<PAGE>
June 30,
- --------------------------------------------------------------------------------
1996 New York Life Insurance
and Annuity Corporation
VL Separate Account
New York Life
MFA Series Fund, Inc.
Unaudited
Semi-Annual
Report
[GRAPHIC APPEARS HERE]
This is a copy of a Report by the MFA Series Fund,
Inc. to the Policy Owners. Distribution of this Report
to persons other than Policy Owners of the MFA Series
Fund, Inc. is authorized only when accompanied or
preceded by a current prospectus. This Report does not
offer for sale or solicit orders to buy any securities.
These Semi-Annual Reports are submitted for the general
information of owners of Variable Life Insurance
Policies (the "Policies") of New York Life Insurance and
Annuity Corporation.
<PAGE>
- -------------------------------------------------------------------------------
To the Owners of NYLIAC Variable Life Policies:
I am pleased to send you the unaudited Semi-Annual Report for NYLIAC Vari-
able Life and New York Life MFA Series Fund, Inc. for the six month period
ended June 30, 1996.
MacKay-Shields Financial Corporation manages the Cash Management Portfolio
and New York Life Insurance Company manages the Bond and Growth Equity Portfo-
lios.
The following is a description of the current and anticipated economic and
market conditions.
ECONOMIC ENVIRONMENT
In the first half of 1996, the U.S. economy rebounded strongly from its 1995
slowdown in response to the three Federal Reserve easing moves that lowered
the Federal funds rate 75 basis points to 5.25%. In the first quarter, surging
consumer spending, business investment, and a revival in home construction
were partially offset by a widening of the trade deficit and the first actual
inventory liquidation in five years. In the second quarter, with a resumption
of inventory accumulation, growth was much stronger.
The economy appears to have enough momentum to keep growing above its poten-
tial non-inflationary rate in the second half of the year. Inflation has re-
mained remarkably subdued for the sixth year of an economic expansion. Howev-
er, with the economy already at or near full employment of labor and capital
resources, inflation is on the verge of creeping upward again. Bond yields
ended their year long decline and increased a full percentage point from De-
cember to June. Market sentiment has gradually shifted during this period from
expecting a further easing of monetary policy to anticipating that the next
move by the Federal Reserve would be to raise short-term interest rates.
After rising 33.5% in 1995, stock prices, as measured by the Dow Jones In-
dustrial Average, increased another 10.5% in the first half of 1996. This oc-
curred despite the rise in bond yields and a rise in the foreign exchange
value of the dollar.
On the following pages, you will find reports on the performance of New York
Life MFA Series Fund, Inc. that are available in NYLIAC Variable Life.
/s/Seymour Sternberg
Seymour Sternberg
President
NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION
1
<PAGE>
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MACKAY-SHIELDS FINANCIAL CORPORATION
ADVISER'S REPORT
Appearing to pick up where it left off last year, the stock market continued
to forge ahead during the first half of 1996, with the broad indices deliver-
ing returns equal to or in excess of the historical average returns that
stocks provide in a full year. The S&P 500* was up 10.09%, the Dow Jones In-
dustrial Average was up 11.77% and NASDAQ** had a return of 12.63%. Most of
the Dow's return came from the first quarter, while the S&P 500 was more bal-
anced between the two periods, slowing a bit during the second quarter. Small
cap stocks in the NASDAQ index sizzled during the second quarter before cor-
recting during the last two weeks in June.
The strength of this performance masked difficulties along the way: volatil-
ity, shifts in market leadership, some earnings disappointments, inflation
jitters and higher interest rates resulting from a stronger than expected
economy. Investors set yet another new record, however, by pouring more money
into stock funds in the first six months of 1996 ($139.5 billion) than they
did during all of 1995, when they invested $128.1 billion. This also topped
the previous full year record of $129.6 billion set in 1993.
The bond market had a difficult first half. During the first quarter, each
of the Lipper*** domestic bond categories, except for high yield, posted a
negative return, as market psychology shifted from euphoria to despair on
March 8, when the largest gain in non-farm payrolls in 12 years sent the bond
market plummeting. The 30 year Treasury bond fell 3.3% and the Dow fell 217
points, before it closed off at 171 points. The next day, however, the stock
market closed higher. The second quarter proved equally trying for bond in-
vestors. After another higher than expected rise in employment in April, long
rates rose again. Although the average bond investor eked out a modestly posi-
tive return in the second quarter, the volatility was unsettling. The 30 year
Treasury bond yield hit 6.94% before settling at 6.90% by the end of the first
half. High yield bonds, by contrast, had a fairly robust first half, aided by
a stronger than expected economy.
In the stock market, interest rate increases during the first half led to a
correction in financials and consumer non-durables. Conversely, economically
sensitive sectors such as chemicals, retail and consumer cyclicals started to
outperform during the first quarter, but a rotational correction occurred dur-
ing the second quarter as the battle of economic acceleration vs. the linger-
ing effects of inventory slowdowns took place. This caused cyclicals such as
chemicals to underperform. Retail stocks remained strong as the consumer ex-
hibited pockets of strength. Healthcare underperformed during the entire first
half, and technology was generally weak as well, as investors grappled with
excess capacity, inventory adjustments and weaker personal computer demand. To
sum it up, making money during the first half was not as easy as the index re-
turns might suggest. Volatility ran rampant. Stock selection was key.
On the international front, non-U.S. markets continued to lag the U.S. dur-
ing the first quarter, but returns were more competitive with ours during the
second quarter. Latin America posted strong gains and small company funds also
prospered in European markets. Japan performed in line with international av-
erages, but was up 43.5% over the twelve months ended June 30, 1996 based on
signs of an economic recovery. Foreign currencies continued a decisive decline
against the U.S. dollar, led by weakness in the Japanese yen and core European
currencies.
Looking ahead to the second half of the year we believe there is a signifi-
cant opportunity for gains in an international portfolio which is diversified
across a broad array of developed markets. The major risk is that the U.S.
dollar continues to appreciate as we believe it will and we are helping to
control this risk by actively protecting our international portfolios against
further declines in foreign currencies.
Domestically, the key issue facing the bond markets as we move forward is
inflation. Despite positive news on the commodity front, the rate of increase
in wages is more important because labor represents approximately two-thirds
of the cost of production. Wage gains remained moderate until the recently re-
ported June employment statistics on July 5th. Average hourly earnings came in
much higher than projected. Market participants were forced to consider that
corporate downsizing and increases in labor productivity had not held back the
2
<PAGE>
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threat of large wage gains. Going forward we will be closely monitoring the
Fed, the economy, and especially inflationary trends, and if appropriate, will
adjust the duration of our fixed income portfolios tactically around the mar-
ket's neutral point.
With respect to the U.S. stock market, investors should be mindful that the
return of 10.84% for the average diversified stock fund during the first half
is about equal to the return that stocks have delivered in an average year
over a period of several decades. On top of a fabulous 1995, it would be hard
to imagine an equally stellar second half. As is always the case, however,
there are pluses and minuses for the market as we enter the second half of the
year. On the plus side, a strong economy should bode well for earnings, espe-
cially for the cyclicals that should now reverse the 1995 trend of inventory
correction and begin to rebuild inventory, including the autos and the paper
companies. And despite the fact that many believe the market to be expensive,
within the context of reasonably low interest rates and inflation, the S&P 500
P/E ratio of 16 to 17 times earnings is not excessive by historical standards.
Another big potential plus which could lead us into the next leg of this bull
market is the anticipated worldwide 1997 recovery in South America, Europe and
Asia.
In the minus column, a stronger than expected economy could lead to even
higher interest rates, which is not good for stocks. On the other hand, too
much economic weakness could reignite recession fears, which would also be bad
for the stock market. Perhaps the biggest potential negative and a real threat
to earnings is the possibility that inflation will once again, for the first
time in a long time, rear its ugly head. Even with its trending a little high-
er, in the 2 1/2% to 3 1/2% range, which we currently anticipate, the market
could cope. If wage pressures and the confluence of other inflation forces
were to push it up past the 4% level, however, we could be in for a more se-
vere blow to interest rates, earnings and the market. Finally, although li-
quidity remains excellent and a driving force behind the market advance as
baby boomers continue to invest for the future, if these flows slowed down or
stopped at some point, even temporarily, we could see increased volatility.
Whatever the future holds, we will continue our disciplined bottom up ap-
proach to both growth and value investing. Stock selection will continue to be
of paramount importance.
Ravi Akhoury
Chairman and Chief Exective Officer
MacKay-Shields Financial Corporation
*"Standard & Poor's 500 Composite Stock Price Index" and "S&P 500" are reg-
istered trademarks of the Standard & Poor's Corporation. The New York Life MFA
Series Fund, Inc. is neither sponsored by nor affiliated with 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.
**"NASDAQ Composite Index" is an unmanaged index and is considered to be
generally representative of the U.S. small capitalization stock market.
***Lipper Analytical Services, Inc. is an independent monitor of mutual fund
performance. Its rankings are based on total returns with capital gains and
dividends reinvested. Results do not reflect any deduction of sales charges.
The Lipper Variable Insurance Products Performance Analysis Service (L-VIPPAS)
ranks the portfolios that invest in the separate accounts of insurance compa-
nies.
3
<PAGE>
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NEW YORK LIFE INSURANCE COMPANY
ADVISER'S REPORT
During the first half of 1996, the performance of the stock and bond markets
diverged significantly. As the credit markets reacted to stronger than ex-
pected economic growth, the Federal Reserve policymakers changed course from
stimulative to neutral. Thus by the end of June, the yield on the ten year
Treasury reached 6.71%, an increase of 114 basis points.
This pressure on values in the bond market was not paralleled by the stock
market. While most domestic bond portfolios were down, the stock market was up
strongly with the S&P 500* increasing by 10.09%. The stock market responded
favorably to prospects for continued earnings growth--from both domestic con-
sumer demand and worldwide economic growth.
