NEW
YORK
LIFE
LOGO
NEW YORK LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
51 Madison Ave., New York, N.Y. 10010
To Our Variable Annuity Owners:
Enclosed is the June 30, 1996 Unaudited Semiannual Report of New York Life
Separate Account N, the Account being used for your contract. Since the assets
of the Account are invested solely in shares of New York Life Fund, Inc., the
June 30, 1996 Semiannual Report of the Fund is also included.
The continued vitality of the equity market was surprising as it was
achieved in an environment of rising interest rates. Upon closer inspection, the
market's strength was clearly explained by the record volume of inflows going
into equity mutual funds. In particular, investors stepped up their risk
tolerance and increased their exposure in more aggressive growth funds. As a
result, small capitalization issues were the best performers in the first half
of the year.
Looking forward, we remain somewhat optimistic in our outlook for the
market. While market valuations remain expensive at current levels, the
continued flow of funds into the market should enable further gains. We expect
the robust economic growth of the first half of the year to begin showing signs
of fading as the year progresses. With expected earnings growth slowing, we have
begun to increase our exposure in stable consumer growth issues and energy
stocks. In addition, we are avoiding the more speculative new stock issues that
absorbed most of the new funds coming into the market in the first half of the
year. Our investment strategy remains focused on investing in quality growth
stocks which sell at reasonable valuations and we intend to remain attentive to
all external variables which impact the equity market.
The five largest common stock holdings as of June 30, 1996 were Emerson
Electric, Federal National Mtg. Association, Marriot International, Pfizer and
Sybron International. No common stock position exceeded 5% of the portfolio.
[Paste-up Harry Hohn signature]
-----------------------------------------
Chairman of the Board
NEW YORK LIFE INSURANCE COMPANY
<PAGE>
New York Life
Separate Account N
A SEPARATE ACCOUNT
OF NEW YORK LIFE
INSURANCE COMPANY
-------------------------------
The unit values under the contracts (rounded to the nearest cent) on the
dates specified below were as follows:
June 30,
1996 December 31,
(Unaudited) 1995
----------- ------------
Variable accumulation unit
value .................................... $71.08 $61.16
Variable annuity unit
value* ................................... 2.63 2.31
Both types of unit values are computed daily and reflect the performance of
the Account's investment in shares of New York Life Fund, Inc. (the "Fund").
Contract values for any day during the "pay in" or accumulation period (before
annuity payments begin) are computed by multiplying the number of "variable
accumulation units" held on that day by their unit value on such day. The
amounts of annuity payments to be made to annuitants (after annuity payments
begin) are computed by multiplying the number of "variable annuity units"
applicable to the contract on the day of computation by their unit value on such
day.
*The corresponding unit values at June 30, 1996 and December 31, 1995, for
contracts issued for delivery in Florida and Texas, where special state
provisions exist, were $3.36 and $2.94, respectively.
- --------------------------------------------------------------------------------
STATEMENT OF
ASSETS AND LIABILITIES
JUNE 30, 1996
(Unaudited)
(dollars in thousands)
ASSETS:
Investment in New York Life
Fund, Inc. at net asset value
(Identified Cost: $1,418) ................................ $1,265
LIABILITIES:
Liability for mortality and expense
risk charges 43
------
Total liabilities 43
------
Total equity ........................................... $1,222
======
TOTAL EQUITY
REPRESENTED BY:
Equity of Contract Owners:
Variable accumulation units
outstanding (3,094 units) ............................... $ 237
Annuity reserve ........................................... 985
------
Total equity ........................................... $1,222
======
Variable accumulation
unit value in dollars .................................... $71.08
======
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
New York Life
Separate Account N
A SEPARATE ACCOUNT
OF NEW YORK LIFE
INSURANCE COMPANY
--------------------------------
STATEMENT
OF OPERATIONS
For the Six Months
Ended June 30, 1996
(Unaudited)
(dollars in thousands)
- --------------------------------------------------------------------------------
Dividend income .................................................... $ 32
Realized capital gain distributions received ....................... 206
Mortality and expense risk charges ................................. (4)
-----
