth Index(1) rose 15.55%.
During the first half of the year, the difference in yield between high-yield
bonds and Treasury securities narrowed enough for the high-yield bond market to
show a positive total return even as interest rates rose. With both the equity
and income portions of the convertible equation showing positive results, the
first half of 1999 was a strong period for most investors in convertible
securities.
PORTFOLIO RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
For the six months ended June 30, 1999, the MainStay VP Convertible Portfolio
returned 18.62%, outperforming the average Lipper(2) Variable Products
specialty/miscellaneous portfolio, which returned 13.75%.
The primary reason for the Portfolio's strong performance was its individual
security selection. One of the Portfolio's largest holdings during the six-month
period was United Globalcom, an international cable systems operator, which rose
250% after offering a portion of its European operations to the public and
receiving a substantial investment from Microsoft. Unisys, another of the
Portfolio's large holdings, advanced on continuing demand for its systems
integration, maintenance, and network services, which contributed positively to
the Portfolio's performance.
TAKING PROFITS, FACING CHALLENGES
Our investment disciplines include setting specific price targets for the
Portfolio's investments. As a result, we took profits for the Portfolio in a
number of securities that participated in the market rise caused by the Federal
Reserve Board action and general economic trends. In April, evidence of an
improving global economy caused cyclical stocks to rise and we used the
opportunity to sell a third of the Portfolio's International Paper holdings at a
substantial gain, with a positive impact on performance. We also sold out the
Portfolio's holdings in United Globalcom and Xilinx at a profit when their
prices rose.
System Software Associates, on the other hand, is an enterprise resource
planning company that suffered from Y2K concerns. Although this security had a
negative impact on the Portfolio's performance in the first half of the year, we
believe the company's prospects will improve as we round the end of the century.
Sun Healthcare is a nursing-home company that had a negative impact on
performance during the first half of the year when the company was more severely
impacted by a change in government reimbursement policies than we had
anticipated.
SHIFTING ALLOCATIONS
During the first half of 1999, our security selection process led us to increase
the Portfolio's weighting in the energy sector, mainly in exploration and
production companies and oil services stocks. Given drilling and production
slowdowns over the past year, we believed natural gas prices would trend higher,
and much higher if we were to experience a normal or chilly winter. In either
case, we believed exploration and production and service companies would be the
prime beneficiaries.
The Portfolio continued to move away from highly valued momentum issuers during
the reporting period. Generally speaking, as the price of a convertible security
rises, the security tends to take on greater risk and perform more like an
equity security than a bond. During the first half of the year, many convertible
issues rose well above their conversion price, leading us to believe that
neither the stock nor the convertible securities would offer investors much
downside protection.
LOOKING AHEAD
Given the high valuations of premier large-capitalization growth stocks at the
end of the reporting period, we anticipate continued migration to small- and
mid-cap issuers for the next several months. Since our experience has shown that
these are the companies most likely to issue convertible securities, we believe
there may be
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<PAGE> 34
positive prospects on the horizon. Whatever the markets may bring, the Portfolio
will continue to seek capital appreciation together with current income.
Denis Laplaige
Thomas Wynn
Portfolio Managers
MacKay-Shields Financial Corporation
(1) The Russell 2000 Growth Index measures the performance of those companies in
the Russell 2000 with higher price-to-book ratios and higher forecasted
earnings growth values. The Index is unmanaged, does not reflect fees or
expenses, and is not available for direct investment.
(2) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
Total returns for the Portfolio shown indicate past performance and are not
indicative of future results. Investment return and principal value will
fluctuate so that shares, upon redemption, may be worth more or less than their
original cost. These results do not reflect any deduction of sales charges,
mortality and expense charges, contract charges, or administrative charges.
Please refer to the Performance Summary for returns reflective of these charges.
Certain of the Portfolio's investments have speculative characteristics.
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MAINSTAY VP GOVERNMENT PORTFOLIO
MARKET RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
The U.S. bond market saw a reversal of trends between the last half of 1998 and
the first half of 1999. Interest rates had fallen in 1998 as the Federal Reserve
and other worldwide central banks lowered interest rates to bring the global
financial crisis under control. As the new year began, bond market participants
realized that the Federal Reserve Board's easing policy would not continue. Many
investors believed that another world crisis was no longer imminent and interest
rates rose approximately 0.50% in the first quarter and another 0.50% in the
second quarter.
During the first half of the year, the strength of the U.S. economy took center
stage. The consumer-led boom was fueled by large tax refunds, the wealth effect
created by a surging stock market, and excess cash from refinancing mortgages.
Overseas, growth seemed to pick up during the first quarter, as the rally in
foreign stock markets signaled worldwide economic improvement. To begin to slow
the U.S. economy, the Federal Reserve Board increased short-term rates by 0.25%
on June 30, 1999.
PORTFOLIO RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
During the first six months of 1999, the MainStay VP Government Portfolio
returned -1.82%, outperforming the -2.35% return of the average Lipper(1)
Variable Products general U.S. government portfolio.
PORTFOLIO STRATEGY
During the first quarter, the average maturity of the Portfolio was in line with
the market (around 7 years) or slightly shorter. The Portfolio used a shorter
duration to position itself defensively in the second quarter as rates rose to
6%. Since securities with shorter maturities suffered less than those with
longer maturities when interest rates rose, the Portfolio's duration strategy
had a positive contribution to the Portfolio's performance for the first half of
the year.
The agency market continued its quest to be the heir apparent to the diminishing
Treasury market. Liquidity and size continued to expand among agency securities,
leading to an actively traded market. Agency yield spreads widened relative to
Treasury securities during the second quarter. We believe the supply-induced
widening has stabilized and we added several agency positions to the Portfolio.
During the first quarter of 1999, residential and commercial mortgage-backed
bonds and asset-backed securities all performed well, contributing positively to
the Portfolio's relative performance as yield spreads between mortgage-backed
and Treasury securities tightened. As interest rates increased in the second
quarter, however, mortgage-backed securities tended to have longer maturities
and less-favorable risk profiles.
To help manage this concern, the Portfolio favored securities that were backed
by commercial mortgages and were in the highest rating category. Our belief was
that these securities offered investors higher yields and strong credit
characteristics and may provide attractive returns going forward. We continued
to add asset-backed securities to the Portfolio in the second quarter, as yield
spreads to Treasuries continued to approach their widest levels in a year.
HIGH CREDIT QUALITY
The Portfolio continues to focus on top-quality, highly liquid investments. Most
of the Portfolio's investments during the first half of 1999 were in U.S.
Treasury and agency securities, which are of a higher quality than securities
rated AAA.(2) During the reporting period, we continued to avoid leveraged
derivatives and foreign government bonds.
LOOKING FORWARD
Rising interest rates, fewer mortgage refinancing opportunities, and a reduced
flow from tax refunds may begin to cool the expanding economy in the coming
months, potentially bringing about the effect the Federal Reserve
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<PAGE> 36
Board is seeking. We continue to see value in liquidity and have positioned the
Portfolio in very actively traded securities. Whatever the economy and the
markets may bring, the Portfolio will continue to seek a high level of current
income, consistent with safety of principal.
Edward Munshower
Christopher Harms
Portfolio Managers
MacKay-Shields Financial Corporation
(1) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
(2) Currently, debt rated AAA has the highest rating assigned by Standard &
Poor's, and according to Standard & Poor's, the obligor's capacity to meet
its financial commitment on the obligation is extremely strong. These
ratings are based solely on the creditworthiness of the bonds in the
Portfolio and are not meant to represent the stability or safety of the
Portfolio.
Total returns for the Portfolio shown indicate past performance and are not
indicative of future results. Investment return and principal value will
fluctuate so that shares, upon redemption, may be worth more or less than their
original cost. These results do not reflect any deduction of sales charges,
mortality and expense charges, contract charges, or administrative charges.
Please refer to the Performance Summary for returns reflective of these charges.
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MAINSTAY VP HIGH YIELD CORPORATE BOND PORTFOLIO
MARKET RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
During the first six months of 1999, the high-yield bond market benefited from
attractive valuations that drew capital from insurance firms, pension plans, and
mutual funds. The result was increasing market liquidity, which was favorable
for high-yield investors. Earlier concerns about a slowdown in economic growth
appeared to have faded, but default rates increased, reaching 4% of issuers over
the twelve months ended June 30, 1999.
PORTFOLIO RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
For the first six months of 1999, the MainStay VP High Yield Corporate Bond
Portfolio returned 10.63%, outperforming the average Lipper(1) Variable Products
high current yield portfolio, which returned 2.95% during the first half of the
year.
A combination of positive events affecting issuers and strategic security
selection, particularly among issues rated B(2) contributed to the Portfolio's
performance. The Portfolio's top-performing securities benefited from several
favorable developments. UIH Australia/Pacific, the largest position in the
Portfolio, rose sharply due to its parent company's initial public offering. As
of June 30, 1999, a pending acquisition had a positive impact on the Portfolio's
holding of @Entertainment, which was proposed to be acquired by UIH
Australia/Pacific. The Portfolio's corporate bond position in United
International Holdings and its stock position in Quest Diagnostic also made
strong contributions to the Portfolio's positive performance for the six-month
reporting period.
STRATEGIC DECISIONS
Early in the year, the Portfolio faced an illiquid high-yield bond market, with
many investors divided in their assessment of which portions of the high-yield
bond market provided the best value. Many investors believed higher-quality
high-yield issues provided the best opportunities, while many others focused
primarily on lower-rated credits. Believing this division was a function of
liquidity rather than an impending recession, we decided to overweight the
Portfolio in single B issues, which offered considerably higher yields at the
time. Concentrating on credits with strong asset coverage and increasing free
cash flow, the strategy contributed positively to the Portfolio's performance.
As default rates continued to rise, however, we moved to a more neutral position
by replacing lower-quality issues with higher-quality high-yield credits. At the
end of June, we believed stronger credits offered more attractive yields on a
risk-adjusted basis.
Although duration is not a primary consideration, the Portfolio generally
maintained a market-neutral duration throughout the reporting period to avoid
imbedding any bet on interest rates into the Portfolio. Our neutral stance did
not impact relative performance, but duration may become more important over
time, as interest-rate volatility continues to impact the high-yield bond
market.
SHIFTING POSITIONS AND SECTOR WEIGHTINGS
We continued to add to the Portfolio's position in MedPartners, a prescription
benefit management services company, which had a positive impact on performance.
Other significant health care holdings that contributed to the Portfolio's
performance in the first half of the year were Magellan Health Services, Quest
Diagnostic, Medaphis, and Team Health. Although health care was the
worst-performing high-yield sector for the first half of the year, careful
security selection and downplaying long-term care helped the Portfolio's
overweighted position have a positive impact on performance.
During the reporting period, we added to the Portfolio's already overweighted
position in the cable and media sectors by adding to the Portfolio's holdings in
UIH Australia/Pacific and NTL. At the same time, we eliminated the Portfolio's
wireless holdings by selling CS Wireless and American Telecasting. During the
first half of the year, we also added to the Portfolio's overweighted position
in utilities, with purchases of AES Eastern Energy.
The Portfolio had an underweighted position in cyclicals, which are securities
that tend to rise quickly with economic upturns and fall quickly when the
economy slows. This underweighted position detracted from performance during the
first half of the year, as the paper and metals sectors outperformed. Given
strong economic growth, we have added to the Portfolio's cyclical exposure with
significant purchases, including: RBF Finance, an oil services company; Lyondell
Chemical, a producer of commodity chemicals; and Doman Industries, a forest
products concern.
As domestic high-yield securities became increasingly attractive during the
first half of the year, we reduced exposure to emerging markets and developed
foreign markets outside Europe. We sold much of the Portfolio's
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position in First Pacific Capital, a Hong Kong conglomerate, and reduced the
Portfolio's position in Tokai Preferred Capital. Both positions contributed
positively to the Portfolio's performance for the six months ended June 30,
1999.
LOOKING AHEAD
Our outlook for the high-yield bond market remains constructive as we continue
to see values that we believe are attractive. As of June 30, 1999, we believe
high-yield bonds presented attractive investment opportunities, with yields that
were more than twice those available on ten-year Treasury bonds. Whatever the
economy or markets may bring, the Portfolio will continue to seek to maximize
current income through investment in a diversified portfolio of high yield, high
risk debt securities, which are ordinarily in the lower rating categories of
recognized rating agencies, with capital appreciation as a secondary objective.
Steven Tananbaum
Donald Morgan
Portfolio Managers
MacKay-Shields Financial Corporation
(1) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
(2) Debt rated B by Standard & Poor's is more vulnerable to nonpayment than
obligations rated BB, but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation. Ratings may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.
Total returns for the Portfolio shown indicate past performance and are not
indicative of future results. Investment return and principal value will
fluctuate so that shares, upon redemption, may be worth more or less than their
original cost. These results do not reflect any deduction of sales charges,
mortality and expense charges, contract charges, or administrative charges.
Please refer to the Performance Summary for returns reflective of these charges.
High-yield securities run greater risks of price fluctuations, loss of principal
and interest, default or bankruptcy by the issuer, and other risks, which is why
these securities are considered speculative.
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MAINSTAY VP INTERNATIONAL EQUITY PORTFOLIO
MARKET RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
During the first six months of 1999, international equity markets were
influenced by a wide variety of forces. The Brazilian real's devaluation in
January and signs of a Japanese market recovery signaled the end of a two-year
global economic crisis. Commodity prices for oil, natural gas, lumber, and
copper rose, which was positive for stocks but negative for bonds, as
inflationary concerns resurfaced.
In the U.S., the Federal Reserve Board reacted to rising prices, low
unemployment, and the potential for wage increases by announcing a bias toward
raising interest rates in May. At the end of June, the Federal Reserve Board
took action by raising the Federal Funds rate by a quarter of a percent. While
the end of the war in Kosovo helped stabilize eastern European economies,
concerns remained over the cost of reconstruction. Meanwhile, the U.S. dollar
charged ahead versus other major currencies, while the Euro suffered from
slowing European growth and the yen faltered as investors pondered the strength
of the Japanese recovery.
PORTFOLIO RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
For the first six months of 1999, the MainStay VP International Equity Portfolio
returned 1.43%, underperforming the average Lipper(1) Variable Products
international portfolio, which returned 8.10%.
The Portfolio's underperformance was largely attributable to its underweighted
position in Japanese securities and overweighted positions in Europe,
particularly in peripheral nations, including Portugal, whose stock market
declined 6.70% in local-currency terms, and Ireland, where the stock market
gained only 0.90% in local terms. Fortunately, the Portfolio was also
overweighted in Finland, which was Europe's best-performing market, returning
46.40% in local terms.
While many European markets had positive returns in local-currency terms,
shifting currency values had a negative impact on U.S. dollar-based investors.
As the U.S. dollar's value rose relative to European currencies, the value of
gains in local-currency terms was substantially negated. On a relative basis,
however, the Portfolio benefited modestly from an appreciating Canadian dollar.
SHIFTING ASSETS IN A CHANGING ENVIRONMENT
The Portfolio uses a "country-first" approach, seeking to identify the most
promising geographical markets and then investing in a wide array of companies
in each target market. During the first half of 1999, the Portfolio shifted
assets from core European markets, such as Germany and France, to markets in the
Far East. Japanese investments, as a percentage of the Portfolio's total assets,
rose through purchases and appreciation from 11% in January to over 20% at the
end of June, which had a positive impact on performance as Japanese stocks rose.
ADVANCING SECTORS AND COMPANIES
The Portfolio also seeks to identify promising lines of business and select
companies that are in a position to take advantage of factors which make
industries more competitive. Telecommunication companies have benefited from
strong consumer demand, and the Portfolio benefited from its positions in Nokia
Oyj and NTT Mobile Communications Network. Nokia Oyj, the number-one supplier of
mobile phones worldwide, rose 63.03% in local terms over the first half of the
year. NTT Mobile Communications Network, which added over 400,000 new
subscriptions in June, or over half of the industry total, rose 76.34% over the
same period.
Auto manufacturers have also advanced. During the reporting period ended June
30, 1999, the Portfolio was invested in DaimlerChrysler in Europe and Honda
Motor and Toyota Motor in Japan, all of which made positive contributions to
performance. Toyota Motor rose 24.76% in local terms for the six months ended
June 30, 1999, and received recognition from both the United Nations and the
Global 500 Award for its environmental initiative.
Irish cement manufacturer, CRH rose 16.78% in local terms for the reporting
period as its international operations capitalized on European infrastructure
improvements. BP Amoco (+26.69% in local terms) benefited from rising oil prices
and increasing demand in Asia. Sony (+58.57% in local terms) advanced on
anticipation of its next-generation game console and announcement of
restructuring measures to cut costs and enhance profitability.
LOOKING AHEAD
We remain optimistic for the international economy, and believe we may see
continued moderate inflation, low interest rates, increasing cross-border
consolidation in Europe, and recoveries in some Asian countries. The
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Portfolio is still overweighted in Europe, particularly in Ireland which is
considered a peripheral country, but we believe Japan has strong potential and
anticipate making additional investments there. At the end of the reporting
period, we anticipate that our strategy will be to seek to purchase new
securities or add to existing positions when prices dip and seek cyclical
companies poised to benefit if the turnaround in the Japanese economy can be
sustained. As of June 30, 1999, we believe that the Portfolio was appropriately
positioned with respect to foreign currencies, particularly the Euro.
The Portfolio will continue to seek to provide long-term growth of capital by
investing in a portfolio consisting primarily of non-U.S. equity securities,
with current income as a secondary objective.
Joseph Portera
Maureen McFarland
Portfolio Managers
MacKay-Shields Financial Corporation
(1) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
Total returns for the Portfolio shown indicate past performance and are not
indicative of future results. Investment return and principal value will
fluctuate so that shares, upon redemption, may be worth more or less than their
original cost. These results do not reflect any deduction of sales charges,
mortality and expense charges, contract charges, or administrative charges.
Please refer to the Performance Summary for returns reflective of these charges.
Investments in foreign securities may be subject to greater risks than domestic
investments. These risks include currency fluctuations, changes in U.S. or
foreign tax or currency laws, and changes in monetary policies and economic and
political conditions in foreign countries.
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MAINSTAY VP TOTAL RETURN PORTFOLIO
MARKET RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
For several years, U.S. growth stocks have shown extraordinary strength. In
April of 1999, however, improving prospects for a world economic recovery turned
the market's focus to value stocks. Cyclical sectors such as energy, oils,
steel, and paper -- which tend to rise quickly with economic upturns and fall
quickly when the economy slows -- were selling at low valuations and advanced
based on expectations of accelerating earnings. When the Federal Reserve Board
announced in May that it was likely to raise interest rates, highly valued
growth stocks came under considerable pressure. At the end of June, the Federal
Reserve Board raised the targeted Federal Funds rate by a quarter of a percent
in a well-anticipated move. The Federal Reserve also shifted to a neutral
stance, which the stock market took as positive news.
The bond market was also affected by the reversal of trends in interest rates.
As the new year began, market participants realized that the Federal Reserve
Board's earlier easing policy would not continue. Many investors believed that
another world crisis was no longer imminent and rates rose approximately 0.50%
in the first quarter and another 0.50% in the second quarter.
During the first half of the year, the strength of the U.S. economy took center
stage. The consumer-led boom was fueled by large tax refunds, the wealth effect
created by a surging stock market, and excess cash from refinancing mortgages.
Overseas, growth seemed to pick up during the first quarter, as the rally in
foreign stock markets signaled worldwide economic improvement.
PORTFOLIO RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
For the first six months of 1999, the MainStay VP Total Return Portfolio
returned 5.06%, underperforming the 6.12% return of the average Lipper(1)
Variable Products balanced portfolio for the six months ended June 30, 1999.
The Portfolio's underperformance resulted primarily from sector rotation. The
market moved away from defensive sectors (such as pharmaceuticals and
supermarkets, which were overweighted in the equity portion of the Portfolio)
and focused on sectors which were underrepresented in this portion of the
Portfolio, such as capital goods and energy. In particular, the market seemed to
favor those securities with greater international and cyclical exposure.
REPOSITIONING THE EQUITY PORTION OF THE PORTFOLIO
During the second quarter of 1999, we decided to reduce the Portfolio's equity
exposure to defensive groups. Because of deteriorating fundamentals, we sold all
of the Portfolio's equity securities in Eli Lilly in May with a positive impact
on the Portfolio's performance. We also reduced the Portfolio's positions in
Kroger and Safeway, taking profits for the Portfolio in June. These sales
allowed the Portfolio to pursue more productive investments.
In the first half of 1999, we added several stocks to the equity portion of the
Portfolio, including shares of Circuit City Stores, Omnicom Group, ALLTEL, and
Time Warner -- all of which made positive contributions to performance.
Significant sales during the first half of the year included McKesson HBOC and
Waste Management, both of which suffered from weakening fundamentals. Although
both stocks were sold before major earnings disappointments were announced, only
the Waste Management sale had a positive impact on the Portfolio's performance.
We also sold the Portfolio's shares of Service Corp. International at a loss
when an earnings shortfall caused a major setback for this funeral and cemetery
company.
As interest rates rose in April and May, we reduced the Portfolio's financial
holdings to a slightly underweighted position by selling Conseco (insurance) and
Fannie Mae (mortgages). The net impact of these sales for the quarter was
neutral.
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TECHNOLOGY STOCKS LEAD THE WAY
Throughout the first half of the year, the Portfolio remained overweighted in
technology stocks, which were particularly strong performers. Sun Microsystems
rose 65% during the first half of 1999. Cisco Systems, EMC and Microsoft also
contributed positively to performance, with returns ranging from 30% to 40% for
the first half of the year. Despite technology's general advance, however,
computer software and services provider Compuware declined substantially on Y2K
concerns, with a negative impact on the Portfolio's performance.
Tyco International, a diversified manufacturing and service company, also showed
strong performance during the first half of 1999. The company benefited from its
record of acquisitions and the market's focus on capital goods stocks.
At the end of June, underweighting the basic materials, capital goods,
communication services, and energy sectors hurt performance, as these groups
advanced. The Portfolio's overweighted position in technology and underweighted
position in utilities had a positive impact, as the former sector advanced and
the latter underperformed.
RESULTS IN THE INCOME PORTION OF THE PORTFOLIO
During the first quarter of 1999, the average maturity of the income portion of
the Portfolio was in line with the market (around 7 years) or slightly shorter.
The income portion of the Portfolio used a shorter duration to position itself
defensively in the second quarter as rates rose to 6.00%. Since securities with
shorter maturities suffered less than those with longer maturities when interest
rates rose, the Portfolio's duration strategy had a positive contribution to the
Portfolio's performance for the first half of the year.
In a diminishing Treasury market, liquidity and size continued to expand among
agency securities, leading to an actively traded market. Agency yield spreads
widened relative to Treasury securities during the second quarter. Based on our
belief that this supply-induced widening stabilized, we added some agency
positions to the income portion of the Portfolio.
During the first quarter of 1999, residential and commercial mortgage-backed
bonds and asset-backed securities held by the income portion of the Portfolio
all performed well, contributing positively to the relative performance of this
portion of the Portfolio as yield spreads between mortgage-backed and Treasury
securities tightened. As interest rates increased in the second quarter,
however, mortgage-backed securities tended to have longer maturities and
less-favorable risk profiles.
To help manage this concern, the Portfolio favored securities that were backed
by commercial mortgages and were in the highest rating category. Our belief was
that these securities offered investors attractive yields and strong credit
characteristics and may provide attractive returns going forward.
Through April 1999, corporate bonds showed relatively strong performance. The
Federal Reserve's bias toward raising interest rates in May, however, had a
definite negative effect. Higher interest rates mean higher borrowing costs,
making it more difficult for corporations to meet their earnings projections.
Corporate bond prices declined as the differences in yield between corporate
bonds and Treasury securities widened. Our past experience has shown that
corporate bond performance has tended to be particularly sensitive to corporate
earnings in the third quarter. Taking this into account, at the end of June, the
income portion of the Portfolio contained a cautiously balanced mix of defensive
and cyclical corporate debt securities, as well as liquid and older issues.
LOOKING FORWARD
Rising interest rates, fewer mortgage refinancing opportunities, and a reduced
flow from individual tax refunds may begin to cool the expanding economy,
bringing about the effect the Federal Reserve Board is seeking. In the income
portion of the Portfolio, we continue to see value in liquidity and have
positioned the Portfolio in
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actively traded securities. Slower economic growth during the second half of
1999 may be good for both stocks and bonds and we have an optimistic outlook for
the remainder of the year. Whatever the economy and the markets may bring, the
Portfolio will continue to seek to realize current income consistent with
reasonable opportunity for future growth of capital and income.
Rudolph C. Carryl
Edmund C. Spelman
Edward Munshower
Portfolio Managers
MacKay-Shields Financial Corporation
(1) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
Total returns for the Portfolio shown indicate past performance and are not
indicative of future results. Investment return and principal value will
fluctuate so that shares, upon redemption, may be worth more or less than their
original cost. These results do not reflect any deduction of sales charges,
mortality and expense charges, contract charges, or administrative charges.
Please refer to the Performance Summary for returns reflective of these charges.
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MAINSTAY VP VALUE PORTFOLIO
MARKET RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
During the first six months of 1999, continued strength in the U.S. economy and
a visible recovery in Asian markets underscored the earnings opportunities for
most value sectors. Volatility continued, fueled by concerns about inflation,
rising interest rates, and whether large-capitalization stocks with record-high
valuations could appreciate further. As a result, value stocks -- with
record-low valuations and improving fundamentals -- outperformed the broad
market during periods of increased volatility. At the end of June, the Federal
Reserve Board's shift from a tightening bias to a neutral stance sent most
sectors of the equity markets higher.
PORTFOLIO RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
For the first half of 1999, the MainStay VP Value Portfolio returned 14.30%,
outperforming the 11.70% return of the average Lipper(1) Variable Products
growth and income portfolio.
The MainStay VP Value Portfolio was able to perform strongly largely as a result
of its overweighted positions in traditional value sectors, including basic
materials, energy, and consumer cyclicals, all of which showed impressive
advances as Asian markets recovered and commodity prices increased.
RESULTS AHEAD OF THE MARKET; WEAKER PERFORMERS
Leading the Portfolio's results were the following stocks: Adaptec, a
manufacturer of computer data-flow systems, which benefited from expense
reductions and asset restructuring while demand for its products remained
strong; Union Pacific Resources Group, an oil and gas company, which advanced
with rising oil prices, but also benefited from restructuring and debt
reductions; and Nippon Telegraph & Telephone whose shares rose with the Japanese
economic recovery, while management focused on increasing shareholder value.
Other strong performers for the Portfolio included United Healthcare, which had
positive earnings momentum as it actively repurchased stock, and Mark IV
Industries, a leading industrial and auto parts company that sought to improve
revenues and returns by shedding capital-intensive divisions and focusing on its
core business. Georgia-Pacific also showed positive performance during the first
half of the year, with higher volume, robust pricing, and efficient operations
that helped lower costs.
Weak performers included Service Corp. International, the world's leading
funeral services company, which the Portfolio purchased after a sharp price
decline. Despite cost cutting initiatives that should enhance future earnings,
the stock did not perform well during the reporting period. Shaw Industries, a
floor covering manufacturer, which is leaving its retail business to focus on
manufacturing, suffered as the market adjusted to its new strategy. Philip
Morris, which we believe continues to trade at a significant discount to asset
value, suffered from continuing litigation concerns. Even so, we believe the
outlook for the company is improving.
SOLID STRATEGY, SHIFTING HOLDINGS
The MainStay VP Value Portfolio remains overweighted in traditional value
sectors. During the first half of 1999, the Portfolio purchased shares of
Seagate Technology, a data communications and management company. Seagate
Technology has a clean balance sheet, strong earnings momentum, and is using
excess cash to aggressively repurchase shares. Another stock the Portfolio
purchased was Smurfit-Stone Container, a paper and packaging company that we
believe may benefit from the Asian market turnaround. The company is reducing
costs and selling noncore assets and the stock has rebounded from its depressed
valuations, which had a positive impact on the Portfolio's performance.
The Portfolio also had some significant sales during the first half of 1999.
When telephone service provider US West faced disappointing earnings, the
Portfolio sold the stock at a profit. When Bank One's stock reached the
Portfolio's target valuation, the Portfolio sold it at a profit. The Portfolio
also benefited when LucasVarity was taken over by TRW, and we used the proceeds
of the sale of LucasVarity shares to purchase additional securities for the
Portfolio.
LOOKING AHEAD
In our view, the Federal Reserve Board's decision to remain neutral bodes well
for a summer stock market rally, but the pace of corporate earnings will remain
the key to assessing value. We believe the recent price corrections in selective
technology and financial stocks have opened some new research opportunities and
may lead to new investments in these sectors. If the Asian recovery continues,
we may consider seeking more opportunities in the
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commodity-driven areas of traditional value sectors. The Portfolio remains
committed to seeking to maximize long-term total return from a combination of
capital growth and income.
Denis Laplaige
Richard Rosen
Portfolio Managers
MacKay-Shields Financial Corporation
(1) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
Total returns for the Portfolio shown indicate past performance and are not
indicative of future results. Investment return and principal value will
fluctuate so that shares, upon redemption, may be worth more or less than their
original cost. These results do not reflect any deduction of sales charges,
mortality and expense charges, contract charges, or administrative charges.
Please refer to the Performance Summary for returns reflective of these charges.
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MAINSTAY VP BOND PORTFOLIO
MARKET RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
- - Expectations of a restrictive Federal Reserve Bank assisted in pushing
interest rates higher in the first half of the year.
- - At the end of the second quarter, the Federal Reserve Bank increased the
Federal Funds target by 25 basis points to 5.00%, while leaving the Discount
Rate unchanged at 4.50%.
- - The Federal Reserve Bank's policy directive included a neutral bias concerning
near term policy action.
- - The U.S. bond market experienced a significant trade off in the first half of
1999. The yield on the ten-year U.S. Treasury note increased by 114 basis
points.
PORTFOLIO RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
- - For the six months ended June 30, 1999, the MainStay VP Bond Portfolio had a
return of -1.88%, outperforming the average portfolio in its Lipper(1) peer
group (Corporate Debt A Rated), which returned -2.20%.
- - Market risk was limited by maintaining a relatively neutral duration posture
throughout the first half of the year.
- - Credit risk was limited by maintaining an average quality of the investments
in the Portfolio of at least AA(2) throughout the first half of the year.
MANAGEMENT DISCUSSION AND ANALYSIS
Early in 1999, robust domestic economic statistics, along with rising oil
prices, altered investor sentiment from an accommodating/neutral Federal Reserve
Bank to a restrictive Federal Reserve Bank. At the end of the second quarter,
the Federal Reserve Bank increased the Federal Funds target by 25 basis points.
The market's anticipation of pending tightening moves by the Federal Reserve
Bank put constant pressure on the domestic bond market during the first half of
the year. In this same period, the additional income generated by corporate
bonds contributed to this sector's strong performance relative to U.S. Treasury
securities.
TO WHAT DO YOU ATTRIBUTE THE PORTFOLIO'S RELATIVE PERFORMANCE?
The Portfolio maintained a concentration in lower quality investment grade
corporate bonds. This asset allocation worked well as these securities
outperformed in their sector.
WHAT WAS YOUR PRIMARY STRATEGY DURING THE FIRST HALF OF 1999?
The Portfolio shifted assets from the U.S. Treasury sector to the
mortgage-backed sector during the first six months of 1999. We did so because of
our belief that reduced prepayments in the mortgage-backed sector associated
with rising interest rates, generally result in a strong relative performance
versus U.S. Treasuries.
WHERE DO YOU PERCEIVE RISK IN THE PORTFOLIO?
Our adjustments to the Portfolio during the first half of the year added some
call risk to the Portfolio. However, the Portfolio's overall structure continues
to be consistent with our long-term conservative approach to managing the
Portfolio. We will continue to monitor the Portfolio and make the necessary
adjustments that our interest rate forecast dictates.
WHAT IS YOUR OUTLOOK FOR THE FIXED INCOME MARKET IN THE SECOND HALF OF 1999?
The increase in U.S. interest rates may be the first step towards tighter global
monetary conditions. But, the steps are likely to be modest and gradual. We
expect U.S. growth to moderate and as such, we believe, there is a
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good chance that there will be no further Federal Reserve Bank tightening in the
near term. We also believe current bond market expectations are overly
pessimistic regarding a continued tightening bias by the Federal Reserve Bank.
In our opinion, U.S. Treasury yields may decrease by September 30, 1999.
Albert R. Corapi, Jr.
Celia M. Holtzberg
Joseph DePasquale
Portfolio Managers
Madison Square Advisors, Inc.
(1) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
(2) Debt rated AA by Standard & Poor's differs from the highest rated issues
only in small degree.
Total returns for the Portfolio shown indicate past performance and are not
indicative of future results. Investment return and principal value will
fluctuate so that shares, upon redemption, may be worth more or less than their
original cost. These results do not reflect any deduction of sales charges,
mortality and expense charges, contract charges, or administrative charges.
Please refer to the Performance Summary for returns reflective of these charges.
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MAINSTAY VP GROWTH EQUITY PORTFOLIO
MARKET RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
The most significant factor influencing the stock market during the first six
months of 1999 was the impressive improvement in U.S. corporate earnings. The
acceleration of earnings growth begun in the first quarter caused the stock
market to focus away from traditional growth stocks toward more value oriented
stocks. Albeit, market gains were somewhat moderated by rising interest rates
that accompanied stronger corporate earnings growth.
PORTFOLIO RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
The MainStay VP Growth Equity Portfolio returned 12.86% for the six-month period
ended 6/30/99. The Portfolio outperformed the Lipper(1) Variable Products growth
fund average, which returned 12.62%. The Portfolio benefited from its holdings
in the technology and communication services sectors, which generated impressive
results in the first half of 1999. In addition, the Portfolio's energy and basic
materials holdings rebounded sharply off depressed valuation levels.
BRIEFLY DESCRIBE ANY MAJOR PORTFOLIO MANAGEMENT DECISIONS DURING THE FIRST HALF
OF 1999.
As a blended Portfolio, our primary focus is setting an optimal asset allocation
between growth and value stocks. As we entered 1999, the MainStay VP Growth
Equity Portfolio was structured with a strong bias toward the growth segment of
the market. However, we shifted the Portfolio toward a more neutral weighting
between growth and value stocks at the end of the first quarter. This decision
was based on our expectation for improving corporate earnings in the first half
of 1999. As a result of our repositioning, the Portfolio was able to withstand
the sharp market rotation into more cyclical and value stocks that occurred in
the second quarter of 1999.
COULD YOU GIVE US SOME OF THE PORTFOLIO'S BEST PERFORMING STOCKS IN THE FIRST
HALF OF THE YEAR?
Two of our best performers, Nortel Networks and Tellabs, are in the
telecommunications equipment industry. Both companies benefited from the strong
demand for its product offerings in the telecommunications infrastructure
segment of the economy. MediaOne Group, a cable systems operator, also generated
strong returns in the first half of the year, appreciating as two suitors
attempted to acquire the company. Global Crossing, a leading independent
provider of undersea fiber optic telecommunications systems, also provided
strong results for the Portfolio, primarily due to the anticipated growth of
intercontinental communication demand over the next decade. Halliburton, one of
the world's largest oil service companies, and Texas Instruments, a leading
semiconductor manufacturer, were other impressive performers for the Portfolio.
The former rebounded off depressed valuation levels as the steady increase in
oil prices positively impacted the company's growth prospects. The latter
continued to benefit from its strong competitive position in a crowded but
fast-growing industry.
WHAT WERE SOME OF THE PORTFOLIO'S WORST PERFORMERS?
Two stocks that significantly held back performance in the first half of the
year were Service Corp. International, one of the world's largest operators of
funeral homes and Rite Aid, one of the largest drug store chains. Both companies
surprised investors with earnings disappointments that severely hurt their
stocks' prices. We sold both of these positions at a loss to the Portfolio,
believing that negative earnings surprises generally erode management
credibility and that recovery may take several years. Eli Lilly, the leading
pharmaceuticals company also underperformed to a lesser degree. Its performance
lagged with most of its industry as investors rotated out of the group and into
industries with better relative earnings growth.
CAN YOU MENTION SOME SIGNIFICANT BUYS IN THE FIRST HALF OF THE YEAR?
We added Alcoa, AlliedSignal, Smurfit-Stone Container and Eaton as we positioned
the Portfolio into some more value oriented holdings. The business of each of
these companies is cyclical in nature and, we believe, is poised to show
improving earnings growth throughout the next year. The performance of these
stocks was highly beneficial to the Portfolio's performance in the first half of
the year.
WERE THERE ANY SIGNIFICANT SELLS IN THE FIRST HALF OF THE YEAR?
We avoided one significant loss by selling our position in Network Associates, a
maker of security software products. Soon after our sale, the company began a
string of negative announcements concerning some of its accounting treatments
followed by a sizable earnings disappointment in the second quarter of the year.
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WHAT ARE THE PORTFOLIO'S CURRENT SECTOR WEIGHTINGS?
We have moved the Portfolio to a neutral weighting among all sectors with the
exception of consumer staples, financial and health care that are slightly
underweighted. Our strategy is based on our outlook for a continued improvement
in corporate earnings, which generally benefits the more cyclical or value
oriented stocks. Such an environment generally does not usually coincide with
lower interest rates that tend to benefit the sectors we are underemphasizing.
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
We expect corporate earnings to continue to meet or exceed estimates through the
remainder of 1999, and thus our strategic outlook going forward remains
positive. In our opinion, the improvement in corporate earnings may broaden what
has been an extremely narrow market performance. On the other hand, continued
earnings growth may also cause interest rates to trend upward in the near term,
although we do not expect the move to be significant.
ARE THERE ANY OTHER COMMENTS YOU WOULD LIKE TO MAKE ABOUT THE PORTFOLIO?
We believe that the benefit of investing in this Portfolio was displayed in the
month of April when the market made a sharp rotation toward value stocks. As a
blended Portfolio, it was able to benefit from this move immediately. The end
result was that we were able to maintain the above average returns versus our
peers with a lower volatility in relative performance.
James Agostisi
Patricia S. Rossi
Portfolio Managers
Madison Square Advisors, Inc
(1) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
Total returns for the Portfolio shown indicate past performance and are not
indicative of future results. Investment return and principal value will
fluctuate so that shares, upon redemption, may be worth more or less than their
original cost. These results do not reflect any deduction of sales charges,
mortality and expense charges, contract charges, or administrative charges.
Please refer to the Performance Summary for returns reflective of these charges.
49
<PAGE> 50
MAINSTAY VP INDEXED EQUITY PORTFOLIO
MARKET RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
A multitude of positive indicators combined to propel stocks of large U.S.
companies higher during the six months ended June 30, 1999, extending the
remarkable bull market of the past several years. Domestically, economic growth
continued to surge. News on the inflation front remained low key. Prices for
oil, natural gas, lumber, and copper recovered during the reporting period,
while agricultural commodity prices generally declined. Many investors welcomed
enhanced stability in global economies.
Within the overall bull market, there were changes among various sectors of the
U.S. equity market. In many respects, the first quarter of 1999 was a
continuation of recent history. The majority of the equity market's performance
was concentrated in a handful of large-capitalization, growth-oriented stocks.
During the second quarter of the year, the tide changed rather dramatically. The
S&P 500 Index(1) continued to fare well, but long out-of-favor value stocks came
roaring back in a spectacular reversal of fortune, as a majority of companies
reported corporate earnings in line with or exceeding analysts' expectations.
Over the same period, smaller-capitalization U.S. stocks outperformed their
larger-cap brethren for the first time in seven quarters.
PORTFOLIO RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
For the six months ended June 30, 1999, the MainStay VP Indexed Equity Portfolio
returned 12.15%, which slightly outperformed the average Lipper(2) Variable
Products S&P 500 Index objective portfolio, which returned 12.10% for the same
period.
S&P 500 INDEX LEADERS
During the first six months of 1999, the outstanding leaders in the
electronics-semiconductors sector included, LSI Logic, up 186% and National
Semiconductor, up 88%. Oil-related stocks, also a significant element of the S&P
500 Index, returned over 20% through June 30, 1999, as oil prices recovered from
their precipitous drop in 1998. Other strong performing sectors of the S&P 500
Index included investment banks/brokers, led by Charles Schwab, up 96%; basic
materials/industries, led by Case, up 120%; and telecommunications, led by
Sprint, up 147%, and Nextel Communications, up 112%.
Housing-related stocks, a relatively small S&P 500 Index component, was the
worst-performing industry sector, struggling as interest rates rose and
home-buying activity began to cool. A more material decline came from the drug
stocks, which comprise almost 5% of the S&P 500 Index, and declined 7.8%. During
the reporting period, McKesson HBOC, down 59%, Rite Aid, down 50%, and Watson
Pharmaceuticals, down 44%, fell the furthest within this sector. Other declining
industries included: tobacco, especially Philip Morris, down 25%; foods/retail
food stores, particularly Albertson's and Safeway, each down 19%; and hospital
management companies, with Tenet Healthcare down 29% and Humana down 27%.
The composition of the S&P 500 Index itself remained relatively constant through
the first six months of 1999, with just a few changes resulting from corporate
actions, such as mergers, spin-offs, and acquisitions.
LOOKING AHEAD
On the whole, the U.S. economy and stock market seem quite healthy as of June
30, 1999. At the same time, we believe that investors should not be lulled into
a sense of complacency, overlooking the risks that come with equity investing.
Two areas of particular concern are -- inflation and equity valuations.
While inflation appears to be dormant right now, numerous indicators may be
harbingers of future inflation in the remainder of the year. Investors should
consider that at the end of this period:
- - unemployment remains at a thirty-year low,
- - economic growth has been inordinately robust in historical terms,
- - oil prices are rebounding, and
- - troubled Pacific Rim and other emerging market economies appear to have
recovered from recent turmoil.
While these new threats to price stability have been absorbed by the bond market
through climbing yields, as of June 30(th), the stock market has yet to react. A
clearer signal that inflation is rising could have a detrimental effect on stock
prices, given the importance of earnings expectations that are priced into the
market at the end of this reporting period.
Equity valuations, as measured by price-to-earnings ratios, have continued to
climb through June of 1999, even as interest rates have gone up. While past
performance is no indication of future results, this pattern has
50
<PAGE> 51
historically implied expectations of strong corporate profitability growth in
the years ahead. Disappointing corporate earnings reports may be met with
disappointing stock market performance.
Of course, the objective of the MainStay VP Indexed Equity Portfolio is to seek
to provide investment results that correspond to the total performance (and
reflect reinvestment of dividends) of publicly traded common stocks represented
by the S&P 500 Index. As a result, we do not respond to nor evaluate changing
market and economic conditions. Nor do we manage according to a given outlook
for the equity markets or the economy in general. That said, we feel it is
important for investors to diversify their portfolios and to keep focused on
their long-term goals despite inevitable short-term volatility in the equity
market.
Jefferson C. Boyce
Stephen Killian
Portfolio Managers
Monitor Capital Advisors, Inc.