As a consequence, we anticipate a less stable environment for the stock mar-
ket going forward for the next six months. Our fundamental view on the economy
remains favorable and we believe that consumer and internationally oriented
businesses are especially well-positioned. Our outlook for the stock portfolio
is to continue to invest in quality growth stocks which sell at reasonable
valuations.
For the bond market, confidence in Fed policymakers will be a key element in
assuring stability. Although the best performing bond sectors have been high
yield and mortgage-backed securities, our core bond portfolio is
conservatively positioned in high grade corporates and Treasuries.
Jean Hoysradt
Senior Vice President
in charge of the Investment
Department
New York Life Insurance Company
*"Standard & Poor's 500 Composite Stock Price Index" and "S&P 500" are reg-
istered trademarks of the Standard & Poor's Corporation. The New York Life MFA
Series Fund, Inc. is neither sponsored by nor affiliated with 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
<PAGE>
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CASH MANAGEMENT PORTFOLIO
The Cash Management Portfolio had a total return of 2.45%* for the first six
months of 1996, slightly ahead of the Lipper** average fund return of 2.43%.
The Portfolio continued to be managed with a focus on liquidity and preserva-
tion of capital. The rise in interest rates during the second quarter did not
materially affect money market rates. We maintained an average maturity of ap-
proximately 47 days. The quality of the Portfolio remains of paramount impor-
tance, with no second tier securities being held. Going forward, we believe
our conservative approach can meet the needs of our most risk averse invest-
ors.
Ravi Akhoury
Frank Salem
Jessica Terc
Portfolio Managers
MacKay-Shields Financial Corporation
*Total returns shown indicate past performance and are not indicative of fu-
ture results. Investment return and principal value will fluctuate so that
shares, upon redemption, may be worth more or less than their original cost.
**Lipper Analytical Services, Inc. is an independent monitor of mutual fund
performance. Its rankings are based on total returns with capital gains and
dividends reinvested. Results do not reflect any deduction of sales charges.
The Lipper Variable Insurance Products Performance Analysis Service (L-VIPPAS)
ranks the portfolios that invest in the separate accounts of insurance compa-
nies.
An investment in the Portfolio is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that the Portfolio will be able to
maintain a stable net asset value of $1.00 per share.
5
<PAGE>
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BOND PORTFOLIO
The Bond Portfolio registered a return of -2.40%* for the six month period
ended June 30, 1996.
During the first half of the year the market experienced a retrenchment from
1995's rally. The yield for the five and ten year U.S. Treasury securities in-
creased 109 and 114 basis points respectively. Many of the positive forces in
the market in 1995 became concerns for higher rates in 1996. Inflation fears
were re-ignited by commodity price increases. Stronger job growth and other
positive economic news curtailed the market's perception of an accommodating
Federal Reserve Bank. The stalled deficit reduction efforts in Washington re-
versed earlier positive expectations and caused much concern in the fixed in-
come market.
We continue to overweight short duration corporate securities. This is con-
sistent with our view of a slow growth economy, implying limited risk from po-
tential spread widening. Overweighting in longer duration U.S. Treasury secu-
rities influenced our relative performance in the first half of the year.
Looking forward, we expect underlying inflationary pressures to appear be-
fore year end. We also anticipate above trend growth in the second half of the
year. We will adjust the portfolio opportunistically, seeking to outperform
the market.
Albert R. Corapi, Jr.
Portfolio Manager
New York Life Insurance Company
*Total returns shown indicate past performance and are not indicative of fu-
ture results. Investment return and principal value will fluctuate so that
shares, upon redemption, may be worth more or less than their original cost.
6
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GROWTH EQUITY PORTFOLIO
The Growth Equity Portfolio reported an exceptional return of 12.88%* for
the six-month period ended June 30, 1996. The Portfolio outperformed both the
S&P 500's** return of 10.09% and the average growth stock fund as ranked by
Lipper Analytical Services*** return of 9.99% by substantial margins. The
Portfolio benefited by the bounce back in consumer spending in the first half
of the year as its holdings in retailing and lodging issues recorded strong
gains. More importantly, the Portfolio's timely positioning into smaller capi-
talization issues proved most profitable as the market rotated toward those
stocks.
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 to 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 toward the second half of the year, we remain somewhat optimistic on
our outlook for the market. While market valuations are not cheap 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 specu-
lative new stock issuances 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. We intend to stick to our disci-
plines in individual stock selection while remaining attentive to all external
variables which impact the equity market.
James Agostisi
Patricia Rossi
Portfolio Managers
New York Life Insurance Company
*Total returns shown indicate past performance and are not indicative of fu-
ture results. Investment return and principal value will fluctuate so that
shares, upon redemption, may be worth more or less than their original cost.
**"Standard & Poor's 500 Composite Stock Price Index" and "S&P 500" are reg-
istered trademarks of the Standard & Poor's Corporation. The New York Life MFA
Series Fund, Inc is neither sponsored by nor affiliated with Standard & Poor's
Corporation. The S&P 500 is an unmanaged index considered generally represen-
tative of the U.S. stock market. Results assume the reinvestment of all income
and capital gains distributions.
***Lipper Analytical Services, Inc. is an independent monitor of mutual fund
performance. Its rankings are based on total returns with capital gains and
dividends reinvested. Results do not reflect any deduction of sales charges.
The Lipper Variable Insurance Products Performance Analysis Service (L-VIPPAS)
ranks the portfolios that invest in the separate accounts of insurance compa-
nies.
7
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1996 (Unaudited)
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT INVESTMENT INVESTMENT
DIVISION DIVISION DIVISION
-------------------------------------
<S> <C> <C> <C>
ASSETS:
Investment in New York Life MFA Series
Fund, Inc., at net asset value
(Identified Cost: $20,085,462;
$8,433,554; $1,520,446, respectively).. $24,081,800 $ 8,347,008 $ 1,520,391
LIABILITIES:
Liability for mortality and expense risk
charges................................ 21,508 7,362 1,382
----------- ----------- -----------
Total equity........................... $24,060,292 $ 8,339,646 $ 1,519,009
=========== =========== ===========
TOTAL EQUITY REPRESENTED BY:
Equity of Policyowners.................. $24,060,292 $ 8,339,646 $ 1,519,009
=========== =========== ===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
8
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
VLI SEPARATE ACCOUNT
STATEMENT OF OPERATIONS
For the six months ended June 30, 1996 (Unaudited)
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT INVESTMENT INVESTMENT
DIVISION DIVISION DIVISION
-------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME (LOSS):
Dividend income.......................... $ -- $ 183 $ 40,133
Mortality and expense risk charges....... (40,107) (14,593) (2,852)
---------- ---------- ----------
Net investment income (loss)............ (40,107) (14,410) 37,281
---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS):
Proceeds from sale of investments........ 962,850 378,591 292,093
Cost of investments sold................. (810,325) (392,477) (292,110)
---------- ---------- ----------
Net realized gain (loss) on investments. 152,525 (13,886) (17)
Realized gain distribution received...... -- -- --
Change in unrealized
appreciation/depreciation on invest-
ments................................... 2,625,095 (192,469) 23
---------- ---------- ----------
Net gain (loss) on investments.......... 2,777,620 (206,355) 6
---------- ---------- ----------
Increase (decrease) attributable to funds
of New York Life Insurance and
Annuity Corporation retained by Separate
Account................................. (1,180) 84 32
---------- ---------- ----------
Net increase (decrease) in total equity
resulting from operations.............. $2,736,333 $ (220,681) $ 37,319
========== ========== ==========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
9
<PAGE>
STATEMENT OF CHANGES IN TOTAL EQUITY
For the six months ended June 30, 1996 (Unaudited) and the year ended December
31, 1995
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION
------------------------ ------------------------ ------------------------
1996 1995 1996 1995 1996 1995
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN TOTAL EQUITY:
Operations:
Net investment income (loss).......... $ (40,107) $ 180,113 $ (14,410) $ 505,142 $ 37,281 $ 83,580
Net realized gain (loss) on
investments.......................... 152,525 62,745 (13,886) 31,268 (17) (13)
Realized gain distribution received... -- 1,757,048 -- -- -- --
Change in unrealized appreciation/
depreciation on investments.......... 2,625,095 2,981,655 (192,469) 812,180 23 (10)
Increase (decrease) attributable to
funds of New York Life Insurance
and Annuity Corporation retained
by Separate Account.................. (1,180) (3,041) 84 (713) 32 (57)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in total
equity resulting from operations.... 2,736,333 4,978,520 (220,681) 1,347,877 37,319 83,500
----------- ----------- ----------- ----------- ----------- -----------
Contributions and withdrawals:
Policyowners' premium payments........ 1,181,899 2,306,809 563,397 1,044,206 155,326 295,148
Cost of insurance..................... (400,896) (797,564) (169,044) (369,180) (21,034) (63,450)
Policyowners' surrenders.............. (1,299,049) (2,077,221) (567,397) (1,044,372) (96,921) (171,408)
(Withdrawals), net of repayments, due
to policy loans...................... (51,574) (255,571) 37,188 65,647 10,821 (11,918)
Policyowners' death benefits.......... (25,291) (48,519) (5,704) (17,733) (1,581) (14,765)
Transfers between Investment
Divisions............................ 171,960 63,007 54,526 3,579 (224,754) (66,579)
----------- ----------- ----------- ----------- ----------- -----------
Total contributions and
withdrawals (net)................... (422,951) (809,059) (87,034) (317,853) (178,143) (32,972)
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in total equity. 2,313,382 4,169,461 (307,715) 1,030,024 (140,824) 50,528
TOTAL EQUITY:
Beginning of period................... 21,746,910 17,577,449 8,647,361 7,617,337 1,659,833 1,609,305
----------- ----------- ----------- ----------- ----------- -----------
End of period......................... $24,060,292 $21,746,910 $ 8,339,646 $ 8,647,361 $ 1,519,009 $ 1,659,833
=========== =========== =========== =========== =========== ===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
10
<PAGE>
NEW YORK LIFE
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) INSURANCE AND
ANNUITY CORPORATION
VLI SEPARATE ACCOUNT
NOTE 1--Organization and Accounting Policies:
- -------------------------------------------------------------------------------
New York Life Insurance and Annuity Corporation VLI Separate Account ("VLI
Separate Account") was established on May 27, 1983, under Delaware law by New
York Life Insurance and Annuity Corporation, a wholly-owned subsidiary of New
York Life Insurance Company. This account was established to receive and
invest premium payments under variable life insurance policies issued by New
York Life Insurance and Annuity Corporation. Effective July 1, 1988, sales of
such policies were terminated.