Net investment income ............................................ 234
-----
Proceeds from sale of securities ................................... 374
Cost of securities sold ............................................ (441)
-----
Net realized loss on investments ................................. (67)
Change in unrealized appreciation /depreciation on investments ..... 22
-----
Net loss on investments .......................................... (45)
-----
Decrease attributable to funds of New York Life
retained by Separate Account ...................................... (28)
-----
Net increase in total equity resulting from operations ........... $ 161
=====
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
New York Life
Separate Account N
A SEPARATE ACCOUNT
OF NEW YORK LIFE
INSURANCE COMPANY
---------------------------
STATEMENT
OF CHANGES Six Months
IN TOTAL EQUITY Ended Year ended
(Unaudited) June 30, 1996 December 31,
(dollars in thousands) (Unaudited) 1995
- ----------------------- ------------- ------------
DECREASE IN TOTAL EQUITY:
OPERATIONS:
- -----------
Net investment income ............................. $ 234 $ 368
Net realized (loss) gain on investments ........... (67) 36
Change in unrealized appreciation /depreciation
on investments .................................. 22 102
Decrease attributable to funds of New York
Life retained by
Separate Account ................................. (28) (31)
------ ------
Net increase in total equity resulting
from operations ................................ 161 475
------ ------
CONTRIBUTIONS AND WITHDRAWALS:
- ------------------------------
Contract Owners' purchase payments ................ 1 11
Contract Owners' surrenders ....................... (317) (1,284)
Contract Owners' annuity and death benefits ....... (55) (128)
------ ------
Total contributions and withdrawals (net) ....... (371) (1,401)
------ ------
Decrease in annuity reserve ....................... 43 16
------ ------
Decrease in total equity ........................ (167) (910)
------ ------
TOTAL EQUITY:
- -------------
Beginning of period ............................... 1,389 2,299
------ ------
End of period ..................................... $1,222 $1,389
====== ======
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
New York Life
Separate Account N
A SEPARATE ACCOUNT
OF NEW YORK LIFE
INSURANCE COMPANY
---------------------------------
NOTES TO
FINANCIAL
STATEMENTS
June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 1--ORGANIZATION AND ACCOUNTING POLICIES:
New York Life Insurance Company ("New York Life") Separate Account N
("Variable Account N") was established in 1969 under New York Law by New York
Life to receive and invest payments under Non-Qualified Individual Variable
Annuity Contracts issued by New York Life. Variable Account N is registered
under the Investment Company Act of 1940, as amended, as a unit investment
trust. The assets of Variable Account N are invested in shares of the New York
Life Fund, Inc. (the "Fund"), a diversified open-end management investment
company, and are clearly identified and distinguished from the other assets and
liabilities of New York Life. Sale of new variable contracts related to Variable
Account N was terminated in November 1979.
In May 1995, New York Life commenced a redemption program offering Contract
Owners of individual variable annuity contracts issued by New York Life through
Variable Account N an option to either surrender their contract for its
accumulated cash value or exchange their contract for a fixed or variable
annuity product offered by New York Life Insurance and Annuity Corporation, a
direct, wholly owned subsidiary of New York Life. Should the redemption program
be acted upon by most or all of the remaining Contract Owners of the individual
variable annuity contracts, the variable account will ultimately liquidate its
remaining assets and cease to operate. The outcome of the redemption program is
not determinable at this date.
No Federal income tax is payable on investment income or capital gains of
Variable Account N under current federal income tax law.
Security valuation--The investment in the New York Life Fund, Inc. is
valued at the net asset value of shares of the Fund.
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.
Annuity reserves--The reserves are computed for currently payable contracts
in accordance with rates taken from approved valuation mortality tables. The
assumed interest rate is 4%, unless issued in Florida or Texas where the rate is
3%.
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.
NOTE 2--INVESTMENTS:
At June 30, 1996, the investment in the New York Life Fund, Inc. by
Variable Account N is as follows (in thousands):
Number of shares: 222
Identified Cost*: $1,418
* The cost stated also represents the aggregate cost for Federal income tax
purposes.