(1) "Standard and Poor's 500 Composite Stock Price Index(R)" and "S&P 500(R)"
are registered trademarks of The McGraw-Hill Companies, Inc. and have been
licensed for use by Monitor Capital Advisors, Inc. The product is not
sponsored, endorsed, sold or promoted by Standard & Poor's Corporation and
Standard & Poor's makes no representation regarding the advisability of
purchasing the product. The S&P 500 is an unmanaged index considered
generally representative of the U.S. stock market. Results assume the
reinvestment of all income and capital gains distributions.
(2) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
Total returns for the Portfolio shown indicate past performance and are not
indicative of future results. Investment return and principal value will
fluctuate so that shares, upon redemption, may be worth more or less than their
original cost. These results do not reflect any deduction of sales charges,
mortality and expense charges, contract charges, or administrative charges.
Please refer to the Performance Summary for returns reflective of these charges.
Unlike other portfolios that generally seek to beat market averages, often with
unpredictable results, index portfolios seek to match the return of their
respective indexes.
51
<PAGE> 52
GLOSSARY
ASSET ALLOCATION: The systematic and thoughtful placement of investment dollars
into various classes of investments, such as stocks, bonds, real estate,
insurance, and cash equivalents.
ASSET-BACKED SECURITIES: Securities backed by loan paper, receivables, or an
anticipated income stream from the sale of merchandise or services. The
securities are generally originated by banks, credit card companies, or other
providers of credit and often "enhanced" by a bank letter of credit or by
insurance from an institution other than the issuer.
BOTTOM-UP INVESTING: Security selection based on the specific portfolio
fundamental merits of individual issues. The opposite of "top-down" investing,
which starts with general economic trends, compares market sectors, and uses
relative security values to narrow the range of issues to examine.
BULL MARKET/BEAR MARKET: A bull market occurs when security prices are rising;
a bear market occurs when security prices decline. A bullish attitude therefore
suggests a positive outlook, while a bearish attitude represents a negative view
of the market or the opportunities it may present.
CALL OPTION: A security that gives its holder the right, but not the
obligation, to buy 100 shares of common stock at a fixed price (the option's
strike price) for a fixed period of time.
CALL RISK: A bondholder's risk that the bond may be redeemed by the issuer
prior to maturity.
CAPITALIZATION: The amount of outstanding equity and debt a company has issued.
Companies may vary greatly in the amount of equity capital they have raised, and
their capitalization may change with new issues or stock repurchases.
COMMERCIAL PAPER: Short-term obligations with maturities ranging from 2 to 270
days issued by banks, corporations, and other borrowers to investors with
temporarily idle cash. Such instruments are unsecured and usually discounted,
although some are interest-bearing. They can be issued directly -- direct
issuers do it that way -- or through brokers equipped to handle the enormous
clerical volume involved. Issuers like commercial paper because the maturities
are flexible and because the rates are usually marginally lower than bank rates.
Investors -- actually lenders, since commercial paper is a form of debt -- like
the flexibility and safety of an instrument that is issued only by top-rated
concerns and is nearly always backed by bank lines of credit. Both Moody's and
Standard & Poor's assign ratings to commercial paper.
COMMODITIES: Bulk goods, such as grains, precious metals, industrial metals,
and foods traded on a commodities exchange.
CREDIT RISK: The risk that the issuer of a security may go into bankruptcy or
default on payments, causing the investor to lose all or part of the investment.
CYCLICALS (CYCLICAL STOCK): A security or stock that tends to rise quickly with
economic upturns and fall quickly when the economy slows. Noncyclical
industries, such as food, insurance, and pharmaceuticals, are likely to have
more consistent performance regardless of economic changes.
DURATION: A measure of price sensitivity, which adjusts for the time value of
the payments investors will receive and which takes into account interest
payments as well as principal payments. Duration is a better gauge of
interest-rate sensitivity than average maturity alone.
EARNINGS PER SHARE: The portion of a company's profit allocated to each share
of outstanding common stock.
EMERGING MARKETS: Countries with smaller or more recently established capital
markets.
FEDERAL RESERVE BOARD: The seven member governing board of the Federal Reserve
System, which is the central bank of the United States. The Board sets policies
on reserve requirements, bank regulations, sets the discount rate, tightens or
loosens the availability of credit in the economy and regulates the purchase of
securities on margin.
FIRST-TIER/SECOND-TIER: Money market instruments in the highest rating category
by two or more major rating agencies are called first-tier or top-tier
securities, while securities in the second-highest rating category by two or
more major rating agencies are referred to as second-tier securities.
FLOATING RATE NOTE: Debt instrument with a variable interest rate. Interest
adjustments are made periodically, often every six months, and are tied to a
money-market index such as Treasury bill rates. Floating rate notes usually have
a maturity of about five years. They provide holders with protection against
rises in interest rates, but pay lower yields than fixed rate notes of the same
maturity. Also known as a FLOATER.
52
<PAGE> 53
GROSS DOMESTIC PRODUCT (GDP): The total value of goods and services produced in
the U.S. economy over a particular period of time, usually one year. The GDP
growth rate measures strictly domestic output and is a primary indicator of the
status of the economy.
GROWTH VERSUS VALUE: Growth investments typically include stocks with rising
prices and positive earnings trends. Value investments typically include
equities that are currently trading below their fair market value, even if they
have the potential to increase in value over time.
HIGH MULTIPLE ISSUES: Represent the highest price-to-earnings companies in the
market. They are considered expensive relative to their earnings.
INFLATION/DEFLATION: Inflation is an increase in the cost of goods and services
over time. As prices rise, the purchasing power of the dollar declines.
Deflation is a reduction in the cost of goods over time. When deflation occurs,
the purchasing power of the dollar increases.
LEVERAGED DERIVATIVES: Financial instrument whose value is based on another
security, such as an option, and whose purchase has been financed with credit.
LIQUIDITY: Securities are said to be liquid when they can be easily bought or
sold in large volume without substantially affecting their price. Some
securities, such as private placements or stocks that have few shares
outstanding are considered illiquid either because there are few market
participants interested in buying or selling the securities or because purchases
and sales may cause wide price swings.
MERGERS AND ACQUISITIONS: A merger is a combination of two companies. An
acquisition is the purchase of a company, division, or business unit. Companies
that engage in mergers and acquisitions often pay shareholders a premium, or an
amount over the current share price, to complete the transaction quickly and
under favorable terms.
MORTGAGE-BACKED SECURITIES: Securities representing interests in "pools" of
mortgages in which principal and interest payments by the holders of underlying
fixed- or adjustable-rate mortgages are, in effect, "passed through" to
investors (net of fees paid to the issuer or guarantor of the securities).
PREPAYMENT: When mortgage or loan holders repay their obligations before they
mature, shortening the stream of interest payments investors receive.
PRICE-TO-BOOK VALUE RATIO: Comparison of a company's market price per share and
its book value per share to determine how much above its "real" value the
company is selling.
PRICE-TO-EARNINGS RATIO: The price of a stock divided by its earnings per
share.
PUT OPTION: A security that gives its holder the right to sell 100 shares of
common stock at a fixed price for a fixed period of time.
RESTRUCTURING: Any action designed to improve the overall financial structure,
labor relations, or productivity of a company. Restructuring may include such
steps as changing management, investing in new plant and equipment, engaging in
mergers and acquisitions, or taking other action to increase output or lower
costs.
SPIN-OFF: A form of corporate divestiture that results in a subsidiary or
division becoming an independent company.
SPLIT ISSUES (SPLIT-RATED ISSUES): Securities rated top tier by one credit
rating agency and second tier by another.
SUPPLY AND DEMAND: In the bond market, supply is influenced by the amount of
new securities issued and the amount of bonds investors wish to sell. Demand
reflects the amount of bonds investors wish to buy, which may decrease when
other markets offer greater opportunities.
In the stock market, an oversupply of a product or service can reduce demand and
lower stock prices. When demand increases relative to supply, stock prices may
recover.
TIGHTEN/EASE: When the Federal Reserve Board moves to raise interest rates, it
is said to be "tightening" or making borrowing more expensive. When it moves to
lower rates, it is said to be "easing" or making borrowing more affordable.
TOTAL RETURN: The performance of an investment with all income and capital
gains reinvested.
VOLATILITY: Fluctuations in the price of securities or markets, up or down,
over a short period of time.
WEIGHTING: The proportion of a portfolio allocated to a specific security,
market sector or country, i.e., a portfolio is said to be overweighed in a
sector or country when that portion of the portfolio is greater than the
53
<PAGE> 54
sector's general relationship to the market as a whole or the country's total
equities relative to the international equity markets as a whole.
YIELD: The income per share (or current value of a security) paid to investors
over a specified period of time as a percentage of the cost of the security.
Mutual fund yields are expressed as a percentage of the fund's current price per
share.
YIELD CURVE: When interest rates available from various short-, intermediate-,
and long-term securities are plotted on a graph, the resulting line is known as
a yield curve.
YIELD SPREAD: The difference in yield between securities in different market
sectors, such as government and mortgage-backed securities -- or between
different securities in a single sector, such as 2- and 30- year Treasuries or
PRIME-1 and PRIME-2 rated commercial paper.
Y2K: A reference to the Year 2000.
54
<PAGE> 55
MAINSTAY VP SERIES FUND, INC.
OFFICERS AND DIRECTORS*
Richard M. Kernan, Jr., Chairman,
Chief Executive Officer and Director
Anne F. Pollack, President,
Chief Administrative Officer and Director
Michael J. Drabb, Director
Jill Feinberg, Director
Daniel Herrick, Director
Robert D. Rock, Director and Vice President
Roman L. Weil, Director
John Weisser, Director
Anthony W. Polis, Treasurer
Sara L. Badler, Secretary
Richard D. Levy, Controller
INVESTMENT ADVISERS
MacKay-Shields Financial Corporation
Madison Square Advisors, Inc.
Monitor Capital Advisors, Inc.
ADMINISTRATOR
New York Life Insurance and Annuity Corporation
CUSTODIANS
The Bank of New York
The Chase Manhattan Bank, N.A.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
* As of June 30, 1999.
The financial information included herein is taken from the records of the Funds
without examination by the Funds' independent accountants, who do not express an
opinion thereon.
55
<PAGE> 56
CAPITAL APPRECIATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (96.9%)+
SHARES VALUE
------------------------
<S> <C> <C>
BANKS (2.0%)
Firstar Corp. .................. 234,700 $ 6,571,600
Wells Fargo & Co. .............. 532,700 22,772,925
--------------
29,344,525
--------------
BROADCAST/MEDIA (3.5%)
Chancellor Media Corp. (a)...... 365,200 20,131,650
Clear Channel Communications,
Inc. (a)....................... 357,100 24,617,581
Fox Entertainment Group, Inc.
(a)............................ 300,000 8,081,250
--------------
52,830,481
--------------
COMMUNICATIONS--EQUIPMENT (7.3%)
Cisco Systems, Inc. (a)......... 870,950 56,012,972
Lucent Technologies, Inc. ...... 784,800 52,924,950
--------------
108,937,922
--------------
COMPUTER SOFTWARE & SERVICES
(8.8%)
America Online, Inc. (a)........ 79,000 8,729,500
Compuware Corp. (a)............. 1,002,100 31,879,306
Equifax Inc. ................... 408,000 14,560,500
Microsoft Corp. (a)............. 583,100 52,588,331
Oracle Corp. (a)................ 677,500 25,152,188
--------------
132,909,825
--------------
COMPUTER SYSTEMS (6.4%)
EMC Corp. (a)................... 807,400 44,407,000
Sun Microsystems, Inc. (a)...... 760,600 52,386,325
--------------
96,793,325
--------------
ELECTRONICS--SEMICONDUCTORS
(3.0%)
Intel Corp. .................... 432,200 25,715,900
Motorola, Inc. ................. 205,600 19,480,600
--------------
45,196,500
--------------
ENTERTAINMENT (1.5%)
Time Warner, Inc. .............. 313,000 22,536,000
--------------
FINANCIAL--MISCELLANEOUS (5.7%)
Associates First Capital Corp.
Class A........................ 813,000 36,026,063
Citigroup Inc. ................. 764,572 36,317,170
Freddie Mac..................... 238,400 13,827,200
--------------
86,170,433
--------------
HEALTH CARE DISTRIBUTORS (1.7%)
Cardinal Health Inc. ........... 397,650 25,499,306
--------------
HEALTH CARE--DRUGS (6.7%)
Elan Corp. PLC ADR (a)(b)....... 568,000 15,762,000
Merck & Co., Inc. .............. 301,000 22,274,000
Pfizer Inc. .................... 195,200 21,423,200
Schering-Plough Corp. .......... 783,500 41,525,500
--------------
100,984,700
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
HEALTH CARE--MEDICAL PRODUCTS
(4.7%)
Guidant Corp. .................. 686,400 $ 35,306,700
Medtronic Inc. ................. 459,800 35,806,925
--------------
71,113,625
--------------
HEALTH CARE--MISCELLANEOUS
(2.3%)
Johnson & Johnson............... 355,562 34,845,076
--------------
HOTEL/MOTEL (1.2%)
Carnival Corp. ................. 353,600 17,149,600
--------------
HOUSEHOLD PRODUCTS (1.9%)
Colgate-Palmolive Co. .......... 285,100 28,153,625
--------------
INSURANCE (3.2%)
American International Group,
Inc. .......................... 408,823 47,857,842
--------------
LEISURE TIME (2.2%)
Harley-Davidson, Inc. .......... 601,500 32,706,563
--------------
MANUFACTURING--DIVERSIFIED
(4.5%)
Tyco International Ltd. ........ 718,400 68,068,400
--------------
PERSONAL LOANS (1.7%)
Providian Financial Corp. ...... 275,300 25,740,550
--------------
RETAIL (19.2%)
Bed Bath & Beyond, Inc. (a)..... 521,600 20,081,600
Circuit City Stores, Inc. ...... 329,100 30,606,300
CVS Corp. ...................... 602,800 30,818,150
Dollar General Corp. ........... 734,978 21,314,362
Home Depot, Inc. (The).......... 640,300 41,259,331
Kohl's Corp. (a)................ 529,000 40,832,188
Kroger Co. (a).................. 1,143,200 31,938,150
Nordstrom, Inc. ................ 359,400 12,039,900
Safeway Inc. (a)................ 542,900 26,873,550
Staples, Inc. (a)............... 1,075,200 33,264,000
--------------
289,027,531
--------------
SPECIALIZED SERVICES (4.2%)
Cendant Corp. (a)............... 998,030 20,459,615
IMS Health Inc. ................ 637,500 19,921,875
Omnicom Group Inc. ............. 281,400 22,512,000
--------------
62,893,490
--------------
TELECOMMUNICATIONS--LONG
DISTANCE (3.3%)
MCI WorldCom, Inc. (a).......... 577,388 49,799,715
--------------
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
56
<PAGE> 57
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
TELEPHONE (1.9%)
ALLTEL Corp. ................... 393,900 $ 28,163,850
--------------
Total Common Stocks
(Cost $848,081,911)............ 1,456,722,884
--------------
SHORT-TERM
INVESTMENTS (5.5%)
PRINCIPAL
AMOUNT
-----------
COMMERCIAL PAPER (5.5%)
American Express Credit Corp.
4.92%, due 7/7/99.............. $10,000,000 9,991,789
5.05%, due 7/12/99............. 8,630,000 8,616,668
Chevron USA Inc.
4.94%, due 7/8/99.............. 10,000,000 9,990,381
5.10%, due 7/16/99............. 10,195,000 10,173,317
Ford Motor Credit Co.
5.65%, due 7/1/99.............. 9,445,000 9,445,000
General Electric Capital Corp.
4.95%, due 7/7/99.............. 7,300,000 7,293,965
General Electric Co.
4.99%, due 7/9/99.............. 13,235,000 13,220,306
Morgan Stanley Dean Witter Co.
4.97%, due 7/16/99............. 13,830,000 13,801,305
--------------
Total Short-Term Investments
(Cost $82,532,731)............. 82,532,731
--------------
Total Investments
(Cost $930,614,642) (c)........ 102.4% 1,539,255,615(d)
Liabilities in Excess of Cash
and Other Assets............... (2.4) (35,839,510)
---------- --------------
Net Assets...................... 100.0% $1,503,416,105
========== ==============
</TABLE>
- ------------
(a) Non-income producing security.
(b) ADR--American Depository Receipt.
(c) The cost stated also represents the aggregate cost for Federal income tax
purposes.
(d) At June 30, 1999 net unrealized appreciation was $608,640,973, based on cost
for Federal income tax purposes. This consisted of aggregate gross
unrealized appreciation for all investments on which there was an excess of
market value over cost of $617,727,787 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $9,086,814.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
57
<PAGE> 58
CAPITAL APPRECIATION PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $930,614,642)....... $1,539,255,615
Cash................................... 269
Receivables:
Investment securities sold........... 9,945,000
Fund shares sold..................... 1,162,997
Dividends............................ 350,733
--------------
Total assets................... 1,550,714,614
--------------
LIABILITIES:
Payables:
Investment securities purchased...... 46,088,046
Adviser.............................. 418,299
Administrator........................ 232,388
Custodian............................ 32,637
Directors............................ 669
Accrued expenses....................... 526,470
--------------
Total liabilities.............. 47,298,509
--------------
Net assets applicable to outstanding
shares............................... $1,503,416,105
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 50 million shares authorized.. $ 456,822
Additional paid-in capital............. 864,893,936
Accumulated net investment loss........ (213,086)
Accumulated undistributed net realized
gain on investments.................. 29,637,460
Net unrealized appreciation
on investments....................... 608,640,973
--------------
Net assets applicable to outstanding
shares............................... $1,503,416,105
==============
Shares of capital stock outstanding.... 45,682,223
==============
Net asset value per share
outstanding.......................... $ 32.91
==============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends............................ $ 2,899,806
Interest............................. 1,105,803
--------------
Total income................... 4,005,609
--------------
Expenses:
Advisory............................. 2,408,632
Administration....................... 1,338,130
Shareholder communication............ 302,720
Professional......................... 60,062
Custodian............................ 54,881
Directors............................ 29,797
Miscellaneous........................ 24,473
--------------
Total expenses................. 4,218,695
--------------
Net investment loss.................... (213,086)
--------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments....... 29,988,841
Net change in unrealized appreciation
on investments....................... 68,887,559
--------------
Net realized and unrealized gain
on investments....................... 98,876,400
--------------
Net increase in net assets resulting
from operations...................... $ 98,663,314
==============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
58
<PAGE> 59
MAINSTAY VP SERIES FUND, INC.
CAPITAL APPRECIATION PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999 1998
----------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income (loss).............................. $ (213,086) $ 1,057,695
Net realized gain on investments.......................... 29,988,841 10,978,637
Net change in unrealized appreciation on investments...... 68,887,559 308,212,084
-------------- --------------
Net increase in net assets resulting from operations...... 98,663,314 320,248,416
-------------- --------------
Dividends and distributions to shareholders:
From net investment income................................ -- (1,091,415)
From net realized gain on investments..................... -- (11,013,862)
In excess of net realized gain on investments............. -- (351,381)
-------------- --------------
Total dividends and distributions to shareholders....... -- (12,456,658)
-------------- --------------
Capital share transactions:
Net proceeds from sale of shares.......................... 253,035,815 246,918,825
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. -- 12,456,658
-------------- --------------
253,035,815 259,375,483
Cost of shares redeemed................................... (85,147,374) (93,381,647)
-------------- --------------
Increase in net assets derived from capital share
transactions............................................ 167,888,441 165,993,836
-------------- --------------
Net increase in net assets.................................. 266,551,755 473,785,594
NET ASSETS:
Beginning of period......................................... 1,236,864,350 763,078,756
-------------- --------------
End of period............................................... $1,503,416,105 $1,236,864,350
============== ==============
Accumulated net investment loss at end of period............ $ (213,086) $ --
============== ==============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31
1999* 1998 1997 1996 1995 1994
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period................... $ 30.61 $ 22.39 $ 18.39 $ 15.49 $ 11.45 $ 12.03
------------ ------------ ------------ ------------ ------------ ------------
Net investment income
(loss)...................... (0.01) 0.03 0.00(a) 0.01 0.06 0.05
Net realized and unrealized
gain (loss) on
investments................. 2.31 8.51 4.31 2.90 4.04 (0.58)
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations.................. 2.30 8.54 4.31 2.91 4.10 (0.53)
------------ ------------ ------------ ------------ ------------ ------------
Less dividends and
distributions:
From net investment
income.................... -- (0.03) (0.00)(a) (0.01) (0.06) (0.05)
From net realized gain
on investments............ -- (0.29) (0.31) -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions............... -- (0.32) (0.31) (0.01) (0.06) (0.05)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value at end of
period...................... $ 32.91 $ 30.61 $ 22.39 $ 18.39 $ 15.49 $ 11.45
============ ============ ============ ============ ============ ============
Total investment return....... 7.51%(c) 38.14% 23.49% 18.75% 35.78% (4.38%)
Ratios (to average net
assets)/ Supplemental Data:
Net investment income
(loss).................... (0.03%)+ 0.11% 0.00%(b) 0.09% 0.57% 0.63%
Net expenses................ 0.63%+ 0.64% 0.65% 0.73% 0.73% 0.73%
Expenses (before
reimbursement)............ 0.63%+ 0.64% 0.65% 0.75% 0.90% 0.91%
Portfolio turnover rate....... 15% 27% 34% 16% 35% 39%
Net assets at end of period
(in 000's).................. $ 1,503,416 $ 1,236,864 $ 763,079 $ 503,622 $ 244,536 $ 113,999
</TABLE>
- ------------
(a) Less than one cent per share.
(b) Less than one-hundredth of a percent.
(c) Total return is not annualized.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
59
<PAGE> 60
CASH MANAGEMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS (100.1%)+
PRINCIPAL AMORTIZED
AMOUNT COST
----------------------
<S> <C> <C>
ASSET-BACKED SECURITY (0.9%)
Bishop's Gate Residential
Mortgage Trust
Series 1998-2A Class A1
5.13%, due 11/22/99 (a)(b)(c).... $3,000,000 $ 3,000,000
------------
CERTIFICATES OF DEPOSIT (13.9%)
ABN AMRO New York
4.94%, due 12/2/99 (c)........... 1,300,000 1,297,752
5.50%, due 6/5/00 (c)............ 2,000,000 1,999,106
Bayerische Landesbank New York
4.88%, due 7/26/99 (b)(c)........ 2,000,000 1,999,856
5.12%, due 3/21/00 (b)(c)........ 2,000,000 1,996,945
Commerzbank AG New York
4.87%, due 4/10/00 (b)(c)........ 2,000,000 1,999,383
5.01%, due 1/10/00 (b)(c)........ 2,000,000 1,999,898
5.09%, due 2/16/00 (b)(c)........ 2,000,000 1,999,575
5.16%, due 2/25/00 (b)(c)........ 2,000,000 1,999,474
Deutsche Bank New York
5.02%, due 1/11/00 (c)........... 2,000,000 2,000,403
5.06%, due 2/8/00 (c)............ 2,000,000 1,999,589
5.25%, due 5/18/00 (c)........... 2,000,000 1,996,824
Dresdner Bank AG
4.95%, due 11/9/99 (c)........... 2,000,000 2,000,194
Nationsbank North America
4.99%, due 1/11/00 (c)........... 2,000,000 1,999,897
Rabobank Nederland N.V. New York
4.83%, due 10/6/99 (c)........... 2,000,000 1,999,997
5.29%, due 5/19/00 (c)........... 2,000,000 1,999,064
5.60%, due 6/14/00 (c)........... 2,000,000 1,999,083
5.64%, due 7/30/99 (c)........... 2,000,000 2,000,872
Societe Generale New York
5.29%, due 3/3/00 (c)............ 2,000,000 1,999,093
Svenska Handelsbanken Inc.
5.23%, due 3/1/00 (c)............ 2,000,000 1,999,228
UBS AG Stamford CT
5.29%, due 3/1/00 (c)............ 2,000,000 1,999,540
5.34%, due 5/30/00 (c)........... 2,000,000 1,999,121
Westdeutsche Landesbank
4.89%, due 7/7/99 (c)............ 2,000,000 1,999,999
4.90%, due 7/7/99 (c)............ 2,000,000 2,000,006
------------
45,284,899
------------
COMMERCIAL PAPER (82.5%)
ABN AMRO North America
Finance Inc.
5.17%, due 9/2/99................ 3,000,000 2,972,857
Abbey National North America
4.81%, due 7/8/99................ 2,000,000 1,998,129
4.88%, due 9/3/99................ 2,000,000 1,982,667
4.95%, due 8/5/99................ 2,000,000 1,990,375
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
----------------------
SHORT-TERM
INVESTMENTS (100.1%)+
<S> <C> <C>
COMMERCIAL PAPER (Continued)
Alliance & Leicester PLC
4.84%, due 7/6/99 (a)............ $4,000,000 $ 3,997,312
5.14%, due 11/24/99 (a).......... 3,000,000 2,937,463
5.20%, due 8/5/99 (a)............ 3,000,000 2,984,833
Allianz of America Finance Corp.
4.81%, due 7/16/99 (a)........... 2,000,000 1,995,992
4.83%, due 7/12/99 (a)........... 2,000,000 1,997,048
5.05%, due 9/20/99 (a)........... 2,000,000 1,977,275
Allomon Funding Corp.
5.05%, due 7/21/99 (a)........... 3,000,000 2,991,583
5.05%, due 7/28/99 (a)........... 3,000,000 2,988,638
American Express Credit Corp.
4.95%, due 8/6/99................ 3,000,000 2,985,150
4.97%, due 7/14/99............... 2,165,000 2,161,114
5.00%, due 7/7/99................ 3,000,000 2,997,500
5.25%, due 7/1/99................ 3,000,000 3,000,000
American General Finance Corp.
4.90%, due 7/30/99............... 2,000,000 1,992,106
4.96%, due 7/23/99............... 2,000,000 1,993,938
5.06%, due 8/6/99................ 3,000,000 2,984,820
Associates First Capital Corp.
4.92%, due 7/14/99............... 2,000,000 1,996,447
5.00%, due 8/16/99............... 2,000,000 1,987,222
5.05%, due 9/13/99............... 3,000,000 2,968,858
AT&T Corp.
5.13%, due 7/27/99............... 2,862,000 2,851,396
5.18%, due 7/15/99............... 3,000,000 2,993,957
BankAmerica Corp.
4.81%, due 11/3/99............... 2,000,000 1,966,597
4.82%, due 10/6/99............... 2,000,000 1,974,026
Barclays US Funding Corp.
4.84%, due 7/6/99................ 2,000,000 1,998,656
BCI Funding Corp.
5.08%, due 8/23/99............... 3,000,000 2,977,563
BellSouth Telecommunications Inc.
4.85%, due 7/14/99............... 2,000,000 1,996,497
4.85%, due 7/16/99............... 2,000,000 1,995,958
4.95%, due 7/20/99............... 2,000,000 1,994,775
5.11%, due 9/3/99................ 3,000,000 2,972,747
5.20%, due 9/7/99................ 3,000,000 2,970,533
Bil North America Inc.
4.81%, due 7/20/99............... 2,000,000 1,994,923
4.88%, due 8/13/99............... 2,000,000 1,988,342
British Telecommunications PLC
4.78%, due 7/26/99............... 2,000,000 1,993,361
BTR Dunlop Finance Inc.
5.03%, due 7/23/99 (a)........... 3,000,000 2,990,778
Caisse Centrale Desjardins du
Quebec
4.81%, due 7/12/99............... 2,000,000 1,997,061
4.92%, due 10/29/99.............. 2,000,000 1,967,867
Chevron USA Inc.
4.92%, due 7/16/99............... 2,000,000 1,995,900
5.01%, due 8/2/99................ 3,000,000 2,986,640
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
60
<PAGE> 61
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS (CONTINUED)
PRINCIPAL AMORTIZED
AMOUNT COST
----------------------
<S> <C> <C>
COMMERCIAL PAPER (Continued)
Cregem North America Inc.
4.82%, due 7/12/99............... $2,000,000 $ 1,997,054
4.84%, due 10/25/99.............. 2,000,000 1,968,809
4.87%, due 8/3/99................ 2,000,000 1,991,072
Dresdner US Finance Inc.
5.03%, due 8/9/99................ 2,000,000 1,989,102
5.15%, due 8/11/99............... 2,000,000 1,988,269
Ford Motor Credit Co.
4.84%, due 7/8/99................ 4,000,000 3,996,247
4.87%, due 7/19/99............... 2,900,000 2,892,938
4.92%, due 7/26/99............... 2,000,000 1,993,167
Franklin Resources Inc.
5.05%, due 8/13/99 (a)........... 3,000,000 2,981,904
General Electric Capital Corp.
4.81%, due 7/13/99............... 2,000,000 1,996,793
4.81%, due 9/10/99............... 2,000,000 1,981,027
4.85%, due 7/15/99............... 2,000,000 1,996,228
4.85%, due 7/28/99............... 2,000,000 1,992,725
Generale Bank Inc.
4.81%, due 7/9/99................ 2,400,000 2,397,435
4.88%, due 8/2/99................ 2,000,000 1,991,324
Goldman Sachs Group L.P. (The)
4.82%, due 10/28/99.............. 2,000,000 1,968,134
5.10%, due 7/29/99............... 3,000,000 2,988,100
5.10%, due 9/22/99............... 3,000,000 2,964,725
Halifax PLC
4.75%, due 7/1/99................ 2,000,000 2,000,000
4.80%, due 10/1/99............... 2,000,000 1,975,467
5.40%, due 7/8/99................ 1,785,000 1,783,126
ING America Insurance Holdings
Inc. 4.83%, due 9/15/99.......... 2,000,000 1,979,607
International Nederlanden (U.S.)
Funding Corp.
4.83%, due 7/6/99................ 3,000,000 2,997,988
KFW International Finance Inc.
4.82%, due 7/19/99............... 1,150,000 1,147,229
5.57%, due 7/1/99................ 3,000,000 3,000,000
Merrill Lynch & Co. Inc.
4.87%, due 7/21/99............... 2,000,000 1,994,589
4.92%, due 7/14/99............... 2,000,000 1,996,447
5.00%, due 7/30/99............... 3,000,000 2,987,917
Morgan (J.P.) & Co. Inc.
4.80%, due 10/15/99.............. 2,000,000 1,971,733
4.82%, due 7/15/99............... 2,000,000 1,996,251
4.85%, due 8/20/99............... 2,000,000 1,986,528
Morgan Stanley, Dean Witter
Discover & Co.
5.00%, due 7/2/99................ 3,000,000 2,999,583
5.00%, due 8/19/99............... 3,000,000 2,979,583
5.01%, due 8/17/99............... 3,000,000 2,980,378
National Rural Utilities
Cooperative Finance Corp.
4.80%, due 7/27/99............... 2,000,000 1,993,067
4.84%, due 7/26/99............... 2,600,000 2,591,261
4.85%, due 7/23/99............... 2,000,000 1,994,072
5.18%, due 8/12/99............... 3,000,000 2,981,870
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
----------------------
SHORT-TERM
INVESTMENTS (CONTINUED)
<S> <C> <C>
COMMERCIAL PAPER (Continued)
Nationwide Building Society
4.85%, due 7/27/99............... $2,000,000 $ 1,992,994
4.86%, due 9/8/99................ 2,000,000 1,981,370
Pemex Capital Inc.
5.13%, due 9/20/99............... 3,000,000 2,965,373
Prudential Finance (Jersey) Ltd.
4.80%, due 7/15/99............... 2,000,000 1,996,267
Prudential Funding Corp.
4.85%, due 7/9/99................ 2,000,000 1,997,844
4.86%, due 7/21/99............... 2,400,000 2,393,520
4.97%, due 7/29/99............... 2,000,000 1,992,269
5.01%, due 8/4/99................ 3,000,000 2,985,805
Quebec (Province of)
4.75%, due 7/6/99................ 2,000,000 1,998,680
4.82%, due 12/17/99.............. 2,000,000 1,954,745
Receivables Capital Corp.
4.94%, due 7/22/99 (a)........... 2,200,000 2,193,660
4.94%, due 8/3/99 (a)............ 2,000,000 1,990,943
Rio Tinto America Inc.
4.84%, due 7/2/99 (a)............ 2,000,000 1,999,731
4.92%, due 8/9/99 (a)............ 2,000,000 1,989,340
Salomon Smith Barney Holdings Inc.
4.80%, due 7/19/99............... 2,000,000 1,995,200
4.89%, due 7/13/99............... 2,000,000 1,996,740
4.92%, due 7/22/99............... 2,000,000 1,994,260
5.00%, due 7/21/99............... 2,000,000 1,994,444
San Paolo U.S. Financial Co.
4.83%, due 8/10/99............... 2,000,000 1,989,267
5.09%, due 11/17/99.............. 2,000,000 1,960,694
Svenska Handelsbanken Inc.
5.11%, due 9/27/99............... 3,000,000 2,962,527
Transportadora De Gas Del Sur S.A.
(TGS) 5.12%, due 9/21/99......... 3,000,000 2,965,013
UBS Finance (Delaware) Inc.
4.81%, due 12/27/99.............. 2,325,000 2,269,394
5.23%, due 7/22/99............... 2,500,000 2,492,373
UNIfunding Inc.
4.82%, due 7/27/99............... 2,000,000 1,993,038
4.95%, due 7/9/99................ 2,000,000 1,997,800
5.00%, due 7/9/99................ 2,000,000 1,997,778
Wells Fargo & Co.
4.82%, due 8/11/99............... 2,000,000 1,989,021
4.83%, due 7/29/99............... 2,000,000 1,992,487
4.85%, due 7/20/99............... 2,000,000 1,994,881
5.00%, due 7/28/99............... 2,000,000 1,992,500
5.00%, due 8/2/99................ 2,000,000 1,991,111
Wood Street Funding Corp.
5.02%, due 8/13/99 (a)........... 2,000,000 1,988,008
5.04%, due 7/16/99 (a)........... 2,050,000 2,045,695
5.04%, due 7/26/99 (a)........... 1,542,000 1,536,603
Xerox Corp.
4.83%, due 7/13/99............... 2,000,000 1,996,780
5.10%, due 8/10/99............... 3,000,000 2,983,000
------------
268,451,808
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
61
<PAGE> 62
CASH MANAGEMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS (CONTINUED)
PRINCIPAL AMORTIZED
AMOUNT COST
----------------------
<S> <C> <C>
FEDERAL AGENCY (0.9% )
Federal Home Loan Mortgage Corp.
(Discount Note)
5.03%, due 8/16/99............... $3,000,000 $ 2,980,718
------------
MEDIUM-TERM NOTES (1.9%)
First Union Corp.
4.99%, due 7/1/99 (b)(c)......... 2,000,000 2,000,000
National Rural Utilities
Cooperative Finance Corp.
4.97%, due 9/21/99 (b)(c)........ 2,000,000 2,000,000
Xerox Corp., Series F
5.64%, due 7/14/00 (b)(c)........ 2,000,000 1,999,094
------------
5,999,094
------------
Total Short-Term Investments
(Amortized Cost $325,716,519)
(d).............................. 100.1% 325,716,519
Liabilities in Excess of
Cash and Other Assets............ (0.1) (345,994)
---------- ------------
Net Assets........................ 100.0% $325,370,525
========== ============
</TABLE>
- ------------
(a) May be sold to institutional investors only.
(b) Floating rate. Rate shown is the rate in effect at June 30, 1999.
(c) Coupon interest bearing security.
(d) The cost stated also represents the aggregate cost for Federal income tax
purposes.
The table below sets forth the diversification of Cash
Management Portfolio investments by industry.
INDUSTRY
DIVERSIFICATION
<TABLE>
<CAPTION>
AMORTIZED
COST PERCENT +
-------------------------
<S> <C> <C>
Auto Finance................ $ 8,882,352 2.7%
Banks #..................... 135,660,782 41.7
Brokerage................... 35,987,329 11.1
Computers & Office Equipment... 3,995,874 1.2
Conglomerates............... 7,966,773 2.4
Consumer Financial
Services.................. 11,143,764 3.4
Domestic Oils............... 4,982,540 1.5
Federal Agency.............. 2,980,718 0.9
Finance..................... 66,882,996 20.6
Foreign Government.......... 3,953,426 1.2
Insurance................... 8,950,470 2.8
Mortgage Loan............... 3,000,000 0.9
Telecommunication
Services.................. 19,769,225 6.1
Utilities................... 11,560,270 3.6
----------- ---------
325,716,519 100.1
Liabilities in Excess of
Cash and Other Assets..... (345,994) (0.1)
----------- ---------
Net Assets.................. $325,370,525 100.0%
=========== =========
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
# The Portfolio will invest more than 25% of the market value of its total
assets in the securities of banks and bank holding companies, including
certificates of deposit, bankers' acceptances and securities guaranteed by
banks and bank holding companies.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
62
<PAGE> 63
MAINSTAY VP SERIES FUND, INC.
CASH MANAGEMENT PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(amortized cost $325,716,519).......... $325,716,519
Cash..................................... 247,653
Interest receivable...................... 889,965
------------
Total assets..................... 326,854,137
------------
LIABILITIES:
Payables:
Adviser................................ 64,125
Administrator.......................... 51,300
Custodian.............................. 9,115
Directors.............................. 284
Accrued expenses......................... 91,515
Dividend payable......................... 1,267,273
------------
Total liabilities................ 1,483,612
------------
Net assets applicable to outstanding
shares................................. $325,370,525
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 600 million shares authorized... $ 3,253,727
Additional paid-in capital............... 322,116,811
Accumulated net realized loss on
investments............................ (13)
------------
Net assets applicable to outstanding
shares................................. $325,370,525
============
Shares of capital stock outstanding...... 325,372,662
============
Net asset value per share outstanding.... $ 1.00
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................... $ 6,765,626
------------
Expenses:
Advisory............................... 336,172
Administration......................... 268,938
Shareholder communication.............. 38,925
Professional........................... 23,311
Custodian.............................. 13,293
Directors.............................. 6,052
Miscellaneous.......................... 7,449
------------
Total expenses................... 694,140
------------
Net investment income.................... 6,071,486
------------
REALIZED LOSS ON INVESTMENTS:
Net realized loss on investments......... (13)
------------
Net increase in net assets resulting from
operations............................. $ 6,071,473
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
63
<PAGE> 64
CASH MANAGEMENT PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999 1998
--------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 6,071,486 $ 9,018,849
Net realized gain (loss) on investments................... (13) 2,765
------------- -------------
Net increase in net assets resulting from operations...... 6,071,473 9,021,614
------------- -------------
Dividends and distributions to shareholders:
From net investment income................................ (6,071,486) (9,018,849)
From net realized gain on investments..................... (141) (2,107)
------------- -------------
Total dividends and distributions to shareholders....... (6,071,627) (9,020,956)
------------- -------------
Capital share transactions:
Net proceeds from sale of shares.......................... 424,605,548 485,909,046
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. 5,707,240 8,752,871
------------- -------------
430,312,788 494,661,917
Cost of shares redeemed................................... (336,494,149) (403,892,045)
------------- -------------
Increase in net assets derived from capital share
transactions............................................ 93,818,639 90,769,872
------------- -------------
Net increase in net assets.................................. 93,818,485 90,770,530
NET ASSETS:
Beginning of period......................................... 231,552,040 140,781,510
------------- -------------
End of period............................................... $ 325,370,525 $ 231,552,040
============= =============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31
1999* 1998 1997 1996 1995 1994
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------ ------------ ------------ ------------ ------------
Net investment income....... 0.02 0.05 0.05 0.05 0.05 0.04
------------ ------------ ------------ ------------ ------------ ------------
Less dividends:
From net investment
income.................. (0.02) (0.05) (0.05) (0.05) (0.05) (0.04)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value at end of
period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ ============ ============ ============ ============ ============
Total investment return..... 2.26%(a) 5.18% 5.25% 4.95% 5.59% 3.82%
Ratios (to average net
assets)/ Supplemental
Data:
Net investment income..... 4.52%+ 5.05% 5.13% 4.92% 5.44% 3.97%
Net expenses.............. 0.52%+ 0.54% 0.54% 0.62% 0.62% 0.62%
Expenses (before
reimbursement).......... 0.52%+ 0.54% 0.54% 0.64% 0.94% 0.89%
Net assets at end of period
(in 000's)................ $ 325,371 $ 231,552 $ 140,782 $ 118,347 $ 87,839 $ 71,116
</TABLE>
- ------------
(a) Total return is not annualized.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
64
<PAGE> 65
MAINSTAY VP SERIES FUND, INC.
CONVERTIBLE PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
CONVERTIBLE SECURITIES (84.2%)+
BONDS (59.6%)
PRINCIPAL
AMOUNT VALUE
---------------------
<S> <C> <C>
AUTO PARTS (3.2%)
Mark IV Industries, Inc.
4.75%, due 11/1/04 (c)............ $1,100,000 $ 973,500
MascoTech, Inc.
4.50%, due 12/15/03............... 1,500,000 1,218,750
-----------
2,192,250
-----------
BANKS (2.4%)
Mitsubishi Bank Ltd. International
Finance (Bermuda) Trust
3.00%, due 11/30/02............... 1,500,000 1,691,250
-----------
BROADCAST/MEDIA (3.2%)
Clear Channel Communications, Inc.
2.625%, due 4/1/03................ 750,000 954,375
News America Holdings, Inc.
(zero coupon), due 3/11/13........ 1,750,000 1,281,875
-----------
2,236,250
-----------
COMPUTER SOFTWARE & SERVICES (2.7%)
PLATINUM Technology International,
Inc. 6.25%, due 12/15/02.......... 1,850,000 1,847,688
-----------
ELECTRICAL EQUIPMENT (2.3%)
LSI Logic Corp.
4.25%, due 3/15/04 (c)............ 1,000,000 1,625,000
-----------
ELECTRONICS--COMPONENTS (1.5%)
ASE Test Ltd.
1.00%, due 7/1/04 (c)............. 1,000,000 1,005,000
-----------
ENERGY (1.5%)
PennzEnergy Co.
4.90%, due 8/15/08................ 1,000,000 1,015,000
-----------
FINANCE (0.2%)
Belgelec Finance S.A.
1.50%, due 8/4/04 (c)(q).......... E167,640 169,645
-----------
FINANCIAL SERVICES (2.4%)
Salomon Smith Barney Holdings, Inc.
0.25%, due 6/15/06................ 1,500,000 1,668,750
-----------
HEALTH CARE (7.8%)
Alza Corp.
5.00%, due 5/1/06................. 1,000,000 1,390,000
Elan Finance Corp. Ltd.
(zero coupon), due 12/14/18 (c)... 1,500,000 766,875
PhyCor, Inc.
4.50%, due 2/15/03................ 1,400,000 1,053,500
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------------------
CONVERTIBLE SECURITIES (84.2%)
BONDS (59.6%)
<S> <C> <C>
HEALTH CARE (Continued)
Roche Holdings, Inc.
(zero coupon), due 4/20/10
(c)(e)............................ $1,500,000 $ 849,375
Veterinary Centers of America, Inc.
5.25%, due 5/1/06................. 1,880,000 1,353,600
-----------
5,413,350
-----------
INVESTMENT BANK/ BROKERAGE (1.5%)
Merrill Lynch & Co., Inc.
0.25%, due 5/10/06................ 1,000,000 1,025,000
-----------
OIL SERVICES (1.4%)
Loews Corp.
