<PAGE> 1
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
MFA SEPARATE ACCOUNTS I AND II
AND
VLI SEPARATE ACCOUNT
UNAUDITED SEMI-ANNUAL REPORT
MAINSTAY
VP SERIES FUND, INC.
June 30, 2000
This is a Report by the
MainStay VP Series Fund,
Inc. for the general
information of Multi-
Funded Annuity and
Variable Life Insurance
policyowners. This Report
does not offer for sale
or solicit orders to
purchase securities.
NEW YORK LIFE
INSURANCE [NY Life Logo]
AND ANNUITY
CORPORATION
<PAGE> 2
LETTER FROM THE PRESIDENT
--------------------------------------------------------------------------------
I am pleased to present the Semi-Annual Report for the six month period ending
June 30, 2000 for the Facilitator(R) Multi-Funded Variable Annuity (MFA) and
Variable Life Insurance (VLI) policies issued by New York Life Insurance and
Annuity Corporation (NYLIAC).
NYLIAC MFA and VLI policies offer a diversified group of investment options. As
a policyowner, you benefit from the experience and professional management of
leading investment advisors MacKay Shields LLC and Madison Square Advisors LLC,
who work diligently on your behalf. As always, your financial well-being is our
goal.
This Semi-Annual Report contains valuable information, including financial
statements for each of the investment divisions available with our
Facilitator(R) Variable Annuity and Variable Life Insurance policies.
Policyowners of NYLIAC MFA can refer to page 3 and policyowners of NYLIAC VLI
should refer to page 19 for their respective financial statements. Commentaries
from the Portfolio Managers are also included in this report.
As our Semi-Annual Report shows, we remain committed to being the soundest,
strongest and easiest company to do business with. We owe our financial strength
to you, our valued clients, who continue to place your trust in us. This
strength, in turn, allows us to keep our financial promises to you. We are
dedicated to the values of integrity and humanity, which we employ toward one
goal: to be there when our clients need us.
Thank you for making us "The Company You Keep(R)".
/s/ Frederick J. Sievert
Frederick J. Sievert
President
New York Life Insurance and Annuity Corporation
(A Delaware Corporation)
1
<PAGE> 3
(THIS PAGE INTENTIONALLY LEFT BLANK)
2
<PAGE> 4
NYLIAC MFA SEPARATE ACCOUNT-I
TAX-QUALIFIED POLICIES
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT INVESTMENT INVESTMENT
DIVISIONS DIVISIONS DIVISIONS
--------------------------- --------------------------- ---------------------------
SINGLE FLEXIBLE SINGLE FLEXIBLE SINGLE FLEXIBLE
PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM
POLICIES POLICIES POLICIES POLICIES POLICIES POLICIES
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in MainStay VP Series Fund,
Inc., at net asset value............ $117,449,399 $223,445,797 $ 19,538,045 $ 39,287,307 $ 4,676,088 $ 5,393,249
LIABILITIES:
Liability to New York Life Insurance
and Annuity Corporation for
mortality and expense risk
charges............................. 348,289 918,407 64,180 175,811 14,758 24,180
------------ ------------ ------------ ------------ ------------ ------------
Total equity...................... $117,101,110 $222,527,390 $ 19,473,865 $ 39,111,496 $ 4,661,330 $ 5,369,069
============ ============ ============ ============ ============ ============
TOTAL EQUITY REPRESENTED BY:
Equity of Policyowners................ $117,101,110 $222,527,390 $ 19,473,865 $ 39,111,496 $ 4,661,330 $ 5,369,069
============ ============ ============ ============ ============ ============
Variable accumulation unit value.... $ 82.37 $ 75.84 $ 33.32 $ 30.68 $ 22.01 $ 20.27
============ ============ ============ ============ ============ ============
Identified Cost of Investment........... $ 83,165,759 $149,694,056 $ 20,430,096 $ 40,486,331 $ 4,676,089 $ 5,393,211
============ ============ ============ ============ ============ ============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT INVESTMENT INVESTMENT
DIVISIONS DIVISIONS DIVISIONS
--------------------------- --------------------------- ---------------------------
SINGLE FLEXIBLE SINGLE FLEXIBLE SINGLE FLEXIBLE
PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM
POLICIES POLICIES POLICIES POLICIES POLICIES POLICIES
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend income....................... $ -- $ -- $ -- $ -- $ 121,627 $ 160,073
Mortality and expense risk charges.... (753,270) (1,978,950) (137,527) (357,017) (26,563) (49,340)
------------ ------------ ------------ ------------ ------------ ------------
Net investment income (loss)...... (753,270) (1,978,950) (137,527) (357,017) 95,064 110,733
------------ ------------ ------------ ------------ ------------ ------------
REALIZED AND UNREALIZED