5
<PAGE>
New York Life
Separate Account N
A SEPARATE ACCOUNT
OF NEW YORK LIFE
INSURANCE COMPANY
---------------------------------
NOTES TO
FINANCIAL
STATEMENTS (Continued)
June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 2--INVESTMENTS: (continued)
Transactions in the New York Life Fund, Inc. shares for the six months
ended June 30, 1996, were as follows (in thousands):
Purchases: $240
Proceeds from sales: $374
NOTE 3--MORTALITY AND EXPENSE RISK CHARGES:
There are charges to Variable Account N for the mortality and expense risks
that New York Life assumes. These charges are made daily at an annual rate of
0.75% of the daily net asset value. The amount of these charges retained in
Variable Account N represents funds of New York Life. Accordingly, New York Life
participates in the results of Variable Account N's investment activities
ratably with the Contract Owners.
NOTE 4--DISTRIBUTION OF NET INCOME:
Variable Account N does not expect to declare dividends to Contract Owners
from accumulated net income. The accumulated net income is distributed to
Contract Owners as part of withdrawals of amounts (in the form of surrenders,
death benefits, transfers or annuity payments) in excess of the net purchase
payments.
NOTE 5--COST TO CONTRACT OWNERS:
At June 30, 1996, the cost to Contract Owners for accumulation units
outstanding, with adjustments for net investment income, market
appreciation/depreciation and deduction for expenses is as follows (in
thousands):
Cost to Contract Owners ................................. $8,313
Accumulated net investment
income ................................................. 8,584
Accumulated net realized gain on
investments ............................................ 162
Unrealized depreciation on
investments ............................................ (153)
Equivalent tax effect on realized
and change in unrealized
capital gains and losses ............................... (81)
Annuity and death benefits .............................. (5,651)
Surrenders .............................................. (9,249)
Mortality and expense risk reserve
increase due to mortality
experience ............................................. 178
Decrease attributable to funds of
New York Life retained by the
Separate Account ....................................... (881)
------
Net amount applicable to Contract
Owners ................................................. $1,222
======
6
<PAGE>
New York Life
Separate Account N
A SEPARATE ACCOUNT
OF NEW YORK LIFE
INSURANCE COMPANY
----------------------------------
NOTES TO
FINANCIAL
STATEMENTS (Continued)
June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 6--UNIT TRANSACTIONS:
Transactions in accumulation units were as follows (in thousands):
Six
Months
Ended
June 30, Year Ended
1996 December 31,
(Unaudited) 1995
----------- ------------
Units redeemed on surrenders ....................... (5) (20)
Units redeemed on annuity and death benefits. ...... -- (2)
--- ---
Net decrease ..................................... (5) (22)
Units outstanding, beginning of period ............. 8 30
--- ---
Units outstanding, end of period ................... 3 8
=== ===
NOTE 7--FINANCIAL HIGHLIGHTS (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 Variable Account N:
<TABLE>
<CAPTION>
Six
Months
Ended
June 30,
1996
(Unaudited) 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986*
---------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning
of period .................. $61.16 $49.25 $48.52 $42.20 $38.01 $28.41 $30.55 $24.68 $21.70 $21.41 $20.69
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net investment income ....... 53.55 14.54 8.73 10.54 8.03 5.41 1.13 5.96 4.74 5.86 4.88
Net realized and
unrealized gains
(losses) on security
transactions (includes
the effect of
accumulation unit
transactions) .............. (43.63) (2.63) (8.00) (4.22) (3.84) 4.19 (3.27) (.09) (1.76) (5.57) (4.16)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Unit value, end of period ... $71.08 $61.16 $49.25 $48.52 $42.20 $38.01 $28.41 $30.55 $24.68 $21.70 $21.41
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
* Per unit data based on average monthly units outstanding during the period
except for 1986.
7
<PAGE>
New York Life Fund, Inc.
Unaudited Semiannual Report
June 30, 1996
================================================================================
NEW YORK LIFE FUND, INC.
- --------------------------------------------------------------------------------
51 Madison Ave., New York, N.Y. 10010
To Our Securityholders:
The assets of New York Life Separate Accounts N and Q are invested solely
in shares of New York Life Fund, Inc.