3.125%, due 9/15/07............... 1,200,000 975,000
-----------
POLLUTION & RELATED (1.4%)
Waste Management, Inc.
4.00%, due 2/1/02................. 750,000 986,250
-----------
PUBLISHING (2.4%)
World Color Press, Inc.
6.00%, due 10/1/07................ 1,775,000 1,679,594
-----------
REAL ESTATE (0.2%)
Macerich Co.
7.25%, due 12/15/02 (d)........... 135,000 126,900
-----------
RESTAURANTS & LODGING (0.0%) (b)
Boston Chicken, Inc.
(zero coupon), due 6/1/15
(e)(f)............................ 6,643,000 33,215
-----------
RETAIL STORES (2.4%)
Home Depot, Inc.
3.25%, due 10/1/01................ 300,000 839,250
Office Depot, Inc.
(zero coupon), due 11/1/08........ 1,000,000 842,500
-----------
1,681,750
-----------
SEMICONDUCTOR EQUIPMENT (1.1%)
Integrated Process Equipment Corp.
6.25%, due 9/15/04................ 1,000,000 773,750
-----------
SEMICONDUCTORS (4.7%)
Amkor Technologies, Inc.
5.75%, due 5/1/03................. 1,300,000 1,301,625
Cypress Semiconductor Corp.
6.00%, due 10/1/02................ 2,000,000 1,952,500
-----------
3,254,125
-----------
SOFTWARE (0.5%)
System Software Associates, Inc.
7.00%, due 9/15/02................ 1,000,000 350,000
-----------
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
65
<PAGE> 66
CONVERTIBLE PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
BONDS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
---------------------
<S> <C> <C>
SPECIALIZED SERVICES (1.4%)
CUC International, Inc.
3.00%, due 2/15/02................ $1,000,000 $ 960,000
-----------
STEEL, ALUMINUM & OTHER METALS
(0.6%)
Coeur d'Alene Mines Corp.
7.25%, due 10/31/05 (c)........... 700,000 427,000
-----------
TECHNOLOGY (3.5%)
Adaptec, Inc.
4.75%, due 2/1/04................. 2,500,000 2,412,500
-----------
TELECOMMUNICATION SERVICES (10.7%)
Bell Atlantic Financial Services,
Inc.
4.50%, due 9/15/05 (c)............ 1,000,000 1,026,250
5.75%, due 4/1/03 (c)............. 850,000 859,562
Gilat Satellite Networks Ltd.
6.50%, due 6/3/04 (g)............. 1,000,000 1,376,466
Global TeleSystems Group
5.75%, due 7/1/10 (d)............. 450,000 712,766
Nextel Communications, Inc.
4.75%, due 7/1/07 (c)............. 750,000 888,750
Rogers Communications, Inc.
2.00%, due 11/26/05 (g)........... 2,000,000 1,547,500
Telefonos de Mexico S.A.
4.25%, due 6/15/04 (g)............ 1,000,000 1,032,500
-----------
7,443,794
-----------
TRANSPORTATION (0.6%)
At Home Corp.
0.5246%, due 12/28/18 (c)......... 500,000 403,750
-----------
Total Bonds
(Cost $41,770,225)................ 41,396,811
-----------
<CAPTION>
PREFERRED STOCKS (24.6%)
SHARES
----------
<S> <C> <C>
AUTO PARTS (1.1%)
Tower Automotive Capital Trust
6.75%............................. 15,000 761,250
-----------
BROADCAST/MEDIA (1.5%)
Comcast Corp.
3.35%............................. 12,000 1,039,500
-----------
COMPUTERS & OFFICE EQUIPMENT (0.8%)
Trikon Technologies, Inc.
8.125%, Series H (h).............. 112,288 168,431
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
COMPUTERS & OFFICE EQUIPMENT
(Continued)
Unisys Corp.
$3.75, Series A................... 6,253 $ 407,227
-----------
575,658
-----------
CONGLOMERATES (1.2%)
Carriage Services Capital Trust
7.00% (c)......................... 15,000 834,375
-----------
DISTRIBUTION/WHOLESALE (0.8%)
Owens & Minor Trust I
5.375%, Series A.................. 15,000 543,750
-----------
ENERGY (0.4%)
Unocal Capital Trust
6.25%............................. 5,000 278,750
-----------
ENTERTAINMENT (1.4%)
Seagram Co. Ltd.
7.50%............................. 20,000 998,750
-----------
FOOD (2.0%)
Suiza Capital Trust II
5.50%............................. 37,000 1,406,000
-----------
FOOD, BEVERAGE & TOBACCO (0.7%)
Chiquita Brands International, Inc.
$3.75, Series B................... 11,000 462,000
-----------
MACHINERY (0.2%)
Ingersoll-Rand Co.
6.75%............................. 4,000 120,000
-----------
NATURAL GAS DISTRIBUTORS &
PIPELINES (1.4%)
El Paso Energy Capital Trust I
4.75%............................. 19,000 940,500
-----------
OIL & GAS--EXPLORATION & PRODUCTION
(1.3%)
Apache Corp.
6.50% (i)......................... 25,000 925,000
-----------
PAPER & FOREST PRODUCTS (1.4%)
International Paper Co.
5.25%............................. 18,000 972,000
-----------
PUBLISHING (1.5%)
Tribune Co.
2.00% (j)......................... 3,000 374,250
6.25%............................. 23,000 646,875
-----------
1,021,125
-----------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
66
<PAGE> 67
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
PREFERRED STOCKS (CONTINUED)
<S> <C> <C>
SHARES VALUE
<CAPTION>
---------------------
<S> <C> <C>
REAL ESTATE (4.7%)
General Growth Properties, Inc.
7.25% (k)(l)...................... 85,000 $ 2,040,000
Glenborough Realty Trust, Inc.
7.75%, Series A................... 65,000 1,235,000
-----------
3,275,000
-----------
SOFTWARE (1.4%)
Microsoft Corp.
$2.196, Series A.................. 10,000 999,375
-----------
SPECIALIZED SERVICES (0.9%)
Cendant Corp.
7.50%............................. 17,000 585,438
-----------
TELECOMMUNICATION SERVICES (1.9%)
Adelphia Communications Corp.
5.50%, Series D................... 3,500 674,187
Global TeleSystems Group, Inc.
7.25% (c)......................... 5,000 332,500
Winstar Communications, Inc.
6.00%, Series A (h)............... 5,871 307,494
-----------
1,314,181
-----------
Total Preferred Stocks
(Cost $17,229,403)................ 17,052,652
-----------
Total Convertible Securities
(Cost $58,999,628)................ 58,449,463
-----------
<CAPTION>
COMMON STOCKS (7.3%)
<S> <C> <C>
COMPUTER SYSTEMS (0.6%)
Comdisco, Inc. .................... 16,000 410,000
-----------
COMPUTERS & OFFICE EQUIPMENT (0.8%)
America Online, Inc. (a)........... 1,000 110,500
Trikon Technologies, Inc. (a)...... 1,897,326 246,652
Unisys Corp. (a)................... 4,764 185,498
-----------
542,650
-----------
DOMESTIC OIL & GAS (0.6%)
Enron Oil & Gas Co. ............... 20,800 421,200
-----------
ELECTRONICS (1.7%)
Analog Devices, Inc. (a)........... 10,000 501,875
Flextronics International Ltd.
(a)............................... 7,000 388,500
Jabil Circuit, Inc. (a)............ 7,000 315,875
-----------
1,206,250
-----------
FINANCE (1.0%)
S&P 500 Depository Receipt......... 5,000 684,610
-----------
INSURANCE (1.0%)
American International Group,
Inc. ............................. 5,853 685,167
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
OIL GAS & DRILLING (0.8%)
BJ Services Co. (a)................ 20,000 $ 588,750
-----------
STEEL (0.8%)
AK Steel Holding Corp. ............ 25,000 562,500
-----------
Total Common Stocks
(Cost $5,567,559)................. 5,101,127
-----------
<CAPTION>
PREFERRED STOCK (0.3%)
<S> <C> <C>
MINING (0.3%)
Freeport-McMoRan Copper &
Gold, Inc. Series Silver (m)(n)... 15,000 211,875
-----------
Total Preferred Stock
(Cost $255,750)................... 211,875
-----------
Total Long-Term Investments
(Cost $64,822,937)................ 63,762,465
-----------
SHORT-TERM
INVESTMENTS (7.6%)
PRINCIPAL
AMOUNT
----------
COMMERCIAL PAPER (7.6%)
American Express Credit Corp.
4.92%, due 7/7/99................. $2,000,000 1,998,357
Ford Motor Credit Corp.
5.65%, due 7/1/99................. 590,000 590,000
Wells Fargo Co.
5.06%, due 7/14/99................ 2,660,000 2,655,136
-----------
Total Short-Term Investments
(Cost $5,243,493)................. 5,243,493
-----------
Total Investments
(Cost $70,066,430) (o)............ 99.4% 69,005,958(p)
Cash and Other Assets,
Less Liabilities.................. 0.6 436,008
--------- ---------
Net Assets......................... 100.0% $69,441,966
========= =========
</TABLE>
- ------------
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) May be sold to institutional investors only.
(d) Eurobond--bond denominated in U.S. dollars or other currencies and sold to
investors outside the country whose currency is used.
(e) LYON-Liquid Yield Option Note: callable, zero coupon securities priced at a
deep discount from par. They include a "put" feature that enables holders
to redeem them at a specific date, at a specific price. Put prices reflect
fixed interest rates, and therefore increase over time.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
67
<PAGE> 68
CONVERTIBLE PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
- ------------
(f) Issuer in bankruptcy.
(g) Yankee bond.
(h) PIK ("Payment in Kind")--interest or dividend payment is made with
additional securities.
(i) Depository Shares--each share represents 0.02 shares of preferred stock.
(j) PHONES--Participation Hybrid Option Note Exchangeable Security.
(k) PIERS--Preferred Income Equity Redeemable Stock.
(l) Depository Shares--each share represents 0.025 shares of 7.25% Preferred
Income Equity Redeemable Stock, Series A.
(m) Depository Shares-each share represents 0.025 shares of silver denominated
preferred stock.
(n) Dividend equals U.S. dollar equivalent of 0.04125 oz. of silver per share.
(o) The cost stated also represents the aggregate cost for Federal income tax
purposes.
(p) At June 30, 1999 net unrealized depreciation was $1,060,472, based on cost
for Federal income tax purposes. This consisted of aggregate gross
unrealized appreciation for all investments on which there was an excess of
market value over cost of $4,686,775 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $5,747,247.
(q) E--Euro.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
68
<PAGE> 69
MAINSTAY VP SERIES FUND, INC.
CONVERTIBLE PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $70,066,430).......... $ 69,005,958
Cash..................................... 1,554
Receivables:
Investment securities sold............. 762,538
Dividends and interest................. 463,163
Fund shares sold....................... 60,336
------------
Total assets..................... 70,293,549
------------
LIABILITIES:
Payables:
Investment securities purchased........ 762,795
Adviser................................ 20,063
Custodian.............................. 16,993
Administrator.......................... 11,146
Accrued expenses......................... 40,586
------------
Total liabilities................ 851,583
------------
Net assets applicable to outstanding
shares................................. $ 69,441,966
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 100 million shares authorized... $ 57,040
Additional paid-in capital............... 61,237,571
Accumulated undistributed net investment
income................................. 1,511,219
Accumulated undistributed net realized
gain on investments.................... 7,696,608
Net unrealized depreciation on
investments............................ (1,060,472)
------------
Net assets applicable to outstanding
shares................................. $ 69,441,966
============
Shares of capital stock outstanding...... 5,703,969
============
Net asset value per share outstanding.... $ 12.17
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................... $ 1,287,748
Dividends.............................. 484,040
------------
Total income..................... 1,771,788
------------
Expenses:
Advisory............................... 113,050
Administration......................... 62,806
Professional........................... 20,793
Custodian.............................. 16,957
Shareholder communication.............. 6,966
Directors.............................. 1,339
Portfolio pricing...................... 871
Miscellaneous.......................... 6,043
------------
Total expenses................... 228,825
------------
Net investment income.................... 1,542,963
------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on investments......... 7,705,695
Net change in unrealized depreciation on
investments............................ 1,421,274
------------
Net realized and unrealized gain on
investments............................ 9,126,969
------------
Net increase in net assets resulting from
operations............................. $ 10,669,932
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
69
<PAGE> 70
CONVERTIBLE PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999 1998
---------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 1,542,963 $ 2,646,321
Net realized gain on investments.......................... 7,705,695 995,633
Net change in unrealized depreciation on investments...... 1,421,274 (2,011,586)
------------ ------------
Net increase in net assets resulting from operations...... 10,669,932 1,630,368
------------ ------------
Dividends and distributions to shareholders:
From net investment income................................ (31,744) (2,714,731)
From net realized gain on investments..................... (430,226) (1,877,278)
------------ ------------
Total dividends and distributions to shareholders....... (461,970) (4,592,009)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares.......................... 5,144,169 21,700,659
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. 461,970 4,592,009
------------ ------------
5,606,139 26,292,668
Cost of shares redeemed................................... (4,082,859) (5,388,586)
------------ ------------
Increase in net assets derived from capital share
transactions............................................ 1,523,280 20,904,082
------------ ------------
Net increase in net assets.................................. 11,731,242 17,942,441
NET ASSETS:
Beginning of period......................................... 57,710,724 39,768,283
------------ ------------
End of period............................................... $ 69,441,966 $ 57,710,724
============ ============
Accumulated undistributed net investment income at end of
period.................................................... $ 1,511,219 $ --
============ ============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
OCTOBER 1,
SIX MONTHS 1996 (a)
ENDED YEAR ENDED THROUGH
JUNE 30, DECEMBER 31 DECEMBER 31,
1999* 1998 1997 1996
----------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period............... $ 10.33 $ 10.76 $ 10.27 $ 10.00
----------- ----------- ----------- -----------
Net investment income................................ 0.27 0.51 0.44 0.10
Net realized and unrealized gain (loss) on
investments........................................ 1.66 (0.02) 1.12 0.29
----------- ----------- ----------- -----------
Total from investment operations..................... 1.93 0.49 1.56 0.39
----------- ----------- ----------- -----------
Less dividends and distributions:
From net investment income......................... (0.01) (0.52) (0.44) (0.10)
From net realized gain on investments.............. (0.08) (0.40) (0.63) (0.02)
----------- ----------- ----------- -----------
Total dividends and distributions.................... (0.09) (0.92) (1.07) (0.12)
----------- ----------- ----------- -----------
Net asset value at end of period..................... $ 12.17 $ 10.33 $ 10.76 $ 10.27
=========== =========== =========== ===========
Total investment return.............................. 18.62%(b) 4.49% 15.43% 3.89%(b)
Ratios (to average net assets)/Supplemental Data:
Net investment income.............................. 4.91%+ 5.19% 5.13% 5.14%+
Net expenses....................................... 0.73%+ 0.72% 0.73% 0.73%+
Expenses (before reimbursement).................... 0.73%+ 0.72% 0.78% 1.46%+
Portfolio turnover rate.............................. 105% 209% 217% 15%
Net assets at end of period (in 000's)............... $ 69,442 $ 57,711 $ 39,768 $ 15,464
</TABLE>
- ------------
(a) Commencement of Operations.
(b) Total return is not annualized.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
70
<PAGE> 71
MAINSTAY VP SERIES FUND, INC.
GOVERNMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
LONG-TERM BONDS (87.6%)+
ASSET-BACKED SECURITIES (3.2%)
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
AIRPLANE LEASES (0.8%)
AerCo Ltd.
Series 1A Class A1
5.1775%, due 7/15/23 (d)........ $ 575,000 $ 573,850
Morgan Stanley Aircraft Finance
Series 1 Class A1
5.1975%, due 3/15/23 (a)(d)..... 825,000 823,903
------------
1,397,753
------------
CONSUMER LOANS (0.1%)
GreenTree Recreational
Equipment & Consumer Trust
Series 1996-C Class A1
5.2275%, due 10/15/17 (c)(d).... 115,747 115,677
------------
CREDIT CARD RECEIVABLES (0.7%)
Citibank Credit Card Master Trust
I
Series 1999-1 Class A
5.50%, due 2/15/06 (c).......... 1,290,000 1,242,580
------------
EQUIPMENT LOANS (1.0%)
Case Equipment Loan Trust
Series 1999-A Class A4
5.77%, due 8/15/05 (c).......... 1,360,000 1,337,764
Newcourt Equipment Trust
Securities
Series 1998-1 Class A3
5.24%, due 12/20/02 (c)(d)...... 410,000 405,187
------------
1,742,951
------------
HOME EQUITY LOANS (0.6%)
Saxon Asset Securities Trust
Series 1997-3 Class AF1
5.2525%, due 10/25/20 (c)(d).... 110,510 110,488
Southern Pacific Secured Assets
Corp.
Series 1997-1 Class A1
5.1225%, due 4/25/27 (c)(d)..... 838,511 836,666
------------
947,154
------------
Total Asset-Backed Securities
(Cost $5,523,215)............... 5,446,115
------------
MORTGAGE-BACKED SECURITIES (5.9%)
COMMERCIAL MORTGAGE LOANS
(COLLATERALIZED MORTGAGE OBLIGATIONS) (5.9%)
Asset Securitization Corp.
Series 1997-MD7 Class A1B
7.41%, due 1/13/30 (c).......... 2,610,000 2,670,186
DLJ Commercial Mortgage Corp.
Series 1999-CG2 Class A1A
6.88%, due 6/10/32 (c).......... 1,535,000 1,554,034
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------
LONG-TERM BONDS (87.6%)
ASSET-BACKED SECURITIES (3.2%)
<S> <C> <C>
COMMERCIAL MORTGAGE LOANS
(COLLATERALIZED MORTGAGE
OBLIGATIONS) (Continued)
LB Commercial Conduit
Mortgage Trust
Series 1998-C4 Class A1B
6.21%, due 10/15/08 (c)......... $ 1,455,000 $ 1,386,528
Series 1999-C1 Class A2
6.78%, due 4/15/09 (c).......... 1,470,000 1,453,301
Merrill Lynch Mortgage Investors,
Inc.
Series 1995-C2 Class A1
7.1752%, due 6/15/21 (c)(d)..... 438,235 440,457
Morgan Stanley Capital I
Series 1998-HF2 Class A1
6.01%, due 11/15/30 (c)......... 480,534 468,438
Nationslink Funding Corp.
Series 1999-1 Class A2
6.316%, due 11/20/08 (c)........ 1,985,000 1,905,481
------------
Total Mortgage-Backed Securities
(Cost $10,001,478).............. 9,878,425
------------
U.S. GOVERNMENT &
FEDERAL AGENCIES (78.5%)
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (13.1%)
5.125%, due 2/13/04 (e)......... 13,375,000 12,815,390
5.375%, due 3/15/02............. 2,630,000 2,597,677
5.625%, due 3/15/01............. 3,000,000 2,998,050
6.375%, due 6/15/09 (e)......... 3,450,000 3,433,543
------------
21,844,660
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (MORTGAGE PASS-
THROUGH SECURITIES) (31.1%)
6.50%, due 5/1/13 - 4/1/29
(c)............................. 27,857,666 27,052,391
7.00%, due 12/1/12.............. 651,145 654,909
7.00%, due 9/15/29 TBA (b)...... 8,365,000 8,272,232
7.50%, due 7/14/29 TBA (b)...... 15,925,000 16,143,969
------------
52,123,501
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION I (MORTGAGE
PASS-THROUGH SECURITIES) (4.5%)
7.00%, due 7/15/25 - 9/15/28
(c)............................. 3,776,519 3,742,046
7.00%, due 8/24/29 TBA (b)...... 1,950,000 1,928,062
8.00%, due 11/15/28 (c)......... 1,753,782 1,807,500
------------
7,477,608
------------
UNITED STATES TREASURY BONDS
(13.8%)
5.25%, due 11/15/28 (e)......... 540,000 478,662
7.625%, due 2/15/25 (e)......... 7,125,000 8,404,151
8.875%, due 8/15/17 (e)......... 7,140,000 9,121,350
9.25%, due 2/15/16 (e).......... 3,900,000 5,079,750
------------
23,083,913
------------
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
71
<PAGE> 72
GOVERNMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
U.S. GOVERNMENT &
FEDERAL AGENCIES (CONTINUED)
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
UNITED STATES TREASURY NOTES
(16.0%)
5.50%, due 5/15/09 (e).......... $ 8,830,000 $ 8,625,762
6.25%, due 2/28/02 (e).......... 8,740,000 8,871,100
6.625%, due 5/15/07 (e)......... 4,695,000 4,889,420
6.875%, due 5/15/06............. 4,165,000 4,384,954
------------
26,771,236
------------
Total U.S. Government &
Federal Agencies
(Cost $134,865,567)............. 131,300,918
------------
Total Long-Term Bonds
(Cost $150,390,260)............. 146,625,458
------------
SHORT-TERM
INVESTMENTS (22.2%)
FEDERAL AGENCIES (22.2%)
Federal Home Loan Bank
Discount Note
4.49%, due 7/1/99............... 12,155,000 12,155,000
4.92%, due 7/21/99.............. 7,360,000 7,339,863
4.99%, due 7/23/99.............. 5,000,000 4,984,740
Federal Mortgage Corp. Discount
Note 4.84%, due 7/29/99......... 3,890,000 3,875,331
4.86%, due 7/23/99.............. 3,590,000 3,579,318
Federal National Mortgage
Association
4.86%, due 7/15/99.............. 5,275,000 5,265,010
------------
Total Short-Term Investments
(Cost $37,199,262).............. 37,199,262
------------
Total Investments (Cost
$187,589,522) (f)............... 109.8% 183,824,720(g)
Liabilities in Excess of
Cash and Other Assets........... (9.8) (16,354,990)
---------- ------------
Net Assets....................... 100.0% $167,469,730
========== ============
</TABLE>
- ------------
(a) May be sold to institutional investors only.
(b) TBA: Securities purchased on a forward commitment basis with an approximate
principal amount and maturity date. The actual principal amount and maturity
date will be determined upon settlement.
(c) Segregated or partially segregated as collateral for TBA.
(d) Floating rate. Rate shown is the rate in effect at June 30, 1999.
(e) Represent securities out on loan or a portion of which is out on loan. (See
Note 2J).
(f) The cost for Federal income tax purposes is $187,703,185.
(g) At June 30, 1999 net unrealized depreciation was $3,878,465, based on cost
for Federal income tax purposes. This consisted of aggregate gross
unrealized appreciation for all investments on which there was an excess of
market value over cost of $89,540 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $3,968,005.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
72
<PAGE> 73
MAINSTAY VP SERIES FUND, INC.
GOVERNMENT PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $187,589,522)......... $183,824,720
Collateral held for securities loaned, at
value.................................. 43,616,955
Receivables:
Investment securities sold............. 23,819,500
Interest............................... 1,679,442
Fund shares sold....................... 7,362
------------
Total assets..................... 252,947,979
------------
LIABILITIES:
Securities lending collateral, at
value.................................. 43,616,955
Payables:
Investment securities purchased........ 41,546,294
Fund shares redeemed................... 156,105
Adviser................................ 40,868
Custodian.............................. 37,517
Administrator.......................... 27,245
Directors.............................. 155
Accrued expenses......................... 53,110
------------
Total liabilities................ 85,478,249
------------
Net assets applicable to outstanding
shares................................. $167,469,730
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 50 million shares authorized.... $ 166,139
Additional paid-in capital............... 170,643,806
Accumulated undistributed net investment
income................................. 4,312,358
Accumulated net realized loss on
investments............................ (3,887,771)
Net unrealized depreciation on
investments............................ (3,764,802)
------------
Net assets applicable to outstanding
shares................................. $167,469,730
============
Shares of capital stock outstanding...... 16,613,911
============
Net asset value per share outstanding.... $ 10.08
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................... $ 4,762,506
------------
Expenses:
Advisory............................... 228,786
Administration......................... 152,524
Professional........................... 24,591
Shareholder communication.............. 20,851
Custodian.............................. 12,889
Directors.............................. 3,318
Portfolio pricing...................... 1,106
Miscellaneous.......................... 6,083
------------
Total expenses................... 450,148
------------
Net investment income.................... 4,312,358
------------
REALIZED AND UNREALIZED LOSS ON
INVESTMENTS:
Net realized loss on investments......... (2,872,588)
Net change in unrealized appreciation on
investments............................ (4,262,147)
------------
Net realized and unrealized loss on
investments............................ (7,134,735)
------------
Net decrease in net assets resulting from
operations............................. $ (2,822,377)
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
73
<PAGE> 74
GOVERNMENT PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999 1998
------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 4,312,358 $ 4,997,110
Net realized gain (loss) on investments................... (2,872,588) 3,761,974
Net change in unrealized appreciation on investments...... (4,262,147) (1,193,654)
------------ ------------
Net increase (decrease) in net assets resulting from
operations.............................................. (2,822,377) 7,565,430
------------ ------------
Dividends to shareholders:
From net investment income................................ -- (4,979,006)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares.......................... 61,708,187 58,973,999
Net asset value of shares issued to shareholders in
reinvestment of dividends............................... -- 4,979,006
------------ ------------
61,708,187 63,953,005
Cost of shares redeemed................................... (10,436,974) (21,273,046)
------------ ------------
Increase in net assets derived from capital share
transactions............................................ 51,271,213 42,679,959
------------ ------------
Net increase in net assets.................................. 48,448,836 45,266,383
NET ASSETS:
Beginning of period......................................... 119,020,894 73,754,511
------------ ------------
End of period............................................... $167,469,730 $119,020,894
============ ============
Accumulated undistributed net investment income at end of
period.................................................... $ 4,312,358 $ --
============ ============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31
1999* 1998 1997 1996 1995 1994
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period...... $ 10.27 $ 9.83 $ 9.59 $ 10.01 $ 9.21 $ 10.15
------------ ------------ ------------ ------------ ------------ ------------
Net investment income...... 0.26 0.45 0.67 0.65 0.75 0.75
Net realized and unrealized
gain (loss) on
investments.............. (0.45) 0.44 0.24 (0.42) 0.80 (0.94)
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations............... (0.19) 0.89 0.91 0.23 1.55 (0.19)
------------ ------------ ------------ ------------ ------------ ------------
Less dividends:
From net investment
income................. -- (0.45) (0.67) (0.65) (0.75) (0.75)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value at end of
period................... $ 10.08 $ 10.27 $ 9.83 $ 9.59 $ 10.01 $ 9.21
============ ============ ============ ============ ============ ============
Total investment return.... (1.82%)(a) 9.00% 9.48% 2.28% 16.72% (1.84%)
Ratios (to average net
assets)/ Supplemental
Data:
Net investment income.... 5.65%+ 5.50% 6.71% 6.66% 7.80% 8.16%
Net expenses............. 0.59%+ 0.63% 0.63% 0.67% 0.67% 0.67%
Expenses (before
reimbursement)......... 0.59%+ 0.63% 0.63% 0.71% 0.82% 0.87%
Portfolio turnover rate.... 159% 405% 345% 304% 592% 483%
Net assets at end of period
(in 000's)............... $ 167,470 $ 119,021 $ 73,755 $ 73,123 $ 64,812 $ 61,641
</TABLE>
- ------------
(a) Total return is not annualized.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
74
<PAGE> 75
MAINSTAY VP SERIES FUND, INC.
HIGH YIELD CORPORATE BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
LONG-TERM BONDS (84.8%)+
ASSET-BACKED SECURITY (1.4%)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
ELECTRIC UTILITIES (1.4%)
AES Eastern Energy, L.P.
Pass-Through Certificates
Series 1999-A
9.00%, due 1/2/17 (c)........ $ 9,615,000 $ 9,446,738
------------
Total Asset-Backed Security
(Cost $9,615,000)............ 9,446,738
------------
CONVERTIBLE BONDS (5.4%)
CELLULAR TELEPHONE (1.2%)
Metro Pacific Capital Ltd.
2.50%, due 4/11/03 (d)....... 7,630,000 7,916,125
------------
CONGLOMERATES (0.8%)
First Pacific Capital Ltd.
2.00%, due 3/27/02 (d)....... 3,050,000 3,057,625
Loxley Public Co. Ltd.
2.50%, due 4/4/01 (d)(g)..... 3,250,000 910,000
3.50%, due 4/20/05 (d)(g).... 3,103,000 961,930
------------
4,929,555
------------
DRUGS (0.2%)
Dura Pharmaceuticals, Inc.
3.50%, due 7/15/02........... 2,100,000 1,596,000
------------
FOOD, BEVERAGE & TOBACCO
(0.4%)
Triarc Consumer
Products Group, L.L.C.
(zero coupon), due 2/9/18.... 10,550,000 2,584,750
------------
MINING (1.2%)
Agnico-Eagle Mines Ltd.
3.50%, due 1/27/04 (t)....... 2,615,000 1,601,688
TVX Gold, Inc.
5.00%, due 3/28/02........... 7,390,000 5,912,000
------------
7,513,688
------------
TECHNOLOGY (1.1%)
Cirrus Logic, Inc.
6.00%, due 12/15/03.......... 10,810,000 7,458,900
------------
TELECOMMUNICATION SERVICES
(0.5%)
Technology Resources
Industries Berhad
(zero coupon), due
10/31/04..................... 3,500,000 2,625,000
2.75%, due 11/28/04 (d)...... 980,000 793,800
------------
3,418,800
------------
Total Convertible Bonds
(Cost $37,870,622)........... 35,417,818
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
CORPORATE BONDS (60.9%)
ASSET-BACKED SECURITY (1.4%)
<S> <C> <C>
AEROSPACE (0.9%)
Pacific Aerospace &
Electronics, Inc.
11.25%, due 8/1/05........... $ 8,190,000 $ 6,142,500
------------
AUTO MANUFACTURING (0.9%)
Titan Tire Corp.
7.00%, due 2/11/00 (e)....... 6,000,000 5,955,000
------------
BANKS (2.5%)
B.F. Saul Real Estate
Investment Trust
Series B
9.75%, due 4/1/08............ 7,685,000 7,147,050
Fuji JGB Inv. L.L.C. Pfd.
Series A
9.87%, due 12/31/49
10.8073%, beginning 6/30/08
(c).......................... 1,470,000 1,278,900
Local Financial Corp.
11.00%, due 9/8/04........... 3,030,000 3,136,050
Tokai Preferred Capital Co.
L.L.C.
9.98%, due 12/29/49
11.0914%, beginning 6/30/08
(c)(d)....................... 5,200,000 4,784,000
------------
16,346,000
------------
BUILDING MAINTENANCE &
SERVICES (1.4%)
Building One Services Corp.
10.50%, due 5/1/09 (c)....... 9,750,000 9,311,250
------------
BUILDING MATERIALS (0.3%)
RH Cement Finance, PLC
16.80%, due 3/10/00 (c)...... 2,000,000 2,000,000
------------
CABLE (5.6%)
@Entertainment, Inc.
Series B
(zero coupon), due 7/15/08
14.50%, beginning 7/15/03.... 7,500,000 4,800,000
NTL, Inc.
Series A
(zero coupon), due 4/15/05
12.75%, beginning 4/15/00.... 5,400,000 5,204,250
UIH Australia/Pacific, Inc.
Series B
(zero coupon), due 5/15/06
14.00%, beginning 5/15/01.... 25,360,000 18,259,200
United International Holdings,
Inc.
Series B
(zero coupon), due 2/15/08
10.75%, beginning 2/15/03.... 12,170,000 8,001,775
------------
36,265,225
------------
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
75
<PAGE> 76
HIGH YIELD CORPORATE BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
CORPORATE BONDS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
CASINOS (4.0%)
El Comandante Capital Corp.
11.75%, due 12/15/03......... $ 891,000 $ 775,170
International Game Technology
7.875%, due 5/15/04 (c)...... 1,700,000 1,670,250
8.375%, due 5/15/09 (c)...... 9,775,000 9,591,719
Louisiana Casino Cruises, Inc.
11.00%, due 12/1/05 (c)...... 2,875,000 2,882,187
Penn National Gaming, Inc.
10.625%, due 12/15/04........ 7,560,000 7,560,000
President Casinos, Inc.
12.00%, due 9/15/01 (c)(e)... 1,180,000 1,180,000
13.00%, due 9/15/01.......... 2,348,000 2,119,070
------------
25,778,396
------------
CELLULAR TELEPHONE (0.6%)
International Wireless
Communications Holdings, Inc.
(zero coupon),
due 8/15/01 (e)(f)........... 7,775,000 777,500
PageMart Nationwide, Inc.
(zero coupon), due 2/1/05
15.00%, beginning 2/1/00..... 3,650,000 3,212,000
------------
3,989,500
------------
CHEMICALS (1.3%)
Agriculture Minerals &
Chemicals, Inc.
10.75%, due 9/30/03.......... 3,215,000 3,186,869
Borden Chemicals & Plastics
L.P.
9.50%, due 5/1/05............ 1,980,000 1,890,900
Lyondell Chemical Co.
10.875%, due 5/1/09 (c)...... 3,205,000 3,333,200
------------
8,410,969
------------
COMPUTERS & OFFICE EQUIPMENT
(0.9%)
American Business Information,
Inc.
9.50%, due 6/15/08........... 2,050,000 1,681,000
Micron Technology, Inc.
6.50%, due 9/30/05 (c)....... 5,000,000 3,850,000
------------
5,531,000
------------
CONSTRUCTION & ENGINEERING
(0.2%)
Traffic Stream (BVI)
Infrastructure Ltd.
14.25%, due 5/1/06 (c)(g).... 3,350,000 1,314,875
------------
CONSUMER DURABLES (0.5%)
Selmer Co., Inc.
11.00%, due 5/15/05.......... 3,000,000 3,202,500
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
COSMETICS (0.8%)
Jafra Cosmetics International,
Inc.
11.75%, due 5/1/08........... $ 6,200,000 $ 5,332,000
------------
DOMESTIC OIL & GAS (1.7%)
Denbury Management, Inc.
9.00%, due 3/1/08............ 5,400,000 4,819,500
Houston Exploration Co. (The)
Series B
8.625%, due 1/1/08........... 2,250,000 2,205,000
Queens Sand Resources, Inc.
12.50%, due 7/1/08........... 4,705,000 2,870,050
TransAmerican Energy Corp.
Series B
13.00%, due 6/15/02 (f)...... 11,715,000 1,361,869
------------
11,256,419
------------
DRUGS (0.8%)
Express Scripts, Inc.
9.625%, due 6/15/09 (c)...... 1,610,000 1,630,125
ICN Pharmaceuticals, Inc.
8.75%, due 11/15/08 (c)...... 3,710,000 3,645,075
------------
5,275,200
------------
ELECTRIC UTILITIES (0.4%)
ESI Tractebel Acquisition
Corp.
Series B
7.99%, due 12/30/11.......... 2,825,000 2,688,779
------------
ENERGY (1.3%)
CMS Energy Corp.
8.00%, due 7/1/01............ 3,700,000 3,703,700
8.375%, due 7/1/03........... 3,000,000 2,991,063
Conproca, S.A.
12.00%, due 6/16/10 (c)(d)... 2,075,000 1,950,500
------------
8,645,263
------------
FINANCE (2.2%)
CB Richard Ellis Services,
Inc.
8.875%, due 6/1/06........... 7,025,000 6,779,125
Cityscape Financial Corp.
Series A
12.75%, due 6/1/04 (g)....... 8,000,000 960,000
ContiFinancial Corp.
7.50%, due 3/15/02........... 1,595,000 1,116,500
8.375%, due 8/15/03.......... 1,990,000 1,393,000
Imperial Credit Industries,
Inc.
Series B
9.875%, due 1/15/07.......... 250,000 202,500
Ocwen Asset Investment Corp.
11.50%, due 7/1/05........... 4,635,000 4,032,450
------------
14,483,575
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
76
<PAGE> 77
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
CORPORATE BONDS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
FOOD, BEVERAGE & TOBACCO
(1.2%)
Buenos Aires Embotelladora
Sociedad Anonima
Series B
12.00%, due 8/3/05 (c)....... $ 1,478,000 $ 1,256,300
Colorado Prime Corp.
12.50%, due 5/1/04........... 5,580,000 1,464,750
Standard Commercial Corp.
8.875%, due 8/1/05........... 6,065,000 5,003,625
------------
7,724,675
------------
GAS UTILITIES (0.4%)
Navigator Gas Transport, PLC
10.50%, due 6/30/07 (c)...... 5,135,000 2,516,150
------------
HEALTH CARE (7.9%)
Abbey Healthcare Group, Inc.
9.50%, due 11/1/02........... 2,395,000 2,371,050
Columbia/HCA Healthcare Corp.
7.50%, due 11/15/95.......... 6,600,000 5,206,799
Fountain View, Inc.
Series B
11.25%, due 4/15/08.......... 2,165,000 1,818,600
Hanger Orthopedic Group, Inc.
11.25%, due 6/15/09 (c)...... 3,160,000 3,207,400
Magellan Health Services, Inc.
9.00%, due 2/15/08........... 7,520,000 6,429,600
Medaphis Corp.
Series B
9.50%, due 2/15/05........... 11,145,000 8,247,300
MedPartners, Inc.
7.375%, due 10/1/06.......... 5,395,000 4,599,237
MultiCare Companies, Inc.
9.00%, due 8/1/07............ 4,680,000 3,276,000
Quest Diagnostics, Inc.
9.875%, due 7/1/09 (c)....... 6,450,000 6,498,375
Team Health, Inc.
12.00%, due 3/15/09 (c)...... 4,445,000 4,556,125
Triad Hospital Holdings, Inc.
11.00%, due 5/15/09 (c)...... 1,815,000 1,846,763
Unilab Corp.
11.00%, due 4/1/06........... 2,875,000 3,133,750
------------
51,190,999
------------
HOME BUILDING (0.8%)
Amatek Industries Pty Ltd.
14.50%, due 2/15/09
(c)(i)(s).................... 4,810 4,810,000
------------
INDUSTRIAL (1.0%)
Morris Materials Handling,
Inc.
9.50%, due 4/1/08............ 2,500,000 962,500
Thermadyne Holdings Corp.
(zero coupon), due 6/1/08
12.50%, beginning 6/1/03..... 11,110,000 5,277,250
------------
6,239,750
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
INSURANCE (0.2%)
Willis Corroon Group, PLC
9.00%, due 2/1/09 (c)........ $ 1,305,000 $ 1,257,694
------------
LEISURE (0.6%)
Bally Total Fitness Holding
Corp.
Series D
9.875%, due 10/15/07......... 4,165,000 4,040,050
------------
MACHINERY (0.2%)
Harnischfeger Industries, Inc.
7.25%, due 12/15/25 (f)(g)... 1,375,000 852,500
8.70%, due 6/15/22 (f)(g).... 1,025,000 635,500
------------
1,488,000
------------
MEDIA (1.4%)
CD Radio, Inc.
(zero coupon), due 12/1/07
15.00%, beginning 12/1/02.... 9,115,000 4,352,413
14.50%, due 5/15/09 (c)(j)... 3,225 3,289,500
Young America Corp.
Series B
11.625%, due 2/15/06......... 2,475,000 1,732,500
------------
9,374,413
------------
MEDICAL EQUIPMENT (0.5%)
DJ Orthopedics L.L.C.
12.625%, due 6/15/09 (c)..... 3,300,000 3,242,250
------------
MINING (0.6%)
Great Central Mines Ltd.
8.875%, due 4/1/08........... 3,898,000 3,703,100
------------
NATURAL GAS PIPELINES (0.3%)
Western Gas Resources, Inc.
10.00%, due 6/15/09 (c)...... 1,620,000 1,652,400
------------
OIL SERVICES (0.7%)
Michael Petroleum Corp.
Series B
11.50%, due 4/1/05........... 6,400,000 3,008,000
RBF Finance Co.
11.375%, due 3/15/09 (c)..... 1,800,000 1,863,000
------------
4,871,000
------------
PAPER & FOREST
PRODUCTS (0.2%)
Pope & Talbot, Inc.
8.375%, due 6/1/13........... 1,700,000 1,530,000
------------
PUBLISHING (0.3%)
General Media, Inc.
10.625%, due 12/31/00........ 2,104,000 1,998,800
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
77
<PAGE> 78
HIGH YIELD CORPORATE BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
CORPORATE BONDS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
REAL ESTATE (3.0%)
Crescent Real Estate Equities
Co.
7.50%, due 9/15/07........... $ 12,590,000 $ 10,767,094
Hospitality Property Trust
7.00%, due 3/1/08............ 1,200,000 1,041,223
LNR Property Corp.
Series B
9.375%, due 3/15/08.......... 4,585,000 4,309,900
10.50%, due 1/15/09.......... 1,480,000 1,480,000
Meditrust Co. (The)
Series MTN
7.77%, due 8/16/02........... 1,940,000 1,789,052
------------
19,387,269
------------
RECREATION & ENTERTAINMENT
(3.1%)
Alliance Entertainment Corp.
Series B
11.25%, due 7/15/05 (f)(g)... 5,835,000 58,350
AMC Entertainment, Inc.
9.50%, due 2/1/11............ 2,000,000 1,880,000
Hollywood Entertainment Corp.
Series B
10.625%, due 8/15/04......... 5,870,000 5,767,275
Marvel Enterprises, Inc.
12.00%, due 6/15/09 (c)...... 4,670,000 4,716,700
Sports Club Company, Inc.
(The)
11.375%, due 3/15/06......... 6,100,000 6,130,500
Town Sports International,
Inc.
9.75%, due 10/15/04 (c)...... 1,600,000 1,528,000
------------
20,080,825
------------
RESTAURANTS & LODGING (2.9%)
Advantica Restaurant Group,
Inc.
11.25%, due 1/15/08.......... 6,610,000 6,362,125
Avado Brands, Inc.
11.75%, due 6/15/09 (c)...... 1,930,000 1,901,050
FRI-MRD Corp.
(zero coupon), due 1/24/02
14.00%, beginning 7/31/99
(c)(e)....................... 3,000,000 2,996,250
15.00%, due 1/24/02 (c)(e)... 5,400,000 5,393,250
Starwood Hotels & Resorts
Worldwide, Inc.
7.375%, due 11/15/15......... 2,535,000 2,180,108
------------
18,832,783
------------
RETAIL (0.2%)
Just For Feet, Inc.
11.00%, due 5/1/09 (c)....... 2,150,000 1,386,750
------------
SEMICONDUCTORS (0.5%)
Amkor Technologies, Inc.
9.25%, due 5/1/06 (c)........ 3,340,000 3,256,500
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
STEEL, ALUMINUM & OTHER METALS
(1.4%)
Easco Corp.
Series B
10.00%, due 3/15/01.......... $ 3,200,000 $ 3,216,000
Generac Portable Products
L.L.C.
11.25%, due 7/1/06 (c)....... 2,620,000 2,921,300
UCAR Global Enterprises, Inc.
Series B
12.00%, due 1/15/05.......... 2,600,000 2,759,250
------------
8,896,550
------------
TECHNOLOGY (0.6%)
Electronic Retailing Systems
International, Inc.
(zero coupon), due 2/1/04
13.25%, beginning 2/1/00..... 8,115,000 2,424,356
Entex Information Services,
Inc.