GAIN (LOSS):
Proceeds from sale of investments..... 15,157,213 20,010,556 8,493,017 5,850,484 979,249 1,004,205
Cost of investments sold.............. (8,510,845) (11,295,756) (8,907,145) (6,041,361) (979,240) (1,004,192)
------------ ------------ ------------ ------------ ------------ ------------
Net realized gain (loss) on
investments..................... 6,646,368 8,714,800 (414,128) (190,877) 9 13
Change in unrealized appreciation
(depreciation) on investments....... (4,049,625) (3,721,266) 1,047,358 1,422,290 (1) 6
------------ ------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments.... 2,596,743 4,993,534 633,230 1,231,413 8 19
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) attributable to
mortality and expense risks assumed
by New York Life Insurance and
Annuity Corporation and retained by
the Separate Account................ 29,818 78,295 (2,249) (5,774) (277) (556)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in total
equity resulting from operations $ 1,873,291 $ 3,092,879 $ 493,454 $ 868,622 $ 94,795 $ 110,196
============ ============ ============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
3
<PAGE> 5
STATEMENT OF CHANGES IN TOTAL EQUITY
For the six months ended June 30, 2000
and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK
INVESTMENT DIVISIONS
------------------------------------------------------------------
SINGLE PREMIUM FLEXIBLE PREMIUM
POLICIES POLICIES
------------------------------ ------------------------------
2000 1999 2000 1999
------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN TOTAL EQUITY:
Operations:
Net investment income (loss)........................ $ (753,270) $ (784,784) $ (1,978,950) $ (2,495,557)
Net realized gain (loss) on investments............. 6,646,368 11,028,923 8,714,800 14,921,578
Realized gain distribution received................. -- 11,258,814 -- 21,214,052
Change in unrealized appreciation (depreciation) on
investments....................................... (4,049,625) 8,108,363 (3,721,266) 20,201,631
Increase (decrease) attributable to mortality and
expense risks assumed by New York Life Insurance
and Annuity Corporation and retained by the
Separate Account.................................. 29,818 (77,545) 78,295 (198,727)
------------ ------------ ------------ ------------
Net increase (decrease) in total equity resulting
from operations................................. 1,873,291 29,533,771 3,092,879 53,642,977
------------ ------------ ------------ ------------
Contributions and (withdrawals):
Policyowners' premium payments...................... 431,204 596,868 1,829,114 3,391,122
Policyowners' surrenders............................ (14,901,523) (20,813,746) (19,922,169) (31,808,658)
Policyowners' annuity and death benefits............ (325,917) (1,142,861) (1,234,236) (647,154)
Net transfers from (to) Fixed Account............... 682,917 140,085 695,473 (295,946)
Transfers between Investment Divisions.............. 3,366,887 (4,422,068) 863,463 (463,179)
------------ ------------ ------------ ------------
Net contributions and (withdrawals)............... (10,746,432) (25,641,722) (17,768,355) (29,823,815)
------------ ------------ ------------ ------------
Increase (decrease) in total equity............. (8,873,141) 3,892,049 (14,675,476) 23,819,162
TOTAL EQUITY:
Beginning of period................................. 125,974,251 122,082,202 237,202,866 213,383,704
------------ ------------ ------------ ------------
End of period....................................... $117,101,110 $125,974,251 $222,527,390 $237,202,866
============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
4
<PAGE> 6
NYLIAC MFA SEPARATE ACCOUNT-I
TAX-QUALIFIED POLICIES
<TABLE>
<CAPTION>
BOND MONEY MARKET
INVESTMENT DIVISIONS INVESTMENT DIVISIONS
--------------------------------------------------------- ---------------------------------------------------------
SINGLE PREMIUM FLEXIBLE PREMIUM SINGLE PREMIUM FLEXIBLE PREMIUM
POLICIES POLICIES POLICIES POLICIES
--------------------------- --------------------------- --------------------------- ---------------------------
2000 1999 2000 1999 2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (137,527) $ 1,261,225 $ (357,017) $ 1,800,587 $ 95,064 $ 138,994 $ 110,733 $ 187,055
(414,128) (204,126) (190,877) 755,879 9 27 13 (7)
-- 2,753 -- 4,188 -- 2 -- 3
1,047,358 (1,937,481) 1,422,290 (4,174,104) (1) (31) 6 1
(2,249) 509 (5,774) 873 (277) (446) (556) (968)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
493,454 (877,120) 868,622 (1,612,577) 94,795 138,546 110,196 186,084
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
164,467 240,297 401,775 945,509 32,106 31,024 92,711 261,881
(3,107,224) (6,691,341) (4,505,471) (7,737,790) (426,641) (2,163,184) (847,754) (1,853,807)