At the Annual Meeting of Shareholders held on April 23, 1996, the present
directors of the Fund were re-elected (as shown on page 19), and the selection
of Price Waterhouse LLP as independent accountants of the Fund for 1996 was
approved by the shareholders (as shown on page 19), and at the Regular Quarterly
Meeting of the Board of Directors held on May 14, 1996, the Board declared
dividend distributions (as shown on page 16) which were paid on May 14, 1996, to
New York Life Separate Accounts N and Q, as the sole shareholders of record of
New York Life Fund, Inc.
The financial information included herein as of June 30, 1996, and for the
six months then ended is taken from the records of the Fund without examination
by independent accountants who do not express an opinion thereon.
RICHARD M. KERNAN JR.
Chairman of the Board
and Chief Executive Officer
NEW YORK LIFE FUND, INC.
8
<PAGE>
NEW YORK LIFE
FUND, INC.
--------------------------
STATEMENT
OF INVESTMENTS
June 30, 1996
(Unaudited) Shares Values
- ------------------------------ (in thousands)
------ --------------
COMMON STOCK (93.1%)@
OIL & ENERGY SERVICES (9.4%)
- ----------------------------
Quaker State Corp. ............................. 2,600 $ 39
Schlumberger Ltd. .............................. 1,050 88
Smith International Inc. # ..................... 3,400 102
Triton Energy Ltd. # ........................... 1,200 58
------
287
------
COMPUTER & BUSINESS EQUIPMENT (9.1%)
- ------------------------------------
Cisco Systems, Inc. # .......................... 1,000 56
Electronic Data Systems Corp. .................. 1,000 54
First Data Corp. ............................... 1,220 97
Hewlett-Packard Co. ............................ 700 70
------
277
------
DRUGS (8.6%)
- ------------
American Home Products Corp. ................... 1,600 96
Amgen Inc. # ................................... 1,100 60
Pfizer Inc. .................................... 1,500 107
------
263
------
ELECTRICAL (7.0%)
- -----------------
Emerson Electric Co. ........................... 1,400 127
General Electric Co. ........................... 1,000 87
------
214
------
FINANCE & MISCELLANEOUS (6.5%)
- ------------------------------
Chelsea GCA Realty, Inc. ....................... 2,500 79
Federal National Mortgage Association .......... 3,600 121
------
200
------
RETAIL TRADE & MERCHANDISING (6.1%)
- -----------------------------------
Federated Department Stores, Inc. # ............ 3,000 102
Smart & Final, Inc. ............................ 3,300 85
------
187
------
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
NEW YORK LIFE
FUND, INC.
--------------------------
STATEMENT
OF INVESTMENTS
June 30, 1996 (Continued)
(Unaudited) Shares Values
- ------------------------------ (in thousands)
------ --------------
MEDICAL SUPPLIES (5.9%)
- -----------------------
Technical Chemicals & Products Inc. # .......... 6,000 $ 86
United States Surgical Corp. ................... 3,000 93
------
179
------
CHEMICALS (5.7%)
- ----------------
Morton International Inc., Ind. ................ 2,000 74
Sealed Air Corp.# .............................. 3,000 101
------
175
------
HOSPITAL & MEDICAL SERVICES (5.7%)
- ----------------------------------
Healthsouth Corp. # ............................ 1,100 40
Healthsource, Inc. # ........................... 1,700 30
Sybron International Corp. # ................... 4,200 105
------
175
------
ELECTRONICS (5.6%)
- ------------------
Allied-Signal, Inc. ............................ 1,500 86
Lockheed Martin Corp. .......................... 1,000 84
------
170
------
TRANSPORTATION (5.0%)
- ---------------------
Conrail, Inc. .................................. 1,500 100
Rollins Truck Leasing Corp. .................... 5,000 52
------
152
------
LODGING & RESTAURANTS (3.5%)
- ----------------------------
Marriott International, Inc. ................... 2,000 108
------
108
------
MEDIA (2.9%)
- ------------
Infinity Broadcasting Corp.# ................... 3,000 90
------
90
------
MISCELLANEOUS (2.8%)
- --------------------
Service Corp. International .................... 1,500 86
------
86
------
ELECTRIC UTILITIES (2.5%)
- -------------------------
CMS Energy Corp. ............................... 2,500 77
------
77
------
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
NEW YORK LIFE
FUND, INC.