12.50%, due 8/1/06........... 2,700,000 1,660,500
------------
4,084,856
------------
TELECOMMUNICATION EQUIPMENT
(0.4%)
EV International, Inc.
Series A
11.00%, due 3/15/07.......... 3,105,000 2,452,950
------------
TELECOMMUNICATION SERVICES
(5.5%)
Arch Escrow Corp.
13.75%, due 4/15/08 (c)...... 1,035,000 931,500
Energis, PLC
9.75%, due 6/15/09 (c)....... 3,230,000 3,270,375
Globalstar L.P. Capital Corp.
10.75%, due 11/1/04.......... 2,490,000 1,618,500
11.50%, due 6/1/05........... 6,545,000 4,254,250
HighwayMaster Communications,
Inc.
Series B
13.75%, due 9/15/05.......... 7,360,000 3,017,600
ICG Communications, Inc.
(zero coupon), due 5/1/08
9.875%, beginning 5/1/03..... 5,000,000 2,750,000
(zero coupon), due 2/15/08
10.00%, beginning 2/15/03.... 7,000,000 3,990,000
ICG Holdings, Inc.
(zero coupon), due 5/1/06
12.50%, beginning 5/1/01..... 2,605,000 2,031,900
ICO Global Communications
Holdings Ltd.
15.00%, due 8/1/05........... 2,800,000 1,092,000
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
78
<PAGE> 79
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
CORPORATE BONDS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
TELECOMMUNICATION SERVICES
(Continued)
Orion Network Systems, Inc.
(zero coupon), due 1/15/07
12.50%, beginning 1/15/02.... $ 4,130,000 $ 2,271,500
RCN Corp.
(zero coupon), due 10/15/07
11.125%, beginning
10/15/02................... 4,790,000 3,221,275
T/SF Communications Corp.
Series B
10.375%, due 11/1/07......... 3,290,000 3,290,000
Telehub Communications Corp.
(zero coupon), due 7/31/05
13.875%, beginning 7/31/01... 6,465,000 4,396,200
------------
36,135,100
------------
TEXTILE & APPAREL (0.5%)
Delta Mills, Inc.
Series B
9.625%, due 9/1/07........... 2,390,000 2,294,400
Norton McNaughton, Inc.
12.50%, due 6/1/05........... 1,270,000 1,144,587
------------
3,438,987
------------
TRANSPORTATION (0.2%)
Pacer International, Inc.
11.75%, due 6/1/07 (c)....... 1,610,000 1,561,700
------------
Total Corporate Bonds
(Cost $427,717,633).......... 397,082,002
------------
FOREIGN BONDS (2.8%)
COMPUTERS & OFFICE EQUIPMENT
(0.4%)
Netia Holdings II B.V.
13.50%, due 6/15/09 (c)...... E 2,400,000 2,574,125
------------
PUBLISHING (2.4%)
IPC Magazines Group, PLC
(zero coupon), due 3/15/08
10.75%, beginning 3/15/03.... L 4,645,000 3,468,741
9.625%, due 3/15/08.......... 4,980,000 6,152,390
Regional Independent
Media Group
(zero coupon), due 7/1/08
12.875%, beginning 7/1/03.... 6,305,000 5,950,693
------------
15,571,824
------------
Total Foreign Bonds
(Cost $19,702,160)........... 18,145,949
------------
LOAN ASSIGNMENTS &
PARTICIPATIONS (5.6%)
PRINCIPAL
AMOUNT VALUE
--------------------------
CASINOS (0.5%)
Isle of Capri Casinos, Inc.
Bank debt
Tranche A
7.792%, due 4/23/04
(e)(k)(l).................... $ 3,500,000 $ 3,500,000
------------
CHEMICALS (0.0%) (b)
Kronos International, Inc.
Bank debt
5.4391%, due 9/15/00
(e)(k)(l).................... DM 247,967 128,791
------------
CONGLOMERATES (0.5%)
First Pacific Capital Ltd.
Bank debt
6.8125%, due 1/23/00
(e)(l)....................... $ 3,000,000 2,910,000
------------
FOOD, BEVERAGE & TOBACCO
(0.8%)
Domino's Pizza, Inc.
Bank debt
Tranche B
8.8125%, due 12/21/06
(e)(k)(l).................... 2,855,565 2,859,134
Bank debt
Tranche C
9.0625%, due 12/21/07
(e)(k)(l).................... 2,855,565 2,859,134
------------
5,718,268
------------
HEALTH CARE (1.1%)
Triad Hospital Holdings, Inc.
Bank debt
Tranche B
8.97%, due 1/1/05
(e)(k)(l).................... 4,300,000 4,300,000
Ventas Realty L.P.
Bank debt
Tranche D
7.81%, due 4/30/03
(e)(k)(l).................... 3,390,624 2,848,124
------------
7,148,124
------------
PAPER & FOREST PRODUCTS (0.8%)
Packaging Corp. of America
Bank debt
Tranche B
8.25%, due 4/23/07
(e)(k)(l).................... 2,391,942 2,391,942
Bank debt
Tranche C
8.50%, due 4/23/08
(e)(k)(l).................... 2,391,942 2,391,942
------------
4,783,884
------------
RECREATION & ENTERTAINMENT
(0.2%)
Affinity Group, Inc.
Bank debt
Tranche B
8.625%, due 6/30/06
(e)(k)(l).................... 1,293,500 1,293,500
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
79
<PAGE> 80
HIGH YIELD CORPORATE BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
LOAN ASSIGNMENTS &
PARTICIPATIONS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
TRANSPORTATION (1.7%)
Eurotunnel
Bank debt
Tier One
5.28%, due 12/31/12
(e)(k)(l).................... FF 7,700,000 $ 998,745
7.03%, due 12/31/12
(e)(k)(l).................. L 7,500,000 9,753,313
------------
10,752,058
------------
Total Loan Assignments &
Participations (Cost
$36,527,681)................. 36,234,625
------------
U.S. GOVERNMENT (1.0%)
UNITED STATES TREASURY BOND
(1.0%)
5.25%, due 2/15/29........... $ 6,900,000 6,199,236
------------
Total U.S. Government
(Cost $6,376,246)............ 6,199,236
------------
YANKEE BONDS (7.7%)
CABLE (0.3%)
Rogers Cablesystems Ltd.
11.00%, due 12/1/15.......... 1,400,000 1,613,500
------------
CELLULAR TELEPHONE (1.6%)
Millicom International
Cellular, S.A.
(zero coupon), due 6/1/06
13.50%, beginning 6/1/01..... 14,499,000 10,656,765
------------
CHEMICALS (0.8%)
Brunner Mond Group, PLC
11.00%, due 7/15/08.......... 2,685,000 1,611,000
Octel Developments, PLC
10.00%, due 5/1/06........... 3,500,000 3,605,000
------------
5,216,000
------------
CONSUMER DURABLES (0.2%)
International Semi-Technology
Microelectronics, Inc.
(zero coupon), due 8/15/03
11.50%, beginning 8/15/00.... 8,965,000 1,389,575
------------
DOMESTIC OIL & GAS (0.0%) (b)
Husky Oil Ltd.
8.90%, due 8/15/28
11.1875%, beginning
8/15/08.................... 200,000 193,625
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
LOAN ASSIGNMENTS &
PARTICIPATIONS (CONTINUED)
<S> <C> <C>
MEDIA (0.4%)
Central European Media
Enterprises Ltd.
9.375%, due 8/15/04.......... $ 3,190,000 $ 2,552,000
------------
MINING (0.7%)
Echo Bay Mines Ltd.
12.00%, due 4/1/27........... 5,145,000 2,881,200
Glencore Nickel Pty Ltd.
9.00%, due 12/1/14........... 1,945,000 1,672,700
------------
4,553,900
------------
PAPER & FOREST PRODUCTS (0.5%)
Doman Industries Ltd.
12.00%, due 7/1/04 (c)....... 3,400,000 3,281,000
------------
STEEL, ALUMINUM & OTHER METALS
(1.0%)
Ivaco, Inc.
11.50%, due 9/15/05.......... 6,505,000 6,748,937
------------
TELECOMMUNICATION SERVICES
(0.7%)
Call-Net Enterprises, Inc.
(zero coupon), due 5/15/09
10.80%, beginning 5/15/04.... 2,715,000 1,500,038
9.375%, due 5/15/09.......... 3,290,000 3,133,725
------------
4,633,763
------------
TRANSPORTATION (1.5%)
Alpha Shipping, PLC
Series A
9.50%, due 2/15/08 (g)....... 4,380,000 1,368,750
Cenargo International, PLC
9.75%, due 6/15/08........... 2,185,000 2,021,125
Ermis Maritime Holdings Ltd.
12.50%, due 3/15/06 (g)...... 5,050,500 1,319,443
Pacific & Atlantic (Holdings)
Inc.
11.50%, due 5/30/08.......... 6,535,000 2,605,831
Pegasus Shipping (Hellas) Ltd.
Series A
11.875%, due 11/15/04........ 4,980,000 2,241,000
------------
9,556,149
------------
Total Yankee Bonds
(Cost $56,432,000)........... 50,395,214
------------
Total Long-Term Bonds
(Cost $594,241,342).......... 552,921,582
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
80
<PAGE> 81
MAINSTAY VP SERIES FUND, INC.
COMMON STOCKS (3.2%)
SHARES VALUE
--------------------------
BROADCAST/MEDIA (0.3%)
Spanish Broadcasting System,
Inc. (a)(c).................. 3,598 $ 2,158,800
------------
CASINOS (0.1%)
Harrah's Entertainment, Inc.
(a).......................... 18,400 404,800
Isle of Capri Casinos, Inc.
(a).......................... 7,053 48,489
Lakes Gaming, Inc. (a)........ 10,375 113,477
------------
566,766
------------
CELLULAR TELEPHONE (0.0%) (b)
Tele Sudeste Celular
Participacoes S.A.
ADR (m)...................... 490 14,210
Telesp Celular Participacoes
S.A.
ADR (m)...................... 983 26,295
------------
40,505
------------
DOMESTIC OIL & GAS (0.2%)
Union Pacific Resources Group,
Inc. ........................ 84,325 1,375,552
------------
FOOD, BEVERAGE & TOBACCO
(0.3%)
Buenos Aires Embotelladora
Sociedad Anonima
Class B (a).................. 482,687 1,689,404
------------
GAS UTILITIES (0.5%)
KeySpan Corp.................. 122,600 3,233,575
------------
HEALTH CARE (0.5%)
Beverly Enterprises, Inc.
(a).......................... 40,000 322,500
General Healthcare Group Ltd.
(a)(n)....................... 572 27,049
Hengan International Group
Ltd. (o)..................... 160,000 80,939
Quest Diagnostics, Inc. (a)... 102,910 2,817,162
------------
3,247,650
------------
PAPER & FOREST PRODUCTS (0.8%)
TimberWest Timber Trust (The)
(p)(q)....................... 635,200 4,935,342
------------
REAL ESTATE (0.2%)
Highwoods Properties, Inc..... 31,770 871,689
Metropolis Realty Trust, Inc.
(a).......................... 4,635 192,353
------------
1,064,042
------------
RECREATION & ENTERTAINMENT
(0.0%) (b)
Loews Cineplex Entertainment
Corp. (a).................... 28,500 309,937
------------
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
TELECOMMUNICATION SERVICES
(0.3%)
Call-Net Enterprises, Inc.
Series B (a)(p).............. 310,300 $ 1,949,726
Embratel Participacoes S.A.
ADR (m)...................... 2,500 34,688
Tele Centro Sul Participacoes
S.A.
ADR (m)...................... 495 27,472
Tele Norte Leste Participacoes
S.A.
ADR (m)...................... 2,498 46,369
Telesp Participacoes S.A.
ADR (m)...................... 2,449 56,021
------------
2,114,276
------------
TEXTILE & APPAREL (0.0%) (b)
Hosiery Corp. of America, Inc.
(a).......................... 500 20,000
------------
Total Common Stocks
(Cost $19,404,259)........... 20,755,849
------------
PREFERRED STOCKS (4.4%)
BROADCAST/MEDIA (1.7%)
Paxson Communications Corp.
12.50% (h)................... 5,793 5,285,684
Spanish Broadcasting System,
Inc.
14.25% (c)(h)................ 2,551 2,767,900
14.25% (h)................... 2,764 2,998,777
------------
11,052,361
------------
CELLULAR TELEPHONE (0.6%)
Nextel Communications, Inc.
13.00%, Series D (h)......... 3,846 4,172,585
------------
EQUIPMENT FINANCING (0.4%)
GPA Group, PLC (a)(e)......... 4,750,000 2,422,500
------------
OIL SERVICES (0.8%)
RBF Finance Co.
13.875% (c)(h)(r)............ 4,700 4,841,000
------------
PAPER & FOREST PRODUCTS (0.3%)
Paperboard Industries
International, Inc.
5.00%, Class A (c)(e)(p)..... 145,000 2,240,980
------------
REAL ESTATE (0.2%)
Crown American Realty Trust
11.00%, Series A............. 26,120 1,230,905
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
81
<PAGE> 82
HIGH YIELD CORPORATE BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
PREFERRED STOCKS (CONTINUED)
SHARES VALUE
--------------------------
<S> <C> <C>
TECHNOLOGY (0.1%)
Metawave Communications Corp.
Series D (a)(c)(e)........... 53,509 $ 353,159
------------
TELECOMMUNICATION SERVICES
(0.3%)
ICG Holdings, Inc.
14.25% (h)................... 2,100 2,089,500
------------
Total Preferred Stocks
(Cost $28,119,328)........... 28,402,990
------------
WARRANTS (0.1%)
CABLE (0.1%)
@Entertainment, Inc.
expire 7/15/08 (a)........... 54,420 653,040
People's Choice TV Corp.
expire 6/1/00 (a)............ 380 4
Supercanal Holding, S.A.
Series A expire 11/14/99
(a)(c)(e).................... 492,587 39,407
------------
692,451
------------
CASINOS (0.0%) (b)
Isle of Capri Casinos, Inc.
expire 5/3/01 (a)............ 1,249 1,249
------------
CELLULAR TELEPHONE (0.0%) (b)
Occidente y Caribe Celular,
S.A.
expire 3/15/04 (a)(c)........ 10,680 181,560
------------
FOOD, BEVERAGE & TOBACCO
(0.0%) (b)
Colorado Prime Corp.
expire 12/31/03 (a)(c)....... 5,210 52
------------
PUBLISHING (0.0%) (b)
General Media, Inc.
expire 12/21/03 (a).......... 900 9
------------
TELECOMMUNICATION SERVICES
(0.0%) (b)
HighwayMaster Communications,
Inc.
expire 9/15/05 (a)(c)........ 5,435 54
ICO Global Communications
Holdings Ltd.
expire 8/1/05 (a)............ 2,800 5,600
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
TELECOMMUNICATION
SERVICES (Continued)
Telehub Communications Corp.
expire 7/31/05 (a)(c)........ 6,465 $ 25,860
------------
31,514
------------
Total Warrants
(Cost $1,036,856)............ 906,835
------------
SHORT-TERM
INVESTMENTS (6.9%)
PRINCIPAL
AMOUNT
--------------
COMMERCIAL PAPER (6.5%)
American Express Credit Corp.
5.05%, due 7/12/99........... $ 7,000,000 6,989,186
Chevron USA, Inc.
5.10%, due 7/16/99........... 9,980,000 9,958,774
General Electric Capital Corp.
4.95%, due 7/7/99............ 3,650,000 3,646,983
5.25%, due 7/9/99............ 8,000,000 7,990,663
KFW International Finance
Corp.
5.70%, due 7/1/99............ 6,435,000 6,435,000
Prudential Funding Corp.
5.01%, due 7/19/99........... 7,260,000 7,600,888
------------
Total Commercial Paper
(Cost $42,621,494)........... 42,621,494
------------
SHORT-TERM
LOAN ASSIGNMENT (0.4%)
HEALTH CARE (0.4%)
Ventas Realty L.P.
Bank debt
Tranche A
7.81%, due 10/30/99
(e)(k)(l).................... 3,125,000 2,625,000
------------
Total Short-Term
Loan Assignment
(Cost $2,870,666)............ 2,625,000
------------
Total Short-Term Investments
(Cost $45,492,160)........... 45,246,494
------------
Total Investments
(Cost $688,293,945) (u)...... 99.4% 648,233,750(v)
Cash and Other Assets,
Less Liabilities............. 0.6 3,600,170
-------------- ------------
Net Assets.................... 100.0% $651,833,920
============== ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
82
<PAGE> 83
MAINSTAY VP SERIES FUND, INC.
- ------------
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) May be sold to institutional investors only.
(d) Eurobond--bond denominated in U.S. dollars or other currencies and sold to
investors outside the country whose currency is used.
(e) Restricted security.
(f) Issuer in bankruptcy.
(g) Issue in default.
(h) PIK ("Payment in Kind")--dividend payment is made with additional
securities.
(i) 4,810 Units--Each unit reflects $1,000 principal amount of 14.50% Senior
Subordinated Notes plus rights to acquire ordinary and preferred shares at
a future date.
(j) 3,225 Units--Each unit reflects $1,000 principal amount of 14.50% Senior
Notes plus 3 warrants to acquire 10.95 shares of common stock at $28.60 per
share at a future date.
(k) Multiple tranche facility.
(l) Floating rate. Rate shown is the rate in effect at June 30, 1999.
(m) ADR--American Depository Receipt.
(n) British security.
(o) Hong Kong security.
(p) Canadian security.
(q) Stapled Unit--Each unit consists of 1 common share, 100 preferred shares
and 1 Subordinated Note receipt.
(r) 4,700 Units--Each unit reflects 1 Senior Preferred Share plus 1 warrant to
acquire 35 shares of common stock at $9.50 per share at a future date.
(s) CIK ("Cash in Kind")--interest payment is made with cash or additional
securities.
(t) Yankee Bond.
(u) The cost for Federal income tax purposes is $688,964,734.
(v) At June 30, 1999 net unrealized depreciation was $40,730,984, based on cost
for Federal income tax purposes. This consisted of aggregate gross
unrealized appreciation for all investments on which there was an excess of
market value over cost of $17,098,585 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $57,829,569.
(w) The following abbreviations are used in the above portfolio:
DM--Deutsche Mark
E --Euro
FF --French Franc
L --Pound Sterling
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
83
<PAGE> 84
HIGH YIELD CORPORATE BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $688,293,945)......... $648,233,750
Cash..................................... 978,261
Deposit with broker...................... 57,119
Receivables:
Dividends and interest................. 12,444,250
Investment securities sold............. 8,194,392
Fund shares sold....................... 2,370,344
Unrealized appreciation on foreign
currency forward contracts............. 852,188
------------
Total assets..................... 673,130,304
------------
LIABILITIES:
Payables:
Investment securities purchased........ 20,315,597
Fund shares redeemed................... 290,944
Adviser................................ 159,253
Shareholder communication.............. 138,060
Administrator.......................... 106,169
Custodian.............................. 10,536
Directors.............................. 211
Accrued expenses......................... 121,254
Unrealized depreciation on foreign
currency forward contracts............. 154,360
------------
Total liabilities................ 21,296,384
------------
Net assets applicable to outstanding
shares................................. $651,833,920
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 100 million shares authorized... $ 540,865
Additional paid-in capital............... 637,554,086
Accumulated undistributed net investment
income................................. 34,459,138
Accumulated undistributed net realized
gain on investments.................... 18,659,712
Net unrealized depreciation on
investments............................ (40,060,195)
Net unrealized appreciation on
translation of other assets and
liabilities in
foreign currencies and foreign currency
forward contracts...................... 680,314
------------
Net assets applicable to outstanding
shares................................. $651,833,920
============
Shares of capital stock outstanding...... 54,086,492
============
Net asset value per share outstanding.... $ 12.05
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................... $ 36,263,098
Dividends (a).......................... 1,745,154
------------
Total income..................... 38,008,252
------------
Expenses:
Advisory............................... 915,439
Administration......................... 610,292
Professional........................... 102,153
Shareholder communication.............. 77,913
Custodian.............................. 16,420
Directors.............................. 13,418
Portfolio pricing...................... 3,211
Miscellaneous.......................... 8,524
------------
Total expenses................... 1,747,370
------------
Net investment income.................... 36,260,882
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) from:
Security transactions.................. 26,524,554
Foreign currency transactions.......... (92,228)
------------
Net realized gain on investments and
foreign currency transactions.......... 26,432,326
------------
Net change in unrealized depreciation on
investments:
Security transactions.................. (2,836,035)
Translation of other assets and
liabilities in
foreign currencies and foreign
currency forward contracts........... 821,192
------------
Net unrealized loss on investments and
foreign currency transactions.......... (2,014,843)
------------
Net realized and unrealized gain on
investments and foreign currency
transactions........................... 24,417,483
------------
Net increase in net assets resulting from
operations............................. $ 60,678,365
============
</TABLE>
- ------------
(a) Dividends recorded net of foreign withholding taxes in the amount of
$15,829.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
84
<PAGE> 85
MAINSTAY VP SERIES FUND, INC.
HIGH YIELD CORPORATE BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999 1998
---------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $36,260,882 $ 51,345,752
Net realized gain (loss) on investments................... 26,524,554 (7,676,643)
Net realized loss on foreign currency transactions........ (92,228) (424,119)
Net change in unrealized depreciation on investments...... (2,836,035) (34,140,189)
Net change in unrealized depreciation on translation of
other assets and liabilities in foreign currencies and
foreign currency forward contracts...................... 821,192 (129,893)
------------ ------------
Net increase in net assets resulting from operations...... 60,678,365 8,974,908
------------ ------------
Dividends and distributions to shareholders:
From net investment income................................ (1,346,154) (51,219,831)
From net realized gain on investments..................... -- (1,567,336)
In excess of net investment income........................ -- (455,590)
------------ ------------
Total dividends and distributions to shareholders....... (1,346,154) (53,242,757)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares.......................... 42,502,465 171,504,905
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. 1,346,154 53,242,757
------------ ------------
43,848,619 224,747,662
Cost of shares redeemed................................... (21,159,748) (35,233,498)
------------ ------------
Increase in net assets derived from capital share
transactions............................................ 22,688,871 189,514,164
------------ ------------
Net increase in net assets.................................. 82,021,082 145,246,315
NET ASSETS:
Beginning of period......................................... 569,812,838 424,566,523
------------ ------------
End of period............................................... $651,833,920 $569,812,838
============ ============
Accumulated undistributed net investment income (excess
distribution) at end of period............................ $34,459,138 $ (455,590)
============ ============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
MAY 1,
SIX MONTHS 1995 (a)
ENDED THROUGH
JUNE 30, YEAR ENDED DECEMBER 31 DECEMBER 31,
1999* 1998 1997 1996 1995
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of
period................................ $ 10.92 $ 11.73 $ 11.61 $ 10.55 $ 10.00
------------ ------------ ------------ ------------ ------------
Net investment income................... 0.67 1.08 0.85 0.59 0.37
Net realized and unrealized gain (loss)
on investments........................ 0.48 (0.76) 0.65 1.22 0.61
Net realized and unrealized gain (loss)
on foreign currency transactions...... 0.01 (0.00)(b) -- -- --
------------ ------------ ------------ ------------ ------------
Total from investment operations........ 1.16 0.32 1.50 1.81 0.98
------------ ------------ ------------ ------------ ------------
Less dividends and distributions:
From net investment income............ (0.03) (1.09) (0.84) (0.59) (0.37)
From net realized gain on
investments......................... -- (0.04) (0.54) (0.16) (0.04)
In excess of net realized gain on
investments......................... -- -- -- -- (0.02)
------------ ------------ ------------ ------------ ------------
Total dividends and distributions....... (0.03) (1.13) (1.38) (0.75) (0.43)
------------ ------------ ------------ ------------ ------------
Net asset value at end of period........ $ 12.05 $ 10.92 $ 11.73 $ 11.61 $ 10.55
============ ============ ============ ============ ============
Total investment return................. 10.63%(c) 2.66% 13.03% 17.16% 10.06%(c)
Ratios (to average net assets)/
Supplemental Data:
Net investment income................. 11.88%+ 9.93% 8.84% 8.59% 10.02%+
Net expenses.......................... 0.57%+ 0.58% 0.59% 0.67% 0.67%+
Expenses (before reimbursement)....... 0.57%+ 0.58% 0.59% 0.71% 1.25%+
Portfolio turnover rate................. 62% 151% 153% 149% 95%
Net assets at end of period (in
000's)................................ $ 651,834 $ 569,813 $ 424,567 $ 205,001 $ 43,314
</TABLE>
- ------------
(a) Commencement of Operations.
(b) Less than one cent per share.
(c) Total return is not annualized.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
85
<PAGE> 86
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (92.9%)+
SHARES VALUE
---------------------
<S> <C> <C>
AUSTRALIA (3.9%)
Australia & New Zealand Banking
Group, Ltd. (banking)............. 37,722 $ 277,372
Broken Hill Proprietary Co., Ltd.
(energy sources).................. 12,682 146,899
Cable & Wireless Optus, Ltd.
(telecommunications) (a).......... 255,415 581,565
Commonwealth Bank of Australia
(banking)......................... 15,562 247,727
Telstra Corp., Ltd.
(telecommunications).............. 95,800 548,941
WMC, Ltd. (metals-nonferrous)...... 82,813 355,743
-----------
2,158,247
-----------
BELGIUM (2.2%)
Delhaize-Le Lion, S.A.
(merchandising)................... 1,840 156,646
Electrabel, S.A.
(utilities-electrical & gas)...... 960 309,885
Fortis AG (insurance).............. 11,930 374,639
Solvay, S.A. Class A (chemicals)... 2,560 169,892
Tractebel, S.A.
(utilities-electrical & gas)...... 1,540 215,996
-----------
1,227,058
-----------
FINLAND (4.5%)
Merita PLC (banking)............... 27,130 154,165
Nokia Oyj Class A (electrical &
electronics)...................... 16,710 1,464,807
Outokumpu Oyj
(metals-nonferrous)............... 17,630 198,182
Pohjola Group Insurance Corp. Class
B (insurance)..................... 7,350 377,108
Sampo Insurance Co., Ltd. Class A
(insurance)....................... 2,800 81,143
UPM-Kymmene Oyj (forest products &
paper)............................ 7,480 214,452
-----------
2,489,857
-----------
FRANCE (7.8%)
Air Liquide, S.A. (chemicals)...... 1,260 198,164
AXA, S.A. (insurance).............. 2,274 277,434
Carrefour, S.A. (merchandising).... 3,474 510,540
Elf Aquitaine, S.A. (energy
sources).......................... 2,876 422,064
Eridania Beghin-Say, S.A. (food &
household products)............... 761 109,090
France Telecom, S.A.
(telecommunications).............. 3,493 263,871
Groupe Danone, S.A. (food &
household products)............... 1,032 266,075
Lafarge, S.A. (building materials &
components)....................... 1,182 112,392
L'Oreal, S.A. (health & personal
care)............................. 807 545,546
Pernod-Ricard, S.A. (beverages &
tobacco).......................... 1,800 120,662
Pinault-Printemps-Redoute, S.A.
(merchandising)................... 827 141,920
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
FRANCE (Continued)
Schneider, S.A. (electrical &
electronics)...................... 2,039 $ 114,499
Societe Generale, S.A. Class A
(banking)......................... 751 132,363
Thomson CSF, S.A. (aerospace &
military technology).............. 3,762 130,748
Total Fina, S.A. Class B (energy
sources) (a)...................... 3,633 468,714
Total Fina, S.A. Strip (energy
sources) (a)...................... 2,070 21
Vivendi, S.A. (business & public
services)......................... 6,510 527,366
-----------
4,341,469
-----------
GERMANY (9.3%)
Allianz AG Registered
(insurance)....................... 1,314 364,529
Bayer AG (chemicals)............... 8,651 360,440
DaimlerChrysler AG (automobiles)... 9,201 797,075
Deutsche Bank AG (banking)......... 3,940 240,345
Deutsche Telekom AG
(telecommunications).............. 15,138 635,401
Dresdner Bank AG (banking)......... 6,215 242,921
Karstadt AG (merchandising)........ 554 266,245
Mannesmann AG
(telecommunications).............. 2,376 354,568
Metro AG (merchandising)........... 3,667 227,663
Muenchener Rueckversicherungs-
Gesellschaft AG Registered
(insurance)....................... 482 89,227
RWE AG (utilities-electrical &
gas).............................. 6,399 296,242
SAP AG (business & public
services)......................... 832 281,438
Schering AG (health & personal
care)............................. 5,312 563,166
Veba AG (utilities-electrical &
gas).............................. 4,217 247,893
Viag AG (utilities-electrical &
gas).............................. 483 228,138
-----------
5,195,291
-----------
HONG KONG (0.4%)
Hutchison Whampoa, Ltd. (multi-
industry)......................... 27,000 244,461
-----------
IRELAND (4.3%)
Allied Irish Banks PLC (banking)... 45,438 597,468
CRH PLC (building materials &
components)....................... 43,548 772,470
Elan Corp. PLC (health & personal
care) (a)......................... 16,960 487,120
Irish Life & Permanent PLC
(insurance)....................... 8,065 85,254
Kerry Group PLC Class A (food &
household products)............... 14,909 176,820
Smurfit (Jefferson) Group PLC
(forest products & paper)......... 129,658 304,204
-----------
2,423,336
-----------
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
86
<PAGE> 87
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
---------------------
<S> <C> <C>
ITALY (3.9%)
Assicurazioni Generali S.p.A.
(insurance)....................... 5,542 $ 192,039
Banca Commerciale Italiana S.p.A.
(banking)......................... 29,737 217,128
Benetton Group S.p.A. (textile &
apparel).......................... 57,348 112,963
ENI S.p.A. (energy sources)........ 86,051 513,830
Italgas S.p.A.
(utilities-electrical & gas)...... 13,846 58,117
Parmalat Finanziaria S.p.A. (food &
household products)............... 5,937 7,776
Pirelli S.p.A. (industrial
components)....................... 8,489 23,112
Riunione Adriatica di Sicurta
S.p.A. (insurance)................ 3,006 29,203
Telecom Italia S.p.A.
(telecommunications) (a).......... 42,927 446,248
Telecom Italia Mobile S.p.A.
(telecommunications).............. 60,547 361,540
Unicredito Italiano S.p.A.
(banking)......................... 43,987 193,250
-----------
2,155,206
-----------
JAPAN (20.8%)
Ajinomoto Co., Inc. (food &
household products)............... 13,000 148,220
Bank of Tokyo-Mitsubishi, Ltd.
(banking) (c)..................... 34,000 484,004
Bridgestone Corp. (industrial
components)....................... 5,000 151,195
Fujitsu, Ltd. (data processing &
reproduction)..................... 15,000 301,769
Hitachi, Ltd. (electrical &
electronics) (c).................. 19,000 178,170
Honda Motor Co., Ltd.
(automobiles)..................... 12,000 508,609
Industrial Bank of Japan, Ltd.
(The) (banking) (c)............... 49,000 388,644
Ito-Yokado Co., Ltd.
(merchandising)................... 5,000 334,611
Kirin Brewery Co., Ltd. (beverages
& tobacco)........................ 19,000 227,618
Matsushita Electric Industrial Co.,
Ltd. (appliances & household
durables)......................... 8,000 155,326
Mitsubishi Electric Corp.
(electrical & electronics)........ 12,000 46,102
Mitsubishi Estate Co., Ltd. (real
estate)........................... 4,000 39,030
Mitsubishi Heavy Industries, Ltd.
(machinery & engineering)......... 34,000 137,926
Mitsui Fudosan Co., Ltd. (real
estate)........................... 8,000 64,774
NEC Corp. (electrical &
electronics)...................... 15,000 186,515
Nintendo Co., Ltd. (recreation &
other consumer goods)............. 1,200 168,644
Nippon Express Co., Ltd.
(transportation-road & rail)...... 17,000 101,829
Nippon Mitsubishi Oil Co. (energy
sources).......................... 11,000 46,350
Nippon Steel Corp.
(metals-steel).................... 58,000 134,654
Nippon Telegraph & Telephone Corp.
(telecommunications).............. 40 465,977
Nomura Securities Co., Ltd.
(financial services).............. 12,000 140,487
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
JAPAN (Continued)
NTT Data Corp. (business & public
services)......................... 70 $ 556,363
NTT Mobile Communications Network,
Inc. (telecommunications) (a)..... 17 230,344
NTT Mobile Communications Network,
Inc. New (telecommunications)
(a)............................... 68 921,378
Olympus Optical Co., Ltd.
(electronic components &
instruments)...................... 11,000 162,588
Rohm Co., Ltd. (electronic
components & instruments)......... 2,000 313,130
Sanyo Electric Co., Ltd.
(appliances & household
durables)......................... 12,000 48,779
Sharp Corp. (appliances & household
durables)......................... 7,000 82,703
Softbank Corp. First Section
(business & public services)...... 900 182,251
Sony Corp. (appliances & household
durables)......................... 7,300 787,079
Sumitomo Bank, Ltd. (banking)...... 22,000 272,828
Sumitomo Electric Industries
(industrial components)........... 7,000 79,580
Sumitomo Forestry Co., Ltd.
(building materials &
components)....................... 19,000 147,873
Sumitomo Marine & Fire Insurance
Co. (insurance)................... 82,000 494,563
Takeda Chemical Industries, Ltd.
(health & personal care).......... 8,000 370,799
TDK Corp. (electronic components &
instruments)...................... 2,000 182,921
Tokio Marine & Fire Insurance Co.
(insurance)....................... 48,000 521,497
Tokyo Electric Power Co., Inc.
(utilities-electrical & gas)...... 4,100 86,549
Tokyo Seimitsu Co., Ltd.
(electronic components &
instruments)...................... 4,100 261,170
Toshiba Corp. (electrical &
electronics)...................... 44,000 313,725
Tostem Corp. (building materials &
components)....................... 7,000 134,464
Toyota Motor Corp. (automobiles)... 24,000 759,443
Yamanouchi Pharmaceutical Co., Ltd.
(health & personal care).......... 8,000 306,024
-----------
11,626,505
-----------
NETHERLANDS (3.5%)
ABN AMRO Holding N.V. (banking).... 13,301 288,064
Akzo Nobel N.V. (chemicals)........ 3,302 138,938
Elsevier N.V. (broadcasting &
publishing)....................... 2,080 24,132
Heineken N.V. (beverages &
tobacco).......................... 3,742 191,606
ING Groep N.V. (financial
services)......................... 7,286 394,488
Koninklijke KPN N.V.
(telecommunications).............. 3,613 169,537
Royal Dutch Petroleum Co. (energy
sources).......................... 9,209 539,443
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
87
<PAGE> 88
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
---------------------
<S> <C> <C>
NETHERLANDS (Continued)
TNT Post Group N.V. (business &
public services).................. 3,486 $ 83,227
Wolters Kluwer CVA N.V.
(broadcasting & publishing)....... 3,312 131,845
-----------
1,961,280
-----------
NEW ZEALAND (0.9%)
Contact Energy Ltd. (utilities-
electrical & gas) (a)............. 69,450 112,613
Fletcher Challenge Building
(building materials &
components)....................... 81,987 119,473
Telecom Corp. of New Zealand Ltd.
(telecommunications).............. 62,664 268,966
-----------
501,052
-----------
PORTUGAL (1.9%)
Banco Comercial Portugues, S.A.
Registered (banking).............. 13,318 345,157
Banco Espirito Santo e Comercial de
Lisboa, S.A. Registered
(banking)......................... 15,450 359,462
Electricidade de Portugal, S.A.
(utilities-electrical & gas)...... 8,736 157,305
Jeronimo Martins SGPS, S.A.
(merchandising)................... 1,541 50,903
Portugal Telecom, S.A. Registered
(telecommunications).............. 4,279 174,090
Portugal Telecom, S.A. Rights
(telecommunications) (a).......... 4,279 44
-----------
1,086,961
-----------
SPAIN (3.7%)
Acerinox, S.A. (metals-steel)...... 980 28,653
Autopistas Concesionaria Espanola,
S.A. (business & public
services)......................... 9,859 115,402
Autopistas Concesionaria Espanola,
S.A. Bonus Rights (business &
public services).................. 9,859 5,694
Banco Bilbao Vizcaya, S.A.
Registered (banking).............. 21,560 311,510
Banco Santander Central Hispano,
S.A. (banking).................... 34,572 360,106
Endesa, S.A. (utilities-electrical
& gas)............................ 10,743 229,119
Fomento de Construcciones y
Contratas, S.A. (construction &
housing).......................... 909 52,029
Gas Natural SDG, S.A. (utilities-
electrical & gas)................. 1,537 111,750
Iberdrola, S.A.
(utilities-electrical & gas)...... 10,722 163,321
Repsol, S.A. (energy sources)...... 10,998 224,576
Telefonica, S.A.
(telecommunications) (a).......... 9,790 471,604
-----------
2,073,764
-----------
SWEDEN (1.2%)
AstraZenca Group PLC (health &
personal care).................... 6,104 237,640
ForeningsSparbanken AB (banking)... 7,474 105,490
Hennes & Mauritz AB Series B
(merchandising)................... 5,568 137,530
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
SWEDEN (Continued)
Skandia Forsakrings AB
(insurance)....................... 5,567 $ 104,111
Svenska Handelsbanken Series A
(banking)......................... 8,685 104,195
-----------
688,966
-----------
SWITZERLAND (6.0%)
Credit Suisse Group Registered
(banking)......................... 2,131 368,737
Nestle S.A. Registered (food &
household products)............... 373 672,052
Novartis AG Registered (health &
personal care).................... 275 401,550
Roche Holdings AG Genusscheine
(health & personal care).......... 69 709,263
Schweizerische Rueckversicherungs
Gesellschaft Registered
(insurance)....................... 138 262,756
UBS AG Registered (banking)........ 2,425 723,787
Zurich Allied AG Registered
(insurance)....................... 414 235,415
-----------
3,373,560
-----------
UNITED KINGDOM (18.3%)
Abbey National PLC (banking)....... 13,598 255,284
Allied Zurich PLC (insurance)...... 8,426 105,923
Barclays PLC (banking)............. 13,215 384,535
Bass PLC (leisure & tourism)....... 38,109 552,953
BG PLC (utilities-electrical &
gas).............................. 48,953 299,012
Boots Co. PLC (merchandising)...... 14,397 170,998
BP Amoco PLC (energy sources)...... 40,596 727,580
British Airways PLC
(transportation-airlines)......... 35,003 241,528
British American Tobacco PLC
(beverages & tobacco)............. 8,366 78,662
British Telecommunications PLC
(telecommunications).............. 61,893 1,037,079
Cable & Wireless PLC
(telecommunications).............. 42,533 542,055
CGU PLC (insurance)................ 10,637 153,670
Diageo PLC (beverages & tobacco)... 45,286 472,919
EMI Group PLC (recreation & other
consumer goods)................... 42,613 341,898
General Electric Co. PLC
(electrical & electronics)........ 26,305 268,275
Granada Group PLC (leisure &
tourism).......................... 12,565 233,118
Great Universal Stores PLC (The)
(merchandising)................... 17,980 199,242
Imperial Chemical Industries PLC
(chemicals)....................... 17,195 169,944
Kingfisher PLC (merchandising)..... 27,999 322,183
Lloyds TSB Group PLC (banking)..... 38,820 526,249
Marks & Spencer PLC
(merchandising)................... 22,514 130,243
National Power PLC (utilities-
electrical & gas)................. 17,268 125,754
National Westminster Bank PLC
(banking)......................... 14,661 310,830
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
88
<PAGE> 89
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
---------------------
<S> <C> <C>
UNITED KINGDOM (Continued)
Peninsular & Oriental Steam
Navigation Co. Deferred Stock
(The) (transportation-shipping)... 5,972 $ 89,665
Prudential Corp. PLC (insurance)... 19,463 286,545
Reed International PLC
(broadcasting & publishing)....... 17,406 116,127
Rio Tinto PLC Registered (metals-
nonferrous)....................... 9,357 156,860
Royal Bank of Scotland Group PLC
(banking)......................... 17,665 359,760
Sainsbury (J.) PLC
(merchandising)................... 16,234 102,358
Scottish Power PLC (utilities-
electrical & gas)................. 9,826 84,878
SmithKline Beecham PLC (health &
personal care).................... 55,882 726,272
Unilever PLC (food & household
products)......................... 34,257 304,825
Vodafone Group PLC
(telecommunications).............. 18,451 363,552
-----------
10,240,776
-----------
UNITED STATES (0.3%)
Hellenic Telecommunications
Organization S.A.
(telecommunications).............. 15,300 169,256
-----------
Total Common Stocks
(Cost $45,971,297)................ 51,957,045
-----------
OPTIONS (0.0%) (B)
<CAPTION>
NOTIONAL
AMOUNT
----------
<S> <C> <C>
UNITED STATES (0.0%) (b)
U.S. Dollar Call/Euro Put
Strike price E1.024
Expire 8/31/99 (a)(f)............. 2,700,000 30,135
-----------
Total Options
(Cost $29,565).................... 30,135
-----------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS (5.4%)
PRINCIPAL
AMOUNT VALUE
---------------------
<S> <C> <C>
COMMERCIAL PAPER (5.4%)
UNITED STATES (5.4%)
Ford Motor Credit Corp.
5.65%, due 7/1/99
(financial services).............. $2,150,000 $ 2,150,000
General Electric Capital Corp.
4.97%, due 7/7/99
(financial services).............. 850,000 849,297
-----------
Total Short-Term Investments
(Cost $2,999,297)................. 2,999,297
-----------
Total Investments
(Cost $49,000,159) (d)............ 98.3% 54,986,477(e)
Cash and Other Assets,
Less Liabilities.................. 1.7 967,314
---------- -----------
Net Assets......................... 100.0% $55,953,791
========== ===========
</TABLE>
- ------------
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) Segregated or partially segregated as collateral for foreign currency
forward contracts.
(d) The cost for Federal income tax purposes is $49,358,986.
(e) At June 30, 1999 net unrealized appreciation for securities was $5,627,491,
based on cost for Federal income tax purposes. This consisted of aggregate
gross unrealized appreciation for all investments on which there was an
excess of market value over cost of $7,203,626 and aggregate gross
unrealized depreciation for all investments on which there was an excess of
cost over market value of $1,576,135.
(f) E -- Euro.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
89
<PAGE> 90
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
The table below sets forth the diversification of International Equity Portfolio
investments by industry.