The VLI Separate Account is registered under the Investment Company Act of
1940, as amended, as a unit investment trust. The assets of VLI Separate
Account are invested in shares of the New York Life MFA Series Fund, Inc. (the
"MFA Fund"), a diversified open-end management investment company, and are
clearly identified and distinguished from the other assets and liabilities of
New York Life Insurance and Annuity Corporation.
There are three Investment Divisions within the VLI Separate Account: the
Common Stock Investment Division which invests in the Growth Equity Portfolio,
the Bond Investment Division which invests in the Bond Portfolio, and the
Money Market Investment Division which invests in the Cash Management
Portfolio. Premium payments received are allocated to the Investment Divisions
of the VLI Separate Account according to Policyowner instructions.
No Federal income tax is payable on investment income or capital gains of the
VLI Separate Account under current Federal income tax law.
Security Valuation--The investment in the MFA Fund is 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 portfo-
lios.
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.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 2--Investments (in 000's):
- --------------------------------------------------------------------------------
At June 30, 1996, the investment in the MFA Fund by the respective Investment
Divisions of the VLI Separate Account is as follows:
<TABLE>
<CAPTION>
GROWTH EQUITY CASH MANAGEMENT
PORTFOLIO BOND PORTFOLIO PORTFOLIO
------------------- ------------------- -------------------
COMMON STOCK BOND MONEY MARKET
INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION
-----------------------------------------------------------
<S> <C> <C> <C>
Number of shares........ 1,239 637 1,520
Identified cost*........ $20,085 $ 8,434 $ 1,520
* The cost stated also represents the aggregate cost for Federal income tax
purposes.
Transactions in MFA Fund shares for the six months ended June 30, 1996, were
as follows:
<CAPTION>
GROWTH EQUITY CASH MANAGEMENT
PORTFOLIO BOND PORTFOLIO PORTFOLIO
------------------- ------------------- -------------------
COMMON STOCK BOND MONEY MARKET
INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION
-----------------------------------------------------------
<S> <C> <C> <C>
Purchases............... $ 501 $ 277 $ 151
Proceeds from sales..... 963 379 292
</TABLE>
12
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
VLI SEPARATE ACCOUNT
NOTE 3--Mortality and Expense Risk Charges:
- --------------------------------------------------------------------------------
VLI Separate Account 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 0.35% of the daily net asset value of each Investment
Division. New York Life Insurance and Annuity Corporation may increase these
charges in the future up to a maximum annual rate of 0.50%. The amount of these
charges retained by the Investment Divisions represents 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:
- --------------------------------------------------------------------------------
VLI Separate Account does not expect to declare dividends to Policyowners from
accumulated net income and realized gains. The income and gains are distributed
to Policyowners as part of withdrawals of amounts (in the form of death
benefits, policy loans, or transfers) in excess of the net premium payments.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 5--Cost to Policyowners (in 000's):
- --------------------------------------------------------------------------------
At June 30, 1996, the cost to Policyowners with adjustments for net investment
income, market appreciation/depreciation and deduction for expenses is as fol-
lows:
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT INVESTMENT INVESTMENT
DIVISION DIVISION DIVISION
------------------------------------
<S> <C> <C> <C>
Cost to Policyowners (net of withdrawals). $ 29,293 $ 14,919 $ 3,217
Sales charges............................. (12,696) (6,363) (1,540)
Cost of insurance......................... (10,228) (5,125) (1,220)
Accumulated net investment income......... 1,823 4,640 1,065
Accumulated net realized gain on
investments and realized gain
distributions received................... 11,885 361 --
Unrealized appreciation/depreciation on
investments.............................. 3,996 (86) --
Decrease attributable to funds of New York
Life Insurance and
Annuity Corporation retained by Separate
Account.................................. (13) (6) (3)
-------- -------- --------
Net amount applicable to Policyowners..... $ 24,060 $ 8,340 $ 1,519
======== ======== ========
</TABLE>
14
<PAGE>
NEW YORK LIFE
INSURANCE AND
ANNUITY CORPORATION
VLI SEPARATE ACCOUNT
(THIS PAGE INTENTIONALLY LEFT BLANK)
15
<PAGE>
NEW YORK LIFE MFA
SERIES FUND, INC.
- -------------------------------------------------------------------------------
To Policyowners:
The assets of NYLIAC Variable Universal Life Separate Account I, NYLIAC
Variable Annuity Separate Account I, NYLIAC Variable Annuity Separate Account
II, NYLIAC LifeStagesSM Separate Account, New York Life Insurance and Annuity
Corporation MFA Separate Account I, New York Life Insurance and Annuity Corpo-
ration MFA Separate Account II and New York Life Insurance and Annuity Corpo-
ration VLI Separate Account are invested in shares of New York Life MFA Series
Fund, Inc. In addition, the assets of NYLIAC Variable Annuity Separate Account
I, NYLIAC Variable Annuity Separate Account II and NYLIAC LifeStagesSM Sepa-
rate Account may be invested in Acacia Capital Corporation, which is not af-
filiated with New York Life MFA Series Fund, Inc. or NYLIAC and any of its
subsidiaries.
At the Annual Meeting of the Board of Directors of the Fund held on February
22, 1996, executive officers of the Fund were elected. At a meeting of the
Board of Directors held on May 14, 1996, the Board declared a dividend distri-
bution which was paid on May 15, 1996, to NYLIAC Variable Universal Life Sepa-
rate Account I, NYLIAC Variable Annuity Separate Account I, NYLIAC Variable
Annuity Separate Account II, NYLIAC LifeStagesSM Separate Account, 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 sharehold-
ers of record of New York Life MFA Series Fund, Inc.
The financial information included herein as of June 30, 1996, 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
NEW YORK LIFE MFA SERIES FUND, INC.
16
<PAGE>
CASH MANAGEMENT PORTFOLIO NEW YORK LIFE MFA
PORTFOLIO OF INVESTMENTS SERIES FUND, INC.
June 30, 1996 (Unaudited)
SHORT-TERM INVESTMENTS (100.1%)+
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
------------------------
<S> <C> <C>
BANK NOTES (4.8%)
Bank of America-Illinois
5.82%, due 3/24/97 (c)............................... $ 1,500,000 $ 1,500,000
First National Bank of Maryland
5.13%, due 2/26/97 (b)(c)............................ 1,000,000 1,000,158
Fleet National Bank-Province, Rhode Island
5.61%, due 10/30/96 (b)(c)........................... 1,700,000 1,700,000
PNC Bank N.A.-
Pittsburgh, Pennsylvania
5.52%, due 2/6/97 (b)(c)............................. 1,000,000 999,619
------------
5,199,777
------------
CERTIFICATES OF
DEPOSIT (4.6%)
Bayerische Vereinsbank AG
5.80%, due 4/29/97 (c)............................... 2,500,000 2,500,000
First National Bank of Maryland
5.69%, due 10/23/96 (b)(c)........................... 2,000,000 2,000,000
Mercantile Safe Deposit & Trust Co., Baltimore,
Maryland
5.68%, due 12/23/96 (b)(c)........................... 500,000 500,122
------------
5,000,122
------------
MEDIUM-TERM NOTES (9.5%)
Abbey National Treasury
Services Plc
5.05%, due 3/3/97 (c)................................ 3,300,000 3,297,622
Associates Corp. of North America
7.50%, due 10/15/96 (c).............................. 1,375,000 1,382,254
Bankers Trust Corp.-New York
5.27%, due 2/14/97 (b)(c)............................ 1,500,000 1,500,000
First Security Bank of Idaho
6.88%, due 10/4/96 (c)............................... 2,000,000 2,006,002
Ford Motor Credit Corp.
5.66%, due 1/6/97 (b)(c)............................. 1,000,000 1,001,095
International Lease Finance Corp.
6.80%, due 9/30/96 (c)............................... 1,000,000 1,002,318
------------
10,189,291
------------
COMMERCIAL PAPER (81.2%)
Atlantic Asset Securitization Corp.
5.37%, due 7/11/96 (a)............................... 3,800,000 3,794,332
Banca CRT Financial Corp.
4.94%, due 8/8/96.................................... 1,500,000 1,492,178
5.06%, due 9/3/96.................................... 2,000,000 1,982,009
5.08%, due 9/3/96.................................... 1,350,000 1,337,808
Bancomer S.A.
5.37%, due 9/13/96................................... 1,000,000 988,962
5.42%, due 7/11/96................................... 1,000,000 998,494
Central Corporate Credit Union
5.37%, due 7/12/96................................... 1,900,000 1,896,882
</TABLE>
- --------
+Percentages indicated are based on Fund net assets.
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
------------------------
<S> <C> <C>
COMMERCIAL PAPER (Continued)
Centric Funding Corp.
5.35%, due 7/10/96................................... $ 5,000,000 $ 4,993,312
Cheltenham & Gloucester Plc
5.28%, due 7/3/96.................................... 3,000,000 2,999,120
COSCO (Cayman) Co. Ltd.
5.34%, due 7/29/96................................... 1,000,000 995,847
Credito Italiano (DE) Inc.
5.01%, due 8/27/96................................... 1,975,000 1,959,333
5.25%, due 7/3/96.................................... 2,000,000 1,999,417
Duracell Inc.
5.38%, due 7/26/96................................... 2,400,000 2,391,033
Eastern Realty Investment Corp.