--------------------------
STATEMENT
OF INVESTMENTS
June 30, 1996 (Continued)
(Unaudited) Shares Values
- ------------------------------ (in thousands)
------ --------------
AEROSPACE/DEFENSE (2.5%)
- -----------------------
UNC Inc. # ..................................... 9,000 $ 75
------
75
------
BANKS (1.8%)
- ------------
Amsouth Bancorporation ......................... 1,500 54
------
54
------
INSURANCE (1.6%)
- ----------------
American Intl. Group, Inc. ..................... 500 49
------
49
------
COMMUNICATIONS (0.9%)
- ---------------------
Loral Space & Communications Ltd.# ............. 2,000 27
------
27
------
TOTAL COMMON STOCKS (Identified Cost: $2,004) .. $2,845
======
Principal
Amount
(in thousands)
--------------
SHORT TERM INVESTMENTS (6.9%)@
COMMERCIAL PAPER (6.9%)
- -----------------------
Associates Corp.--N.A.
5.15% Master Note, due on demand (yield 5.29%) . $ 25 $ 25
Federal Farm Credit Banks
5.27% Note, due 7/1/96 (yield 5.28%) ........... 60 60
GTE North Inc.
5.40% Note, due 7/1/96 (yield 5.40%) ........... 100 100
Federal Home Loan Mortgage Corp.
5.27% Note, due 7/10/96 (yield 5.29%) .......... 25 25
------
TOTAL SHORT-TERM INVESTMENTS
(Amortized Cost: $210) ........................ $ 210
------
TOTAL INVESTMENTS (100%) (Cost: $2,214*) ........ $3,055**
======
@ Percentages indicated are based on total investments.
# Securities which were non-income producing during the six month period ending
June 30, 1996.
* The cost stated also represents the aggregate cost for federal income tax
purposes.
** Total net unrealized appreciation on investments of $841,000 consists of
gross unrealized appreciation on all investments of $884,000 and gross
unrealized depreciation on all investments of $43,000.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
NEW YORK LIFE
FUND, INC.
-----------------------------
STATEMENT
OF ASSETS
AND LIABILITIES
June 30, 1996
(Unaudited)
(in thousands)
- --------------------------------------------------------------------------------
ASSETS:
Investments in securities, at market value (Cost: $2,214) .......... $3,055
Cash ............................................................... 5
Dividends and interest receivable .................................. 3
------
Total assets ................................................... 3,063
------
LIABILITIES:
Payable to New York Life for fund shares redeemed .................. 7
Investment advisory fees payable ................................... 2
Directors' fees payable ............................................ 14
------
Total liabilities .............................................. 23
------
NET ASSETS:
Capital stock (Authorized 10,000,000 shares--Par Value--$1.00) ..... 532
Paid-in capital .................................................... 1,024
Accumulated net investment loss .................................... (15)
Accumulated undistributed net realized gain on investments ......... 658
Unrealized appreciation on investments ............................. 841
------
Net assets applicable to outstanding shares .................... $3,040
======
Number of shares outstanding ................................... 532
======
Net asset value per share outstanding .......................... $ 5.71
======
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
NEW YORK LIFE
FUND, INC.
------------------------------
STATEMENT
OF OPERATIONS
For the Six Months
Ended June 30, 1996
(Unaudited)
(in thousands)
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS:
INCOME:
- -------
Dividends .......................................................... $ 20
Interest ........................................................... 9
------
Total Income ................................................... 29
------
EXPENSES:
- ---------
Investment advisory fee ............................................ 4
Directors' fees, expenses and franchise taxes ...................... 40
------
Total expenses ................................................. 44
------
Net investment loss .......................................... (15)
------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments ................................... 658
Change in unrealized appreciation/depreciation on investments ...... (138)
------
Net gain on investments ........................................ 520
------
Increase in net assets resulting from operations ............. $505
======
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
NEW YORK LIFE
FUND, INC.