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
VALUE PERCENT +
------------------------
<S> <C> <C>
Aerospace & Military
Technology.................. $ 130,748 0.2%
Appliances & Household
Durables.................... 1,073,887 1.9
Automobiles................... 2,065,127 3.7
Banking....................... 8,251,382 14.8
Beverages & Tobacco........... 1,091,467 2.0
Broadcasting & Publishing..... 272,104 0.5
Building Materials &
Components.................. 1,286,672 2.3
Business & Public Services.... 1,751,741 3.1
Chemicals..................... 1,037,379 1.9
Construction & Housing........ 52,029 0.1
Data Processing &
Reproduction................ 301,770 0.5
Electrical & Electronics...... 2,572,091 4.6
Electronic Components &
Instruments................. 919,808 1.6
Energy Sources................ 3,089,478 5.5
Financial Services............ 3,534,272 6.3
Food & Household Products..... 1,684,859 3.0
Forest Products & Paper....... 518,657 0.9
Health & Personal Care........ 4,347,380 7.8
Industrial Components......... 253,887 0.5
Insurance..................... 4,035,056 7.2
Leisure & Tourism............. 786,071 1.4
Machinery & Engineering....... 137,926 0.3
Merchandising................. 2,751,083 4.9
Metals-Nonferrous............. 710,784 1.3
Metals-Steel.................. 163,307 0.3
Multi-Industry................ 244,461 0.4
Real Estate................... 103,804 0.2
Recreation & Other Consumer
Goods....................... 510,542 0.9
Telecommunications............ 8,006,016 14.3
Textile & Apparel............. 112,963 0.2
Transportation-Airlines....... 241,528 0.4
Transportation-Road & Rail.... 101,829 0.2
Transportation-Shipping....... 89,665 0.2
Utilities-Electrical & Gas.... 2,726,569 4.9
----------- ------
54,956,342 98.3
Cash and Other Assets, Less
Liabilities................. 997,449 1.7
----------- ------
Net Assets.................... $55,953,791 100.0%
=========== ======
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
90
<PAGE> 91
MAINSTAY VP SERIES FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $49,000,159).......... $ 54,986,477
Cash denominated in foreign currencies
(identified cost $861,088)............. 857,636
Cash..................................... 129,338
Receivables:
Investment securities sold............. 2,127,339
Dividends and interest................. 206,765
Fund shares sold....................... 33,993
Unrealized appreciation on foreign
currency forward contracts............. 252,476
------------
Total assets..................... 58,594,024
------------
LIABILITIES:
Payables:
Investment securities purchased........ 2,293,715
Adviser................................ 27,394
Shareholder communication.............. 21,588
Custodian.............................. 11,028
Administrator.......................... 9,131
Fund shares redeemed................... 301
Accrued expenses......................... 29,702
Unrealized depreciation on foreign
currency forward contracts............. 247,374
------------
Total liabilities................ 2,640,233
------------
Net assets applicable to outstanding
shares................................. $ 55,953,791
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 100 million shares authorized... $ 44,681
Additional paid-in capital............... 49,450,363
Accumulated distribution in excess of net
investment income...................... (13,820)
Accumulated net realized loss on
investments............................ (50,605)
Accumulated undistributed net realized
gain on foreign currency
transactions........................... 548,292
Net unrealized appreciation on
investments............................ 5,986,318
Net unrealized depreciation on
translation of other assets and
liabilities in foreign currencies and
foreign currency forward contracts..... (11,438)
------------
Net assets applicable to outstanding
shares................................. $ 55,953,791
============
Shares of capital stock outstanding...... 4,468,127
============
Net asset value per share outstanding.... $ 12.52
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a).......................... $ 604,567
Interest............................... 38,926
------------
Total income..................... 643,493
------------
Expenses:
Advisory............................... 138,716
Administration......................... 46,239
Professional........................... 21,259
Shareholder communication.............. 13,846
Portfolio pricing...................... 10,372
Custodian.............................. 6,976
Directors.............................. 865
Miscellaneous.......................... 5,803
------------
Total expenses................... 244,076
------------
Net investment income.................... 399,417
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) from:
Security transactions.................. 981,400
Option transactions.................... (12,838)
Foreign currency transactions.......... 548,292
------------
Net realized gain on investments and
foreign currency transactions.......... 1,516,854
------------
Net change in unrealized appreciation
(depreciation) on investments:
Security transactions.................. (1,265,987)
Translation of other assets and
liabilities in foreign currencies and
foreign currency forward contracts... 71,873
------------
Net unrealized loss on investments and
foreign currency transactions.......... (1,194,114)
------------
Net realized and unrealized gain on
investments and foreign currency
transactions........................... 322,740
------------
Net increase in net assets resulting from
operations............................. $ 722,157
============
</TABLE>
- ------------
(a) Dividends recorded net of foreign withholding taxes in the amount of
$84,853.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
91
<PAGE> 92
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999 1998
---------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 399,417 $ 389,647
Net realized gain on investments.......................... 981,400 364,490
Net realized loss on option transactions.................. (12,838) (35,720)
Net realized gain on foreign currency transactions........ 548,292 20,112
Net change in unrealized appreciation on investments...... (1,265,987) 6,418,225
Net change in unrealized appreciation (depreciation) on
translation of other assets and liabilities in foreign
currencies and foreign currency forward contracts....... 71,873 (175,712)
------------ ------------
Net increase in net assets resulting from operations...... 722,157 6,981,042
------------ ------------
Dividends to shareholders:
From net investment income................................ (232,996) (698,611)
In excess of net investment income........................ -- (180,241)
------------ ------------
Total dividends to shareholders......................... (232,996) (878,852)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares.......................... 20,013,785 13,924,150
Net asset value of shares issued to shareholders in
reinvestment of dividends............................... 232,996 878,852
------------ ------------
20,246,781 14,803,002
Cost of shares redeemed................................... (2,788,334) (13,171,173)
------------ ------------
Increase in net assets derived from capital share
transactions............................................ 17,458,447 1,631,829
------------ ------------
Net increase in net assets.................................. 17,947,608 7,734,019
NET ASSETS:
Beginning of period......................................... 38,006,183 30,272,164
------------ ------------
End of period............................................... $55,953,791 $ 38,006,183
============ ============
Accumulated distribution in excess of net investment income
at end of period.......................................... $ (13,820) $ (180,241)
============ ============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
MAY 1,
SIX MONTHS 1995 (a)
ENDED THROUGH
JUNE 30, YEAR ENDED DECEMBER 31 DECEMBER 31,
1999* 1998 1997 1996 1995
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period..... $ 12.40 $ 10.31 $ 10.65 $ 10.20 $ 10.00
------------ ------------ ------------ ------------ ------------
Net investment income...................... 0.11 0.23 1.06 0.44 0.64
Net realized and unrealized gain (loss) on
investments.............................. (0.06) 2.20 0.27 0.06 0.01
Net realized and unrealized gain (loss) on
foreign
currency transactions.................... 0.12 (0.05) (0.78) 0.56 0.05
------------ ------------ ------------ ------------ ------------
Total from investment operations........... 0.17 2.38 0.55 1.06 0.70
------------ ------------ ------------ ------------ ------------
Less dividends and distributions:
From net investment income............... (0.05) (0.23) (0.89) (0.60) (0.06)
From net realized gain on investments and
foreign currency transactions.......... -- -- -- (0.01) (0.44)
In excess of net investment income....... -- (0.06) -- -- --
------------ ------------ ------------ ------------ ------------
Total dividends and distributions.......... (0.05) (0.29) (0.89) (0.61) (0.50)
------------ ------------ ------------ ------------ ------------
Net asset value at end of period........... $ 12.52 $ 12.40 $ 10.31 $ 10.65 $ 10.20
============ ============ ============ ============ ============
Total investment return.................... 1.43%(b) 23.11% 5.17% 10.54% 6.96%(b)
Ratios (to average net assets)/Supplemental
Data:
Net investment income.................... 1.73%+ 1.13% 1.25% 1.01% 1.07%+
Net expenses............................. 1.06%+ 0.97% 0.97% 0.97% 0.97%+
Expenses (before reimbursement).......... 1.06%+ 1.17% 1.25% 1.51% 2.51%+
Portfolio turnover rate.................... 25% 57% 61% 16% 14%
Net assets at end of period (in 000's)..... $ 55,954 $ 38,006 $ 30,272 $ 34,509 $ 14,631
</TABLE>
- ------------
(a) Commencement of Operations.
(b) Total return is not annualized.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
92
<PAGE> 93
MAINSTAY VP SERIES FUND, INC.
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
LONG-TERM BONDS (32.5%)+
ASSET-BACKED SECURITIES (4.4%)
<S> <C> <C>
PRINCIPAL
AMOUNT VALUE
-----------------------
AIRLINES (0.2%)
America West Airlines Inc.
Series C
6.86%, due 7/2/04............... $ 1,291,196 $ 1,275,960
------------
AIRPLANE LEASES (1.1%)
AerCo Ltd.
Series 1A Class A1
5.1775%, due 7/15/23 (f)........ 1,245,000 1,242,510
Aircraft Finance Trust
Series 1999-1 Class C
8.00%, due 5/15/24 (c).......... 1,615,000 1,529,922
Aircraft Lease Portfolio
Securitization Ltd.
Series 1996-1 Class CX
6.35%, due 6/15/06 (e)(f)....... 1,077,556 1,076,910
Airplanes Pass-Through Trust
Series 1 Class C
8.15%, due 3/15/19.............. 2,917,539 2,871,617
Morgan Stanley Aircraft Finance
Series 1A Class A1
5.1975%, due 3/15/23 (f)........ 1,770,000 1,767,646
------------
8,488,605
------------
AUTO LEASES (0.8%)
Premier Auto Trust
Series 1998-4 Class A3
5.69%, due 6/8/02............... 2,275,000 2,265,718
Series 1999-1 Class A3
5.69%, due 11/8/02.............. 1,850,000 1,842,452
Toyota Auto Lease Trust
Series 1998-B Class A1
5.35%, due 7/25/02.............. 2,210,000 2,189,823
------------
6,297,993
------------
CREDIT CARD RECEIVABLES (0.5%)
Chase Credit Card Master Trust
Series 1997-2 Class A
6.30%, due 4/15/03.............. 1,635,000 1,642,766
Citibank Credit Card Master Trust
I
Series 1999-1 Class A
5.50%, due 2/15/06.............. 1,840,000 1,772,362
------------
3,415,128
------------
EQUIPMENT LOANS (0.7%)
Case Equipment Receivables Trust
Series 1999-A Class A
5.77%, due 8/15/05.............. 1,790,000 1,760,734
IKON Receivables, LLC
Series 1999-1 Class A3
5.99%, due 5/15/05.............. 2,495,000 2,484,671
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------
LONG-TERM BONDS (32.5%)
ASSET-BACKED SECURITIES (4.4%)
<S> <C> <C>
EQUIPMENT LOANS (Continued)
Newcourt Equipment Trust
Securities
Series 1998-1 Class A3
5.24%, due 12/20/02............. $ 680,000 $ 672,017
------------
4,917,422
------------
FINANCE (0.6%)
Green Tree Financial Corporation
Series 1999-3 Class A1
4.948%, due 6/1/00.............. 2,225,000 2,222,553
Series 1999-4 Class A4
6.64%, due 5/1/31............... 1,885,000 1,891,597
------------
4,114,150
------------
LEISURE TIME (0.2%)
Harley-Davidson Eaglemark
Motorcycle Trust
Series 1999-1 Class A2
5.52%, due 2/15/05.............. 1,450,000 1,421,942
------------
TRANSPORTATION (0.3%)
Federal Express Corp.
Pass-Through Certificate
Series 98-1A Class A
6.72%, due 1/15/22.............. 1,939,426 1,869,626
------------
Total Asset-Backed Securities
(Cost $32,250,220).............. 31,800,826
------------
CORPORATE BONDS (5.9%)
AEROSPACE (0.1%)
Newport News Shipbuilding Inc.
8.625%, due 12/1/06............. 425,000 446,250
Wyman-Gordon Co.
8.00%, due 12/15/07............. 310,000 332,475
------------
778,725
------------
AIRLINES (0.5%)
Atlas Air, Inc.
8.77%, due 1/2/11............... 3,370,000 3,323,427
Northwest Airlines Corp.
7.36%, due 2/1/20............... 665,000 640,395
------------
3,963,822
------------
AUTO PARTS (0.2%)
Pennzoil-Quaker State Company
7.375%, due 4/1/29.............. 1,650,000 1,558,177
------------
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
93
<PAGE> 94
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
CORPORATE BONDS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
BANKS (0.3%)
Bank One Corp.
7.60%, due 5/1/07............... $ 610,000 $ 631,313
BankAmerica Corp.
6.625%, due 6/15/04............. 1,090,000 1,091,537
Tokai Preferred Capital Company
L.L.C.
Series A
9.98%, due 12/29/49 (c)(f)...... 205,000 188,600
------------
1,911,450
------------
BUILDING MATERIALS (0.1%)
Vulcan Materials Co.
6.00%, due 4/1/09............... 1,125,000 1,057,680
------------
CASINOS (0.1%)
International Game Technology
8.375%, due 5/15/09 (c)......... 305,000 299,281
------------
CHEMICALS (0.1%)
Agriculture Minerals & Chemicals
10.75%, due 9/30/03............. 100,000 99,125
Lyondell Chemical Co.
9.875%, due 5/1/07 (c).......... 480,000 490,800
Terra Industries Inc.
Series B
10.50%, due 6/15/05............. 150,000 144,000
------------
733,925
------------
ELECTRIC UTILITIES (0.1%)
ESI Tractebel Acquisition Corp.
7.99%, due 12/30/11............. 300,000 285,534
------------
ENERGY (0.2%)
AES Eastern Energy, L.P.
9.00%, due 7/2/17 (c)........... 365,000 358,613
Caithness Coso Fund Group
9.05%, due 12/15/09 (c)......... 425,000 423,937
CMS Energy Corp.
8.375%, due 7/1/03.............. 970,000 967,110
------------
1,749,660
------------
FINANCE (0.3%)
CB Richard Ellis Services, Inc.
8.875%, due 6/1/06.............. 475,000 458,375
Fremont General Corp.
Series B
7.70%, due 3/17/04.............. 1,590,000 1,571,922
------------
2,030,297
------------
FINANCIAL SERVICES (0.2%)
Sears Roebuck Acceptance Corp.
Medium-Term Note
Series IV
6.36%, due 12/4/01.............. 1,165,000 1,164,406
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
FOOD, BEVERAGE & TOBACCO (0.7%)
Coca-Cola Enterprises Inc.
6.95%, due 11/15/26............. $ 680,000 $ 648,040
Joseph E. Seagram & Sons, Inc.
5.79%, due 4/15/01.............. 905,000 896,185
RJ Reynolds Tobacco Holdings,
Inc.
7.75%, due 5/15/06 (c).......... 3,720,000 3,570,940
Standard Commercial Tobacco Corp.
8.875%, due 8/1/05.............. 210,000 173,250
------------
5,288,415
------------
HEALTH CARE (0.1%)
Columbia/HCA Healthcare Corp.
7.50%, due 11/15/95............. 380,000 299,785
Express Scripts, Inc.
9.625%, due 6/15/09 (c)......... 365,000 369,563
------------
669,348
------------
HEAVY DUTY TRUCKS (0.1%)
Dana Corp.
7.00%, due 3/1/29............... 1,105,000 1,019,871
------------
HOMEBUILDING (0.0%) (b)
Standard Pacific Corp.
8.50%, due 4/1/09............... 180,000 171,000
------------
HOTEL (0.1%)
Felcor Suites LP
7.625%, due 10/1/07............. 245,000 227,850
Starwood Hotels & Resorts
Worldwide, Inc.
7.375%, due 11/15/15............ 200,000 172,001
------------
399,851
------------
INSURANCE (0.3%)
Conseco, Inc.
6.40%, due 6/15/01 (i).......... 1,750,000 1,716,190
Willis Corroon Corp.
9.00%, due 2/1/09 (c)........... 380,000 366,225
------------
2,082,415
------------
INVESTMENT BANK/ BROKERAGE (0.8%)
Donaldson, Lufkin & Jenrette Inc.
5.875%, due 4/1/02.............. 2,370,000 2,334,782
Goldman Sachs Group
6.65%, due 5/15/09.............. 3,020,000 2,924,417
Lehman Brothers Holdings, Inc.
6.625%, due 2/5/06.............. 525,000 503,244
------------
5,762,443
------------
MEDIA (0.2%)
CSC Holdings, Inc.
7.625%, due 7/15/18............. 200,000 185,250
Turner Broadcasting System, Inc.
8.375%, due 7/1/13.............. 1,370,000 1,476,490
------------
1,661,740
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
94
<PAGE> 95
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
CORPORATE BONDS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
MINING (0.1%)
Great Central Mines, Ltd.
8.875%, due 4/1/08 (k).......... $ 240,000 $ 228,000
Murrin Murrin Holdings Pty Ltd.
9.375%, due 8/31/07............. 190,000 168,150
------------
396,150
------------
NATURAL GAS DISTRIBUTORS &
PIPELINES (0.0%) (b)
Western Gas Resources, Inc.
10.00%, due 6/15/09 (c)......... 245,000 249,900
------------
OIL SERVICES (0.4%)
Conoco, Inc.
6.95%, due 4/15/29.............. 1,700,000 1,593,750
R & B Falcon Corp.
6.95%, due 4/15/08.............. 270,000 217,350
RBF Finance Co.
11.375%, due 3/15/09 (c)........ 60,000 62,100
Vastar Resources Inc.
6.50%, due 4/1/09............... 1,135,000 1,099,894
------------
2,973,094
------------
PAPER & FOREST PRODUCTS (0.1%)
Pope & Talbot Inc.
8.375%, due 6/1/13.............. 475,000 427,500
------------
REAL ESTATE (0.3%)
Crescent Real Estate Equities Co.
7.50%, due 9/15/07.............. 460,000 393,397
Hospitality Properties Trust
7.00%, due 3/1/08............... 285,000 247,290
Mack-Cali Realty L.P.
7.00%, due 3/15/04.............. 1,770,000 1,746,176
------------
2,386,863
------------
RETAIL (0.0%) (b)
KMart Corp.
8.375%, due 7/1/22.............. 180,000 180,179
------------
SEMICONDUCTORS (0.0%) (b)
Amkor Technologies, Inc.
9.25%, due 5/1/06 (c)........... 155,000 151,125
------------
SPECIALIZED SERVICES (0.1%)
WPP Finance USA Corp.
6.625%, due 7/15/05............. 970,000 920,384
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
TELECOMMUNICATION SERVICES (0.4%)
Orange PLC
8.00%, due 8/1/08............... $ 320,000 $ 305,600
Price Communications Wire Corp.
9.125%, due 12/15/06............ 570,000 575,700
Sprint Capital Corp.
6.875%, due 11/15/28............ 2,220,000 2,028,525
------------
2,909,825
------------
Total Corporate Bonds
(Cost $44,472,653).............. 43,183,060
------------
MORTGAGE-BACKED SECURITIES (2.2%)
COMMERCIAL MORTGAGE LOANS
(COLLATERALIZED MORTGAGE OBLIGATIONS) (2.2%)
Asset Securization Corp.
Series 1997-MD7 Class A1B
7.41%, due 1/13/30 (e).......... 2,770,000 2,833,876
DLJ Commercial Mortgage Corp.
Series 1999-CG2 Class A1A
6.88%, due 7/10/08 (e).......... 2,115,000 2,141,226
LB Commercial Conduit Mortgage
Trust
Series 1998-C4 Class A1B
6.21%, due 10/15/08 (e)......... 2,000,000 1,905,880
Series 1999-C1 Class A2
6.78%, due 4/15/09 (e).......... 2,015,000 1,992,110
Merrill Lynch Mortgage Investors,
Inc.
Series 1995-C2 Class A1
7.1752%, due 6/15/21 (e)(f)..... 1,056,048 1,061,402
Morgan Stanley Capital I
Series 1998-HF2 Class A1
6.01%, due 11/15/30 (e)......... 1,994,198 1,944,004
Nationslink Funding Corp.
Series 1999-1 Class A2
6.316%, due 11/20/08............ 2,725,000 2,615,836
SASCO Floating Rate Commercial
Mortgage Trust
Series 1998-C3A Class A1A
5.6425%, due 6/25/15 (c)(f)..... 1,730,199 1,730,199
------------
16,224,533
------------
Total Mortgage-Backed Securities
(Cost $16,404,551).............. 16,224,533
------------
U.S. GOVERNMENT &
FEDERAL AGENCIES (19.3%)
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (1.4%)
5.125%, due 2/13/04 (g)......... 6,040,000 5,787,286
6.375%, due 6/15/09 (g)......... 4,550,000 4,528,297
------------
10,315,583
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
95
<PAGE> 96
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
U.S. GOVERNMENT &
FEDERAL AGENCIES (CONTINUED)
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (MORTGAGE
PASS-THROUGH SECURITIES) (7.3%)
6.50%, due 5/1/03-4/1/29........ $33,804,043 $ 32,831,940
7.00%, due 11/1/12-12/1/12...... 4,263,963 4,288,609
7.00%, due 9/15/29 TBA (d)...... 3,635,000 3,594,688
7.50%, due 7/14/29 TBA (d)...... 12,940,000 13,117,925
------------
53,833,162
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION I (MORTGAGE
PASS-THROUGH SECURITIES) (2.2%)
7.00%, due 9/15/28 (e).......... 7,706,007 7,633,802
7.50%, due 12/15/23-11/25/28.... 5,002,113 5,070,370
8.00%, due 11/25/28............. 2,929,568 3,019,300
------------
15,723,472
------------
UNITED STATES TREASURY BONDS
(2.2%)
5.25%, due 11/15/28 (g)......... 3,365,000 2,982,770
7.625%, due 2/15/25............. 905,000 1,067,475
8.875%, due 8/15/17 (g)......... 4,440,000 5,672,100
9.25%, due 2/15/16 (g).......... 4,935,000 6,427,837
------------
16,150,182
------------
UNITED STATES TREASURY NOTES
(6.2%)
5.25%, due 8/15/03.............. 1,020,000 1,002,629
5.375%, due 6/30/03 (g)......... 5,890,000 5,819,143
5.50%, due 5/15/09 (g).......... 14,290,000 13,959,472
5.625%, due 11/30/00............ 4,885,000 4,897,994
6.25%, due 2/28/02-2/15/03
(g)............................. 12,960,000 13,156,776
6.875%, due 5/15/06............. 150,000 157,921
7.875%, due 11/15/04 (g)........ 5,496,000 6,011,250
------------
45,005,185
------------
Total U.S. Government &
Federal Agencies
(Cost $144,100,861)............. 141,027,584
------------
YANKEE BONDS (0.7%)
CABLE (0.0%) (b)
Rogers Cablesystem Ltd.
10.125%, due 9/1/12............. 90,000 96,412
------------
ELECTRIC UTILITIES (0.2%)
United Utilities, PLC
6.45%, due 4/1/08............... 1,475,000 1,388,447
------------
INDUSTRIAL (0.0%) (b)
Stena Line AB
10.50%, due 12/15/05............ 280,000 279,300
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------
U.S. GOVERNMENT &
FEDERAL AGENCIES (CONTINUED)
<S> <C> <C>
MEDIA (0.1%)
Rogers Communications, Inc.
8.875%, due 7/15/07............. $ 360,000 $ 361,800
------------
MINING (0.0%) (b)
Glencore Nickel Property Ltd.
9.00%, due 12/1/14.............. 145,000 124,700
------------
MULTI-INDUSTRIAL (0.3%)
Tyco International Group S.A.
7.00%, due 6/15/28.............. 2,325,000 2,167,598
------------
OIL SERVICES (0.0%) (b)
Husky Oil, Ltd.
8.90%, due 8/15/28.............. 30,000 29,044
------------
TELECOMMUNICATION SERVICES (0.1%)
Call-Net Enterprises, Inc.
9.375%, due 5/15/09............. 120,000 114,300
(zero coupon), due 5/15/09
10.80%, beginning 5/15/04....... 310,000 171,275
------------
285,575
------------
TRANSPORTATION (0.0%) (b)
Cenargo International PLC
9.75%, due 6/15/08.............. 230,000 212,750
------------
Total Yankee Bonds
(Cost $5,342,273)............... 4,945,626
------------
Total Long-Term Bonds
(Cost $242,570,558)............. 237,181,629
------------
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCKS (65.7%)
SHARES
-----------
<S> <C> <C>
BANKS (1.3%)
Firstar Corp. ................... 77,000 2,156,000
Wells Fargo & Co. ............... 163,200 6,976,800
------------
9,132,800
------------
COMPUTERS & OFFICE EQUIPMENT
(4.4%)
EMC Corp. (a).................... 259,900 14,294,500
Sun Microsystems, Inc. (a)....... 263,000 18,114,125
------------
32,408,625
------------
CONSUMER DURABLES (1.4%)
Harley-Davidson, Inc. ........... 194,000 10,548,750
------------
CONSUMER SERVICES (1.8%)
Cendant Corp. (a)................ 305,203 6,256,662
Omnicom Group, Inc. ............. 89,200 7,136,000
------------
13,392,662
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
96
<PAGE> 97
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
COSMETICS (1.2%)
Colgate-Palmolive Co. ........... 85,300 $ 8,423,375
------------
DRUGS (4.4%)
Elan Corp. PLC ADR (a)(g)(h)..... 179,600 4,983,900
Merck & Co., Inc. ............... 98,000 7,252,000
Pfizer, Inc. .................... 64,100 7,034,975
Schering-Plough Corp. ........... 242,200 12,836,600
------------
32,107,475
------------
FINANCIAL SERVICES (5.8%)
Associates First Capital Corp.
Class A......................... 263,300 11,667,481
CIT Group, Inc. (The)
Class A......................... 61,000 1,761,375
Citigroup Inc. .................. 236,250 11,221,875
Equifax Inc. .................... 132,700 4,735,731
Freddie Mac...................... 79,400 4,605,200
Providian Financial Corp. ....... 89,250 8,344,875
------------
42,336,537
------------
HEALTH CARE (2.0%)
Cardinal Health, Inc. (g)........ 128,550 8,243,269
IMS Health, Inc. ................ 205,700 6,428,125
------------
14,671,394
------------
HOTEL/MOTEL (0.8%)
Carnival Corp. .................. 116,100 5,630,850
------------
INSURANCE (2.1%)
American International Group,
Inc. ........................... 132,344 15,492,490
------------
MEDIA (2.0%)
Chancellor Media Corp. (a)(g).... 114,000 6,284,250
Clear Channel Communications,
Inc. (a)........................ 116,200 8,010,537
------------
14,294,787
------------
MEDICAL EQUIPMENT (4.8%)
Guidant Corp. ................... 223,000 11,470,563
Johnson & Johnson................ 115,452 11,314,296
Medtronic, Inc. ................. 160,200 12,475,575
------------
35,260,434
------------
MULTI-INDUSTRIAL (2.9%)
Tyco International Ltd. ......... 223,100 21,138,725
------------
RECREATION & ENTERTAINMENT (1.2%)
Fox Entertainment Group, Inc.
Class A (a)..................... 73,500 1,979,906
Time Warner Inc. ................ 92,200 6,638,400
------------
8,618,306
------------
RETAIL (13.1%)
Bed Bath & Beyond, Inc. (a)...... 173,800 6,691,300
Circuit City Stores.............. 106,400 9,895,200
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
RETAIL (Continued)
CVS Corp. ....................... 188,500 $ 9,637,062
Dollar General Corp. ............ 258,573 7,498,617
Home Depot, Inc. (The) (g)....... 209,800 13,518,987
Kohl's Corp. (a)................. 179,800 13,878,313
Kroger Co. (The)(a).............. 362,400 10,124,550
Nordstrom, Inc. ................. 160,000 5,360,000
Safeway, Inc. (a)................ 175,800 8,702,100
Staples, Inc. (a)................ 337,350 10,436,766
------------
95,742,895
------------
SOFTWARE (5.2%)
America Online, Inc. (a)......... 24,000 2,652,000
Compuware Corp. (a).............. 322,000 10,243,625
Microsoft Corp. (a).............. 186,400 16,810,950
Oracle Corp. (a)................. 219,855 8,162,117
------------
37,868,692
------------
SPECIALIZED SERVICES (0.8%)
Young & Rubicam, Inc. ........... 125,500 5,702,406
------------
TECHNOLOGY (4.7%)
Cisco Systems, Inc. (a).......... 302,450 19,451,316
Intel Corp. ..................... 138,200 8,222,900
Motorola, Inc. .................. 66,900 6,338,775
------------
34,012,991
------------
TELECOMMUNICATION EQUIPMENT
(2.5%)
Lucent Technologies Inc. ........ 274,800 18,531,825
------------
TELECOMMUNICATION SERVICES (3.3%)
ALLTEL Corp. .................... 122,300 8,744,450
MCI WorldCom, Inc. (a)........... 180,432 15,562,260
------------
24,306,710
------------
Total Common Stocks
(Cost $257,671,981)............. 479,622,729
------------
PREFERRED STOCKS (0.1%)
ENTERTAINMENT (0.0%) (b)
Time Warner Capital I
8.875%, 12/31/25................ 7,700 198,275
------------
PAPER & FOREST PRODUCTS (0.1%)
Paperboard Industries
International, Inc. 5.00%, Class
A (c)(j)(l)..................... 15,000 231,826
------------
Total Preferred Stocks (Cost
$448,227)....................... 430,101
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
97
<PAGE> 98
TOTAL RETURN PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
SHORT-TERM
INVESTMENTS (5.7%)
PRINCIPAL
AMOUNT VALUE
-----------------------
COMMERCIAL PAPER (5.7%)
General Electric Co.
5.60%, due 7/9/99............... $ 9,550,000 $ 9,539,397
KFW International Finance Inc.
5.70%, due 7/1/99............... 4,390,000 4,390,000
Salomon Smith Barney, Inc.
5.14%, due 7/21/99.............. 16,190,000 16,144,940
Wells Fargo Co.
5.06%, due 7/14/99.............. 11,670,000 11,648,655
------------
Total Short-Term Investments
(Cost $41,722,992).............. 41,722,992
------------
Total Investments
(Cost $542,413,758) (m)......... 104.0% 758,957,451(n)
Liabilities in Excess of Cash and
Other Assets.................... (4.0) (29,269,347)
----------- ------------
Net Assets....................... 100.0% $729,688,104
=========== ============
- ------------
<TABLE>
<CAPTION>
<S> <C>
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) May be sold to institutional investors only.
(d) TBA: Securities purchased on a forward commitment
basis with an approximate principal amount and
maturity date. The actual principal amount and
maturity date will be determined upon settlement.
(e) Segregated as collateral for TBA.
(f) Floating rate. Rate shown is the rate in effect at
June 30, 1999.
(g) Represent securities out on loan or a portion
which is out on loan. (See Note 2J).
(h) ADR--American Depository Receipt.
(i) MOPPRS--(Mandatory Par Put Remarketed
Securities)--Subject to mandatory tender on
remarketing dates.
(j) Restricted security.
(k) Euro-Dollar bond.
(l) Canadian security.
(m) The cost for Federal income tax purposes is
$542,894,789.
(n) At June 30, 1999 net unrealized appreciation was
$216,062,662, based on cost for Federal income tax
purposes. This consisted of aggregate gross
unrealized appreciation for all investments on
which there was an excess of market value over
cost of $225,372,708 and aggregate gross
unrealized depreciation for all investments on
which there was an excess of cost over market
value of $9,310,046.
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
98
<PAGE> 99
MAINSTAY VP SERIES FUND, INC.
TOTAL RETURN PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $542,413,758)......... $758,957,451
Collateral held for securities loaned, at
value.................................. 73,367,972
Cash..................................... 1,711
Receivables:
Investment securities sold............. 10,716,031
Dividends and interest................. 2,563,756
Fund shares sold....................... 425,232
------------
Total assets..................... 846,032,153
------------
LIABILITIES:
Securities lending collateral, at
value.................................. 73,367,972
Payables:
Investment securities purchased........ 42,443,935
Adviser................................ 183,441
Administrator.......................... 114,650
Custodian.............................. 13,210
Directors.............................. 376
Accrued expenses......................... 220,465
------------
Total liabilities................ 116,344,049
------------
Net assets applicable to outstanding
shares................................. $729,688,104
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 50 million shares authorized.... $ 348,216
Additional paid-in capital............... 496,191,039
Accumulated undistributed net investment
income................................. 6,324,160
Accumulated undistributed net realized
gain on investments.................... 10,280,996
Net unrealized appreciation on
investments............................ 216,543,693
------------
Net assets applicable to outstanding
shares................................. $729,688,104
============
Shares of capital stock outstanding...... 34,821,602
============
Net asset value per share outstanding.... $ 20.96
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................... $ 7,175,304
Dividends.............................. 1,114,215
------------
Total income..................... 8,289,519
------------
Expenses:
Advisory............................... 1,079,884
Administration......................... 674,927
Shareholder communication.............. 111,626
Professional........................... 40,287
Custodian.............................. 27,447
Directors.............................. 15,304
Portfolio pricing...................... 4,028
Miscellaneous.......................... 13,043
------------
Total expenses................... 1,966,546
------------
Net investment income.................... 6,322,973
------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on investments......... 10,726,087
Net change in unrealized appreciation on
investments............................ 17,010,340
------------
Net realized and unrealized gain on
investments............................ 27,736,427
------------
Net increase in net assets resulting from
operations............................. $ 34,059,400
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
99
<PAGE> 100
TOTAL RETURN PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999 1998
-------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 6,322,973 $ 11,612,124
Net realized gain on investments.......................... 10,726,087 15,978,852
Net change in unrealized appreciation on investments...... 17,010,340 103,139,834
------------ ------------
Net increase in net assets resulting from operations...... 34,059,400 130,730,810
------------ ------------
Dividends and distributions to shareholders:
From net investment income................................ (20,329) (11,697,070)
From net realized gain on investments..................... (1,507,077) (16,858,107)
------------ ------------
Total dividends and distributions to shareholders....... (1,527,406) (28,555,177)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares.......................... 61,659,423 89,034,995
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. 1,527,406 28,555,177
------------ ------------
63,186,829 117,590,172
Cost of shares redeemed................................... (10,392,004) (22,028,105)
------------ ------------
Increase in net assets derived from capital share
transactions............................................ 52,794,825 95,562,067
------------ ------------
Net increase in net assets.................................. 85,326,819 197,737,700
NET ASSETS:
Beginning of period......................................... 644,361,285 446,623,585
------------ ------------
End of period............................................... $729,688,104 $644,361,285
============ ============
Accumulated undistributed net investment income at end of
period.................................................... $ 6,324,160 $ 21,516
============ ============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31
1999* 1998 1997 1996 1995 1994
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period................. $ 19.99 $ 16.47 $ 14.56 $ 13.26 $ 10.58 $ 11.32
------------ ------------ ------------ ------------ ------------ ------------
Net investment income....... 0.18 0.38 0.37 0.30 0.31 0.27
Net realized and unrealized
gain (loss) on
investments............... 0.83 4.07 2.21 1.30 2.69 (0.72)
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations................ 1.01 4.45 2.58 1.60 3.00 (0.45)
------------ ------------ ------------ ------------ ------------ ------------
Less dividends and
distributions:
From net investment
income.................. -- (0.38) (0.36) (0.30) (0.32) (0.29)
From net realized gain
on investments.......... (0.04) (0.55) (0.31) -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions............. (0.04) (0.93) (0.67) (0.30) (0.32) (0.29)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value at end of
period.................... $ 20.96 $ 19.99 $ 16.47 $ 14.56 $ 13.26 $ 10.58
============ ============ ============ ============ ============ ============
Total investment return..... 5.06%(a) 27.13% 17.79% 12.08% 28.33% (3.99%)
Ratios (to average net
assets)/ Supplemental
Data:
Net investment income..... 1.87%+ 2.20% 2.46% 2.52% 3.06% 3.50%
Net expenses.............. 0.58%+ 0.60% 0.60% 0.69% 0.69% 0.69%
Expenses (before
reimbursement).......... 0.58%+ 0.60% 0.60% 0.71% 0.81% 0.88%
Portfolio turnover rate..... 60% 158% 125% 175% 253% 297%
Net assets at end of period
(in 000's)................ $ 729,688 $ 644,361 $ 446,624 $ 332,897 $ 194,893 $ 122,333
</TABLE>
- ------------
(a) Total return is not annualized.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
100
<PAGE> 101
MAINSTAY VP SERIES FUND, INC.
VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (95.4%)+
SHARES VALUE
-----------------------
<S> <C> <C>
ALUMINUM (1.6%)
Reynolds Metals Co. ............. 96,600 $ 5,699,400
------------
AUTO PARTS & EQUIPMENT (1.6%)
Federal-Mogul Corp. ............. 14,000 728,000
Mark IV Industries, Inc. ........ 231,000 4,879,875
------------
5,607,875
------------
BANKS (3.8%)
Bank of America Corp. ........... 92,534 6,783,899
Washington Mutual, Inc. ......... 189,500 6,703,563
------------
13,487,462
------------
BUILDING MATERIALS (1.0%)
Sherwin-Williams Co. (The)....... 124,300 3,449,325
------------
CHEMICALS (3.1%)
Geon Co. (The)................... 49,600 1,599,600
IMC Global Inc. ................. 240,500 4,238,813
Lyondell Chemical Co. ........... 239,100 4,931,437
------------
10,769,850
------------
COMPUTER SYSTEMS (1.3%)
Seagate Technology, Inc. (a)..... 182,600 4,679,125
------------
COMPUTERS--NETWORKING (2.1%)
Adaptec Inc. (a)................. 212,100 7,489,781
------------
CONTAINERS--METAL &
GLASS (1.6%)
Owens-Illinois Inc. (a).......... 168,400 5,504,575
------------
CONTAINERS--PAPER (2.7%)
Smurfit-Stone Container Corp.
(a)............................. 305,000 6,271,563
Temple-Inland Inc. .............. 49,000 3,344,250
------------
9,615,813
------------
ELECTRIC POWER COMPANIES (7.7%)
DTE Energy Co. .................. 110,500 4,420,000
Energy East Corp. ............... 142,600 3,707,600
Illinova Corp. .................. 191,600 5,221,100
Niagara Mohawk Holdings, Inc.
(a)............................. 347,700 5,584,931
OGE Energy Corp. ................ 56,900 1,351,375
Texas Utilities Co. ............. 160,300 6,612,375
------------
26,897,381
------------
ELECTRICAL EQUIPMENT (1.4%)
Honeywell Inc. .................. 42,000 4,866,750
------------
ENGINEERING & CONSTRUCTION (1.6%)
Fluor Corp. ..................... 137,100 5,552,550
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
FINANCIAL--MISCELLANEOUS (4.5%)
Citigroup Inc. .................. 146,623 $ 6,964,592
Equitable Cos., Inc. (The)....... 82,400 5,520,800
SLM Holding Corp. ............... 71,000 3,252,688
------------
15,738,080
------------
FOOD (1.0%)
ConAgra, Inc. ................... 128,900 3,431,962
------------
HEALTH CARE--HMOs (2.9%)
United Healthcare Corp. ......... 163,300 10,226,663
------------
HEAVY DUTY TRUCKS & PARTS (0.8%)
Dana Corp. ...................... 63,079 2,905,576
------------
HOTEL/MOTEL (2.1%)
Harrah's Entertainment, Inc.
(a)............................. 329,100 7,240,200
------------
INSURANCE (9.2%)
Allstate Corp. (The)............. 219,200 7,863,800
Chubb Corp. ..................... 83,300 5,789,350
CIGNA Corp. ..................... 90,000 8,010,000
Conseco, Inc. ................... 148,400 4,516,925
MGIC Investment Corp. ........... 132,800 6,225,000
------------
32,405,075
------------
LEISURE TIME (0.3%)
Callaway Golf Co. ............... 72,700 1,063,237
------------
MACHINERY--DIVERSIFIED (2.3%)
American Standard Cos. Inc.
(a)............................. 168,100 7,963,738
------------
NATURAL GAS DISTRIBUTORS &
PIPELINES (4.7%)
Coastal Corp. (The).............. 163,800 6,552,000
Consolidated Natural Gas Co. .... 57,000 3,462,750
El Paso Energy Corp. ............ 122,400 4,306,950
KeySpan Energy................... 81,312 2,144,604
------------
16,466,304
------------
OIL & GAS SERVICES (15.3%)
Kerr-McGee Corp. ................ 133,752 6,712,678
Noble Affiliates, Inc. .......... 197,600 5,569,850
Ocean Energy, Inc. (a)........... 424,170 4,082,636
Santa Fe Synder Corp. (a)........ 365,000 2,783,125
Texaco Inc. ..................... 111,700 6,981,250
Tosco Corp. ..................... 254,600 6,603,687
Union Pacific Resources Group
Inc. ........................... 544,200 8,877,263
Unocal Corp. .................... 176,800 7,005,700
Valero Energy Corp. ............. 237,400 5,089,263
------------
53,705,452
------------
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
101
<PAGE> 102
VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
PAPER & FOREST PRODUCTS (2.8%)
Bowater Inc. .................... 42,800 $ 2,022,300
Georgia-Pacific Corp. ........... 88,700 4,202,162
International Paper Co. ......... 74,200 3,747,100
------------
9,971,562
------------
POLLUTION CONTROL (1.7%)
Browning-Ferris Industries
Inc. ........................... 143,400 6,166,200
------------
RETAIL (4.8%)
Federated Department Stores, Inc.
(a)............................. 128,000 6,776,000
Kmart Corp. (a).................. 272,400 4,477,575
Payless ShoeSource, Inc. (a)..... 68,300 3,654,050
Saks Inc. (a).................... 67,900 1,960,613
------------
16,868,238
------------
SPECIALIZED SERVICES (1.4%)
Service Corp. International...... 263,200 5,066,600
------------
STEEL (2.0%)
UCAR International Inc. (a)...... 85,900 2,168,975
USX Corp. ....................... 181,300 4,895,100
------------
7,064,075
------------
TELECOMMUNICATIONS--
LONG DISTANCE (1.7%)
AT&T Corp. ...................... 105,600 5,893,800
------------
TELEPHONE (1.8%)
Nippon Telegraph & Telephone
Corp. ADR (b)(c)................ 100,500 6,293,813
------------
TEXTILES--APPAREL MANUFACTURERS
(1.5%)
Liz Claiborne, Inc. ............. 142,100 5,186,650
------------
TEXTILES--HOME FURNISHINGS (0.9%)
Shaw Industries, Inc. (a)........ 195,000 3,217,500
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
COMMON STOCKS (CONTINUED)
<S> <C> <C>
TOBACCO (3.1%)
Philip Morris Cos. Inc. ......... 249,600 $ 10,030,800
R.J. Reynolds Tobacco Holdings,
Inc. (a)........................ 22,033 694,050
------------
10,724,850
------------
TOYS (1.1%)
Mattel, Inc. .................... 149,100 3,941,831
------------
Total Common Stocks
(Cost $301,048,760)............. 335,161,293
------------
SHORT-TERM INVESTMENTS (4.3%)
COMMERCIAL PAPER (4.3%)
American Express Credit Corp.
4.92%, due 7/7/99............... $ 5,000,000 $ 4,995,894
Ford Motor Credit Co.
5.65%, due 7/1/99............... 10,135,000 10,135,000
------------
Total Short-Term Investments
(Cost $15,130,894).............. 15,130,894
------------
Total Investments
(Cost $316,179,654) (d)......... 99.7% 350,292,187(e)
Cash and Other Assets,
Less Liabilities................ 0.3 917,233
---------- ----------
Net Assets....................... 100.0% $351,209,420
========== ==========
</TABLE>
- ------------
(a) Non-income producing security.
(b) ADR--American Depository Receipt.
(c) Segregated as collateral for foreign currency forward contract.
(d) The cost for Federal income tax purposes is $316,449,107.