5.38%, due 7/12/96................................... 1,336,000 1,333,804
Enterprise Funding Corp.
5.33%, due 7/8/96 (a)................................ 2,100,000 2,097,824
5.42%, due 7/22/96 (a)............................... 2,000,000 1,993,677
Goldman Sachs & Co.
5.32%, due 7/10/96................................... 3,000,000 2,996,010
Halliburton Co.
5.35%, due 7/9/96.................................... 2,800,000 2,796,671
Korea Development Bank
5.40%, due 9/4/96.................................... 3,900,000 3,861,975
Lyon Short Term Funding Corp.
5.35%, due 7/8/96 (a)................................ 1,400,000 1,398,544
Merrill Lynch-Australia
5.37%, due 7/17/96................................... 5,000,000 4,988,067
Mitsubishi Motors Credit of America Inc. Series C
5.40%, due 7/15/96................................... 2,500,000 2,494,750
5.45%, due 7/25/96................................... 2,450,000 2,441,098
Morgan Stanley Group Inc.
5.63%, due 7/1/96.................................... 3,050,000 3,050,000
MPS U.S. Commercial Paper Corp.
5.29%, due 7/8/96.................................... 3,000,000 2,996,914
5.42%, due 9/19/96................................... 2,000,000 1,975,911
Nacional Financiera SNC
Series A
5.30%, due 7/1/96.................................... 900,000 900,000
Series B
5.33%, due 7/2/96.................................... 2,500,000 2,499,630
National Bank of Pakistan
5.38%, due 10/25/96.................................. 1,000,000 982,664
Petroleo Brasileiro S.A.-Petrobras
5.42%, due 1/14/97................................... 2,000,000 1,940,681
Receivables Capital Corp.
5.31%, due 7/2/96 (a)................................ 1,500,000 1,499,779
Redland Finance Inc.
5.32%, due 7/3/96.................................... 1,000,000 999,704
Songs Fuel Co.
5.15%, due 7/5/96.................................... 1,000,000 999,428
SRD Finance Inc.
5.50%, due 7/18/96................................... 5,000,000 4,987,014
State Bank of New South
Wales Ltd.
5.62%, due 7/1/96.................................... 165,000 165,000
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
17
<PAGE>
CASH MANAGEMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1996 (Unaudited)
SHORT-TERM INVESTMENTS (CONTINUED)
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
--------------------------
<S> <C> <C>
COMMERCIAL PAPER (Continued)
Triple-A One Funding Corp.
5.35%, due 7/9/96 (a)............................... $ 2,725,000 $ 2,721,760
UNIfunding Inc.
4.94%, due 8/9/96................................... 2,000,000 1,989,297
Wood Street Funding Corp.
5.40%, due 7/12/96 (a).............................. 300,000 299,505
Working Capital Management
Co. L.P.
5.52%, due 7/19/96.................................. 5,300,000 5,285,372
------------
87,523,806
------------
Total Short-Term Investments
(Amortized Cost $107,912,996) (d) 100.1% 107,912,996
Liabilities in Excess of
Cash and Other Assets............................... (0.1) (114,731)
----------- ------------
Net Assets........................................... 100.0% $107,798,265
=========== ============
</TABLE>
- --------
(a) May be sold to institutional investors only.
(b) Floating rate. Rate shown is the rate in effect at June 30, 1996.
(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.
SHORT-TERM INVESTMENTS
<TABLE>
<CAPTION>
AMORTIZED
COST PERCENT +
-----------------------
<S> <C> <C>
Banks #................................................. $ 73,361,810 68.1%
Brokerage............................................... 11,034,077 10.3
Construction & Engineering.............................. 999,704 0.9
Consumer Financial Services............................. 1,001,095 0.9
Electrical Equipment.................................... 2,391,033 2.2
Energy.................................................. 2,796,671 2.6
Finance................................................. 15,329,178 14.2
Utilities-Gas........................................... 999,428 0.9
------------ -----
107,912,996 100.1
Liabilities in Excess of
Cash and Other Assets.................................. (114,731) (0.1)
------------ -----
Net Assets.............................................. $107,798,265 100.0%
============ =====
</TABLE>
- --------
+ Percentages indicated are based on Fund net assets.
# The Fund will invest more than 25% of the market value of its total assets
in the securities of banks and bank holding companies, including certifi-
cates 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.
18
<PAGE>
NEW YORK LIFE MFA
SERIES FUND, INC.
CASH MANAGEMENT PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
As of June 30, 1996 (Unaudited) For the six months ended June 30,
1996 (Unaudited)
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (amortized cost
$107,912,996).................................................. $107,912,996
Cash............................................................ 102,685
Receivables:
Investment securities sold...................................... 3,111,002
Fund shares sold................................................ 423,690
Interest........................................................ 384,983
NYLIAC.......................................................... 7,947
------------
Total assets.................................................. 111,943,303
------------
LIABILITIES:
Payables:
Investment securities purchased................................. 3,213,493
Fund shares redeemed............................................ 409,332
Adviser......................................................... 20,737
Recordkeeping................................................... 14,794
Administrator................................................... 8,295
Custodian....................................................... 2,200
Directors....................................................... 1,056
Accrued expenses................................................ 71,844
Dividend payable................................................ 403,287
------------
Total liabilities............................................. 4,145,038
------------
Net assets applicable to
outstanding shares............................................. $107,798,265
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per share)
200 million shares authorized.................................. $ 1,078,000
Additional paid-in capital...................................... 106,721,483
Accumulated net realized loss
on investments................................................. (1,218)
------------
Net assets applicable to
outstanding shares............................................. $107,798,265
============
Shares of capital stock outstanding............................. 107,799,988
============
Net asset value per share outstanding........................... $ 1.00
============
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest......................................................... $ 2,461,011
------------
Expenses: (Note 2)
Advisory (Note 3)................................................ 111,489
Administration (Note 3).......................................... 89,191
Recordkeeping (Note 3)........................................... 34,574
Custodian........................................................ 7,202
Auditing......................................................... 7,003
Shareholder communication........................................ 3,859
Directors........................................................ 3,081
Legal............................................................ 3,040
Miscellaneous.................................................... 951
------------
Total expenses ................................................ 260,390
------------
Net investment income............................................ 2,200,621
------------
REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments................................. 115
------------
Net increase in net assets resulting
from operations................................................. $ 2,200,736
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
19
<PAGE>
CASH MANAGEMENT PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996 (Unaudited) and the year ended December
31, 1995
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<CAPTION>
1996 1995
---------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income............................. $ 2,200,621 $ 3,649,839
Net realized gain (loss) on investments........... 115 (949)
------------ ------------
Net increase in net assets resulting from opera-
tions............................................ 2,200,736 3,648,890
------------ ------------
Dividends to shareholders:
From net investment income........................ (2,200,621) (3,649,839)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares.................. 123,072,907 128,846,016
Net asset value of shares issued to shareholders
in reinvestment of dividends..................... 2,161,316 3,587,829
------------ ------------
125,234,223 132,433,845
Cost of shares redeemed........................... (105,275,417) (115,709,733)
------------ ------------
Increase in net assets derived from capital share
transactions.................................... 19,958,806 16,724,112
------------ ------------
Net increase in net assets....................... 19,958,921 16,723,163
NET ASSETS:
Beginning of period............................... 87,839,344 71,116,181
------------ ------------
End of period..................................... $107,798,265 $ 87,839,344
============ ============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
JANUARY 29,
SIX MONTHS 1993 (A)
ENDED THROUGH
JUNE 30, YEAR ENDED DECEMBER 31 DECEMBER 31,
1996* 1995 1994 1993
---------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at be-
ginning of period...... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------ ------------ ------------
Net investment income... 0.03 0.05 0.04 0.02
------------ ------------ ------------ ------------
Less dividends:
From net investment in-
come.................. (0.03) (0.05) (0.04) (0.02)
------------ ------------ ------------ ------------
Net asset value at end
of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ ============ ============ ============
Total investment return
(b).................... 2.45% 5.59% 3.82% 2.40%
Ratios (to average net
assets)/Supplemental
Data:
Net investment income.. 4.93%+ 5.44% 3.97% 2.65%+
Net expenses........... 0.58%+ 0.62% 0.62% 0.62%+
Expenses (before reim-
bursement)............ 0.58%+ 0.94% 0.89% 1.10%+
Net assets at end of pe-
riod (in 000's)........ $ 107,798 $ 87,839 $ 71,116 $ 26,733
</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.
20
<PAGE>
BOND PORTFOLIO NEW YORK LIFE MFA
PORTFOLIO OF INVESTMENTS SERIES FUND, INC.
June 30, 1996 (Unaudited)
LONG-TERM BONDS (96.1%)+
CORPORATE BONDS (45.6%)
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
BANKS (7.0%)
BankAmerica Corp.
7.75%, due 7/15/02................................... $ 4,000,000 $ 4,125,000
First Union Corp.
9.45%, due 6/15/99................................... 5,000,000 5,362,500
Golden West Financial Corp.
10.25%, due 12/1/00.................................. 1,000,000 1,125,000
Republic New York Corp.
7.75%, due 5/15/09................................... 5,000,000 5,150,000
------------
15,762,500
------------
CONGLOMERATE
/DIVERSIFIED (0.9%)
Harcourt General, Inc.
9.50%, due 3/15/00................................... 2,000,000 2,152,500
------------
CONTAINERS (1.7%)
Federal Paper Board Inc.
10.00%, due 4/15/11.................................. 3,100,000 3,758,750
------------
DATA PROCESSING (1.3%)
International Business
Machines Corp.
6.375%, due 6/15/00.................................. 3,000,000 2,966,250
------------
DIVERSIFIED UTILITIES (5.0%)
Consumers Power Co.
7.375%, due 9/15/23.................................. 5,000,000 4,575,000
Long Island Lighting Co.
8.75%, due 2/15/97 (a)............................... 2,000,000 2,022,500
Niagara Mohawk Power Corp.