STATEMENT
OF CHANGES IN
NET ASSETS Six Months Year ended
(Unaudited) Ended December 31,
(in thousands) June 30, 1996 1995
- --------------------------------- ------------- ------------
DECREASE IN NET ASSETS:
OPERATIONS:
- ------------
Net investment (loss) income ..................... $ (15) $ 78
Net realized gain on investments ................. 658 1,401
Change in unrealized appreciation/depreciation
on investments ................................. (138) 543
------ ------
Net increase in assets from operations .......... 505 2,022
------ ------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
- -----------------------------------
Net investment income ............................ (78) (49)
Net realized gain from investment transactions ... (494) (1,181)
------ ------
Distributions to shareholders ................... (572) (1,230)
------ ------
CAPITAL STOCK TRANSACTIONS:
- ---------------------------
Proceeds from sale of shares ..................... 3 34
Net asset value of shares issued to
shareholders upon reinvestment of
distributions ................................... 572 1,230
------ ------
................................................. 575 1,264
Cost of shares redeemed .......................... (1,785) (6,812)
------ ------
Capital stock transactions ....................... (1,210) (5,548)
------ ------
Decrease in net assets .......................... (1,277) (4,756)
------ ------
NET ASSETS:
- -----------
Beginning of period .............................. 4,317 9,073
------ ------
End of period (including accumulated loss
of $15 and undistributed net
investment income of $78, respectively) ......... $3,040 $4,317
====== ======
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
NEW YORK LIFE
FUND, INC.
--------------------------------
NOTES TO
FINANCIAL
STATEMENTS
June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 1--ORGANIZATION AND ACCOUNTING POLICIES:
New York Life Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as a diversified open-end management investment
company. Shares of the Fund are currently offered only to New York Life
Insurance Company ("New York Life") for allocation to New York Life's Separate
Account Q and Separate Account N ("Variable Account Q" and "Variable Account N",
respectively, and "Variable Accounts," collectively). Sale of new variable
contracts related to the Variable Accounts was terminated in November 1979.
In May 1995, New York Life commenced a redemption program offering Contract
Owners of individual variable annuity contracts issued by New York Life through
the Variable Accounts an option to either surrender their contract for its
accumulated cash value or exchange their contract for a fixed or variable
annuity product offered by New York Life Insurance and Annuity Corporation, a
direct, wholly owned subsidiary of New York Life. Should the redemption program
be acted upon by most or all of the remaining Contract Owners of the individual
variable annuity contracts, the Fund will ultimately liquidate its remaining
assets and cease to operate. The outcome of the redemption program is not
determinable at this date.
The following is a summary of the significant accounting policies followed
by the Fund in the preparation of its financial statements.
Security valuation--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 their value on the 61st day prior
to maturity, if their original term to maturity at purchase exceeded 60 days.
Common stock issues traded on a national securities exchange are valued at the
last reported sale price on the principal exchange on which the security is
traded. Common stock issues traded in an over-the-counter market are valued at
the last bid price on the day the securities are being valued.
Securities and assets for which market quotations are not readily available
are valued at fair value as determined in good faith by or under the direction
of the Board of Directors of the Fund.
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). Dividend
income received by the Fund and dividends and distributions to shareholders of
the Fund are recorded as of their respective ex-dividend dates. Interest income
on debt securities is recorded daily.
Dividends to shareholders--Income and capital gain dividends are determined
in accordance with income tax regulations which may differ from generally
accepted accounting principles. These differences are primarily due to differing
treatments for deferral of wash sales and post October losses. All permanent
book and tax basis differences are reclassified to paid-in capital.
15
<PAGE>
NEW YORK LIFE
FUND, INC.
--------------------------------
NOTES TO
FINANCIAL
STATEMENTS (Continued)
June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 1--ORGANIZATION AND ACCOUNTING POLICIES (continued):
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.
NOTE 2--PORTFOLIO TRANSACTIONS:
Transactions in securities, other than short-term securities, for the six
months ended June 30, 1996, were as follows (in thousands):
PURCHASES:
Common stocks ................................. $1,060
------
PROCEEDS FROM SALES:
Common stocks ................................. $2,616
------
NOTE 3--INVESTMENT ADVISER:
The Fund has entered into an investment advisory agreement with New York
Life under which New York Life will provide, subject to the direction of the
Board of Directors of the Fund, investment advisory and related services.