(e) At June 30, 1999 net unrealized appreciation was $33,843,080, based on cost
for Federal income tax purposes. This consisted of aggregate gross
unrealized appreciation for all investments on which there was an excess of
market value over cost of $46,846,516 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $13,003,436.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
102
<PAGE> 103
MAINSTAY VP SERIES FUND, INC.
VALUE PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $316,179,654)......... $350,292,187
Cash..................................... 3,020
Receivables:
Investment securities sold............. 11,779,906
Dividends.............................. 682,658
Fund shares sold....................... 236,464
Unrealized appreciation on foreign
currency forward contract.............. 25,587
------------
Total assets..................... 363,019,822
------------
LIABILITIES:
Payables:
Investment securities purchased........ 11,514,162
Adviser................................ 103,505
Shareholder communication.............. 92,761
Administrator.......................... 57,503
Custodian.............................. 13,651
Directors.............................. 278
Accrued expenses......................... 28,542
------------
Total liabilities................ 11,810,402
------------
Net assets applicable to outstanding
shares................................. $351,209,420
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 100 million shares authorized... $ 220,176
Additional paid-in capital............... 318,882,274
Accumulated undistributed net investment
income................................. 2,164,504
Accumulated net realized loss on
investments............................ (4,195,654)
Net unrealized appreciation on
investments............................ 34,112,533
Net unrealized appreciation on foreign
currency forward contract.............. 25,587
------------
Net assets applicable to outstanding
shares................................. $351,209,420
============
Shares of capital stock outstanding...... 22,017,598
============
Net asset value per share outstanding.... $ 15.95
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends.............................. $ 2,924,948
Interest............................... 258,995
------------
Total income..................... 3,183,943
------------
Expenses:
Advisory............................... 580,530
Administration......................... 322,517
Shareholder communication.............. 52,810
Professional........................... 26,716
Custodian.............................. 18,846
Directors.............................. 7,292
Miscellaneous.......................... 10,728
------------
Total expenses................... 1,019,439
------------
Net investment income.................... 2,164,504
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
FORWARD CONTRACT TRANSACTIONS:
Net realized gain (loss) from:
Security transactions.................. (3,359,034)
Foreign currency forward contract
transactions......................... 235,448
------------
Net realized loss on investments and
foreign currency forward contract
transactions........................... (3,123,586)
------------
Net change in unrealized appreciation
(depreciation) on investments:
Security transactions.................. 44,131,116
Foreign currency forward contract...... 104,603
------------
Net unrealized gain on investments and
foreign currency forward contract
transactions........................... 44,235,719
------------
Net realized and unrealized gain on
investments and foreign currency
forward contract transactions.......... 41,112,133
------------
Net increase in net assets resulting from
operations............................. $ 43,276,637
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
103
<PAGE> 104
VALUE PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999 1998
---------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 2,164,504 $ 5,023,618
Net realized gain (loss) on investments................... (3,359,034) 21,769,146
Net realized gain on foreign currency forward contract
transactions............................................ 235,448 --
Net change in unrealized appreciation (depreciation) on
investments............................................. 44,131,116 (44,777,169)
Net unrealized appreciation (depreciation) on foreign
currency forward contract............................... 104,603 (79,016)
------------ ------------
Net increase (decrease) in net assets resulting from
operations.............................................. 43,276,637 (18,063,421)
------------ ------------
Dividends and distributions to shareholders:
From net investment income................................ -- (5,031,657)
From net realized gain on investments..................... -- (24,497,929)
In excess of net realized gain on investments............. -- (1,072,068)
------------ ------------
Total dividends and distributions to shareholders....... -- (30,601,654)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares.......................... 13,665,128 90,387,964
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. -- 30,601,654
------------ ------------
13,665,128 120,989,618
Cost of shares redeemed................................... (25,475,358) (16,760,962)
------------ ------------
Increase (decrease) in net assets derived from capital
share transactions...................................... (11,810,230) 104,228,656
------------ ------------
Net increase in net assets.................................. 31,466,407 55,563,581
NET ASSETS:
Beginning of period......................................... 319,743,013 264,179,432
------------ ------------
End of period............................................... $351,209,420 $319,743,013
============ ============
Accumulated undistributed net investment income at end of
period.................................................... $ 2,164,504 $ --
============ ============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
MAY 1,
SIX MONTHS 1995 (a)
ENDED THROUGH
JUNE 30, YEAR ENDED DECEMBER 31 DECEMBER 31,
1999* 1998 1997 1996 1995
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period.... $ 13.96 $ 16.09 $ 13.90 $ 11.58 $ 10.00
------------ ------------ ------------ ------------ ------------
Net investment income..................... 0.10 0.24 0.21 0.17 0.10
Net realized and unrealized gain (loss) on
investments............................. 1.89 (0.90) 2.94 2.52 1.58
------------ ------------ ------------ ------------ ------------
Total from investment operations.......... 1.99 (0.66) 3.15 2.69 1.68
------------ ------------ ------------ ------------ ------------
Less dividends and distributions:
From net investment income.............. -- (0.24) (0.21) (0.17) (0.10)
From net realized gain on investments... -- (1.23) (0.75) (0.20) --
------------ ------------ ------------ ------------ ------------
Total dividends and distributions......... -- (1.47) (0.96) (0.37) (0.10)
------------ ------------ ------------ ------------ ------------
Net asset value at end of period.......... $ 15.95 $ 13.96 $ 16.09 $ 13.90 $ 11.58
============ ============ ============ ============ ============
Total investment return................... 14.30%(b) (4.14%) 22.89% 23.22% 16.76%(b)
</TABLE>
<TABLE>
Ratios (to average net assets)/Supplemental Data:
<S> <C> <C> <C> <C> <C>
Net investment income...................... 1.34%+ 1.60% 1.78% 2.10% 2.57%+
Net expenses............................... 0.63%+ 0.65% 0.65% 0.73% 0.73%+
Expenses (before reimbursement)............ 0.63%+ 0.65% 0.65% 0.79% 1.45%+
Portfolio turnover rate...................... 36% 69% 48% 41% 20%
Net assets at end of period (in 000's)....... $ 351,209 $ 319,743 $ 264,179 $ 120,415 $ 24,429
</TABLE>
- ------------
(a) Commencement of Operations.
(b) Total return is not annualized.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
104
<PAGE> 105
MAINSTAY VP SERIES FUND, INC.
BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
LONG-TERM BONDS (96.0%)+
CORPORATE BONDS (51.8%)
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
AIRPORT TRANSPORTATION (1.7%)
Delta Airlines, Inc.
6.65%, due 3/15/04.............. $ 5,000,000 $ 4,918,750
------------
BANKS (4.9%)
BankAmerica Corp.
7.75%, due 7/15/02.............. 4,000,000 4,150,000
Fleet National Bank
5.75%, due 1/15/09.............. 5,000,000 4,556,250
Golden West Financial Corp.
10.25%, due 12/1/00............. 1,000,000 1,051,250
Popular Inc.
6.20%, due 4/30/01.............. 5,000,000 4,956,250
------------
14,713,750
------------
CHEMICALS (1.0%)
Praxair, Inc.
6.15%, due 4/15/03.............. 3,000,000 2,947,500
------------
CONTAINERS (1.6%)
Owens-Illinois, Inc.
7.80%, due 5/15/18.............. 5,000,000 4,625,000
------------
ELECTRIC POWER COMPANIES (1.7%)
Niagara Mohawk Power Corp.
7.125%, due 7/1/01.............. 5,000,000 5,018,750
------------
ELECTRIC UTILITIES (3.4%)
Cleveland Electric Illuminating
Co.
7.88%, due 11/1/17.............. 5,000,000 5,081,250
Commonwealth Edison Co.
6.95%, due 7/15/18.............. 5,000,000 4,787,500
------------
9,868,750
------------
ELECTRONICS/ELECTRIC (3.0%)
Raytheon Co.
5.95%, due 3/15/01.............. 5,000,000 4,981,250
6.75%, due 3/15/18.............. 4,000,000 3,775,000
------------
8,756,250
------------
FINANCE (13.6%)
Chrysler Financial Corp.
5.875%, due 2/7/01.............. 5,000,000 4,993,750
CIT Group Inc.
6.50%, due 6/14/02.............. 3,000,000 3,003,750
Ford Motor Credit Corp.
5.80%, due 1/12/09.............. 5,000,000 4,568,750
General Motors Acceptance Corp.
5.625%, due 2/15/01............. 6,000,000 5,955,000
Household Finance Corp.
6.50%, due 11/15/08............. 5,000,000 4,768,750
John Deere Capital Corp.
5.35%, due 10/23/01............. 5,000,000 4,893,750
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------
CORPORATE BONDS (51.8%)
<S> <C> <C>
FINANCE (Continued)
Norwest Financial, Inc.
6.85%, due 7/15/09.............. $ 7,000,000 $ 6,938,750
Providian National Bank
6.75%, due 3/15/02.............. 5,000,000 4,975,000
------------
40,097,500
------------
MEDIA (1.6%)
News America Inc.
7.125%, due 4/8/28.............. 5,000,000 4,556,250
------------
OIL & GAS (3.0%)
Conoco, Inc.
6.95%, due 4/15/29.............. 5,000,000 4,687,500
Oryx Energy Co.
9.50%, due 11/1/99 (a).......... 4,235,000 4,272,056
------------
8,959,556
------------
PAPER/PRODUCTS (1.6%)
Champion International Corp.
9.875%, due 6/1/00.............. 4,500,000 4,640,625
------------
POLLUTION CONTROL (1.4%)
USA Waste Services, Inc.
7.00%, due 10/1/04.............. 4,000,000 4,025,000
------------
RAILROADS (4.1%)
CSX Corp.
7.05%, due 5/1/02............... 7,000,000 7,087,500
Norfolk Southern Corp.
7.80%, due 5/15/27.............. 5,000,000 5,193,750
------------
12,281,250
------------
RETAIL STORES (2.4%)
Harcourt General, Inc.
9.50%, due 3/15/00.............. 2,000,000 2,037,500
Penney (J.C.) Co., Inc.
6.95%, due 4/1/00............... 5,000,000 5,037,500
------------
7,075,000
------------
RETAIL -- FOOD (1.7%)
Kroger Co.
7.70%, due 6/1/29............... 5,000,000 4,962,500
------------
TELECOMMUNICATIONS (3.5%)
Sprint Capital Corp.
6.875%, due 11/15/28............ 6,000,000 5,482,500
Worldcom, Inc.
6.40%, due 8/15/05.............. 5,000,000 4,881,250
------------
10,363,750
------------
WHOLESALE--FOOD (1.6%)
Pepsi Bottling Group, Inc.
7.00%, due 3/1/29............... 5,000,000 4,693,750
------------
Total Corporate Bonds
(Cost $156,621,334)............. 152,503,931
------------
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
105
<PAGE> 106
BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
U.S. GOVERNMENT &
FEDERAL AGENCIES (42.5%)
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
FEDERAL HOME LOAN BANK (1.7%)
5.625%, due 3/19/01............. $ 5,000,000 $ 4,991,000
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (7.2%)
5.125%, due 2/13/04............. 15,000,000 14,372,400
5.91%, due 8/25/03.............. 7,000,000 6,913,480
------------
21,285,880
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (MORTGAGE PASS-THROUGH
SECURITIES) (18.0%)
6.00%, due 2/1/14-12/1/27....... 8,313,114 7,934,803
6.50%, due 6/1/09-1/1/28........ 18,975,348 18,417,517
7.00%, due 2/1/27-1/1/28........ 16,370,954 16,186,781
7.50%, due 7/1/28............... 5,036,608 5,088,536
8.00%, due 5/1/25............... 5,112,838 5,242,244
------------
52,869,881
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION I
(MORTGAGE PASS-THROUGH
SECURITY) (0.7%)
9.00%, due 4/15/26.............. 2,051,641 2,178,576
------------
UNITED STATES TREASURY
BONDS (3.9%)
5.25%, due 11/15/28............. 8,000,000 7,091,280
7.125%, due 2/15/23............. 4,000,000 4,431,520
------------
11,522,800
------------
UNITED STATES TREASURY
NOTES (11.0%)
5.50%, due 3/31/03.............. 7,000,000 6,838,090
5.875%, due 11/15/05............ 5,000,000 5,000,000
6.125%, due 8/15/07............. 5,000,000 5,052,150
6.50%, due 8/15/05.............. 15,000,000 15,422,850
------------
32,313,090
------------
Total U.S. Government &
Federal Agencies
(Cost $126,727,861)............. 125,161,227
------------
YANKEE BONDS (1.7%)
CRUDE PETROLEUM &
NATURAL GAS (1.7%)
Gulf Canada Resources Ltd.
9.00%, due 8/15/99 (a).......... 5,000,000 5,012,500
------------
Total Yankee Bonds
(Cost $5,011,404)............... 5,012,500
------------
Total Long-Term Bonds
(Cost $288,360,599)............. 282,677,658
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
SHORT-TERM
INVESTMENTS (2.5%)
COMMERCIAL PAPER (2.5%)
Allergan, Inc.
5.20%, due 7/13/99.............. $ 1,100,000 $ 1,098,093
Associates Corp. of North America
4.708%, due on demand (b)....... 2,597,000 2,597,000
General Electric Capital Corp.
5.70%, due 7/1/99............... 3,511,000 3,511,000
------------
Total Short-Term Investments
(Cost $7,206,093)............... 7,206,093
------------
Total Investments
(Cost $295,566,692) (c)......... 98.5% 289,883,751(d)
Cash and Other Assets,
Less Liabilities................ 1.5 4,273,653
---------- ------------
Net Assets....................... 100.0% $294,157,404
========== ============
</TABLE>
- ------------
(a) Long-term security maturing within the subsequent twelve month period.
(b) Adjustable rate. Rate shown is the rate in effect at
June 30, 1999.
(c) The cost for Federal income tax purposes is $295,667,597.
(d) At June 30, 1999 net unrealized depreciation was $5,783,846, based on cost
for Federal income tax purposes. This consisted of aggregate gross
unrealized appreciation for all investments on which there was an excess of
market value over cost of $940,795 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $6,724,641.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
106
<PAGE> 107
MAINSTAY VP SERIES FUND, INC.
BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $295,566,692)......... $289,883,751
Cash..................................... 2,722
Receivables:
Interest............................... 4,577,882
Investment securities sold............. 3,350,000
Fund shares sold....................... 202,500
------------
Total assets..................... 298,016,855
------------
LIABILITIES:
Payables:
Investment securities purchased........ 3,510,444
Fund shares redeemed................... 143,781
Shareholder communication.............. 67,070
Adviser................................ 60,149
Administrator.......................... 48,120
Directors.............................. 164
Accrued expenses......................... 29,723
------------
Total liabilities................ 3,859,451
------------
Net assets applicable to outstanding
shares................................. $294,157,404
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 100 million shares authorized... $ 226,658
Additional paid-in capital............... 292,166,538
Accumulated undistributed net investment
income................................. 8,206,612
Accumulated net realized loss on
investments............................ (759,463)
Net unrealized depreciation on
investments............................ (5,682,941)
------------
Net assets applicable to outstanding
shares................................. $294,157,404
============
Shares of capital stock outstanding...... 22,665,778
============
Net asset value per share outstanding.... $ 12.98
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................... $ 8,960,244
------------
Expenses:
Advisory............................... 361,835
Administration......................... 289,468
Shareholder communication.............. 32,288
Professional........................... 27,863
Directors.............................. 6,619
Portfolio pricing...................... 3,392
Miscellaneous.......................... 6,941
------------
Total expenses................... 728,406
------------
Net investment income.................... 8,231,838
------------
REALIZED AND UNREALIZED LOSS ON
INVESTMENTS:
Net realized loss on investments......... (759,463)
Net change in unrealized appreciation on
investments............................ (13,075,119)
------------
Net realized and unrealized loss on
investments............................ (13,834,582)
------------
Net decrease in net assets resulting from
operations............................. $ (5,602,744)
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
107
<PAGE> 108
BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999 1998
---------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 8,231,838 $ 14,515,227
Net realized gain (loss) on investments................... (759,463) 6,948,226
Net change in unrealized appreciation on investments...... (13,075,119) 19,352
------------ ------------
Net increase (decrease) in net assets resulting from
operations.............................................. (5,602,744) 21,482,805
------------ ------------
Dividends and distributions to shareholders:
From net investment income................................ (32,869) (14,391,518)
From net realized gain on investments..................... -- (7,064,292)
------------ ------------
Total dividends and distributions to shareholders....... (32,869) (21,455,810)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares.......................... 42,271,979 63,383,438
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. 32,869 21,455,810
------------ ------------
42,304,848 84,839,248
Cost of shares redeemed................................... (19,904,062) (36,423,049)
------------ ------------
Increase in net assets derived from capital share
transactions............................................ 22,400,786 48,416,199
------------ ------------
Net increase in net assets.................................. 16,765,173 48,443,194
NET ASSETS:
Beginning of period......................................... 277,392,231 228,949,037
------------ ------------
End of period............................................... $294,157,404 $277,392,231
============ ============
Accumulated undistributed net investment income at end of
period.................................................... $ 8,206,612 $ 7,643
============ ============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31
1999* 1998 1997 1996 1995 1994
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period.................. $ 13.23 $ 13.14 $ 12.83 $ 13.42 $ 12.09 $ 13.43
------------ ------------ ------------ ------------ ------------ ------------
Net investment income........ 0.36 0.74 0.88 0.87 0.88 0.88
Net realized and unrealized
gain (loss) on
investments................ (0.60) 0.46 0.35 (0.59) 1.33 (1.34)
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations................. (0.24) 1.20 1.23 0.28 2.21 (0.46)
------------ ------------ ------------ ------------ ------------ ------------
Less dividends and
distributions:
From net investment
income................... (0.01) (0.74) (0.88) (0.87) (0.88) (0.88)
From net realized gain
on investments........... -- (0.37) (0.04) -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions.............. (0.01) (1.11) (0.92) (0.87) (0.88) (0.88)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value at end of
period..................... $ 12.98 $ 13.23 $ 13.14 $ 12.83 $ 13.42 $ 12.09
============ ============ ============ ============ ============ ============
Total investment return...... (1.88%)(a) 9.12% 9.65% 2.05% 18.31% (3.39%)
Ratios (to average net
assets)/ Supplemental Data:
Net investment income...... 5.69%+ 5.86% 6.42% 6.31% 6.55% 6.53%
Net expenses............... 0.50%+ 0.52% 0.50% 0.58% 0.62% 0.62%
Expenses (before
reimbursement)........... 0.50%+ 0.52% 0.50% 0.58% 0.91% 0.67%
Portfolio turnover rate...... 129% 206% 187% 103% 81% 88%
Net assets at end of period
(in 000's)................. $ 294,157 $ 277,392 $ 228,949 $ 226,375 $ 235,030 $ 206,686
</TABLE>
- ------------
(a) Total return is not annualized.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
108
<PAGE> 109
MAINSTAY VP SERIES FUND, INC.
GROWTH EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30,1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (96.9%)+
SHARES VALUE
------------------------
<S> <C> <C>
ALUMINUM (1.1%)
Alcoa Inc....................... 200,000 $ 12,375,000
--------------
BANKS--MAJOR REGIONAL (2.8%)
Bank of New York Co., Inc.
(The).......................... 300,000 11,006,250
Mellon Bank Corp................ 286,000 10,403,250
U.S. Bancorp.................... 310,000 10,540,000
--------------
31,949,500
--------------
BANKS--MONEY CENTER (1.0%)
Bank of America Corp............ 160,000 11,730,000
--------------
BEVERAGES--ALCOHOLIC (1.0%)
Anheuser-Busch Cos., Inc........ 160,000 11,350,000
--------------
BEVERAGES--SOFT DRINKS (0.4%)
Pepsi Bottling Group Inc........ 190,000 4,381,875
--------------
BROADCAST/MEDIA (6.4%)
Capstar Broadcasting Corp. Class
A (a).......................... 382,600 10,473,675
Clear Channel Communications,
Inc. (a)....................... 150,000 10,340,625
Comcast Corp. Special Class A... 450,000 17,296,875
MediaOne Group Inc. (a)......... 230,000 17,106,250
News Corp. Ltd. (The) ADR (b)... 310,000 10,946,875
USA Networks, Inc. (a).......... 147,000 5,898,375
--------------
72,062,675
--------------
CHEMICALS (0.6%)
IMC Global Inc.................. 300,000 5,287,500
Praxair Inc..................... 27,000 1,321,313
--------------
6,608,813
--------------
COMMUNICATIONS--EQUIPMENT MANUFACTURERS
(7.9%)
ADC Telecommunications, Inc.
(a)............................ 280,000 12,757,500
Cisco Systems, Inc. (a)......... 220,000 14,148,750
Lucent Technologies Inc. ....... 231,000 15,578,063
Nokia Corp. ADR (b)............. 200,000 18,312,500
Nortel Networks Corp. .......... 180,000 15,626,250
Tellabs, Inc. (a)............... 200,000 13,512,500
--------------
89,935,563
--------------
COMPUTER SOFTWARE & SERVICES
(4.0%)
America Online Inc. (a)......... 110,000 12,155,000
Ceridian Corp. (a).............. 280,000 9,152,500
Microsoft Corp. (a)............. 150,000 13,528,125
SunGard Data Systems Inc. (a)... 300,000 10,350,000
--------------
45,185,625
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
COMPUTER SYSTEMS (4.4%)
Comdisco Inc. .................. 550,000 $ 14,093,750
EMC Corp. (a)................... 180,000 9,900,000
Hewlett-Packard Co. ............ 120,000 12,060,000
Sun Microsystems, Inc. (a)...... 200,000 13,775,000
--------------
49,828,750
--------------
CONTAINERS--PAPER (0.9%)
Smurfit-Stone Container Corp.
(a)............................ 500,000 10,281,250
--------------
ELECTRIC POWER COMPANIES (0.5%)
Duke Energy Corp................ 100,000 5,437,500
--------------
ELECTRICAL EQUIPMENT (2.9%)
Emerson Electric Co............. 170,000 10,688,750
General Electric Co............. 200,000 22,600,000
--------------
33,288,750
--------------
ELECTRONICS--SEMICONDUCTORS
(3.9%)
Applied Materials, Inc. (a)..... 160,000 11,820,000
Motorola, Inc................... 110,000 10,422,500
Texas Instruments Inc. ......... 110,000 15,950,000
Vitesse Semiconductor Corp.
(a)............................ 90,000 6,069,375
--------------
44,261,875
--------------
ENTERTAINMENT (1.3%)
Time Warner Inc................. 200,000 14,400,000
--------------
FINANCIAL--MISCELLANEOUS (5.1%)
American Express Co. ........... 90,000 11,711,250
American General Corp. ......... 120,000 9,045,000
Associates First Capital Corp.
Class A........................ 260,000 11,521,250
Citigroup Inc. ................. 300,000 14,250,000
Freddie Mac..................... 200,000 11,600,000
--------------
58,127,500
--------------
FOOD & HEALTH CARE DISTRIBUTORS
(1.7%)
Cardinal Health, Inc. .......... 135,000 8,656,875
SYSCO Corp...................... 360,000 10,732,500
--------------
19,389,375
--------------
HEALTH CARE--DIVERSIFIED (4.8%)
Abbott Laboratories............. 225,000 10,237,500
American Home Products Corp. ... 200,000 11,500,000
Bristol-Myers Squibb Co. ....... 190,000 13,383,125
Johnson & Johnson............... 120,000 11,760,000
Warner-Lambert Co............... 112,250 7,787,344
--------------
54,667,969
--------------
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
109
<PAGE> 110
GROWTH EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
HEALTH CARE--DRUGS (3.7%)
Glaxo Wellcome PLC ADR (b)...... 150,000 $ 8,493,750
Lilly (Eli) & Co. .............. 160,000 11,460,000
Pharmacia & Upjohn, Inc. ....... 200,000 11,362,500
SmithKline Beecham PLC ADR (b).. 157,300 10,391,631
--------------
41,707,881
--------------
HEALTH CARE--MEDICAL PRODUCTS
(1.0%)
Biomet, Inc..................... 150,000 5,962,500
Genzyme Corp.-- General Division
(a)............................ 100,000 4,850,000
Genzyme Surgical Products (a)... 35,802 157,754
--------------
10,970,254
--------------
HEAVY DUTY TRUCKS & PARTS (1.5%)
Eaton Corp...................... 180,000 16,560,000
--------------
INSURANCE BROKERS (0.9%)
Marsh & McLennan Cos., Inc...... 135,000 10,192,500
--------------
INSURANCE--LIFE (0.9%)
Provident Cos., Inc............. 260,000 10,400,000
--------------
INSURANCE--MULTI-LINE (1.0%)
American International Group,
Inc............................ 95,800 11,214,587
--------------
INSURANCE--PROPERTY & CASUALTY
(0.8%)
Allstate Corp. (The)............ 250,000 8,968,750
--------------
INTERNET SOFTWARE & SERVICES
(0.1%)
Rhythms NetConnections Inc.
(a)............................ 23,500 1,371,812
--------------
MACHINERY--DIVERSIFIED (0.5%)
Ingersoll-Rand Co............... 91,000 5,880,875
--------------
MANUFACTURING--DIVERSIFIED
(2.7%)
AlliedSignal Inc................ 260,000 16,380,000
Tyco International Ltd.......... 150,000 14,212,500
--------------
30,592,500
--------------
NATURAL GAS DISTRIBUTORS & PIPELINES (2.0%)
Coastal Corp. (The)............. 280,000 11,200,000
Enron Corp...................... 135,000 11,036,250
--------------
22,236,250
--------------
OFFICE EQUIPMENT & SUPPLIES
(0.9%)
Xerox Corp...................... 180,000 10,631,250
--------------
OIL & GAS DRILLING (0.5%)
Transocean Offshore Inc......... 200,000 5,250,000
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
OIL & GAS--EQUIPMENT & SERVICES
(1.6%)
Halliburton Co.................. 200,000 $ 9,050,000
Schlumberger Ltd................ 150,000 9,553,125
--------------
18,603,125
--------------
OIL--INTEGRATED DOMESTIC (0.7%)
USX-Marathon Group.............. 250,000 8,140,625
--------------
OIL--INTEGRATED INTERNATIONAL
(2.3%)
BP Amoco PLC ADR (b)............ 65,791 7,138,323
Conoco Inc. Class A............. 200,000 5,575,000
Mobil Corp...................... 140,000 13,860,000
--------------
26,573,323
--------------
PAPER & FOREST PRODUCTS (1.1%)
Boise Cascade Corp.............. 275,000 11,825,000
--------------
PUBLISHING (1.0%)
McGraw-Hill Cos., Inc. (The).... 214,000 11,542,625
--------------
RAILROADS (1.0%)
Union Pacific Corp.............. 185,000 10,787,812
--------------
REAL ESTATE INVESTMENT/
MANAGEMENT (1.1%)
Chelsea GCA Realty, Inc......... 96,300 3,575,138
First Industrial Realty Trust,
Inc............................ 175,000 4,801,562
Liberty Property Trust.......... 166,500 4,141,687
--------------
12,518,387
--------------
RETAIL STORES--DEPARTMENT (1.3%)
Federated Department Stores,
Inc. (a)....................... 275,000 14,557,813
--------------
RETAIL STORES--FOOD (2.4%)
Kroger Co. (The) (a)............ 540,000 15,086,250
Safeway Inc. (a)................ 220,000 10,890,000
Smart & Final Inc............... 163,000 1,711,500
--------------
27,687,750
--------------
RETAIL STORES--GENERAL
MERCHANDISE (1.3%)
Wal-Mart Stores, Inc............ 300,000 14,475,000
--------------
RETAIL STORES--SPECIALTY (1.9%)
Costco Cos., Inc. (a)........... 175,000 14,010,938
CVS Corp........................ 148,000 7,566,500
--------------
21,577,438
--------------
SPECIALIZED SERVICES (3.5%)
Acxiom Corp. (a)................ 200,000 4,987,500
Cendant Corp. (a)............... 560,000 11,480,000
Fiserv, Inc. (a)................ 250,000 7,828,125
ServiceMaster Co. (The)......... 400,000 7,500,000
Young & Rubicam Inc. (a)........ 175,000 7,951,563
--------------
39,747,188
--------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
110
<PAGE> 111
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
TELECOMMUNICATIONS--LONG
DISTANCE (6.3%)
Allegiance Telecom Inc. (a)..... 126,000 $ 6,914,250
AT&T Corp....................... 200,000 11,162,500
Global Crossing Ltd. (a)........ 163,744 6,969,354
MCI WorldCom, Inc. (a).......... 160,000 13,800,000
Qwest Communications
International Inc. (a)......... 300,000 9,918,750
Sprint Corp. (FON Group)........ 250,000 13,203,125
Sprint Corp. (PCS Group) (a).... 55,000 3,141,875
Time Warner Telecom Inc. Class A
(a)............................ 22,500 652,500
WinStar Communications, Inc.
(a)............................ 125,000 6,093,750
--------------
71,856,104
--------------
TELEPHONE (3.6%)
ALLTEL Corp..................... 175,000 12,512,500
Ameritech Corp.................. 206,000 15,141,000
Bell Atlantic Corp.............. 200,000 13,075,000
--------------
40,728,500
--------------
WASTE DISPOSAL (0.6%)
Republic Services, Inc. Class A
(a)............................ 273,500 6,769,125
--------------
Total Common Stocks (Cost
$762,414,402).................. 1,098,628,494
--------------
SHORT-TERM INVESTMENTS (3.5%)
COMMERCIAL PAPER (3.5%)
Associates Corp. of North
America
4.71%, due on demand (c)....... $16,100,000 $ 16,100,000
CIBA Specialty Chemical Corp.
5.45%, due 7/1/99.............. 21,390,000 21,390,000
General Electric Capital Corp.
5.70%, due 7/1/99.............. 2,539,000 2,539,000
--------------
Total Short-Term Investments
(Cost $40,029,000)............. 40,029,000
--------------
Total Investments
(Cost $802,443,402) (d)........ 100.4% 1,138,657,494(e)
Liabilities In Excess of
Cash and Other Assets.......... (0.4) (4,136,550)
---------- --------------
Net Assets...................... 100.0% $1,134,520,944
========== ==============
</TABLE>
- ------------
(a) Non-income producing security.
(b) ADR--American Depository Receipt.
(c) Adjustable rate. Rate shown is the rate in effect at June 30, 1999.
(d) The cost stated also represents the aggregate cost for Federal income tax
purposes.
(e) At June 30, 1999 net unrealized appreciation was $336,214,092, based on
cost for Federal income tax purposes. This consisted of aggregate gross
unrealized appreciation for all investments on which there was an excess of
market value over cost of $344,772,664 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $8,558,572.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
111
<PAGE> 112
GROWTH EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $802,443,402)....... $1,138,657,494
Cash................................... 2,276,104
Receivables:
Investment securities sold........... 11,538,743
Dividends and interest............... 916,488
Fund shares sold..................... 370,046
--------------
Total assets................... 1,153,758,875
--------------
LIABILITIES:
Payables:
Investment securities purchased...... 18,039,172
Fund shares redeemed................. 477,677
Shareholder communication............ 264,713
Adviser.............................. 226,190
Administrator........................ 180,952
Directors............................ 734
Accrued expenses....................... 48,493
--------------
Total liabilities.............. 19,237,931
--------------
Net assets applicable to outstanding
shares............................... $1,134,520,944
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 100 million shares
authorized........................... $ 425,678
Additional paid-in capital............. 724,058,834
Accumulated undistributed net
investment income.................... 3,460,263
Accumulated undistributed net realized
gain on investments.................. 70,362,077
Net unrealized appreciation on
investments.......................... 336,214,092
--------------
Net assets applicable to outstanding
shares............................... $1,134,520,944
==============
Shares of capital stock outstanding.... 42,567,825
==============
Net asset value per share
outstanding.......................... $ 26.65
==============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)........................ $ 4,689,834
Interest............................. 1,355,711
--------------
Total income................... 6,045,545
--------------
Expenses:
Advisory............................. 1,302,510
Administration....................... 1,042,008
Shareholder communication............ 142,896
Professional......................... 50,916
Directors............................ 23,460
Miscellaneous........................ 23,492
--------------
Total expenses................. 2,585,282
--------------
Net investment income.................. 3,460,263
--------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on investments....... 70,362,077
Net change in unrealized appreciation
on investments....................... 52,901,461
--------------
Net realized and unrealized gain on
investments.......................... 123,263,538
--------------
Net increase in net assets resulting
from operations...................... $ 126,723,801
==============
- ------------
(a) Dividends recorded net of foreign withholding taxes
in the amount of $35,451.
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
112
<PAGE> 113
MAINSTAY VP SERIES FUND, INC.
GROWTH EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999 1998
--------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 3,460,263 $ 7,259,332
Net realized gain on investments.......................... 70,362,077 73,678,921
Net change in unrealized appreciation on investments...... 52,901,461 123,768,075
---------------- -------------
Net increase in net assets resulting from operations...... 126,723,801 204,706,328
---------------- -------------
Dividends and distributions to shareholders:
From net investment income................................ -- (7,247,513)
From net realized gain on investments..................... -- (73,678,921)
---------------- -------------
Total dividends and distributions to shareholders....... -- (80,926,434)
---------------- -------------
Capital share transactions:
Net proceeds from sale of shares.......................... 92,717,744 121,819,072
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. -- 80,926,434
---------------- -------------
92,717,744 202,745,506
Cost of shares redeemed................................... (81,657,041) (88,843,247)
---------------- -------------
Increase in net assets derived from capital share
transactions............................................ 11,060,703 113,902,259
---------------- -------------
Net increase in net assets.................................. 137,784,504 237,682,153
NET ASSETS:
Beginning of period......................................... 996,736,440 759,054,287
---------------- -------------
End of period............................................... $ 1,134,520,944 $ 996,736,440
================ =============
Accumulated undistributed net investment income at end of
period.................................................... $ 3,460,263 $ --
================ =============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31
1999* 1998 1997 1996 1995 1994
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period.... $ 23.62 $ 20.31 $ 18.63 $ 17.22 $ 14.69 $ 15.64
----------- ------------- ------------- ------------- ------------- -------------
Net investment income.... 0.08 0.19 0.16 0.18 0.22 0.22
Net realized and
unrealized gain (loss)
on investments......... 2.95 5.21 4.74 4.06 4.06 (0.03)
----------- ------------- ------------- ------------- ------------- -------------
Total from investment
operations............. 3.03 5.40 4.90 4.24 4.28 0.19
----------- ------------- ------------- ------------- ------------- -------------
Less dividends and
distributions:
From net investment
income............... -- (0.19) (0.16) (0.18) (0.22) (0.22)
From net realized gain
on investments....... -- (1.90) (3.06) (2.65) (1.53) (0.92)
----------- ------------- ------------- ------------- ------------- -------------
Total dividends and
distributions.......... -- (2.09) (3.22) (2.83) (1.75) (1.14)
----------- ------------- ------------- ------------- ------------- -------------
Net asset value at end of
period................. $ 26.65 $ 23.62 $ 20.31 $ 18.63 $ 17.22 $ 14.69
=========== ============= ============= ============= ============= =============
Total investment
return................. 12.86%(a) 26.59% 26.75% 24.50% 29.16% 1.20%
Ratios (to average net
assets)/
Supplemental Data:
Net investment
income............... 0.66%+ 0.84% 0.80% 0.98% 1.29% 1.41%
Net expenses........... 0.50%+ 0.51% 0.50% 0.58% 0.62% 0.62%
Expenses (before
reimbursement)....... 0.50%+ 0.51% 0.50% 0.58% 0.91% 0.65%
Portfolio turnover
rate................... 32% 69% 103% 104% 104% 108%
Net assets at end of
period (in 000's)...... $1,134,521 $ 996,736 $ 759,054 $ 564,685 $ 427,507 $ 330,161
</TABLE>
- ------------
(a) Total return is not annualized.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
113
<PAGE> 114
INDEXED EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (97.7%)+
SHARES VALUE
------------------------
<S> <C> <C>
AEROSPACE/DEFENSE (1.2%)
Boeing Co. (The)................ 109,667 $ 4,845,911
General Dynamics Corp. ......... 14,283 978,386
Goodrich (B.F.) Co. ............ 8,426 358,105
Lockheed Martin Corp. .......... 44,408 1,654,198
Northrop Grumman Corp. ......... 7,720 511,932
Raytheon Co.
Class B........................ 37,926 2,669,042
Rockwell International Corp. ... 21,568 1,310,256
United Technologies Corp. ...... 54,284 3,891,484
--------------
16,219,314
--------------
AIRLINES (0.3%)
AMR Corp. (a)................... 17,265 1,178,336
Delta Air Lines, Inc. .......... 15,813 911,224
Southwest Airlines Co. ......... 37,782 1,175,965
US Airways Group, Inc. (a)...... 8,284 360,872
--------------
3,626,397
--------------
ALUMINUM (0.3%)
Alcan Aluminum Ltd. ............ 25,479 813,735
Alcoa Inc. ..................... 41,379 2,560,326
Reynolds Metals Co. ............ 7,357 434,063
--------------
3,808,124
--------------
AUTO PARTS & EQUIPMENT (0.3%)
Cooper Tire & Rubber Co. ....... 8,564 202,325
Delphi Automotive Systems
Corp. ......................... 63,432 1,177,457
Genuine Parts Co. .............. 20,180 706,300
Goodyear Tire & Rubber Co.
(The).......................... 17,555 1,032,453
--------------
3,118,535
--------------
AUTOMOBILES (1.0%)
Ford Motor Co. ................. 136,344 7,694,915
General Motors Corp. ........... 72,986 4,817,076
--------------
12,511,991
--------------
BANKS--MAJOR REGIONAL (4.2%)
AmSouth Bancorp................. 19,886 461,107
Bank of New York Co., Inc.
(The).......................... 85,756 3,146,173
Bank One Corp. ................. 133,141 7,930,211
BankBoston Corp. ............... 33,423 1,708,751
BB&T Corp. ..................... 35,375 1,297,820
Comerica Inc. .................. 17,606 1,046,457
Fifth Third Bancorp............. 30,250 2,013,516
Firstar Corp. .................. 74,450 2,084,600
Fleet Financial Group, Inc. .... 64,237 2,850,517
Huntington Bancshares Inc. ..... 23,622 826,770
KeyCorp......................... 50,469 1,621,317
Mellon Bank Corp. .............. 58,704 2,135,358
Mercantile Bancorp., Inc. ...... 17,753 1,014,140
National City Corp. ............ 35,365 2,316,408
Northern Trust Corp. ........... 12,574 1,219,678
PNC Bank Corp. ................. 34,216 1,971,697
Regions Financial Corp. ........ 25,216 969,240
Republic New York Corp. ........ 11,824 806,249
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
BANKS--MAJOR REGIONAL (Continued)
SouthTrust Corp. ............... 18,783 $ 720,798
State Street Corp. ............. 18,070 1,542,726
Summit Bancorp. ................ 19,288 806,479
SunTrust Banks, Inc. ........... 36,205 2,513,985
Synovus Financial Corp. ........ 30,570 607,579
Union Planters Corp. ........... 16,014 715,625
U.S. Bancorp.................... 81,904 2,784,736
Wachovia Corp. ................. 22,859 1,955,873
Wells Fargo Co. ................ 186,194 7,959,793
--------------
55,027,603
--------------
BANKS--MONEY CENTER (2.4%)
Bank of America Corp. .......... 196,364 14,395,936
Chase Manhattan Corp. (The)..... 95,176 8,244,621
First Union Corp. .............. 109,059 5,125,773
Morgan (J.P.) & Co., Inc. ...... 20,010 2,811,405
--------------
30,577,735
--------------
BANKS--SAVINGS & LOANS (0.2%)
Golden West Financial Corp. .... 6,376 624,848
Washington Mutual, Inc. ........ 67,353 2,382,612
--------------
3,007,460
--------------
BEVERAGES--ALCOHOLIC (0.4%)
Anheuser-Busch Cos., Inc. ...... 53,547 3,798,490
Brown-Forman Corp.
Class B........................ 7,674 500,249
Coors (Adolph) Co.
Class B........................ 4,122 204,039
--------------
4,502,778
--------------
BEVERAGES--SOFT DRINKS (2.0%)
Coca-Cola Co. (The) (c)......... 277,947 17,371,688
Coca-Cola Enterprises Inc. ..... 47,804 1,469,973
PepsiCo, Inc. .................. 163,982 6,344,053
--------------
25,185,714
--------------
BROADCAST/MEDIA (1.1%)
CBS Corp. (a)................... 79,999 3,474,957
Clear Channel Communications,
Inc. (a)....................... 37,424 2,579,917
Comcast Corp. Special Class A... 83,438 3,207,148
MediaOne Group Inc. (a)......... 68,192 5,071,780
--------------
14,333,802
--------------
BUILDING MATERIALS (0.1%)
Masco Corp. .................... 37,950 1,095,806
Owens Corning................... 6,214 213,606
Sherwin-Williams Co. (The)...... 19,128 530,802
--------------
1,840,214
--------------
CHEMICALS (1.5%)
Air Products & Chemicals,
Inc. .......................... 25,908 1,042,797
Dow Chemical Co. (The).......... 24,779 3,143,836
Du Pont (E.I.) De Nemours &
Co. ........................... 127,023 8,677,259
Eastman Chemical Co. ........... 8,900 460,575
Hercules Inc. .................. 11,316 444,860
Monsanto Co. ................... 71,125 2,804,992
Praxair, Inc. .................. 17,782 870,207
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
114
<PAGE> 115
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
CHEMICALS (Continued)
Rohm & Haas Co. ................ 23,887 $ 1,024,153
Union Carbide Corp. ............ 14,944 728,520
--------------
19,197,199
--------------
CHEMICALS--DIVERSIFIED (0.2%)
Avery Dennison Corp. ........... 12,790 772,196
Engelhard Corp. ................ 14,105 319,126
FMC Corp. (a)................... 3,537 241,621
PPG Industries, Inc. ........... 19,572 1,155,971
--------------
2,488,914
--------------
CHEMICALS--SPECIALTY (0.1%)
Grace (W.R.) & Co. (a).......... 7,837 144,005
Great Lakes Chemical Corp. ..... 6,571 302,677
Nalco Chemical Co. ............. 7,501 389,114
Sigma-Aldrich Corp. ............ 11,346 390,728
--------------
1,226,524
--------------
COMMUNICATIONS--EQUIPMENT MANUFACTURERS
(4.5%)
Andrew Corp. (a)................ 9,293 175,986
Cabletron Systems, Inc. (a)..... 20,747 269,711
Cisco Systems, Inc. (a)......... 358,364 23,047,285
General Instrument Corp. (a).... 19,491 828,368
Lucent Technologies, Inc. ...... 342,409 23,091,180
Network Appliance, Inc. (a)..... 5,600 312,900
Nortel Networks Corp. .......... 74,824 6,495,659
Scientific-Atlanta, Inc. ....... 8,393 302,148
Tellabs, Inc. (a)............... 44,124 2,981,128
3Com Corp. (a).................. 40,778 1,088,263
--------------
58,592,628
--------------
COMPUTER SOFTWARE & SERVICES (7.1%)
Adobe Systems Inc. ............. 6,839 561,867
America Online Inc. (a)......... 122,346 13,519,233
Autodesk, Inc. ................. 6,627 195,911
Automatic Data Processing,
Inc. .......................... 69,678 3,065,832
BMC Software, Inc. (a).......... 26,603 1,436,562
Ceridian Corp. (a).............. 16,229 530,485
Computer Associates
International, Inc. ........... 60,432 3,323,760
Computer Sciences Corp. (a)..... 17,940 1,241,224
Compuware Corp. (a)............. 41,419 1,317,642
Electronic Data Systems
Corp. ......................... 55,446 3,136,164
Equifax Inc. ................... 16,311 582,099
First Data Corp. ............... 48,618 2,379,243
Microsoft Corp. (a)(c).......... 574,804 51,840,136
Novell, Inc. (a)................ 37,908 1,004,562
Oracle Corp. (a)................ 162,149 6,019,782
Parametric Technology Corp.