7.375%, due 8/1/03................................... 2,000,000 1,777,500
Public Service Co. of Colorado
6.00%, due 1/1/01.................................... 3,000,000 2,910,000
------------
11,285,000
------------
ELECTRIC UTILITIES (1.5%)
Commonwealth Edison Co.
9.75%, due 2/15/20................................... 1,450,000 1,555,125
Southern California Edison Corp.
5.875%, due 2/1/98................................... 2,000,000 1,985,000
------------
3,540,125
------------
FINANCE (11.5%)
American General Finance Corp.
7.00%, due 10/1/97................................... 7,000,000 7,059,290
Chrysler Financial Corp.
8.125%, due 12/15/96 (a)............................. 6,000,000 6,064,260
Ford Motor Credit Co.
6.25%, due 2/26/98................................... 3,000,000 2,996,250
General Motors Acceptance Corp.
5.625%, due 2/15/01.................................. 6,000,000 5,707,500
9.625%, due 12/15/01................................. 1,000,000 1,118,750
</TABLE>
- --------
+Percentages indicated are based on Fund net assets.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
FINANCE (Continued)
Mellon Financial Co.
7.625%, due 11/15/99................................. $ 3,000,000 $ 3,090,000
------------
26,036,050
------------
FOOD (0.5%)
ConAgra, Inc.
9.875%, due 11/15/05................................. 1,000,000 1,167,500
------------
FOREIGN (3.5%)
British Telecommunications Plc
9.375%, due 2/15/99.................................. 4,200,000 4,483,500
9.625%, due 2/15/19.................................. 1,000,000 1,103,750
National Westminster Bancorp, Inc.
9.375%, due 11/15/03................................. 2,000,000 2,262,500
------------
7,849,750
------------
LEISURE/AMUSEMENT (2.6%)
Walt Disney Co. (The)
6.75%, due 3/30/06................................... 6,000,000 5,820,000
------------
OIL & GAS (0.5%)
Phillips Petroleum Co.
9.18%, due 9/15/21................................... 1,200,000 1,290,552
------------
PAPER/PRODUCTS (2.2%)
Champion International Corp.
9.875%, due 6/1/00................................... 4,500,000 4,938,750
------------
RAILROADS (1.1%)
CSX Corp.
9.00%, due 8/15/06................................... 2,200,000 2,469,500
------------
RETAIL STORES (5.4%)
Price/Costco, Inc.
7.125%, due 6/15/05.................................. 5,000,000 4,887,500
Sears Roebuck & Co.
8.45%, due 11/1/98................................... 7,000,000 7,297,500
------------
12,185,000
------------
TELECOMMUNICATIONS (0.9%)
AT&T Corp.
8.625%, due 12/1/31.................................. 2,000,000 2,110,000
------------
Total Corporate Bonds
(Cost $100,743,979).................................. 103,332,227
------------
U.S. GOVERNMENT &
FEDERAL AGENCIES (50.5%)
FEDERAL HOME LOAN MORTGAGE
CORPORATION (4.4%)
6.655%, due 5/20/99.................................. 10,000,000 9,996,900
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
21
<PAGE>
BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1996 (Unaudited)
U.S. GOVERNMENT &FEDERAL AGENCIES (CONTINUED)
SHORT-TERM INVESTMENTS (2.4%)
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
FEDERAL NATIONAL
MORTGAGE
ASSOCIATION (6.7%)
4.95%, due 9/30/98................................... $10,000,000 $ 9,718,100
8.70%, due 6/10/99................................... 5,000,000 5,298,100
------------
15,016,200
------------
UNITED STATES TREASURY BONDS (16.7%)
6.00%, due 2/15/26................................... 5,000,000 4,431,600
6.875%, due 8/15/25.................................. 17,000,000 16,828,980
7.625%, due 2/15/07.................................. 10,000,000 10,377,400
10.75%, due 5/15/03.................................. 5,000,000 6,130,850
------------
37,768,830
------------
UNITED STATES TREASURY NOTES (22.7%)
6.25%, due 2/15/03................................... 15,000,000 14,742,450
6.875%, due 5/15/06.................................. 8,000,000 8,082,480
7.125%, due 2/29/00.................................. 5,000,000 5,114,400
7.50%, due 2/15/05................................... 5,000,000 5,258,400
7.875%, due 4/15/98.................................. 6,000,000 6,180,120
8.50%, due 11/15/00.................................. 11,200,000 12,063,184
------------
51,441,034
------------
Total U.S. Government &
Federal Agencies
(Cost $114,268,017).................................. 114,222,964
------------
Total Long-Term Bonds
(Cost $215,011,996).................................. 217,555,191
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
COMMERCIAL PAPER (2.4%)
Associates Corp. of North America
5.286%, due on demand (b)........................... $ 461,000 $ 461,000
PHH Corp.
5.60%, due 7/1/96................................... 5,000,000 5,000,000
------------
Total Short-Term Investments
(Cost $5,461,000)................................... 5,461,000
------------
Total Investments
(Cost $220,472,996) (c)............................. 98.5% 223,016,191 (d)
Cash and Other Assets,
Less Liabilities.................................... 1.5 3,293,210
----------- ------------
Net Assets........................................... 100.0% $226,309,401
=========== ============
</TABLE>
- --------
(a) Long-term securities maturing within the subsequent twelve month period.
(b) Adjustable rate. Rate shown is the rate in effect at June 30, 1996.
(c) The cost stated also represents the aggregate cost for Federal income tax
purposes.
(d) At June 30, 1996 net unrealized appreciation was $2,543,195, 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 $5,663,386 and aggregate gross unrealized de-
preciation for all investments on which there was an excess of cost over
market value of $3,120,191.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
22
<PAGE>
NEW YORK LIFE MFA
SERIES FUND, INC.
BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
As of June 30, 1996 (Unaudited) For the six months ended June 30,
1996 (Unaudited)
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2)
(identified cost $220,472,996)................................ $ 223,016,191
Cash........................................................... 2,568
Receivables:
Investment securities sold..................................... 5,129,000
Interest....................................................... 3,808,066
Fund shares sold............................................... 110,717
NYLIAC......................................................... 11,366
-------------
Total assets................................................. 232,077,908
-------------
LIABILITIES:
Payables:
Investment securities purchased................................ 4,997,667
Fund shares redeemed........................................... 242,893
Recordkeeping.................................................. 162,499
Adviser........................................................ 143,319
Administrator.................................................. 18,342
Directors...................................................... 2,510
Accrued expenses............................................... 201,277
-------------
Total liabilities............................................ 5,768,507
-------------
Net assets applicable to
outstanding shares............................................ $226,309,401
=============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per share)
100 million shares authorized................................. $ 172,810
Additional paid-in capital..................................... 220,159,947
Accumulated undistributed net
investment income............................................. 7,151,286
Accumulated net realized loss
on investments................................................ (3,717,837)
Net unrealized appreciation
on investments................................................ 2,543,195
-------------
Net assets applicable to
outstanding shares............................................ $ 226,309,401
=============
Shares of capital stock outstanding............................ 17,280,988
=============
Net asset value per share outstanding.......................... $ 13.10
=============
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest....................................................... $ 7,852,532
-------------
Expenses: (Note 2)
Advisory (Note 3).............................................. 284,867
Administration (Note 3)........................................ 227,893
Recordkeeping (Note 3)......................................... 139,849
Shareholder communication...................................... 69,973
Auditing....................................................... 25,750
Legal.......................................................... 10,208
Directors...................................................... 7,644
Portfolio pricing.............................................. 1,956
Miscellaneous.................................................. 5,097
-------------
Total expenses
before reimbursement........................................ 773,237
Expense reimbursement from
Administrator (Note 3)........................................ (73,534)
-------------
Net expenses................................................. 699,703
-------------
Net investment income.......................................... 7,152,829
-------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments............................... (969,629)
Net change in unrealized appreciation
on investments................................................ (11,847,511)
-------------
Net realized and unrealized loss
on investments................................................ (12,817,140)
-------------
Net decrease in net assets resulting
from operations............................................... $ (5,664,311)
=============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
23
<PAGE>
BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996 (Unaudited) and the year ended December
31, 1995
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<CAPTION>
1996 1995
---------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income............................. $ 7,152,829 $ 14,495,255
Net realized gain (loss) on investments........... (969,629) 4,716,932
Net change in unrealized appreciation
(depreciation) on investments.................... (11,847,511) 17,768,492
------------ ------------
Net increase (decrease) in net assets resulting
from operations.................................. (5,664,311) 36,980,679
------------ ------------
Dividends to shareholders:
From net investment income........................ (5,000) (14,491,993)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares.................. 14,068,594 22,956,887
Net asset value of shares issued to shareholders
in reinvestment of dividends..................... 5,000 14,491,993
------------ ------------
14,073,594 37,448,880
Cost of shares redeemed........................... (17,125,326) (31,593,131)
------------ ------------
Increase (decrease) in net assets derived from
capital share transactions...................... (3,051,732) 5,855,749
------------ ------------
Net increase (decrease) in net assets............ (8,721,043) 28,344,435
NET ASSETS:
Beginning of period............................... 235,030,444 206,686,009
------------ ------------
End of period..................................... $226,309,401 $235,030,444
============ ============
Accumulated undistributed net investment income... $ 7,151,286 $ 3,457
============ ============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31
1996* 1995 1994 1993 1992 1991
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period..... $ 13.42 $ 12.09 $ 13.43 $ 12.91 $ 12.77 $ 11.86
---------- ---------- ---------- ---------- ---------- ----------
Net investment income.... 0.42 0.88 0.88 0.95 0.92 1.02
Net realized and
unrealized gain (loss)
on investments.......... (0.74) 1.33 (1.34) 0.53 0.13 0.91
---------- ---------- ---------- ---------- ---------- ----------
Total from investment
operations.............. (0.32) 2.21 (0.46) 1.48 1.05 1.93
---------- ---------- ---------- ---------- ---------- ----------
Less dividends:
From net investment
income................. (0.00)(b) (0.88) (0.88) (0.96) (0.91) (1.02)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of
period.................. $ 13.10 $ 13.42 $ 12.09 $ 13.43 $ 12.91 $ 12.77
========== ========== ========== ========== ========== ==========
Total investment return
(a)..................... (2.40%) 18.31% (3.39%) 11.40% 8.26% 16.27%
Ratios (to average net
assets)/Supplemental
Data:
Net investment income... 6.35%+ 6.55% 6.53% 6.79% 7.54% 8.22%
Net expenses............ 0.62%+ 0.62% 0.62%# 0.27%# 0.25% 0.25%
Expenses (before
reimbursement)......... 0.69%+ 0.91% 0.67%# 0.27%# 0.25% 0.25%
Portfolio turnover rate.. 35% 81% 88% 41% 10% 57%
Net assets at end of
period (in 000's)....... $ 226,309 $ 235,030 $ 206,686 $ 228,683 $ 203,947 $ 164,124
</TABLE>
- --------
(a) Total return is not annualized.