This investment advisory agreement requires that New York Life pay certain
Fund expenses, including custodian and transfer agent fees, legal and accounting
fees, and printing expenses, as well as provide the Fund with administrative
services, office space and equipment, and pay salaries of the officers of the
Fund and administrative personnel necessary for advising the Fund. All officers
of the Fund are officers of the investment adviser. Investment advisory fees are
paid to New York Life at the annual rate of 0.25% of the average daily net
assets. These fees are charged daily and paid quarterly.
NOTE 4--INCOME TAXES:
Federal income taxes are not provided on net investment income and net
realized capital gains as the Fund qualifies as a regulated investment company
as defined under the Internal Revenue Code. Accordingly, the Fund intends to
distribute annually to its shareholders, within the allowable time limit, its
net investment income and net realized capital gains on investments in an amount
sufficient to relieve it from liability for Federal income taxes.
NOTE 5--DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income and distributions of net realized
capital gains of the Fund are declared at least annually.
The Tax Reform Act of 1986 (TRA) imposes a four percent non-deductible
excise tax on regulated investment companies which fail to declare by the end of
the calendar year, and pay before February 1 of the following year, 98% of net
investment income earned during the calendar year and of net realized capital
gains earned during a specified twelve month period. The Fund declared and paid
in 1995, and intends to declare and pay for 1996, dividends in the amount
sufficient to eliminate any excise tax liability. In 1996, the remaining 1995
undistributed net investment income was paid as follows: dividends from
undistributed net investment income of $78,000 amounting to $.18 per share and
net realized capital gains of $494,000 amounting to $1.13 per share.
16
<PAGE>
NEW YORK LIFE
FUND, INC.
--------------------------------
NOTES TO
FINANCIAL
STATEMENTS (Continued)
June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 6--CAPITAL STOCK:
At June 30, 1996, there were 10,000,000 shares of $1.00 par value capital
stock authorized. Transactions in capital stock were as follows (in thousands):
Six Months
Ended
June 30, Year Ended
1996 December 31,
(Unaudited) 1995
---------- ------------
Shares sold ................................... 1 5
Shares issued to shareholders upon
reinvestment of distributions ............... 100 199
---- -----
.............................................. 101 204
Shares redeemed ............................... (286) (927)
---- -----
Net decrease .............................. (185) (723)
Shares outstanding, beginning of period ....... 717 1,440
---- -----
Shares outstanding, end of period ............. 532 717
==== =====
17
<PAGE>
New York Life
Fund, Inc.
-----------------------------
NOTES TO
FINANCIAL
STATEMENTS (Continued)
June 30, 1996
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 7--Financial Highlights:
- -------------------------------------
The following table presents selected per share income and capital changes
(for a share outstanding throughout each period) and selected ratios:
<TABLE>
<CAPTION>
Six Months
Ended Years Ended December 31,
June 30, 1996 ---------------------------------------------------------------------------------------
(Unaudited) 1995 1994 1993 1992 1991 1990 1989 1988 1987* 1986
======================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning
of period..................... $ 6.02 $ 6.30 $ 7.11 $ 7.26 $ 7.55 $ 6.28 $ 6.93 $ 7.47 $ 7.64 $ 9.18 $10.42
---------------------------------------------------------------------------------------------------
Net investment (loss) income... (.03) .11 .09 .10 .11 .12 .17 .32 .27 .24 .27
Net realized and unrealized
gains (losses) on security
transactions (includes
the effect of capital
share transactions)........... 1.03 1.43 .06 1.00 .76 2.01 (.61) 1.47 .85 .06 .38
---------------------------------------------------------------------------------------------------
Total from investment
operations.................... 1.00 1.54 .15 1.10 .87 2.13 (.44) 1.79 1.12 .30 .65
---------------------------------------------------------------------------------------------------
Less dividends and
distributions:
Dividends from net