(a)............................ 30,464 422,688
Paychex, Inc. .................. 27,718 883,511
PeopleSoft, Inc. (a)............ 27,127 467,941
Shared Medical Systems Corp. ... 2,899 189,160
--------------
92,117,802
--------------
COMPUTER SYSTEMS (5.3%)
Apple Computer, Inc. (a)........ 17,885 828,299
Compaq Computer Corp. .......... 191,518 4,536,583
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
COMPUTER SYSTEMS (Continued)
Data General Corp. (a).......... 5,718 $ 83,268
Dell Computer Corp. (a)......... 285,679 10,570,123
EMC Corp. (a)................... 114,032 6,271,760
Gateway Inc. (a)................ 17,716 1,045,244
Hewlett-Packard Co. ............ 114,131 11,470,166
International Business Machines
Corp. ......................... 204,354 26,412,755
Seagate Technology, Inc. (a).... 25,043 641,727
Silicon Graphics, Inc. (a)...... 21,276 348,395
Sun Microsystems, Inc. (a)...... 87,194 6,005,487
Unisys Corp. (a)................ 30,349 1,181,714
--------------
69,395,521
--------------
CONGLOMERATES (0.1%)
Tenneco Inc. ................... 19,290 460,549
Textron Inc. ................... 16,949 1,395,114
--------------
1,855,663
--------------
CONTAINERS--METAL & GLASS (0.1%)
Ball Corp. ..................... 3,407 143,946
Crown Cork & Seal Co., Inc. .... 13,787 392,929
Owens-Illinois, Inc. (a)........ 17,571 574,352
--------------
1,111,227
--------------
CONTAINERS--PAPER (0.1%)
Bemis Co., Inc. ................ 6,020 239,295
Temple-Inland Inc. ............. 6,360 434,070
--------------
673,365
--------------
COSMETICS/PERSONAL CARE (0.6%)
Alberto-Culver Co.
Class B........................ 6,369 169,575
Avon Products, Inc. ............ 29,493 1,636,862
Gillette Co. (The).............. 125,144 5,130,903
International Flavors &
Fragrances Inc. ............... 11,898 527,974
--------------
7,465,314
--------------
ELECTRIC POWER COMPANIES (2.0%)
Ameren Corp. ................... 15,443 592,625
American Electric Power Co.,
Inc. .......................... 21,692 814,806
Carolina Power & Light Co. ..... 17,065 730,595
Central & South West Corp. ..... 23,932 559,411
Cinergy Corp. .................. 17,872 571,904
CMS Energy Corp. ............... 13,200 552,750
Consolidated Edison, Inc. ...... 25,577 1,157,359
Constellation Energy Group...... 16,759 496,485
Dominion Resources, Inc. ....... 21,603 935,680
DTE Energy Co. ................. 16,361 654,440
Duke Energy Corp. .............. 40,976 2,228,070
Edison International............ 39,113 1,046,273
Entergy Corp. .................. 27,791 868,469
FirstEnergy Corp. .............. 26,441 819,671
Florida Progress Corp. ......... 11,000 454,438
FPL Group, Inc. ................ 20,283 1,107,959
GPU, Inc. ...................... 14,145 596,742
New Century Energies Inc. ...... 12,947 502,505
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
115
<PAGE> 116
INDEXED EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
ELECTRIC POWER COMPANIES (Continued)
Niagara Mohawk Holdings Inc.
(a)............................ 21,112 $ 339,112
Northern States Power Co. ...... 17,224 416,606
PacifiCorp...................... 33,470 615,011
PECO Energy Co. ................ 21,564 907,036
PG&E Corp. ..................... 43,279 1,406,568
PP&L Resources, Inc. ........... 17,767 546,335
Public Service Enterprise Group
Inc. .......................... 24,771 1,012,515
Reliant Energy, Inc. ........... 33,356 921,459
Southern Co. (The).............. 78,646 2,084,119
Texas Utilities Co. ............ 31,605 1,303,706
Unicom Corp. ................... 24,462 943,316
--------------
25,185,965
--------------
ELECTRICAL EQUIPMENT (3.8%)
Cooper Industries, Inc. ........ 10,662 554,424
Emerson Electric Co. ........... 49,051 3,084,082
General Electric Co. (c)........ 368,548 41,645,924
Grainger (W.W.), Inc. .......... 10,474 563,632
Honeywell Inc. ................. 14,278 1,654,463
Raychem Corp. .................. 8,737 323,269
Solectron Corp. (a)............. 28,439 1,896,526
Thomas & Betts Corp. ........... 6,428 303,723
--------------
50,026,043
--------------
ELECTRONICS--DEFENSE (0.0%) (b)
EG&G, Inc. ..................... 5,052 179,978
--------------
ELECTRONICS--INSTRUMENTATION (0.1%)
PE Corp.-PE Biosystems Group.... 5,608 643,518
Tektronix, Inc. ................ 5,311 160,326
--------------
803,844
--------------
ELECTRONICS--SEMICONDUCTORS (3.2%)
Advanced Micro Devices, Inc.
(a)............................ 16,594 299,729
Applied Materials, Inc. (a)..... 41,973 3,100,755
Intel Corp. .................... 373,720 22,236,340
KLA-Tencor Corp. (a)............ 9,828 637,592
LSI Logic Corp. (a)............. 16,132 744,089
Micron Technology, Inc. (a)..... 28,138 1,134,313
Motorola, Inc. ................. 67,928 6,436,178
National Semiconductor Corp.
(a)............................ 18,903 478,482
Texas Instruments Inc. ......... 44,138 6,400,010
--------------
41,467,488
--------------
ENGINEERING & CONSTRUCTION (0.0%) (b)
Fluor Corp. .................... 8,562 346,761
Foster Wheeler Corp. ........... 4,667 65,921
--------------
412,682
--------------
ENTERTAINMENT (1.8%)
King World Productions, Inc.
(a)............................ 7,807 271,781
Seagram Co. Ltd. ............... 48,218 2,428,982
Time Warner Inc. ............... 134,322 9,671,184
Viacom Inc.
Class B (a).................... 77,786 3,422,584
Walt Disney Co. (The)........... 231,956 7,147,144
--------------
22,941,675
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
FINANCIAL--MISCELLANEOUS (4.4%)
AFLAC Inc. ..................... 30,000 $ 1,436,250
American Express Co. ........... 50,756 6,604,625
American General Corp. ......... 28,373 2,138,615
Associates First Capital Corp.
Class A........................ 81,967 3,632,163
Citigroup Inc. ................. 379,115 18,007,963
Fannie Mae...................... 115,437 7,893,005
Franklin Resources Inc. ........ 28,419 1,154,522
Freddie Mac..................... 78,304 4,541,632
MBIA Inc. ...................... 11,246 728,178
MBNA Corp. ..................... 90,297 2,765,346
Morgan Stanley Dean Witter &
Co. ........................... 64,308 6,591,570
SLM Holding Corp. .............. 18,383 842,171
Transamerica Corp. ............. 13,989 1,049,175
--------------
57,385,215
--------------
FOOD (1.7%)
Bestfoods....................... 31,464 1,557,468
Campbell Soup Co. .............. 49,148 2,205,517
ConAgra, Inc. .................. 54,996 1,464,269
General Mills, Inc. ............ 17,165 1,379,637
Heinz (H.J.) Co. ............... 40,459 2,028,007
Hershey Foods Corp. ............ 15,691 931,653
Kellogg Co. .................... 45,660 1,506,780
Nabisco Group Holdings Corp. ... 36,547 714,961
Quaker Oats Co. (The)........... 15,141 1,004,984
Ralston-Ralston Purina Group.... 36,705 1,117,208
Sara Lee Corp. ................. 101,711 2,307,568
Unilever N.V. .................. 64,367 4,489,598
Wrigley (Wm.) Jr. Co. .......... 13,145 1,183,050
--------------
21,890,700
--------------
FOOD & HEALTH CARE DISTRIBUTORS
(0.3%)
Cardinal Health, Inc. .......... 30,571 1,960,365
McKesson HBOC, Inc. ............ 31,315 1,005,994
SUPERVALU Inc. ................. 13,439 345,214
SYSCO Corp. .................... 37,301 1,112,036
--------------
4,423,609
--------------
GOLD & PRECIOUS METALS MINING (0.1%)
Barrick Gold Corp. ............. 43,937 851,279
Battle Mountain Gold Co. (a).... 25,883 63,090
Homestake Mining Co. ........... 29,302 239,910
Newmont Mining Corp. ........... 18,845 374,544
Placer Dome Inc. ............... 36,616 432,527
--------------
1,961,350
--------------
HARDWARE & TOOLS (0.1%)
Black & Decker Corp. (The)...... 9,850 621,781
Snap-on Inc. ................... 7,427 268,765
Stanley Works (The)............. 10,092 324,836
--------------
1,215,382
--------------
HEALTH CARE--DIVERSIFIED (4.2%)
Abbott Laboratories............. 171,211 7,790,101
Allergan, Inc. ................. 7,464 828,504
American Home Products Corp. ... 147,116 8,459,170
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
116
<PAGE> 117
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
HEALTH CARE--DIVERSIFIED (Continued)
Bristol-Myers Squibb Co. ....... 223,642 $ 15,752,783
Johnson & Johnson............... 151,410 14,838,180
Mallinckrodt Inc. .............. 8,004 291,146
Warner-Lambert Co. ............. 95,855 6,649,940
--------------
54,609,824
--------------
HEALTH CARE--DRUGS (4.4%)
Lilly (Eli) & Co. .............. 123,946 8,877,632
Merck & Co., Inc. .............. 265,346 19,635,604
Pfizer Inc. .................... 145,749 15,995,953
Pharmacia & Upjohn, Inc. ....... 57,057 3,241,551
Schering-Plough Corp. .......... 165,357 8,763,921
Watson Pharmaceuticals, Inc.
(a)............................ 10,700 375,169
--------------
56,889,830
--------------
HEALTH CARE--HMOs (0.3%)
Aetna Inc. ..................... 15,865 1,418,926
Humana Inc. (a)................. 18,845 243,807
United Healthcare Corp. ........ 19,499 1,221,125
Wellpoint Health Networks Inc.
(a)............................ 7,600 645,050
--------------
3,528,908
--------------
HEALTH CARE--HOSPITAL MANAGEMENT (0.2%)
Columbia/HCA Healthcare
Corp. ......................... 63,953 1,458,928
Tenet Healthcare Corp. (a)...... 34,989 649,483
--------------
2,108,411
--------------
HEALTH CARE--MEDICAL PRODUCTS (1.0%)
Bard (C.R.), Inc. .............. 5,796 277,121
Bausch & Lomb Inc. ............. 6,452 493,578
Baxter International Inc. ...... 32,832 1,990,440
Becton, Dickinson & Co. ........ 28,256 847,680
Biomet, Inc. ................... 12,703 504,944
Boston Scientific Corp. (a)..... 44,564 1,958,031
Guidant Corp. (a)............... 34,063 1,752,116
Medtronic, Inc. ................ 65,830 5,126,511
St. Jude Medical, Inc. (a)...... 9,524 339,293
--------------
13,289,714
--------------
HEALTH CARE--MISCELLANEOUS (0.4%)
ALZA Corp. (a).................. 11,417 580,840
Amgen Inc. (a).................. 57,620 3,507,618
HCR Manor Care, Inc. (a)........ 12,555 303,674
HEALTHSOUTH Corp. (a)........... 46,709 697,716
--------------
5,089,848
--------------
HEAVY DUTY TRUCKS & PARTS (0.2%)
Cummins Engine Co., Inc. ....... 4,695 268,202
Dana Corp. ..................... 18,736 863,027
Eaton Corp. .................... 8,112 746,304
ITT Industries, Inc. ........... 9,890 377,056
Navistar International Corp.
(a)............................ 7,484 374,200
PACCAR Inc. .................... 8,828 471,195
--------------
3,099,984
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
HOMEBUILDING (0.0%) (b)
Centex Corp. ................... 6,658 $ 250,091
Kaufman & Broad Home Corp. ..... 5,385 133,952
Pulte Corp. .................... 4,917 113,706
--------------
497,749
--------------
HOTEL/MOTEL (0.4%)
Carnival Corp. ................. 69,133 3,352,951
Harrah's Entertainment, Inc.
(a)............................ 14,385 316,470
Hilton Hotels Corp. ............ 29,063 412,331
Marriott International, Inc.
Class A........................ 28,060 1,048,743
--------------
5,130,495
--------------
HOUSEHOLD--FURNISHINGS & APPLIANCES (0.1%)
Armstrong World Industries,
Inc. .......................... 4,544 262,700
Maytag Corp. ................... 9,926 691,718
Whirlpool Corp. ................ 8,495 628,630
--------------
1,583,048
--------------
HOUSEHOLD PRODUCTS (1.7%)
Clorox Co. (The)................ 13,363 1,427,335
Colgate-Palmolive Co. .......... 33,016 3,260,330
Fort James Corp. ............... 24,823 940,171
Kimberly-Clark Corp. ........... 59,976 3,418,632
Procter & Gamble Co. (The)...... 149,677 13,358,672
--------------
22,405,140
--------------
HOUSEWARES (0.2%)
Fortune Brands, Inc. ........... 18,813 778,388
Newell Rubbermaid Inc. ......... 31,773 1,477,445
Tupperware Corp. ............... 6,445 164,348
--------------
2,420,181
--------------
INSURANCE BROKERS (0.4%)
Aon Corp. ...................... 28,890 1,191,713
Marsh & McLennan Cos., Inc. .... 29,656 2,239,028
--------------
3,430,741
--------------
INSURANCE--LIFE (0.4%)
Conseco, Inc. .................. 36,467 1,109,964
Jefferson-Pilot Corp. .......... 12,006 794,647
Lincoln National Corp. ......... 22,746 1,189,900
Provident Cos., Inc. ........... 15,334 613,360
Torchmark Corp. ................ 15,032 512,967
UNUM Corp. ..................... 15,716 860,451
--------------
5,081,289
--------------
INSURANCE--MULTI-LINE (1.5%)
American International Group,
Inc. .......................... 139,564 16,337,711
CIGNA Corp. .................... 22,874 2,035,786
Hartford Financial Services
Group, Inc. (The).............. 25,582 1,491,750
--------------
19,865,247
--------------
INSURANCE--PROPERTY &
CASUALTY (0.7%)
Allstate Corp. (The)............ 90,867 3,259,854
Chubb Corp. (The)............... 18,204 1,265,178
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
117
<PAGE> 118
INDEXED EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
INSURANCE--PROPERTY & CASUALTY (Continued)
Cincinnati Financial Corp. ..... 18,587 $ 698,174
Loews Corp. .................... 12,341 976,482
MGIC Investment Corp. .......... 12,355 579,140
Progressive Corp. (The)......... 8,201 1,189,145
SAFECO Corp..................... 15,312 675,642
St. Paul Cos., Inc. (The)....... 25,493 810,996
--------------
9,454,611
--------------
INVESTMENT BANK/BROKERAGE (0.8%)
Bear Stearns Cos., Inc. (The)... 13,141 614,342
Lehman Brothers Holdings
Inc. .......................... 13,358 831,534
Merrill Lynch & Co., Inc. ...... 41,443 3,312,850
Paine Webber Group Inc. ........ 16,400 766,700
Schwab (Charles) Corp. (The).... 46,001 5,054,360
--------------
10,579,786
--------------
LEISURE TIME (0.1%)
Brunswick Corp. ................ 10,383 289,426
Mirage Resorts, Inc. (a)........ 22,435 375,786
--------------
665,212
--------------
MACHINE TOOLS (0.0%) (b)
Milacron Inc. .................. 4,184 77,404
--------------
MACHINERY--DIVERSIFIED (0.5%)
Briggs & Stratton Corp. ........ 2,588 149,457
Case Corp. ..................... 8,432 405,790
Caterpillar Inc. ............... 40,053 2,403,180
Deere & Co. .................... 26,134 1,035,560
Ingersoll-Rand Co. ............. 18,733 1,210,620
NACCO Industries, Inc. Class
A.............................. 925 67,988
Thermo Electron Corp. (a)....... 17,735 355,808
Timken Co. (The)................ 6,954 135,603
--------------
5,764,006
--------------
MANUFACTURED HOUSING (0.0%) (b)
Fleetwood Enterprises, Inc. .... 3,966 104,851
--------------
MANUFACTURING--DIVERSIFIED (1.5%)
AlliedSignal Inc. .............. 62,295 3,924,585
Crane Co. ...................... 7,622 239,617
Danaher Corp. .................. 15,191 882,977
Dover Corp. .................... 24,057 920,180
Illinois Tool Works Inc. ....... 28,198 2,312,236
Johnson Controls, Inc. ......... 9,567 663,113
Millipore Corp. ................ 4,975 201,798
Pall Corp. ..................... 14,061 311,978
Parker-Hannifin Corp. .......... 12,255 560,666
Sealed Air Corp. (a)............ 9,436 612,161
Tyco International Ltd. ........ 92,405 8,755,374
--------------
19,384,685
--------------
METALS--MINING (0.1%)
ASARCO Inc...................... 4,444 83,603
Cyprus Amax Minerals Co......... 10,147 154,108
Freeport-McMoRan Copper & Gold
Inc. Class B (a)............... 18,373 329,566
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
METALS--MINING (Continued)
Inco Ltd. (a)................... 21,670 $ 390,060
Phelps Dodge Corp. ............. 6,616 409,778
--------------
1,367,115
--------------
MISCELLANEOUS (0.8%)
AES Corp. (The) (a)............. 21,536 1,251,780
American Greetings Corp. Class
A.............................. 7,599 228,920
Archer-Daniels-Midland Co. ..... 66,246 1,022,673
Corning Inc. ................... 27,395 1,921,074
Harcourt General, Inc. ......... 8,034 414,253
Harris Corp. ................... 8,931 349,984
Jostens, Inc. .................. 3,834 80,754
Minnesota Mining &
Manufacturing Co. ............. 45,319 3,939,921
Nextel Communications, Inc.
Class A (a).................... 33,335 1,673,000
Pioneer Hi-Bred International,
Inc. .......................... 26,989 1,050,884
Sprint Corp. (PCS Group) (a).... 49,561 2,831,172
TRW, Inc. ...................... 13,495 740,538
--------------
15,504,953
--------------
NATURAL GAS DISTRIBUTORS & PIPELINES (0.7%)
Coastal Corp. (The)............. 24,022 960,880
Columbia Energy Group........... 9,301 583,056
Consolidated Natural Gas Co. ... 10,844 658,773
Eastern Enterprises............. 2,578 102,476
Enron Corp. .................... 39,810 3,254,468
NICOR Inc. ..................... 5,436 206,908
ONEOK, Inc. .................... 3,562 113,094
Peoples Energy Corp. ........... 3,967 149,506
Sempra Energy................... 27,080 612,685
Sonat, Inc. .................... 12,458 412,671
Williams Cos., Inc. (The)....... 48,581 2,067,729
--------------
9,122,246
--------------
OFFICE EQUIPMENT & SUPPLIES (0.5%)
Pitney Bowes Inc. .............. 30,248 1,943,434
Xerox Corp. .................... 74,492 4,399,684
--------------
6,343,118
--------------
OIL & GAS DRILLING (0.0%) (b)
Helmerich & Payne, Inc. ........ 5,610 133,588
Rowan Cos., Inc. (a)............ 9,322 171,874
--------------
305,462
--------------
OIL & GAS--EQUIPMENT & SERVICES (0.6%)
Baker Hughes Inc. .............. 36,904 1,236,284
Halliburton Co. ................ 49,649 2,246,617
McDermott International Inc. ... 6,708 189,501
Schlumberger Ltd................ 61,630 3,925,061
--------------
7,597,463
--------------
OIL & GAS--EXPLORATION & PRODUCTION (0.3%)
Anadarko Petroleum Corp. ....... 13,635 501,938
Apache Corp. ................... 12,491 487,149
Burlington Resources Inc. ...... 19,997 864,870
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
118
<PAGE> 119
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
OIL & GAS--EXPLORATION & PRODUCTION
(Continued)
Union Pacific Resources Group,
Inc. .......................... 28,379 $ 462,932
Unocal Corp. ................... 27,411 1,086,161
--------------
3,403,050
--------------
OIL--INTEGRATED DOMESTIC (0.6%)
Amerada Hess Corp. ............. 10,309 613,386
Ashland Inc. ................... 8,355 335,244
Atlantic Richfield Co. ......... 36,289 3,032,400
Kerr-McGee Corp. ............... 9,735 488,575
Occidental Petroleum Corp. ..... 39,239 828,924
Phillips Petroleum Co. ......... 28,407 1,429,227
Sunoco Inc. .................... 10,211 308,245
USX-Marathon Group.............. 34,803 1,133,272
--------------
8,169,273
--------------
OIL--INTEGRATED INTERNATIONAL
(4.3%)
Chevron Corp. .................. 73,691 7,014,462
Exxon Corp. .................... 273,407 21,086,515
Mobil Corp. .................... 88,010 8,712,990
Royal Dutch Petroleum Co. ADR
(d)............................ 241,540 14,552,785
Texaco Inc. .................... 60,385 3,774,063
--------------
55,140,815
--------------
PAPER & FOREST PRODUCTS (0.6%)
Boise Cascade Corp. ............ 6,307 271,201
Champion International Corp. ... 10,883 521,024
Georgia-Pacific Group........... 19,318 915,190
International Paper Co. ........ 46,188 2,332,494
Louisiana-Pacific Corp. ........ 12,113 287,684
Mead Corp. (The)................ 11,388 475,449
Potlatch Corp. ................. 3,304 145,170
Westvaco Corp. ................. 11,287 327,323
Weyerhaeuser Co. ............... 22,577 1,552,169
Willamette Industries, Inc. .... 12,444 573,201
--------------
7,400,905
--------------
PERSONAL LOANS (0.5%)
Capital One Financial Corp. .... 22,226 1,237,710
Countrywide Credit Industries,
Inc. .......................... 12,723 543,908
Household International,
Inc. .......................... 54,000 2,558,250
Providian Financial Corp. ...... 15,988 1,494,878
--------------
5,834,746
--------------
PHOTOGRAPHY/IMAGING (0.2%)
Eastman Kodak Co. .............. 36,542 2,475,721
IKON Office Solutions, Inc. .... 16,791 251,865
Polaroid Corp. ................. 4,938 136,412
--------------
2,863,998
--------------
POLLUTION CONTROL (0.3%)
Browning-Ferris Industries,
Inc. .......................... 17,634 758,262
Waste Management, Inc. ......... 68,624 3,688,540
--------------
4,446,802
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
PUBLISHING (0.1%)
McGraw-Hill Cos., Inc. (The).... 22,239 $ 1,199,516
Meredith Corp. ................. 5,795 200,652
--------------
1,400,168
--------------
PUBLISHING--NEWSPAPER (0.4%)
Dow Jones & Co., Inc. .......... 10,194 540,919
Gannett Co., Inc. .............. 31,474 2,246,457
Knight-Ridder, Inc. ............ 8,989 493,833
New York Times Co. (The) Class
A.............................. 19,859 731,059
Times Mirror Co. (The) Class
A.............................. 8,193 485,435
Tribune Co. .................... 13,362 1,164,164
--------------
5,661,867
--------------
RAILROADS (0.5%)
Burlington Northern Santa Fe
Corp. ......................... 52,871 1,639,001
CSX Corp. ...................... 24,523 1,111,198
Kansas City Southern
Industries, Inc. .............. 12,400 791,275
Norfolk Southern Corp. ......... 42,815 1,289,802
Union Pacific Corp. ............ 27,931 1,628,726
--------------
6,460,002
--------------
RESTAURANTS (0.6%)
Darden Restaurants, Inc. ....... 15,103 329,434
McDonald's Corp. ............... 152,616 6,304,949
Tricon Global Restaurants, Inc.
(a)............................ 17,284 935,496
Wendy's International, Inc. .... 13,946 394,846
--------------
7,964,725
--------------
RETAIL STORES--APPAREL (0.6%)
Gap, Inc. (The)................. 96,677 4,870,129
Limited, Inc. (The)............. 24,050 1,091,269
TJX Cos., Inc. (The)............ 36,228 1,206,845
--------------
7,168,243
--------------
RETAIL STORES--DEPARTMENT (0.5%)
Dillard's, Inc. Class A......... 12,063 423,713
Federated Department Stores,
Inc. (a)....................... 23,450 1,241,384
Kohl's Corp. (a)................ 18,362 1,417,317
May Department Stores Co.
(The).......................... 37,607 1,537,186
Nordstrom, Inc. ................ 15,953 534,426
Penney (J.C.) Co., Inc. ........ 29,616 1,438,227
--------------
6,592,253
--------------
RETAIL STORES--DRUGS (0.3%)
Longs Drug Stores Corp. ........ 4,395 151,902
Rite Aid Corp. ................. 29,151 717,843
Walgreen Co. ................... 112,272 3,297,990
--------------
4,167,735
--------------
RETAIL STORES--FOOD (0.7%)
Albertson's, Inc. .............. 47,384 2,443,255
Great Atlantic & Pacific Tea
Co., Inc. (The)................ 4,301 145,428
Kroger Co. (The) (a)............ 92,792 2,592,377
Safeway Inc. (a)................ 55,902 2,767,149
Winn-Dixie Stores, Inc. ........ 16,698 616,782
--------------
8,564,991
--------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
119
<PAGE> 120
INDEXED EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
RETAIL STORES--GENERAL MERCHANDISE (2.3%)
Dayton Hudson Corp. ............ 49,828 $ 3,238,820
Kmart Corp. (a)................. 55,579 913,580
Sears, Roebuck & Co. ........... 42,910 1,912,177
Wal-Mart Stores, Inc. .......... 501,194 24,182,610
--------------
30,247,187
--------------
RETAIL STORES--SPECIALTY (1.9%)
AutoZone, Inc. (a).............. 16,937 510,227
Best Buy Co., Inc. (a).......... 13,700 924,750
Circuit City Stores-Circuit City
Group.......................... 11,303 1,051,179
Consolidated Stores Corp. (a)... 12,374 334,098
Costco Cos., Inc. (a)........... 24,786 1,984,429
CVS Corp. ...................... 43,936 2,246,228
Dollar General Corp. ........... 25,058 726,682
Home Depot, Inc. (The).......... 166,917 10,755,714
Lowe's Cos., Inc. .............. 41,837 2,371,635
Office Depot, Inc. (a).......... 37,900 836,169
Pep Boys-Manny, Moe & Jack
(The).......................... 5,920 128,020
Staples Inc. (a)................ 52,386 1,620,692
Tandy Corp. .................... 22,006 1,075,543
Toys "R" Us, Inc. (a)........... 27,983 578,898
--------------
25,144,264
--------------
SHOES (0.2%)
NIKE, Inc. Class B.............. 31,802 2,013,464
Reebok International Ltd. (a)... 6,304 117,412
--------------
2,130,876
--------------
SPECIALIZED SERVICES (0.7%)
Block (H&R), Inc. .............. 10,924 546,200
Cendant Corp. (a)............... 86,514 1,773,537
Dun & Bradstreet Corp. (The).... 18,476 654,743
Ecolab Inc. .................... 14,606 637,187
IMS Health Inc. ................ 35,717 1,116,156
Interpublic Group of Cos., Inc.
(The).......................... 15,683 1,358,540
Laidlaw Inc. ................... 37,336 275,353
National Service Industries,
Inc. .......................... 4,602 165,672
Omnicom Group Inc. ............. 20,139 1,611,120
Service Corp. International..... 30,636 589,743
--------------
8,728,251
--------------
SPECIALTY PRINTING (0.1%)
Deluxe Corp. ................... 8,725 339,730
Donnelley (R.R.) & Sons Co. .... 14,734 546,079
--------------
885,809
--------------
STEEL (0.1%)
Allegheny Teledyne Inc. ........ 21,742 491,913
Bethlehem Steel Corp. (a)....... 14,719 113,152
Nucor Corp. .................... 9,899 469,584
USX-U.S. Steel Group............ 9,986 269,622
Worthington Industries, Inc. ... 10,379 170,605
--------------
1,514,876
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
TELECOMMUNICATIONS--LONG DISTANCE (3.6%)
AT&T Corp. ..................... 358,427 $ 20,004,707
MCI WorldCom, Inc. (a).......... 209,563 18,074,809
Sprint Corp. (FON Group)........ 97,446 5,146,367
--------------
43,225,883
--------------
TELEPHONE (4.7%)
ALLTEL Corp. ................... 31,697 2,266,336
Ameritech Corp. ................ 123,796 9,099,006
Bell Atlantic Corp. ............ 174,828 11,429,381
BellSouth Corp. ................ 213,339 10,000,266
CenturyTel, Inc. ............... 15,550 618,113
Frontier Corp. ................. 19,554 1,153,686
GTE Corp. ...................... 109,241 8,268,178
SBC Communications Inc. ........ 221,152 12,826,816
US West Inc. ................... 56,681 3,330,009
--------------
58,991,791
--------------
TEXTILES--APPAREL MANUFACTURERS (0.1%)
Fruit of the Loom Ltd. (a)...... 8,172 79,677
Liz Claiborne, Inc. ............ 7,091 258,822
Russell Corp. .................. 3,835 74,783
Springs Industries, Inc. Class
A.............................. 1,994 86,988
V.F. Corp. ..................... 13,469 575,799
--------------
1,076,069
--------------
TOBACCO (0.9%)
Philip Morris Cos. Inc. ........ 271,709 10,919,305
UST Inc. ....................... 19,810 579,443
--------------
11,498,748
--------------
TOYS (0.1%)
Hasbro, Inc. ................... 22,059 616,273
Mattel, Inc. ................... 46,936 1,240,871
--------------
1,857,144
--------------
TRANSPORTATION--MISCELLANEOUS (0.2%)
FDX Corp. (a)................... 33,522 1,818,569
Ryder System, Inc............... 7,945 206,570
--------------
2,025,139
--------------
Total Common Stocks
(Cost $883,972,672)............ 1,263,644,686(e)
--------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
120
<PAGE> 121
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS (1.8%)
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
COMMERCIAL PAPER (1.5%)
Cooperative Association of
Tractor Dealers Inc.
5.35%, due 7/16/99 (c)......... $9,800,000 $ 9,778,144
Minebea CP Inc.
5.15%, due 7/22/99 (c)......... 7,800,000 7,776,541
Toys "R" Us, Inc.
5.25%, due 7/8/99 (c).......... 1,700,000 1,698,263
--------------
Total Commercial Paper
(Cost $19,252,948)............. 19,252,948
--------------
U.S. GOVERNMENT (0.3%)
United States Treasury Bills
4.50%, due 9/23/99 (c)......... 2,400,000 2,374,349
4.56%, due 9/16/99 (c)......... 2,000,000 1,980,491
--------------
Total U.S. Government
(Cost $4,354,840).............. 4,354,840
--------------
Total Short-Term Investments
(Cost $23,607,788)............. 23,607,788
--------------
Total Investments
(Cost $907,580,460) (f)........ 99.5% 1,287,252,474(g)
Cash and Other Assets,
Less Liabilities............... 0.5 6,620,176
--------- -------------
Net Assets...................... 100.0% $1,293,872,650
========= =============
</TABLE>
FUTURES CONTRACTS (0.1%)
<TABLE>
<CAPTION>
CONTRACTS UNREALIZED
LONG APPRECIATION(H)
---------------------------
<S> <C> <C>
Standard & Poor's 500
September 1999................. 86 $ 1,015,848
Mini September 1999............ 2 3,268
--------------
Total Futures Contracts
(Settlement Value
$29,844,720)................... $ 1,019,116
==============
</TABLE>
- ------------
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) Segregated as collateral for futures contracts.
(d) ADR--American Depository Receipt.
(e) The combined market value of common stocks and settlement value of Standard
& Poor's 500 Index futures contracts represents 100.0% of net assets.
(f) The cost for Federal income tax purposes is $907,840,121.
(g) At June 30, 1999 net unrealized appreciation was $379,412,353, based on cost
for Federal income tax purposes. This consisted of aggregate gross
unrealized appreciation for all investments on which there was an excess of
market value over cost of $391,546,134 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $12,133,781.
(h) Represents the difference between the value of the contracts at the time
they were opened and the value at June 30, 1999.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
121
<PAGE> 122
INDEXED EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $907,580,460)....... $1,287,252,474
Receivables:
Investment securities sold........... 7,099,779
Fund shares sold..................... 1,216,319
Dividends and interest............... 1,074,033
Variation margin receivable on futures
contracts............................ 792,010
--------------
Total assets................... 1,297,434,615
--------------
LIABILITIES:
Payables:
Investment securities purchased...... 2,719,047
Shareholder communication............ 303,438
Administrator........................ 202,311
Fund shares redeemed................. 144,129
Adviser.............................. 101,155
Custodian............................ 50,299
Directors............................ 599
Accrued expenses....................... 40,987
--------------
Total liabilities.............. 3,561,965
--------------
Net assets applicable to outstanding
shares............................... $1,293,872,650
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 50 million shares
authorized........................... $ 448,280
Additional paid-in capital............. 894,355,660
Accumulated undistributed net
investment income.................... 6,865,996
Accumulated undistributed net realized
gain on investments.................. 11,511,584
Net unrealized appreciation on
investments and futures
transactions......................... 380,691,130
--------------
Net assets applicable to outstanding
shares............................... $1,293,872,650
==============
Shares of capital stock outstanding.... 44,827,972
==============
Net asset value per share
outstanding.......................... $ 28.86
==============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)........................ $ 6,781,529
Interest............................. 2,057,253
--------------
Total income................... 8,838,782
--------------
Expenses:
Administration....................... 1,081,849
Advisory............................. 540,924
Shareholder communication............ 191,220
Custodian............................ 63,392
Professional......................... 50,192
Directors............................ 22,694
Miscellaneous........................ 22,515
--------------
Total expenses................. 1,972,786
--------------
Net investment income.................. 6,865,996
--------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain from:
Security transactions................ 8,574,018
Futures transactions................. 3,666,124
--------------
Net realized gain on investments....... 12,240,142
--------------
Net change in unrealized appreciation
on investments:
Security transactions................ 105,354,318
Futures transactions................. 551,367
--------------
Net unrealized gain on investments..... 105,905,685
--------------
Net realized and unrealized gain on
investments.......................... 118,145,827
--------------
Net increase in net assets resulting
from operations...................... $ 125,011,823
==============
- ------------
(a) Dividends recorded net of foreign withholding taxes
in the amount of $144,199.
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
122
<PAGE> 123
MAINSTAY VP SERIES FUND, INC.
INDEXED EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999 1998
-----------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 6,865,996 $ 9,155,693
Net realized gain on investments.......................... 12,240,142 9,947,952
Net change in unrealized appreciation on investments and
futures transactions.................................... 105,905,685 158,250,661
-------------- ------------
Net increase in net assets resulting from operations...... 125,011,823 177,354,306
-------------- ------------
Dividends and distributions to shareholders:
From net investment income................................ -- (9,192,904)
From net realized gain on investments..................... (7,311,916) (8,579,470)
-------------- ------------
Total dividends and distributions to shareholders....... (7,311,916) (17,772,374)
-------------- ------------
Capital share transactions:
Net proceeds from sale of shares.......................... 374,936,842 373,005,680
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. 7,311,916 17,772,374
-------------- ------------
382,248,758 390,778,054
Cost of shares redeemed................................... (152,860,975) (100,347,307)
-------------- ------------
Increase in net assets derived from capital share
transactions............................................ 229,387,783 290,430,747
-------------- ------------
Net increase in net assets.................................. 347,087,690 450,012,679
NET ASSETS:
Beginning of period......................................... 946,784,960 496,772,281
-------------- ------------
End of period............................................... $1,293,872,650 $946,784,960
============== ============
Accumulated undistributed net investment income at end of
period.................................................... $ 6,865,996 $ --
============== ============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
June 30, Year ended December 31
1999* 1998 1997 1996 1995 1994
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period..... $ 25.89 $ 20.58 $ 16.10 $ 13.53 $ 10.38 $ 10.58
------------- -------------- -------------- -------------- -------------- --------------
Net investment income..... 0.15 0.26 0.27 0.24 0.27 0.24
Net realized and
unrealized gain (loss)
on investments.......... 2.99 5.58 4.99 2.79 3.55 (0.15)
------------- -------------- -------------- -------------- -------------- --------------
Total from investment
operations.............. 3.14 5.84 5.26 3.03 3.82 0.09
------------- -------------- -------------- -------------- -------------- --------------
Less dividends and
distributions:
From net investment
income................ -- (0.26) (0.27) (0.24) (0.28) (0.24)
From net realized gain
on investments........ (0.17) (0.27) (0.51) (0.22) (0.39) (0.05)
------------- -------------- -------------- -------------- -------------- --------------
Total dividends and
distributions........... (0.17) (0.53) (0.78) (0.46) (0.67) (0.29)
------------- -------------- -------------- -------------- -------------- --------------
Net asset value at end of
period.................. $ 28.86 $ 25.89 $ 20.58 $ 16.10 $ 13.53 $ 10.38
============= ============== ============== ============== ============== ==============
Total investment return... 12.15%(a) 28.49% 32.84% 22.42% 36.89% 0.76%
Ratios (to average net assets)/
Supplemental Data:
Net investment income... 1.27%+ 1.30% 1.75% 2.14% 2.52% 2.61%
Net expenses............ 0.37%+ 0.38% 0.39% 0.47% 0.47% 0.47%
Expenses (before
reimbursement)........ 0.37%+ 0.38% 0.39% 0.50% 0.62% 0.68%
Portfolio turnover rate... 2% 4% 5% 3% 5% 8%
Net assets at end of
period (in 000's)....... $ 1,293,873 $ 946,785 $ 496,772 $ 223,945 $ 105,171 $ 63,164
</TABLE>
- ------------
(a) Total return is not annualized.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
123
<PAGE> 124
(THIS PAGE INTENTIONALLY LEFT BLANK)
124
<PAGE> 125
MAINSTAY VP SERIES FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-- Organization and Business:
- --------------------------------------------------------------------------------
MainStay VP Series Fund, Inc. (the "Fund") was incorporated under Maryland law
on June 3, 1983. The Fund is registered under the Investment Company Act of
1940, as amended, ("Investment Company Act") as an open-end diversified
management investment company. Convertible Portfolio, which commenced
operations on October 1, 1996, High Yield Corporate Bond, International Equity
and Value Portfolios, which commenced operations on May 1, 1995, Capital
Appreciation, Cash Management, Government, Total Return and Indexed Equity
Portfolios, which commenced operations on January 29, 1993 and Bond and Growth
Equity Portfolios, which commenced operations on January 23, 1984, (the
"Portfolios"; each separately a "Portfolio") are separate Portfolios of the
Fund. Shares of the Portfolios are currently offered only to New York Life
Insurance and Annuity Corporation ("NYLIAC"), a wholly owned subsidiary of New
York Life Insurance Company ("New York Life"). NYLIAC allocates shares of the
Portfolios to, among others, New York Life Insurance and Annuity Corporation's
Corporate Sponsored Variable Universal Life Separate Account-I. The Separate
Account is used to fund flexible premium corporate sponsored variable life
insurance policies.
The investment objectives for each of the Portfolios of the Fund are as follows:
Capital Appreciation: to seek long-term growth of capital. Dividend income, if
any, is an incidental consideration.
Cash Management: to seek as high a level of current income as is considered
consistent with the preservation of capital and liquidity.
Convertible: to seek capital appreciation together with current income.
Government: to seek a high level of current income, consistent with safety of
principal.
High Yield Corporate Bond: to maximize current income through investment in a
diversified portfolio of high yield, high risk debt securities which are
ordinarily in the lower rating categories of recognized rating agencies (that
is, rated Baa to B by Moody's or BBB to B by S&P). Capital appreciation is a
secondary objective.
International Equity: to seek long-term growth of capital by investing in a
portfolio consisting primarily of non-U.S. equity securities. Current income is
a secondary objective.
Total Return: to realize current income consistent with reasonable opportunity
for future growth of capital and income.
Value: to realize maximum long-term total return from a combination of capital
growth and income.
Bond: to seek the highest income over the long term consistent with
preservation of principal.
Growth Equity: to seek long-term growth of capital, with income as a secondary
consideration.
Indexed Equity: to seek to provide investment results that correspond to the
total return performance (and reflect reinvestment of dividends) of publicly
traded common stocks represented by the S&P 500 Index.
There are certain risks involved in investing in foreign securities that are in
addition to the usual risks inherent in domestic instruments. These risks
include those resulting from future adverse political and economic developments
and possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions.
125
<PAGE> 126
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 2--Significant Accounting Policies:
- --------------------------------------------------------------------------------
The following is a summary of significant accounting policies followed by the
Fund:
(A)
VALUATION OF FUND SHARES. The net asset value per share of each Portfolio is
calculated on each day the New York Stock Exchange (the "Exchange") is open for
trading as of the close of regular trading on the Exchange. The net asset value
per share is calculated for each Portfolio by dividing the current market value
(amortized cost, in the case of Cash Management Portfolio) of the Portfolio's
total assets, less liabilities, by the total number of outstanding shares of
that Portfolio. Each Portfolio's net asset value will fluctuate, and although
the Cash Management Portfolio seeks to preserve the value of your investment of
$1.00 per share, an investor could lose money by investing in any Portfolio. An
investment in the Cash Management Portfolio is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
(B)
SECURITIES VALUATION. Portfolio securities of Cash Management Portfolio are
valued at amortized cost, which approximates market value. The amortized cost
method involves valuing a security at its cost on the date of purchase and
thereafter assuming a constant amortization to maturity of the difference
between such cost and the value on maturity date.