(b) Less than one cent per share.
# At the MFA Series Fund, Inc.'s shareholders meeting on December 14, 1993, the
shareholders voted to have the Bond Portfolio assume certain administrative
and operating expenses of the Fund previously borne by New York Life.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
24
<PAGE>
GROWTH EQUITY PORTFOLIO NEW YORK LIFE MFA
PORTFOLIO OF INVESTMENTS SERIES FUND, INC.
June 30, 1996 (Unaudited)
COMMON STOCKS (96.4%)+
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
AEROSPACE/DEFENSE (4.8%)
Boeing Co. (The)...................................... 60,000 $ 5,227,500
Coltec Industries Inc. (a)............................ 370,000 5,272,500
Lockheed Martin Corp.................................. 61,200 5,140,800
Loral Space &
Communications Ltd. (a).............................. 196,000 2,670,500
Northrop Grumman Corp. ............................... 80,000 5,450,000
------------
23,761,300
------------
AUTO & AUTO SERVICES (1.0%)
Ford Motor Co......................................... 150,000 4,856,250
------------
BANKS (3.4%)
AmSouth Bancorp....................................... 62,400 2,254,200
Bankers Trust New York Corp........................... 75,000 5,540,625
Chase Manhattan Corp. (The)........................... 93,600 6,610,500
Commerce Bancshares Inc............................... 74,550 2,544,019
------------
16,949,344
------------
BEVERAGES (2.6%)
Anheuser-Busch Cos., Inc.............................. 68,500 5,137,500
Pepsico Inc........................................... 216,800 7,669,300
------------
12,806,800
------------
BUILDING &
MAINTENANCE (1.0%)
ADT Ltd. (a).......................................... 250,000 4,718,750
------------
BUILDING PRODUCTS (0.9%)
Sherwin-Williams Co. (The)............................ 100,000 4,650,000
------------
CHEMICALS (3.4%)
Engelhard Corp........................................ 80,800 1,858,400
Morton International, Inc. ........................... 125,000 4,656,250
Praxair, Inc.......................................... 100,000 4,225,000
Sealed Air Corp. (a).................................. 182,500 6,136,562
------------
16,876,212
------------
COMMERCIAL SERVICES (2.6%)
Alco Standard Corp.................................... 54,800 2,479,700
Career Horizons, Inc. (a)............................. 114,500 4,007,500
Service Corp. International........................... 110,000 6,325,000
------------
12,812,200
------------
COMMUNICATIONS (3.1%)
ADC Telecommunications Inc. (a) 90,000 4,050,000
Andrew Corp. (a)...................................... 70,000 3,762,500
AT&T Corp............................................. 100,000 6,200,000
Teleport Communications
Group Inc. (a)....................................... 73,500 1,405,687
------------
15,418,187
------------
</TABLE>
- --------
+Percentages indicated are based on Fund net assets.
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
COMPUTER & BUSINESS EQUIPMENT (7.5%)
Checkfree Corp. (a)................................... 100,000 $ 1,987,500
Computer Sciences Corp. (a)........................... 70,000 5,232,500
Electronic Data Systems Corp.......................... 100,000 5,375,000
First Data Corp....................................... 91,030 7,248,264
FIserv Inc. (a)....................................... 111,000 3,330,000
Intel Corp............................................ 75,000 5,507,813
Sungard Data Systems Inc. (a)......................... 125,000 5,015,625
U.S. Robotics Corp. (a)............................... 40,000 3,420,000
------------
37,116,702
------------
DRUGS (6.3%)
Allergan Inc.......................................... 92,400 3,626,700
American Home Products Corp. ......................... 91,800 5,519,475
Amgen Inc. (a)........................................ 50,000 2,700,000
Elan Corp. Plc ADR (a)(c)............................. 81,000 4,627,125
Eli Lilly & Co........................................ 75,000 4,875,000
Pfizer Inc............................................ 58,800 4,196,850
Warner-Lambert Co..................................... 102,400 5,632,000
------------
31,177,150
------------
ELECTRICAL (4.4%)
Emerson Electric Co................................... 70,000 6,326,250
General Electric Co. ................................. 119,000 10,293,500
Mark IV Industries, Inc. ............................. 223,758 5,062,525
------------
21,682,275
------------
ELECTRONICS (3.4%)
Analog Devices, Inc. (a).............................. 155,000 3,952,500
Hewlett-Packard Co.................................... 30,000 2,988,750
Raytheon Co........................................... 100,000 5,162,500
Rockwell International Corp........................... 83,600 4,786,100
------------
16,889,850
------------
FINANCE (4.6%)
Beneficial Corp....................................... 90,000 5,051,250
Federal National
Mortgage Association................................. 160,000 5,360,000
Great Western Financial Corp.......................... 175,000 4,178,125
Republic New York Corp................................ 80,000 4,980,000
Signet Banking Corp................................... 146,900 3,415,425
------------
22,984,800
------------
FOODS (3.5%)
Chiquita Brands International, Inc. 168,000 2,184,000
Dole Food Co., Inc.................................... 66,200 2,846,600
IBP, Inc.............................................. 100,000 2,762,500
Sara Lee Corp......................................... 144,000 4,662,000
Sysco Corp............................................ 140,000 4,795,000
------------
17,250,100
------------
HOSPITAL & MEDICAL SERVICES (4.9%)
HEALTHSOUTH Corp. (a)................................. 70,100 2,523,600
Medtronic, Inc........................................ 50,000 2,800,000
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
25
<PAGE>
GROWTH EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1996 (Unaudited)
COMMON STOCKS (CONTINUED)
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
HOSPITAL & MEDICAL SERVICES (Continued)
NABI (a).............................................. 245,000 $ 2,327,500
Quorum Health Group, Inc.............................. 100,000 2,637,500
Sybron International Corp. (a)........................ 186,200 4,655,000
Tenet Healthcare Corp. (a)............................ 225,000 4,809,375
U.S. Surgical Corp. .................................. 140,600 4,358,600
------------
24,111,575
------------
HOUSEHOLD PRODUCTS (1.1%)
Colgate-Palmolive Co. ................................ 65,000 5,508,750
------------
INSURANCE-PROPERTY &
CASUALTY (3.4%)
Allstate Corp. (The).................................. 120,000 5,475,000
American International Group, Inc. 70,000 6,903,750
General Re Corp....................................... 30,000 4,567,500
------------
16,946,250
------------
LEISURE/AMUSEMENT (1.7%)
International Game Technology......................... 286,000 4,826,250
MGM Grand, Inc. (a)................................... 86,000 3,429,250
------------
8,255,500
------------
LODGING &
RESTAURANTS (2.7%)
ITT Corp. (New) (a)................................... 80,000 5,300,000
Landry's Seafood Restaurants Inc. (a) 50,000 1,237,500
Marriott International, Inc. ......................... 125,000 6,718,750
------------
13,256,250
------------
MANUFACTURING (2.1%)
AlliedSignal Inc. .................................... 96,000 5,484,000
Minnesota Mining &
Manufacturing Co..................................... 75,000 5,175,000
------------
10,659,000
------------
MEDIA & INFORMATION
SERVICES (2.2%)
Evergreen Media Corp. Class A (a) 70,000 2,992,500
Heritage Media Corp. Class A (a)...................... 130,000 5,183,750
Infinity Broadcasting Corp. (a)....................... 87,000 2,610,000
------------
10,786,250
------------
METALS (1.4%)
Aluminum Co. of America............................... 85,000 4,876,875
Titanuim Metals Corp. (a)............................. 80,000 2,070,000
------------
6,946,875
------------
OIL & ENERGY
SERVICES (4.6%)
Aquila Gas Pipeline Corp. ............................ 107,800 1,401,400
Halliburton Co. ...................................... 57,000 3,163,500
Quaker State Corp. ................................... 333,000 4,995,000
Schlumberger Ltd. .................................... 50,000 4,212,500
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
OIL & ENERGY
SERVICES (Continued)
Smith International, Inc. (a)......................... 180,500 $ 5,437,562
Triton Energy Ltd. Class A (a)........................ 60,000 2,917,500
XCL Ltd. (a).......................................... 1,316,800 411,500
------------
22,538,962
------------
PACKAGING (0.6%)
Crown Cork & Seal Co., Inc............................ 60,000 2,700,000
------------
PAPER & FOREST
PRODUCTS (1.7%)
Georgia Pacific Corp.................................. 35,000 2,485,000
International Paper Co................................ 62,600 2,308,375
Kimberly-Clark Corp. ................................. 50,000 3,862,500
------------
8,655,875
------------
PUBLISHING (1.1%)
Tribune Co............................................ 75,900 5,512,238
------------
REAL ESTATE (2.1%)
Chelsea GCA Realty, Inc. ............................. 96,300 3,057,525
First Industrial Reality Trust, Inc. ................. 175,000 4,112,500
Liberty Property Trust................................ 166,500 3,309,187
------------
10,479,212
------------
RETAIL TRADE &
MERCHANDISING (6.6%)
Consolidated Stores Corp. (a)......................... 125,000 4,593,750
Eckerd Corp. (a)...................................... 200,000 4,525,000
Federated Department
Stores, Inc. (a)..................................... 74,500 2,542,313
Home Depot Inc........................................ 100,000 5,400,000
Kroger Co. (The) (a).................................. 148,000 5,846,000
Price/Costco, Inc. (a)................................ 250,000 5,406,250
Smart & Final, Inc.................................... 163,000 4,176,875
------------
32,490,188
------------
TRANSPORTATION (4.1%)
AMR Corp. (a)......................................... 50,000 4,550,000
Conrail Inc........................................... 63,500 4,214,813
Rollins Truck Leasing Corp............................ 380,500 3,947,687
UNC Inc. (a).......................................... 300,000 2,512,500
Union Pacific Corp.................................... 75,000 5,240,625
------------
20,465,625
------------
UTILITIES--ELECTRIC (0.8%)
CMS Energy Corp....................................... 135,000 4,168,125
------------
UTILITIES--TELEPHONE (2.8%)
Frontier Corp......................................... 130,000 3,981,250
Qualcomm Inc. (a)..................................... 100,000 5,312,500
WorldCom Inc. (a)..................................... 85,300 4,723,487
------------
14,017,237
------------
Total Common Stocks
(Cost $398,611,397).................................. 477,447,832
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
26
<PAGE>
NEW YORK LIFE MFA
SERIES FUND, INC.