investment income............. (.18) (.03) (.09) (.09) (.19) (.17) (.05) (.32) (.25) (.48) (.29)
Distributions from net
realized capital gains
on security transactions...... (1.13) (1.79) (.87) (1.16) (.97) (.69) (.16) (2.01) (1.04) (1.36) (1.60)
---------------------------------------------------------------------------------------------------
Total dividends and
distributions................. (1.31) (1.82) (.96) (1.25) (1.16) (.86) (.21) (2.33) (1.29) (1.84) (1.89)
---------------------------------------------------------------------------------------------------
Net asset value, end of
period........................ $ 5.71 $ 6.02 $ 6.30 $ 7.11 $ 7.26 $ 7.55 $ 6.28 $ 6.93 $ 7.47 $ 7.64 $ 9.18
===================================================================================================
Total Investment Return........ 16.62%@ 24.45% 2.10% 15.22% 11.50% 33.96% (6.34)% 24.04% 14.66% 3.28% 6.25%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands)................ $3,040 $ 4,317 $ 9,073 $10,947 $10,705 $10,738 $8,377 $9,509 $14,708 $13,706 $14,358
Ratio of expenses to
average net assets............ 1.31%** 1.27% .73% .37% .39% .41% .44% .39% .37% .33% .33%
Ratio of net investment (loss)
income to average
net assets.................... (0.46%)** 0.88% 1.12% 1.23% 1.42% 1.70% 2.65% 2.89% 3.21% 2.39% 2.62%
Portfolio turnover rate........ 33.19%** 81.47% 101.69% 112.96% 81.58% 97.28% 111.58% 105.14% 128.16% 58.65% 75.90%
</TABLE>
* Per share data based upon average monthly shares outstanding during the
period.
@ Actual return for the six month period.
** Amounts are on an annualized basis.
18
<PAGE>
New York Life
Fund, Inc.
----------------
At the Annual Meeting of the Shareholders held on April 23, 1996, 100% of
the Fund's issued and outstanding capital stock was represented by proxy. The
results of matters voted on are as follows:
<TABLE>
- ----------------------------------------------------------------------------------------------------
<CAPTION>
1. Election of Directors.
Percentage of
Principal Percentage of Shares Withheld
Name Occupation Shares Voted For Authority
- ---- ---------- ---------------- ---------------
<S> <C> <C> <C>
Michael J. Drabb Executive Vice President 100% 0%
O'Brien Asset
Management, Inc.
Jill Feinberg Consultant 100% 0%
Jill Feinberg & Co.
Daniel Herrick Treasurer and Senior 100% 0%
Executive Emeritus
National Gallery
of Art
Richard M. Kernan, Jr. Executive Vice President 100% 0%
New York Life
Insurance Company
Anne F. Pollack Senior Vice President 100% 0%
New York Life
Insurance Company
Robert D. Rock Senior Vice President 100% 0%
New York Life
Insurance Company
Roman D. Weil Professor of Accounting 100% 0%
University of Chicago
- ----------------------------------------------------------------------------------------------------
</TABLE>
2. Selection of Price Waterhouse LLP as Independent Accountants:
Percentage of Percentage of Percentage of
Shares Voted For Shares Voted Against Shares Abstained
---------------- -------------------- ----------------
100% 0% 0%
- --------------------------------------------------------------------------------
The Executive Officers are as follows:
Richard M. Kernan, Jr. ................ Chairman of the
Board and Chief
Executive Officer
Anne F. Pollack ....................... President and Chief
Administrative
Officer
Jay S. Calhoun ........................ Treasurer
Marc J. Chalfin ....................... Controller
A.Thomas Smith III .................... Secretary
- -------------------------------------------------------------------------------
19
<PAGE>
When making a redemption request please complete the form regarding Federal
income tax withholding. If a Contract Owner does not advise us, in writing,
whether or not to withhold Federal income taxes from the taxable proceeds, tax
laws require us to withhold taxes and remit them to the Federal Government.
[LOGO] NEW YORK LIFE
These Semiannual Reports are submitted for the general information of
owners of the Individual Variable Annuity Contracts (the "Contracts") of New
York Life Insurance Company. The information furnished hereby is restricted to
the exclusive use of holders of previously issued and outstanding Contracts. All
public offering and sales of the Contracts were discontinued as of November 27,
1979.
JUNE 30,
- ----------------------------------------------------
1996
UNAUDITED
SEMIANNUAL
REPORTS
NEW YORK LIFE
SEPARATE ACCOUNT N
AND NEW YORK LIFE
FUND, INC.
[LOGO]
Printed on
recycled
paper