Securities of each of the other Portfolios are stated at value determined (a) by
appraising common and preferred stocks which are traded on the Exchange at the
last sale price on that day or, if no sale occurs, at the mean between the
closing bid and asked prices, (b) by appraising common and preferred stocks
traded on other United States national securities exchanges or foreign
securities exchanges as nearly as possible in the manner described in (a) by
reference to their principal exchange, including the National Association of
Securities Dealers National Market System, (c) by appraising over-the-counter
securities quoted on the National Association of Securities Dealers NASDAQ
system (but not listed on the National Market System) at the bid price supplied
through such system, (d) by appraising over-the-counter securities not quoted on
the National Association of Securities Dealers NASDAQ system and securities
listed or traded on certain foreign exchanges whose operations are similar to
the U.S. over-the-counter market, at prices supplied by the pricing agent or
brokers selected by the Adviser (see Note 3) if these prices are deemed to be
representative of market values at the regular close of business of the
Exchange, (e) by appraising debt securities at prices supplied by a pricing
agent selected by the Adviser, whose prices reflect broker/dealer supplied
valuations and electronic data processing techniques if those prices are deemed
by the Adviser to be representative of market values at the regular close of
business of the Exchange, (f) by appraising options and futures contracts at the
last sale price on the market where such options or futures contracts are
principally traded, and (g) by appraising all other securities and other assets,
including debt securities for which prices are supplied by a pricing agent but
are not deemed by the Adviser to be representative of market values, but
excluding money market instruments with a remaining maturity of sixty days or
less and including restricted securities and securities for which no market
quotations are available, at fair value in accordance with procedures approved
by the Directors. Short-term securities which mature in more than 60 days are
valued at current market quotations. Short-term securities which mature in 60
days or less are valued at amortized cost if their term to maturity at purchase
was 60 days or less, or by amortizing the difference between market value on the
61st day prior to maturity and value on maturity date if their original term to
maturity at purchase exceeded 60 days.
Events affecting the values of certain portfolio securities that occur between
the close of trading on the principal market for such securities (foreign
exchanges and over-the-counter markets) and the regular close of the Exchange
will not be reflected in the Portfolios' calculations of net asset values unless
the Adviser believes that the particular event would materially affect net asset
value, in which case an adjustment would be made.
126
<PAGE> 127
MAINSTAY VP SERIES FUND, INC.
(C)
FOREIGN CURRENCY FORWARD CONTRACTS. A foreign currency forward contract is an
agreement to buy or sell currencies of different countries on a specified future
date at a specified rate. During the period the forward contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking to market" such contract on a daily basis to reflect the
market value of the contract at the end of each day's trading. When the forward
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transaction and
the Portfolio's basis in the contract. The High Yield Corporate Bond,
International Equity and Value Portfolios enter into foreign currency forward
contracts in order to hedge their foreign currency denominated investments and
receivables and payables against adverse movements in future foreign exchange
rates.
The use of foreign currency forward contracts involves, to varying degrees,
elements of market risk in excess of the amount recognized in the statement of
assets and liabilities. The contract amount reflects the extent of the
Portfolio's involvement in these financial instruments. Risks arise from the
possible movements in the foreign exchange rates underlying these instruments.
The unrealized appreciation (depreciation) on forward contracts reflects the
Portfolio's exposure at period-end to credit loss in the event of a
counterparty's failure to perform its obligations.
HIGH YIELD CORPORATE BOND PORTFOLIO
Foreign currency forward contracts open at June 30, 1999:
<TABLE>
<CAPTION>
CONTRACT CONTRACT UNREALIZED
AMOUNT AMOUNT APPRECIATION/
SOLD PURCHASED (DEPRECIATION)
-------------- ------------ --------------
<S> <C> <C> <C>
FOREIGN CURRENCY SALE CONTRACTS
- ------------------------------------------------------------
Euro vs. U.S. Dollar, expiring 8/5/99-12/6/99............... E 7,059,745 $ 7,600,752 $ 270,258
Pound Sterling vs. U.S. Dollar, expiring 9/8/99-10/6/99..... L 15,119,300 $ 24,433,074 581,930
</TABLE>
<TABLE>
<CAPTION>
CONTRACT CONTRACT
AMOUNT AMOUNT
PURCHASED SOLD
-------------- ------------
<S> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
- ------------------------------------------------------------
Euro vs. U.S. Dollar, expiring 8/5/99....................... E 3,103,644 $ 3,363,872 (154,360)
---------
Net unrealized appreciation on foreign currency forward
contracts................................................. $ 697,828
=========
</TABLE>
INTERNATIONAL EQUITY PORTFOLIO
Foreign currency forward contracts open at June 30, 1999:
<TABLE>
<CAPTION>
CONTRACT CONTRACT UNREALIZED
AMOUNT AMOUNT APPRECIATION/
SOLD PURCHASED (DEPRECIATION)
-------------- ------------ --------------
<S> <C> <C> <C>
FOREIGN CURRENCY SALE CONTRACTS
- ------------------------------------------------------------
Australian Dollar vs. U.S. Dollar, expiring 8/18/99......... A$ 1,973,200 $ 1,249,660 $ (57,095)
Euro vs. U.S. Dollar, expiring 8/31/99...................... E 4,150,000 $ 4,515,413 215,207
New Zealand Dollar vs. U.S. Dollar, expiring 8/16/99........ N$ 1,280,000 $ 693,792 14,905
Pound Sterling vs. Euro, expiring 8/11/99................... L 1,691,820 E 2,600,000 22,364
</TABLE>
<TABLE>
<CAPTION>
CONTRACT CONTRACT
AMOUNT AMOUNT
PURCHASED SOLD
-------------- ------------
<S> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
- ------------------------------------------------------------
Euro vs. U.S. Dollar, expiring 8/31/99...................... E 3,589,791 $ 3,910,000 (190,279)
---------
Net unrealized appreciation on foreign currency forward
contracts................................................. $ 5,102
=========
</TABLE>
127
<PAGE> 128
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
VALUE PORTFOLIO
Foreign currency forward contract open at June 30, 1999:
<TABLE>
<CAPTION>
CONTRACT CONTRACT
AMOUNT AMOUNT UNREALIZED
SOLD PURCHASED APPRECIATION
-------------- ------------ --------------
<S> <C> <C> <C>
FOREIGN CURRENCY SALE CONTRACT
- ------------------------------------------------------------
Japanese Yen vs. U.S. Dollar, expiring 9/16/99.............. Y 422,000,000 $ 3,553,086 $ 25,587
---------
Net unrealized appreciation on foreign currency forward
contract.................................................. $ 25,587
=========
</TABLE>
(D)
FUTURES CONTRACTS. A futures contract is an agreement to purchase or sell a
specified quantity of an underlying instrument at a specified future date and
price, or to make or receive a cash payment based on the value of a securities
index. During the period the futures contract is open, changes in the value of
the contract are recognized as unrealized gains or losses by "marking to market"
such contract on a daily basis to reflect the market value of the contract at
the end of each day's trading. The Portfolio agrees to receive from or pay to
the broker an amount of cash equal to the daily fluctuation in the value of the
contract. Such receipts or payments are known as "variation margin". When the
futures contract is closed, the Portfolio records a realized gain or loss equal
to the difference between the proceeds from (or cost of) the closing transaction
and the Portfolio's basis in the contract. The Indexed Equity Portfolio invests
in stock index futures contracts to gain full exposure to changes in stock
market prices to fulfill its investment objective.
The use of futures contracts involves, to varying degrees, elements of market
risk in excess of the amount recognized in the statement of assets and
liabilities. The contract or notional amounts and variation margin reflect the
extent of the Portfolio's involvement in open futures positions. Risks arise
from the possible imperfect correlation in movements in the price of futures
contracts and the underlying hedged assets, and the possible inability of
counterparties to meet the terms of their contracts. However, the Portfolio's
activities in futures contracts are conducted through regulated exchanges which
minimize counterparty credit risks.
(E)
REPURCHASE AGREEMENTS. At the time a Portfolio enters into a repurchase
agreement, the value of the underlying security, including accrued interest,
will be equal to or exceed the value of the repurchase agreement and, in the
case of repurchase agreements exceeding one day, the value of the underlying
security, including accrued interest, is required during the term of the
agreement to be equal to or exceed the value of the repurchase agreement. The
underlying securities for all repurchase agreements are held in a segregated
account of the respective Portfolio's custodian. In the case of repurchase
agreements exceeding one day, the market value of the underlying securities are
monitored by the Adviser by pricing them daily. (Also see Note 5).
(F)
SECURITY TRANSACTIONS AND INVESTMENT INCOME. The Fund records security
transactions on the trade date. Realized gains and losses on security
transactions are determined using the identified cost method and include gains
and losses from repayments of principal on mortgage related and other
asset-backed securities. Dividend income is recognized on the ex-dividend date
and interest income is accrued daily except when collection is not expected.
Discounts on securities purchased for all Portfolios are accreted on the
constant yield method over the life of the respective securities or, if
applicable, over the period to the first call date. Premiums on securities
purchased are not amortized for any Portfolio except Cash Management Portfolio
which amortizes the premium on the constant yield method over the life of the
respective securities.
128
<PAGE> 129
MAINSTAY VP SERIES FUND, INC.
(G)
FOREIGN CURRENCY INVESTING. The books and records of the Fund are recorded in
U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the
mean between the buying and selling rates last quoted by any major U.S. bank at
the following dates:
(i) market value of investment securities, other assets and
liabilities--at the valuation date,
(ii) purchases and sales of investment securities, income and
expenses--at the date of such transactions.
The assets and liabilities of High Yield Corporate Bond and International Equity
Portfolios are presented at the exchange rates and market values at the close of
the period. The changes in net assets arising from fluctuations in exchange
rates and the changes in net assets resulting from changes in market prices are
not separately presented. However, gains and losses from certain foreign
currency transactions are treated as ordinary income for Federal income tax
purposes.
Net realized gain (loss) on foreign currency transactions represents net gains
and losses on foreign currency forward contracts, net currency gains or losses
realized as a result of differences between the amounts of securities sale
proceeds or purchase cost, dividends, interest and withholding taxes recorded on
the Portfolio's books and the U.S. dollar equivalent amount actually received or
paid. Net currency gains or losses from valuing foreign currency denominated
assets and liabilities, other than investments, at period-end exchange rates are
reflected in unrealized foreign exchange gains (losses).
INTERNATIONAL EQUITY PORTFOLIO
Foreign currency held at June 30, 1999:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
- ---------------------------------------- -------- --------
<S> <C> <C> <C> <C>
Australian Dollar A$ 387,530 $254,955 $256,506
Canadian Dollar C$ 1,065 721 720
Euro E 250,823 260,510 258,673
Hong Kong Dollar HK 131 17 17
Japanese Yen Y 375,700 3,100 3,104
New Zealand Dollar N$ 427,482 227,775 226,523
Pound Sterling L 58,691 94,120 92,515
Swedish Krona SK 58,326 6,997 6,860
Swiss Franc CF 19,772 12,893 12,718
-------- --------
$861,088 $857,636
======== ========
</TABLE>
(H)
MORTGAGE DOLLAR ROLLS. Certain of the Portfolios enter into mortgage dollar roll
("MDR") transactions in which they sell mortgage backed securities ("MBS") from
their portfolio to a counterparty from whom they simultaneously agree to buy a
similar security on a delayed delivery basis. The MDR transactions of the
Portfolios are classified as purchase and sale transactions. The securities sold
in connection with the MDRs are removed from the portfolio and a realized gain
or loss is recognized. The securities the Portfolios have agreed to acquire are
included at market value in the portfolio of investments and liabilities for
such purchase commitments are included as payables for investments purchased.
The Portfolios maintain a segregated account with the custodian containing
securities from the respective portfolios having a value not less than the
repurchase price, including accrued interest. MDR transactions involve certain
risks, including the risk that the MBS returned to the Portfolios at the end of
the roll, while substantially similar, could be inferior to what was initially
sold to the counterparty.
129
<PAGE> 130
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(I)
RESTRICTED SECURITIES. A restricted security is a security which has been
purchased through a private offering and cannot be resold to the general public
without prior registration under the Securities Act of 1933. Disposal of these
securities may involve time-consuming negotiations and expense, and prompt sale
at an acceptable price may be difficult. The issuers of the securities will bear
the costs involved in registration under the Securities Act of 1933 and in
connection with the disposition of such securities. The High Yield Corporate
Bond and Total Return Portfolios do not have the right to demand that such
securities be registered. The Portfolios may not invest more than 10% and 15%,
respectively, of their net assets in illiquid securities.
HIGH YIELD CORPORATE BOND PORTFOLIO
Restricted securities held at June 30, 1999:
<TABLE>
<CAPTION>
PRINCIPAL PERCENT
ACQUISITION AMOUNT/ 6/30/99 OF
SECURITY DATE(S) SHARES COST VALUE NET ASSETS
-------- ------------------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Affinity Group, Inc.
Bank debt
Tranche B
8.625%, due 6/30/06 12/17/98 $ 1,293,500 $ 1,293,500 $ 1,293,500 0.2%
Domino's Pizza, Inc.
Bank debt
Tranche B
8.8125%, due 12/21/06 12/24/98 $ 2,855,565 2,855,565 2,859,134 0.4
Bank debt
Tranche C
9.0625%, due 12/21/07 12/24/98 $ 2,855,565 2,855,565 2,859,134 0.4
Eurotunnel
Bank debt
Tier One
5.28%, due 12/31/12 5/12/99 FF 7,700,000 1,037,959 998,745 0.2
7.03%, due 12/31/12 5/12/99 L 7,500,000 10,031,849 9,753,313 1.5
First Pacific Capital Ltd.
Bank debt
6.8125%, due 1/23/00 8/13/98 $ 3,000,000 2,790,799 2,910,000 0.5
FRI-MRD Corp.
(zero coupon), due 1/24/02
14.00%, beginning 7/31/99 10/30/98 $ 3,000,000 2,988,590 2,996,250 0.5
15.00%, due 1/24/02 8/12/97-4/3/98 $ 5,400,000 5,333,085 5,393,250 0.8
GPA Group, PLC
Preferred Stock 3/7/96-11/20/97 4,750,000 2,353,175 2,422,500 0.4
International Wireless
Communications Holdings, Inc.
(zero coupon), due 8/15/01 6/17/98 $ 7,775,000 2,018,524 777,500 0.1
Isle of Capri Casinos, Inc.
Bank debt
Tranche A
7.792%, due 4/23/04 5/12/99 $ 3,500,000 3,478,889 3,500,000 0.5
Kronos International, Inc.
Bank debt
5.4391%, due 9/15/00 2/25/97-3/15/99 DM 247,967 138,609 128,791 0.0(a)
Metawave Communications Corp.
Preferred Stock
Series D 5/14/99 53,509 0(b) 353,159 0.1
</TABLE>
130
<PAGE> 131
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL PERCENT
ACQUISITION AMOUNT/ 6/30/99 OF
SECURITY DATE(S) SHARES COST VALUE NET ASSETS
-------- ------------------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Packaging Corp. of America
Bank debt
Tranche B
8.25%, due 4/23/07 4/23/99 $ 2,391,942 $ 2,391,942 $ 2,391,942 0.4%
Bank debt
Tranche C
8.50%, due 4/23/08 4/23/99 $ 2,391,942 2,391,942 2,391,942 0.4
Paperboard Industries
International, Inc.
Preferred Stock
5.00%, Class A 5/4/98 145,000 2,413,129 2,240,980 0.3
President Casinos, Inc.
12.00%, due 9/15/01 12/3/98 $ 1,180,000 1,180,000 1,180,000 0.2
Supercanal Holding, S.A.
Warrants, Series A, expire 11/14/99 11/20/97 492,587 39,407 39,407 0.0(a)
Titan Tire Corp.
7.00%, due 2/11/00 6/24/97 $ 6,000,000 5,935,217 5,955,000 0.9
Triad Hospital Holdings, Inc.
Bank debt
Tranche B
8.97%, due 1/1/05 6/9/99 $ 4,300,000 4,300,000 4,300,000 0.7
Ventas Realty L.P.
Bank debt
Tranche A
7.81%, due 10/30/99 4/5/99-6/11/99 $ 3,125,000 2,870,666 2,625,000 0.4
Bank debt
Tranche D
7.81%, due 4/30/03 4/5/99 $ 3,390,624 2,961,062 2,848,124 0.4
----------- ----------- ----
$61,659,474 $60,217,671 9.3%
=========== =========== ====
</TABLE>
- ---------------
(a) Less than one tenth of a percent.
(b) This preferred stock has no cost.
DM--Deutsche Mark
FF--French Franc
L--Pound Sterling
TOTAL RETURN PORTFOLIO
Restricted security held at June 30, 1999:
<TABLE>
<CAPTION>
PERCENT
ACQUISITION 6/30/99 OF
SECURITY DATE SHARES COST VALUE NET ASSETS
-------- ------------------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Paperboard Industries
International, Inc.
Preferred Stock, 5.00%, Class A 5/4/98 15,000 $ 249,634 $ 231,826 0.10%
=========== =========== ====
</TABLE>
(J)
SECURITIES LENDING. The Portfolios may lend their securities to broker-dealers
and financial institutions. The loans are secured by collateral (cash or
securities) at least equal at all times to the market value of the securities
loaned. The Portfolios may bear the risk of delay in recovery of, or loss of
rights in, the securities loaned should the borrower of the securities fail
financially. The Portfolios receive compensation for lending their securities in
the form of fees or they retain a portion of interest on the investment of any
cash received as collateral. The Portfolios also continue to receive interest
and dividends
131
<PAGE> 132
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
on the securities loaned, and any gain or loss in the market price of the
securities loaned that may occur during the term of the loan will be for the
account of the Portfolios.
At June 30, 1999, Government and Total Return Portfolios had portfolio
securities with a fair market value of $36,554,459 and $62,462,750, respectively
on loan to broker-dealers and government securities dealers.
Cash collateral received by Government and Total Return Portfolios is invested
in investment grade commercial paper, or other securities in accordance with the
Portfolios securities lending procedures. Such investments are included as an
asset and a corresponding liability in the Statement of Assets and Liabilities.
While the Portfolios invest cash collateral in investment grade securities or
other "high quality" investment vehicles, the Portfolios bear the risk that
liability for the collateral may exceed the value of the investment.
Net income earned on securities lending amounted to $31,577 and $70,491, net of
broker fees and rebates, respectively, for the six months ended June 30, 1999,
which is included as interest income on the Statement of Operations.
GOVERNMENT PORTFOLIO
Investments made with cash collateral at June 30, 1999:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<S> <C> <C>
SHORT-TERM COMMERCIAL PAPER
Amsterdam Funding Corp. 5.127%, due 8/18/99................. $ 5,300,000 $ 5,251,387
Atlantis One Funding Corp. 5.104%, due 7/1/99............... 5,000,000 4,995,750
Bayerische Hypo-Und Vereinsbank AG 5.851%, due 7/1/99....... 3,520,000 3,519,428
Liberty Lighthouse Corp. 5.16%, due 11/5/99................. 5,000,000 4,997,799
Premier Auto Trust 5.22%, due 7/6/99........................ 143,388 143,601
Textron Financial Corp. 5.255%, due 11/24/99................ 7,000,000 6,998,990
Triangular Funding Corp. 5.04%, due 10/15/99................ 6,000,000 6,000,000
-----------
31,906,955
-----------
REPURCHASE AGREEMENTS
Goldman Sachs & Co. 6.10%, due 12/31/99 (Collateralized by
$550,260 Unova Inc. 6.875%, due 3/15/05 Market Value
$524,810
$680,400 Owens Corning 7.00%, due 3/15/09 Market Value
$632,772
$485,460 Erac USA Finance Company 6.75%, due 5/15/09
Market Value $458,521
$1,753,920 Conagra Inc. 7.00%, due 10/1/28 Market Value
$1,617,184
$2,275,020 Abitibi-Consolidated Inc. 7.40%, due 4/1/18
Market Value $2,125,178)................................ 4,440,000 4,440,000
</TABLE>
132
<PAGE> 133
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<S> <C> <C>
REPURCHASE AGREEMENTS (Continued)
Goldman Sachs & Co. 6.14%, due 12/31/99
(Collateralized by $468,740 Unova Inc. 6.875%, due
3/15/05 Market Value $447,061
$579,600 Owens Corning 7.00%, due 3/15/09 Market Value
$539,028
$413,540 Erac USA Finance Company 6.75%, due 5/15/09
Market Value $390,593
$1,494,080 Conagra Inc. 7.00%, due 10/1/28 Market Value
$1,377,602
$1,937,980 Abitibi-Consolidated Inc. 7.40%, due 4/1/18
Market Value $1,810,337)................................ $ 3,770,000 $ 3,770,000
Prudential Securities Inc. 6.10%, due 12/31/99
(Collateralized by $500,000 U.S. West Capital Funding Inc.
6.25%, due 7/15/05 Market Value $476,873
$521,633 U.S. Treasury Security Stripped Interest Payment
8.875%, due 8/15/17 Market Value $161,611
$303,061 U.S. Treasury Security Stripped Interest Payment
9.875%, due 11/15/12 Market Value $129,274
$80,102 U.S. Treasury Bond 10.375%, due 11/15/12 Market
Value $101,191
$357,143 Telecom De Puerto Rico 6.65%, due 5/15/06 Market
Value $348,214
$141,837 Joseph E. Seagram & Sons 6.25%, due 12/15/01
Market Value $140,241
$561,224 Residential Asset Securities Corp. 7.15%, due
7/25/30 Market Value $561,224
$204,082 Pulte Corp. 8.375%, due 8/15/04 Market Value
$205,102
$234,694 Oxy USA Inc. 7.00%, due 4/15/11 Market Value
$208,824
$122,449 News America Holdings Inc. 8.50%, due 2/15/05
Market Value $128,418
$366,490 The Money Store Business Loan Backed Trust
5.3975%, due 6/15/13 Market Value $366,490
$346,939 Hydro-Quebec Capitech Inc. 8.00%, due 2/1/13
Market Value $367,736
$5,816 Financial Corp. FICO Strip (zero coupon), due
2/8/04 Market Value $4,342
$78,367 Federal National Mortgage Association 5.125%, due
2/13/04 Market Value $74,528
$204,082 Federal Home Loan Bank 5.52%, due 4/5/02 Market
Value $200,301
$51,020 Federal Home Loan Bank 5.73%, due 5/29/01 Market
Value $50,787).......................................... 3,500,000 3,500,000
-----------
11,710,000
-----------
$43,616,955
===========
</TABLE>
133
<PAGE> 134
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
TOTAL RETURN PORTFOLIO
Investments made with cash collateral at June 30, 1999:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<S> <C> <C>
SHORT-TERM COMMERCIAL PAPER
Amsterdam Funding Corp. 5.127%, due 8/18/99................. $ 700,000 $ 693,580
Atlantis One Funding Corp. 5.104%, due 7/1/99............... 5,000,000 4,995,750
Bankers Trust Corp. 5.27%, due 8/16/99...................... 7,400,000 7,404,440
Bayer Hypo-Und Vereinsbank AG 5.851%, due 7/1/99............ 3,550,000 3,549,423
Park Avenue Receivables Corp. 4.20%, due 7/7/99............. 5,000,000 4,994,779
-----------
21,637,972
-----------
REPURCHASE AGREEMENTS
Goldman Sachs & Co. 6.10%, due 12/31/99 (Collateralized by
$1,426,833 Unova Inc. 6.875%, due 3/15/05 Market Value
$1,360,842
$2,228,306 TRW, Inc. 6.45%, due 6/15/01 Market Value
$2,218,947
$160,102 TCI Communications Inc. 7.125%, due 2/15/28
Market Value $151,897
$160,102 Seagram Company Ltd. 8.35%, due 11/15/06 Market
Value $168,457
$480,307 Joseph E. Seagram & Sons 7.50%, due 12/15/18
Market Value $458,468
$640,410 Joseph E. Seagram & Sons 8.375%, due 2/15/07
Market Value $664,598
$319,244 Paine Webber Group Inc. 6.375%, due 5/15/04
Market Value $308,802
$1,601,025 Owens Corning 7.70%, due 5/1/08 Market Value
$1,567,003
$1,120,717 Lockheed Martin Corp. 7.20%, due 5/1/36 Market
Value $1,099,906
$560,999 Conagra, Inc. 7.00%, due 10/1/28 Market Value
$517,264
$1,280,820 Bank Boston Capital Trust IV 5.6975%, due
6/8/28 Market Value $1,221,582
$1,165,546 Anadarko Petroleum Corp. 7.20%, due 3/15/29
Market Value $1,080,359)................................ 10,000,000 10,000,000
</TABLE>
134
<PAGE> 135
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<S> <C> <C>
REPURCHASE AGREEMENTS (Continued)
Goldman Sachs & Co. 6.14%, due 12/31/99 (Collateralized by
$3,029,167 Unova Inc. 6.875%, due 3/15/05 Market Value
$2,889,068
$4,730,694 TRW, Inc. 6.45%, due 6/15/01 Market Value
$4,710,825
$339,898 TCI Communications Inc. 7.125%, due 2/15/28
Market Value $322,478
$339,898 Seagram Company Ltd. 8.35%, due 11/15/06 Market
Value $357,633
$1,019,693 Joseph E. Seagram & Sons 7.50%, due 12/15/18
Market Value $973,327
$1,359,590 Joseph E. Seagram & Sons 8.375%, due 2/15/07
Market Value $1,410,942
$677,756 Paine Webber Group Inc. 6.375%, due 5/15/04
Market Value $655,586
$3,398,975 Owens Corning 7.70%, due 5/1/08 Market Value
$3,326,747
$2,379,283 Lockheed Martin Corp. 7.20%, due 5/1/36 Market
Value $2,335,099
$1,191,001 Conagra, Inc. 7.00%, due 10/1/28 Market Value
$1,098,150
$2,719,180 Bank Boston Capital Trust IV 5.6975%, due
6/8/28 Market Value $2,593,418
$2,474,454 Anadarko Petroleum Corp. 7.20%, due 3/15/29
Market Value $2,293,601)................................ $21,230,000 $21,230,000
Prudential Securities Inc. 6.10%, due 12/31/99
(Collateralized by $2,928,571 U.S. West Capital Funding
Inc. 6.25%, due 7/15/05 Market Value $2,793,110
$3,055,277 U.S. Treasury Security Stripped Interest
Payment 8.875%, due 8/15/17 Market Value $946,577
$1,775,073 U.S. Treasury Security Stripped Interest
Payment 9.875%, due 11/15/12 Market Value $757,175
$469,169 U.S. Treasury Bond 10.375%, due 11/15/12 Market
Value $592,692
$2,091,837 Telecom De Puerto Rico 6.65%, due 5/15/06
Market Value $2,039,541
$830,758 Joseph E. Seagram & Sons 6.25%, due 12/15/01
Market Value $821,412
$3,287,172 Residential Asset Securities Corporation 7.15%,
due 7/25/30 Market Value $3,287,172
$1,195,335 Pulte Corp. 8.375%, due 8/15/04 Market Value
$1,201,312
</TABLE>
135
<PAGE> 136
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<S> <C> <C>
REPURCHASE AGREEMENTS (Continued)
$1,374,636 Oxy USA Inc. 7.00%, due 4/15/11 Market Value
$1,223,109
$717,201 News America Holdings Inc. 8.50%, due 2/15/05
Market Value $752,165
$2,146,582 The Money Store Business Loan Backed Trust
5.3975%, due 6/15/13 Market Value $2,146,582
$2,032,070 Hydro-Quebec Capitech Inc. 8.00%, due 2/1/13
Market Value $2,153,884
$34,067 Financial Corp. FICO Strip (zero coupon), due
2/8/04 Market Value $25,433
$459,009 Federal National Mortgage Association 5.125%, due
2/13/04 Market Value $436,523
$1,195,335 Federal Home Loan Bank 5.52%, due 4/5/02 Market
Value $1,173,190
$298,834 Federal Home Loan Bank 5.73%, due 5/29/01 Market
Value $297,466)......................................... $20,500,000 $20,500,000
-----------
51,730,000
-----------
$73,367,972
===========
</TABLE>
(K)
COMMITMENTS AND CONTINGENCIES. As of June 30, 1999, High Yield Corporate Bond
Portfolio had an unfunded loan commitment pursuant to the following loan
agreement:
<TABLE>
<CAPTION>
UNFUNDED
BORROWER COMMITMENT
-------- ----------
<S> <C>
Kronos International, Inc................................... $ 57,119
========
</TABLE>
(L)
PURCHASED AND WRITTEN OPTIONS. International Equity Portfolio may write covered
call and put options on its portfolio securities or foreign currencies. Premiums
are received and are recorded as liabilities. The liabilities are subsequently
adjusted to reflect the current value of the options written. Premiums received
from writing options which expire are treated as realized gains. Premiums
received from writing options which are exercised or are canceled in closing
purchase transactions are added to the proceeds or netted against the amount
paid on the transaction to determine the realized gain or loss. By writing a
covered call option, a Portfolio foregoes in exchange for the premium the
opportunity for capital appreciation above the exercise price should the market
price of the underlying security or foreign currency increase. By writing a
covered put option, a Portfolio, in exchange for the premium, accepts the risk
of a decline in the market value of the underlying security or foreign currency
below the exercise price.
The Portfolio may purchase call and put options on its portfolio securities or
foreign currencies. The Portfolio may purchase call options to protect against
an increase in the price of the security or foreign currency it anticipates
purchasing. The Portfolio may purchase put options on its securities or foreign
currencies to protect against a decline in the value of the security or foreign
currency or to close out covered written put positions. Risks may arise from an
imperfect correlation between the change in market value of the securities or
foreign currencies held by the Portfolio and the prices of options relating to
the securities or foreign currencies purchased or sold by the Portfolio and from
the possible lack of a liquid secondary market for an option. The maximum
exposure to loss for any purchased option is limited to the premium initially
paid for the option.
136
<PAGE> 137
MAINSTAY VP SERIES FUND, INC.
(M)
FINANCIAL INSTRUMENTS WITH CONCENTRATION OF CREDIT RISK. High Yield Corporate
Bond Portfolio invests in Loan Participations. When the Portfolio purchases a
Participation, the Portfolio typically enters into a contractual relationship
with the lender or third party selling such Participation ("Selling
Participant"), but not with the Borrower. As a result, the Portfolio assumes the
credit risk of the Borrower, the Selling Participant and any other persons
interpositioned between the Portfolio and the Borrower ("Intermediate
Participants"). The Portfolio may not directly benefit from the collateral
supporting the Senior Loan in which it has purchased the Participation. The
Portfolio may be considered to have a concentration of credit risk in the
banking industry, since the Portfolio will only acquire Participations if the
Selling Participant and each Intermediate Participant is a financial
institution.
(N)
FEDERAL INCOME TAXES. Each of the Portfolios is treated as a separate entity for
Federal income tax purposes. The Fund's policy is to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of the taxable income to the shareholders of
each Portfolio within the allowable time limits. Therefore, no Federal income
tax provision is required.
Investment income received by a Portfolio from foreign sources may be subject to
foreign income taxes withheld at the source.
(O)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions are
recorded on the ex-dividend date. For Cash Management Portfolio, dividends are
declared daily and paid monthly. Each of the other Portfolios intends to declare
and pay, as a dividend, substantially all of their net investment income and net
realized gains no less frequently than once a year. Income dividends and capital
gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax differences" are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their Federal tax basis
treatment; temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for Federal tax purposes are reported
as dividends in excess of net investment income or distributions in excess of
net realized capital gains.
(P)
EXPENSES. Expenses with respect to the Fund are allocated to the individual
Portfolios in proportion to the net assets of the respective Portfolios when the
expenses are incurred except when direct allocations of expenses can be made.
(Q)
USE OF ESTIMATES. The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
137
<PAGE> 138
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 3--Fees and Related Party Policies:
- --------------------------------------------------------------------------------
(A)
INVESTMENT ADVISORY AND ADMINISTRATION FEES. MacKay-Shields Financial
Corporation ("MacKay-Shields") acts as investment adviser to Capital
Appreciation, Cash Management, Convertible, Government, High Yield Corporate
Bond, International Equity, Total Return and Value Portfolios under an
Investment Advisory Agreement. MacKay-Shields is a registered investment
adviser, a wholly-owned subsidiary of NYLIFE Inc. and an indirect wholly-owned
subsidiary of New York Life. As of May 1, 1999, Madison Square Advisors, Inc.
("Madison Square Advisors") acts as investment adviser to Bond and Growth
Equity Portfolios under an Investment Advisory Agreement. Madison Square
Advisors is a registered investment adviser, a wholly-owned subsidiary of
NYLIFE Inc. and an indirect subsidiary of New York Life. Prior to May 1, 1999,
New York Life acted as investment adviser to the Bond and Growth Equity
Portfolios and was replaced by Madison Square Advisors under a Substitution
Agreement. The substitution had no effect on investment personnel, investment
strategies or fees of the Portfolios. Monitor Capital Advisors Inc. ("Monitor")
acts as investment adviser to Indexed Equity Portfolio under an Investment
Advisory Agreement. Monitor is a registered investment adviser, a wholly-owned
subsidiary of NYLIFE Inc. and an indirect wholly-owned subsidiary of New York
Life.
NYLIAC is Administrator for the Fund.
The Fund, on behalf of each Portfolio, pays the Advisers and Administrator a
monthly fee for the services performed and the facilities furnished at an
approximate annual rate of the average daily net assets of each Portfolio as
follows:
<TABLE>
<CAPTION>
ADVISER ADMINISTRATOR
------- -------------
<S> <C> <C>
Capital Appreciation Portfolio.............................. 0.36% 0.20%
Cash Management Portfolio................................... 0.25% 0.20%
Convertible Portfolio....................................... 0.36% 0.20%
Government Portfolio........................................ 0.30% 0.20%
High Yield Corporate Bond Portfolio......................... 0.30% 0.20%
International Equity Portfolio.............................. 0.60% 0.20%
Total Return Portfolio...................................... 0.32% 0.20%
Value Portfolio............................................. 0.36% 0.20%
Bond Portfolio.............................................. 0.25% 0.20%
Growth Equity Portfolio..................................... 0.25% 0.20%
Indexed Equity Portfolio.................................... 0.10% 0.20%
</TABLE>
(B)
DISTRIBUTOR. NYLIFE Distributors Inc. ("NYLIFE Distributors"), a wholly-owned
subsidiary of NYLIFE Inc. and an indirect wholly-owned subsidiary of New York
Life, serves as the Fund's distributor and principal underwriter (the
"Distributor") pursuant to a Distribution agreement. NYLIFE Distributors is not
obligated to sell any specific amount of the Fund's shares, and receives no
compensation from the Fund pursuant to the Distribution Agreement.
(C)
DIRECTORS FEES. Directors, other than those affiliated with New York Life,
MacKay-Shields, Monitor or NYLIFE Distributors, are paid an annual fee of
$35,000, and $1,500 for each Board meeting and each Committee meeting attended
plus reimbursement for travel and out-of-pocket expenses. The Fund allocates
this expense in proportion to the net assets of the respective Portfolios.
138
<PAGE> 139
MAINSTAY VP SERIES FUND, INC.
(D)
CAPITAL. At June 30, 1999 NYLIAC was the beneficial owner of shares of the
Convertible Portfolio with a net asset value of $12,174,323. This value
represents 17.53% of the net assets of the Convertible Portfolio at June 30,
1999.
(E)
OTHER. Fees for the cost of legal services provided to the Fund by the Office of
General Counsel of New York Life are charged to the Portfolios. For the six
months ended June 30, 1999 these fees, in the following amounts, were included
in Professional fees shown on the Statement of Operations:
<TABLE>
<S> <C>
Capital Appreciation Portfolio.............................. $25,369
Cash Management Portfolio................................... 5,022
Convertible Portfolio....................................... 1,171
Government Portfolio........................................ 2,745
High Yield Corporate Bond Portfolio......................... 12,302
International Equity Portfolio.............................. 756
Total Return Portfolio...................................... 13,022
Value Portfolio............................................. 6,146
Bond Portfolio.............................................. 5,611
Growth Equity Portfolio..................................... 19,846
Indexed Equity Portfolio.................................... 19,250
</TABLE>
- --------------------------------------------------------------------------------
NOTE 4--Federal Income Tax:
- --------------------------------------------------------------------------------
At December 31, 1998, for Federal income tax purposes, capital loss
carryforwards, as shown in the table below, were available to the extent
provided by regulations to offset future realized gains of each respective
Portfolio through the years indicated. To the extent that these loss
carryforwards are used to offset future capital gains, it is probable that the
capital gains so offset will not be distributed to shareholders. Additionally,
as shown in the table below, certain Portfolios intend to elect, to the extent
provided by regulations, to treat certain qualifying capital losses that arose
during the year after October 31, 1998 as if they arose on January 1, 1999.
<TABLE>
<CAPTION>
CAPITAL LOSS CAPITAL LOSS
AVAILABLE THROUGH AMOUNT (000'S) DEFERRED (000'S)
----------------- -------------- ----------------
<S> <C> <C> <C>
Capital Appreciation Portfolio.............................. $ 0 $ 351
====== ======
Convertible Portfolio....................................... $ 0 $ 9
====== ======
Government Portfolio........................................ 2004 $ 810 $ 92
====== ======
High Yield Corporate Bond Portfolio......................... 2006 $4,243 $2,859
====== ======
International Equity Portfolio.............................. 2005 $ 268
2006 $ 159
------
$ 427 $ 465
====== ======
Value Portfolio............................................. $ 0 $ 803
====== ======
</TABLE>
International Equity and Value Portfolios intend to elect to treat for Federal
income tax purposes approximately $54,148 and $79,016, respectively, of
qualifying foreign exchange losses that arose during the year after October 31,
1998 as if they arose on January 1, 1999. Cash Management and Government
Portfolios utilized $460 and $3,832,073, respectively, of capital loss
carryforwards during the year ended December 31, 1998.
139
<PAGE> 140
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 5--Financial Investments:
- --------------------------------------------------------------------------------
High Yield Corporate Bond Portfolio invests primarily in high yield bonds.
These bonds may involve special risks in addition to the risks associated with
investment in higher rated debt securities. High yield bonds may be more
susceptible to real or perceived adverse economic and competitive industry
conditions than higher grade bonds. Also, the secondary market on which high
yield bonds are traded may be less liquid than the market for higher grade
bonds.
Each Portfolio may enter into repurchase agreements to earn income. In the event
of the bankruptcy of the seller or the failure of the seller to repurchase the
securities as agreed, a Portfolio could suffer losses, including loss of
interest on or principal of the security and costs associated with delay and
enforcement of the repurchase agreement.
- --------------------------------------------------------------------------------
NOTE 6--Line of Credit:
- --------------------------------------------------------------------------------
Capital Appreciation, Convertible, Government, High Yield Corporate Bond,
International Equity, Total Return, Value, Bond, Growth Equity and Indexed
Equity Portfolios maintain a line of credit of $375,000,000 with The Bank of
New York in order to secure a source of funds for temporary purposes to meet
unanticipated or excessive shareholder redemption requests. The Portfolios pay
a commitment fee, at an annual rate of 0.065% of the average commitment amount,
regardless of usage. Such commitment fees are allocated amongst the Portfolios
based upon net assets and other factors. Interest on any revolving credit loan
is charged based upon the Federal Funds Advances rate. There were no borrowings
on this line of credit at June 30, 1999.
140
<PAGE> 141
MAINSTAY VP SERIES FUND, INC.
(THIS PAGE INTENTIONALLY LEFT BLANK)
141
<PAGE> 142
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 7--Purchases and Sales of Securities (in 000's):
- --------------------------------------------------------------------------------
During the six month period ended June 30, 1999, purchases and sales of
securities, other than securities subject to repurchase transactions and
short-term securities, were as follows:
<TABLE>
<CAPTION>
CAPITAL APPRECIATION CONVERTIBLE GOVERNMENT
PORTFOLIO PORTFOLIO PORTFOLIO
PURCHASES SALES PURCHASES SALES PURCHASES SALES
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Government Securities......................... $ -- $ -- $ -- $ -- $221,742 $206,065
All others......................................... 355,141 197,399 61,609 63,685 19,028 14,167
------------------------------------------------------------------
Total.............................................. $355,141 $197,399 $ 61,609 $ 63,685 $240,770 $220,232
==================================================================
</TABLE>
<TABLE>
<CAPTION>
GROWTH EQUITY INDEXED EQUITY
PORTFOLIO PORTFOLIO
PURCHASES SALES PURCHASES SALES
----------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government Securities......................... $ -- $ -- $ -- $ --
All others......................................... 372,289 315,680 245,992 19,048
----------------------------------------------
Total.............................................. $372,289 $315,680 $245,992 $ 19,048
==============================================
</TABLE>
- --------------------------------------------------------------------------------
NOTE 8--Capital Share Transactions (in 000's):
- --------------------------------------------------------------------------------
Transactions in capital shares for the six month period ended June 30, 1999 and
the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
CAPITAL APPRECIATION CASH MANAGEMENT CONVERTIBLE
PORTFOLIO PORTFOLIO PORTFOLIO
1999 1998 1999 1998 1999 1998
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold........................................ 7,983 9,454 424,608 485,911 446 1,946
Shares issued in reinvestment of dividends and
distributions.................................... -- 410 5,707 8,753 39 434
-----------------------------------------------------------------
7,983 9,864 430,315 494,664 485 2,380
Shares redeemed.................................... (2,706) (3,542) (336,496) (403,894) (365) (491)
-----------------------------------------------------------------
Net increase (decrease)............................ 5,277 6,322 93,819 90,770 120 1,889
=================================================================
</TABLE>
<TABLE>
<CAPTION>
GROWTH EQUITY INDEXED EQUITY
PORTFOLIO PORTFOLIO
1999 1998 1999 1998
--------------------------------------------
<S> <C> <C> <C> <C>
Shares sold........................................ 3,658 5,372 13,610 16,025
Shares issued in reinvestment of dividends and
distributions.................................... -- 3,440 259 702
--------------------------------------------
3,658 8,812 13,869 16,727
Shares redeemed.................................... (3,297) (3,977) (5,613) (4,296)
--------------------------------------------
Net increase....................................... 361 4,835 8,256 12,431
============================================
</TABLE>
142
<PAGE> 143
MAINSTAY VP SERIES FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD INTERNATIONAL
CORPORATE BOND EQUITY TOTAL RETURN VALUE BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
PURCHASES SALES PURCHASES SALES PURCHASES SALES PURCHASES SALES PURCHASES SALES
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 6,375 $ -- $ -- $ -- $263,657 $240,755 $ -- $ -- $198,109 $175,782
373,399 351,395 26,251 10,797 187,571 162,352 111,498 127,796 206,095 195,542
- --------------------------------------------------------------------------------------------------------------------
$379,774 $351,395 $ 26,251 $ 10,797 $451,228 $403,107 $111,498 $127,796 $404,204 $371,324
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD INTERNATIONAL
GOVERNMENT CORPORATE BOND EQUITY TOTAL RETURN VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
1999 1998 1999 1998 1999 1998 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6,049 5,655 3,620 14,171 1,608 1,187 3,022 4,903 890 5,442
-- 486 111 4,862 19 72 75 1,446 -- 2,175
- ---------------------------------------------------------------------------------------------------------------
6,049 6,141 3,731 19,033 1,627 1,259 3,097 6,349 890 7,617
(1,027) (2,051) (1,828) (3,031) (224) (1,129) (511) (1,234) (1,783) (1,122)
- ---------------------------------------------------------------------------------------------------------------
5,022 4,090 1,903 16,002 1,403 130 2,586 5,115 (893) 6,495
===============================================================================================================
<CAPTION>
BOND
PORTFOLIO
1999 1998
- ------------------------
<S> <C>
3,209 4,582
2 1,627
- ------------------------
3,211 6,209
(1,515) (2,659)
- ------------------------
1,696 3,550
========================
</TABLE>
143
<PAGE> 144
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