SHORT-TERM INVESTMENTS (5.5%)
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------------
<S> <C> <C>
COMMERCIAL PAPER (5.5%)
Associates Corp. of North America
5.33%, due on demand (b)......................... $ 3,120,000 $ 3,120,000
Bemis Co.
5.33%, due 7/2/96................................ 5,000,000 4,999,260
Sara Lee Corp.
5.55%, due 7/1/96................................ 19,000,000 19,000,000
------------
27,119,260
------------
Total Short-Term Investments
(Cost $27,119,260)............................... 27,119,260
------------
Total Investments
(Cost $425,730,657) (d).......................... 101.9% 504,567,092 (e)
Liabilities in Excess of
Cash and Other Assets............................ (1.9) (9,440,103)
----------- ------------
Net Assets........................................ 100.0% $495,126,989
=========== ============
</TABLE>
- --------
(a) Non-income producing securities.
(b) Adjustable Rate. Rate shown is the rate in effect at June 30, 1996.
(c) ADR--American Depository Receipt.
(d) The cost stated also represents the aggregate cost for Federal income tax
purposes.
(e) At June 30, 1996 net unrealized appreciation was $78,836,435, 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 $85,832,659 and aggregate gross unrealized depre-
ciation for all investments on which there was an excess of cost over mar-
ket value of $6,996,224.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
27
<PAGE>
GROWTH EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
As of June 30, 1996 (Unaudited) For the six months ended June 30,
1996 (Unaudited)
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2)
(identified cost $425,730,657).................................. $504,567,092
Cash............................................................. 2,572
Receivables:
Investment securities sold....................................... 23,319,979
Dividends and interest........................................... 636,292
Fund shares sold................................................. 504,755
------------
Total assets................................................... 529,030,690
------------
LIABILITIES:
Payables:
Investment securities purchased.................................. 32,691,380
Recordkeeping.................................................... 306,795
Adviser.......................................................... 306,330
Fund shares redeemed............................................. 175,265
NYLIAC........................................................... 44,296
Administrator.................................................... 40,539
Directors........................................................ 5,396
Accrued expenses................................................. 333,700
------------
Total liabilities.............................................. 33,903,701
------------
Net assets applicable to
outstanding shares.............................................. $495,126,989
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per share)
100 million shares authorized................................... $ 254,680
Additional paid-in capital....................................... 365,511,123
Accumulated undistributed net investment income.................. 1,887,962
Accumulated undistributed net realized gain on investments....... 48,636,789
Net unrealized appreciation
on investments.................................................. 78,836,435
------------
Net assets applicable to outstanding shares...................... $495,126,989
============
Shares of capital stock outstanding.............................. 25,468,033
============
Net asset value per share outstanding............................ $ 19.44
============
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a).................................................... $ 2,734,859
Interest......................................................... 579,169
------------
Total income................................................... 3,314,028
------------
Expenses: (Note 2)
Advisory (Note 3)................................................ 575,927
Administration (Note 3).......................................... 460,742
Recordkeeping (Note 3)........................................... 256,383
Shareholder communication........................................ 129,047
Auditing......................................................... 46,979
Legal............................................................ 19,545
Directors........................................................ 15,789
Registration..................................................... 135
Miscellaneous.................................................... 9,090
------------
Total expenses
before reimbursement.......................................... 1,513,637
Expense reimbursement from
Administrator (Note 3).......................................... (87,571)
------------
Net expenses................................................... 1,426,066
------------
Net investment income............................................ 1,887,962
------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments................................. 48,636,789
Net change in unrealized appreciation
on investments.................................................. 5,001,563
------------
Net realized and unrealized gain
on investments.................................................. 53,638,352
------------
Net increase in net assets resulting
from operations................................................. $ 55,526,314
============
</TABLE>
- --------
(a) Dividends recorded net of foreign withholding taxes in the amount of
$1,501.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
28
<PAGE>
GROWTH EQUITY PORTFOLIO NEW YORK LIFE MFA
STATEMENT OF CHANGES IN NET ASSETS SERIES FUND, INC.
For the six months ended June 30, 1996 (Unaudited) and the year ended December
31, 1995
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
<TABLE>
<CAPTION>
1996 1995
---------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income.............................. $ 1,887,962 $ 4,885,469
Net realized gain on investments................... 48,636,789 34,444,510
Net change in unrealized appreciation on
investments....................................... 5,001,563 56,914,338
------------ ------------
Net increase in net assets resulting from
operations........................................ 55,526,314 96,244,317
------------ ------------
Dividends and distributions to shareholders:
From net investment income......................... -- (4,897,272)
From net realized gain on investments.............. -- (34,471,675)
------------ ------------
Total dividends and distributions to
shareholders.................................... -- (39,368,947)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares................... 33,952,853 35,852,696
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions.... -- 39,368,947
------------ ------------
33,952,853 75,221,643
Cost of shares redeemed............................ (21,858,999) (34,751,127)
------------ ------------
Increase in net assets derived from capital share
transactions..................................... 12,093,854 40,470,516
------------ ------------
Net increase in net assets........................ 67,620,168 97,345,886
NET ASSETS:
Beginning of period................................ 427,506,821 330,160,935
------------ ------------
End of period...................................... $495,126,989 $427,506,821
============ ============
Accumulated undistributed net investment income.... $ 1,887,962 $ --
============ ============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31
1996* 1995 1994 1993 1992 1991
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period.... $ 17.22 $ 14.69 $ 15.64 $ 15.53 $ 15.57 $ 13.00
---------- ---------- ---------- ---------- ---------- ----------
Net investment income... 0.08 0.22 0.22 0.24 0.22 0.27
Net realized and
unrealized gain (loss)
on investments......... 2.14 4.06 (0.03) 1.88 1.72 4.10
---------- ---------- ---------- ---------- ---------- ----------
Total from investment
operations............. 2.22 4.28 0.19 2.12 1.94 4.37
---------- ---------- ---------- ---------- ---------- ----------
Less dividends and
distributions:
From net investment
income................ -- (0.22) (0.22) (0.25) (0.22) (0.29)
From net realized gain
on investments........ -- (1.53) (0.92) (1.76) (1.76) (1.51)
---------- ---------- ---------- ---------- ---------- ----------
Total dividends and
distributions.......... -- (1.75) (1.14) (2.01) (1.98) (1.80)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end
of period.............. $ 19.44 $ 17.22 $ 14.69 $ 15.64 $ 15.53 $ 15.57
========== ========== ========== ========== ========== ==========
Total investment return
(a).................... 12.88% 29.16% 1.20% 13.71% 12.42% 33.62%
Ratios (to average net
assets)/Supplemental
Data:
Net investment income.. 0.82%+ 1.29% 1.41% 1.42% 1.50% 1.78%
Net expenses........... 0.62%+ 0.62% 0.62%# 0.27%# 0.27% 0.29%
Expenses (before
reimbursement)........ 0.66%+ 0.91% 0.65%# 0.27%# 0.27% 0.29%
Portfolio turnover rate. 63% 104% 108% 121% 82% 100%
Average commission rate
paid................... $ 0.0593 (b) (b) (b) (b) (b)
Net assets at end of
period (in 000's)...... $ 495,127 $ 427,507 $ 330,161 $ 319,196 $ 272,834 $ 204,147
</TABLE>
- --------
(a) Total return is not annualized.
(b) Disclosure of amount required for fiscal years beginning on or after Sep-
tember 1, 1995.
# At the MFA Series Fund, Inc.'s shareholders meeting on December 14, 1993, the
shareholders voted to have the Growth Equity Portfolio assume certain admin-
istrative and operating expenses of the Fund previously borne by New York
Life.
+Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--Organization and Business:
- -------------------------------------------------------------------------------
New York Life MFA Series Fund, Inc. (the "Company") was incorporated under
Maryland law on June 3, 1983. The Company is registered under the Investment
Company Act of 1940, as amended, ("Investment Company Act") as an open-end
diversified management investment company. Cash Management Portfolio, which
commenced operations on January 29, 1993, and Bond and Growth Equity
Portfolios, which commenced operations on January 23, 1984, (the "Funds") are
separate series of the Company. Shares of the Funds 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 Funds to, among others, New York Life Insurance and
Annuity Corporation's MFA Separate Account I, MFA Separate Account II and VLI
Separate Account ("Separate Accounts", collectively). The MFA Separate
Accounts are used to fund multi-funded retirement annuity policies and the VLI
Separate Account is used to fund variable life insurance policies issued by
NYLIAC.
Effective May 2, 1994, the name of the New York Life MFA Series Fund, Inc.
Common Stock Portfolio changed to New York Life MFA Series Fund, Inc. Growth
Equity Portfolio.
The investment objectives for each of the Portfolios of the Company are as
follows:
Cash Management: to seek as high a level of current income as is considered
consistent with the preservation of capital and liquidity.
Bond: to seek the highest income over the long term consistent with preser-
vation of principal.
Growth Equity: to seek long-term growth of capital with income as a second-
ary consideration.
- -------------------------------------------------------------------------------
NOTE 2--Significant Accounting Policies:
- -------------------------------------------------------------------------------
The following is a summary of significant accounting policies followed by the
Company:
(A)
VALUATION OF FUND SHARES. The net asset value per share of each Fund is
calculated on every day the New York Stock Exchange is open for trading,
except the day after Thanksgiving and Christmas Eve. Net asset value per share
is calculated as of the regular close of the New York Stock Exchange (normally
4:00 P.M., Eastern time) for each Fund by dividing the current market value
(amortized cost, in the case of Cash Management Portfolio) of the Fund's total
assets, less liabilities, by the total number of outstanding shares of that
Fund.
(B)
SECURITIES VALUATION. Portfolio securities of Cash Management Portfolio are
valued at amortized cost, which approximates market value. This method
involves initially valuing an instrument at its cost and thereafter amortizing
the premium or accreting the discount to income over the life of the security.
Securities of each of the other Funds are stated at value determined (a) by
appraising common and preferred stocks which are traded on the New York Stock
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 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 if these prices are deemed
30
<PAGE>
NEW YORK LIFE MFA
SERIES FUND, INC.
to be representative of market values at the regular close of business of the
New York Stock 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 New York Stock 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
New York Stock Exchange will not be reflected in the Funds' 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.
(C)
REPURCHASE AGREEMENTS. At the time the Funds enter 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 Funds' 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).
(D)
SECURITY TRANSACTIONS AND INVESTMENT INCOME. The Company 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 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 Funds are accreted on the constant yield method over the
life of the respective securities or, if applicable, over the period to the
first date of call.
(E)
FEDERAL INCOME TAXES. Each of the Funds is treated as a separate entity for
Federal income tax purposes. The Company'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 Fund within the allowable time limits. Therefore, no Federal income tax
provision is required.
Investment income received by a Fund from foreign sources may be subject to
foreign income taxes withheld at the source.
(F)
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 Funds 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.
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Income dividends and capital gain distributions are determined in accordance
with Federal income tax regulations which may differ from generally accepted
accounting principles.
(G)
ORGANIZATION COSTS. Costs incurred in connection with the initial organization
and registration of a Portfolio of the Company are amortized over 60 months
beginning with the commencement of operations of the respective Portfolio.
Organization costs for Cash Management Portfolio, paid by, and reimbursable
to, NYLIAC, aggregated approximately $50,700. Such costs are being amortized
beginning with the commencement of operations of the Portfolio on January 29,
1993. In the event that any of the initial shares purchased by NYLIAC are
redeemed, proceeds of such redemption will be reduced by the proportionate
amount of the unamortized deferred organizational expenses which the number of
shares redeemed bears to the total number of initial shares purchased.
All of the initial shares purchased by NYLIAC in Cash Management Portfolio
were redeemed on February 21, 1995. (Also see Note 7 for further discussion of
this redemption).
(H)
EXPENSES. Expenses with respect to the Company are allocated to the individual
Funds in proportion to the net assets of the respective Funds when the
expenses are incurred except where allocations of direct expenses can
otherwise fairly be made.
(I)
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 3--Fees and Related Party Policies:
- -------------------------------------------------------------------------------
(A)
INVESTMENT ADVISORY AND ADMINISTRATION FEES. MacKay-Shields Financial
Corporation ("MacKay-Shields") acts as investment adviser to Cash Management
Portfolio 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 Insurance Company ("New York
Life"). New York Life acts as investment adviser to Bond and Growth Equity
Portfolios under an Investment Advisory agreement.
NYLIAC is Administrator for the Company.
The Company, on behalf of each Fund, 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 Fund as
follows:
<TABLE>
<CAPTION>
ADVISER ADMINISTRATOR
------- -------------
<S> <C> <C>
Cash Management Portfolio................................. .25% .20%
Bond Portfolio............................................ .25% .20%
Growth Equity Portfolio................................... .25% .20%
</TABLE>
32
<PAGE>
NEW YORK LIFE MFA
SERIES FUND, INC.
The Administrator has voluntarily agreed to assume the Funds' operating
expenses through December 31, 1996, which on an annualized basis exceed the
percentages indicated below, after which, the voluntary expense limitation may
be terminated at any time.
<TABLE>
<S> <C>
Cash Management Portfolio.................................................. .62%
Bond Portfolio............................................................. .62%
Growth Equity Portfolio.................................................... .62%
</TABLE>
In connection with the expense limitation the Administrator assumed certain
of the expenses of the Funds for the six months ended June 30, 1996 as shown
on the Statement of Operations.
(B)
DIRECTORS FEES. Directors, other than those affiliated with New York Life,
MacKay-Shields, Monitor, NYLIFE Distributors or NYLIFE Securities, are paid an
annual fee of $16,000 and $750 for each Board meeting attended plus
reimbursement for travel and out-of-pocket expenses. The Company allocates
this expense in proportion to the net assets of the respective Funds.
(C)
RECORDKEEPING FEES. NYLIAC provides recordkeeping services for Cash
Management, Bond and Growth Equity Portfolios. For the four months ended April
30, 1996, the Portfolios accrued recordkeeping fees as follows:
<TABLE>
<S> <C>
Cash Management Portfolio............................................. $ 5,223
Bond Portfolio........................................................ 111,341
Growth Equity Portfolio............................................... 208,472
</TABLE>
Effective May 1, 1996, these fees are paid by NYLIAC.
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 4--Federal Income Tax:
- --------------------------------------------------------------------------------
At December 31, 1995, for Federal income tax purposes, capital loss
carryforwards, as shown in the table below, are 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.
<TABLE>
<CAPTION>
CAPITAL LOSS
AVAILABLE THROUGH AMOUNT (000'S)
----------------- --------------
<S> <C> <C>
Cash Management Portfolio...................... 2003 $ 1
======
Bond Portfolio................................. 2002 $2,748
======
</TABLE>
- --------------------------------------------------------------------------------
NOTE 5--Financial Investments:
- --------------------------------------------------------------------------------
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--Acquisition of Money Market Portfolio:
- --------------------------------------------------------------------------------
On March 31, 1994, Cash Management Portfolio acquired all the net assets of
Money Market Portfolio pursuant to a plan of reorganization approved by the
shareholders of Cash Management and Money Market Portfolios on December 14,
1993. The acquisition was accomplished by a tax-free exchange of 37,601,126
shares of Cash Management Portfolio (valued at $37,601,126) for the 3,759,941
shares of Money Market Portfolio outstanding on March 31, 1994. Money Market's
net assets at that date ($37,597,525) were combined with those of Cash
Management Portfolio. The aggregate net assets of Cash Management and Money
Market Portfolios immediately before the acquisition were $28,516,066 and
$37,597,525, respectively. The combined net assets of Cash Management and Money
Market Portfolios immediately after the acquisition were $66,113,591.
34
<PAGE>
NEW YORK LIFE MFA
SERIES FUND, INC.
NOTE 7--Redemption by NYLIAC of Initial Investment:
- --------------------------------------------------------------------------------
On February 21, 1995, NYLIAC redeemed all of its initial investment in Cash
Management Portfolio. In connection with the redemption of the initial shares,
NYLIAC reimbursed the Portfolio $28,042, which represented the unamortized
deferred organization expense of the Portfolio on the date of the redemption.
- --------------------------------------------------------------------------------
NOTE 8--Purchases and Sales of Securities (in 000's):
- --------------------------------------------------------------------------------
During the six month period ended June 30, 1996, purchases and sales of
securities, other than securities subject to repurchase transactions and short-
term securities, were as follows:
<TABLE>
<CAPTION>
BOND GROWTH EQUITY
PORTFOLIO PORTFOLIO
PURCHASES SALES PURCHASES SALES
-------------------------------------
<S> <C> <C> <C> <C>
U.S. Government Securities............... $71,453 $63,332 $ -- $ --
All others............................... 14,772 10,877 294,426 282,474
-------------------------------------
Total.................................... $86,225 $74,209 $294,426 $282,474
-------------------------------------
-------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTE 9--Capital Share Transactions (in 000's):
- --------------------------------------------------------------------------------
Transactions in capital shares for the six month period ended June 30, 1996 and
the year ended December 31, 1995 were as follows:
<TABLE>
<CAPTION>
CASH MANAGEMENT BOND GROWTH EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
1996 1995 1996 1995 1996 1995
------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold................... 123,075 128,846 1,073 1,732 1,829 2,118
Shares issued in reinvestment
of dividends and
distributions................ 2,161 3,588 -- 1,080 -- 2,286
------------------------------------------------
125,236 132,434 1,073 2,812 1,829 4,404
Shares redeemed............... 105,277 115,710 1,306 2,397 1,184 2,060
------------------------------------------------
Net increase (decrease)....... 19,959 16,724 (233) 415 645 2,344
------------------------------------------------
------------------------------------------------
</TABLE>
35
<PAGE>
NEW YORK LIFE
MFA 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
Richard W. Zuccaro, Tax Vice President
Anthony W. Polis, Treasurer
A. Thomas Smith III, Secretary
Marc J. Chalfin, Controller
Investment Advisers
MacKay-Shields Financial Corporation
New York Life Insurance Company
Administrator
New York Life Insurance and Annuity Corporation
Custodians
The Bank of New York
Chemical Bank
Independent Accountants
Price Waterhouse LLP
Legal Counsel
Jorden Burt Berenson & Johnson LLP
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.
36
<PAGE>
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