(212,416) (402,399) (223,308) (183,129) (9,516) (10,120) (41,924) (24,579)
(153,264) 383,717 (100,398) (227,092) (40,212) 35,448 (7,941) (24,848)
(4,899,693) 3,376,669 (977,190) (278,051) 1,525,555 1,050,777 116,316 743,395
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(8,208,130) (3,093,057) (5,404,592) (7,480,553) 1,081,292 (1,056,055) (688,592) (897,958)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(7,714,676) (3,970,177) (4,535,970) (9,093,130) 1,176,087 (917,509) (578,396) (711,874)
27,188,541 31,158,718 43,647,466 52,740,596 3,485,243 4,402,752 5,947,465 6,659,339
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 19,473,865 $ 27,188,541 $ 39,111,496 $ 43,647,466 $ 4,661,330 $ 3,485,243 $ 5,369,069 $ 5,947,465
============ ============ ============ ============ ============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
5
<PAGE> 7
(THIS PAGE INTENTIONALLY LEFT BLANK)
6
<PAGE> 8
NYLIAC MFA SEPARATE ACCOUNT-II
NON-QUALIFIED POLICIES
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT INVESTMENT INVESTMENT
DIVISIONS DIVISIONS DIVISIONS
--------------------------- --------------------------- ---------------------------
SINGLE FLEXIBLE SINGLE FLEXIBLE SINGLE FLEXIBLE
PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM
POLICIES POLICIES POLICIES POLICIES POLICIES POLICIES
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in MainStay VP
Series Fund, Inc., at net asset
value............................... $148,843,687 $ 21,430,487 $ 32,245,495 $ 4,388,785 $ 4,954,700 $ 597,562
LIABILITIES:
Liability to New York Life Insurance
and Annuity Corporation for
mortality and expense risk
charges............................. 442,735 87,395 105,727 19,655 15,831 2,971
------------ ------------ ------------ ------------ ------------ ------------
Total equity...................... $148,400,952 $ 21,343,092 $ 32,139,768 $ 4,369,130 $ 4,938,869 $ 594,591
============ ============ ============ ============ ============ ============
TOTAL EQUITY REPRESENTED BY:
Equity of Policyowners................ $148,400,952 $ 21,343,092 $ 32,139,768 $ 4,369,130 $ 4,938,869 $ 594,591
============ ============ ============ ============ ============ ============
Variable accumulation
unit value........................ $ 82.37 $ 75.84 $ 33.44 $ 30.73 $ 22.01 $ 20.27
============ ============ ============ ============ ============ ============
Identified Cost of Investment........... $105,805,198 $ 15,029,857 $ 33,476,975 $ 4,543,106 $ 4,954,697 $ 597,561
============ ============ ============ ============ ============ ============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT INVESTMENT INVESTMENT
DIVISIONS DIVISIONS DIVISIONS
--------------------------- --------------------------- ---------------------------
SINGLE FLEXIBLE SINGLE FLEXIBLE SINGLE FLEXIBLE
PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM
POLICIES POLICIES POLICIES POLICIES POLICIES POLICIES
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME (LOSS):
Dividend income....................... $ -- $ -- $ -- $ -- $ 148,462 $ 19,735
Mortality and expense risk charges.... (934,095) (187,635) (231,916) (39,644) (32,628) (6,093)
------------ ------------ ------------ ------------ ------------ ------------
Net investment income (loss)...... (934,095) (187,635) (231,916) (39,644) 115,834 13,642
------------ ------------ ------------ ------------ ------------ ------------
REALIZED AND UNREALIZED
GAIN (LOSS):
Proceeds from sale of investments..... 11,904,810 1,876,216 16,553,157 585,877 1,448,908 551,719
Cost of investments sold.............. (6,648,443) (1,085,433) (17,895,386) (620,858) (1,448,889) (551,719)
------------ ------------ ------------ ------------ ------------ ------------
Net realized gain (loss) on
investments..................... 5,256,367 790,783 (1,342,229) (34,981) 19 --
Change in unrealized appreciation
(depreciation) on investments....... (1,845,727) (327,700) 2,408,338 171,621 -- 2
------------ ------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments.... 3,410,640 463,083 1,066,109 136,640 19 2
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) attributable to
mortality and expense risks assumed
by New York Life Insurance and
Annuity Corporation and retained by
the Separate Account................ 35,303 7,354 (3,813) (641) (372) (70)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in total
equity resulting from operations $ 2,511,848 $ 282,802 $ 830,380 $ 96,355 $ 115,481 $ 13,574
============ ============ ============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
7
<PAGE> 9
STATEMENT OF CHANGES IN TOTAL EQUITY
For the six months ended June 30, 2000
and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK
INVESTMENT DIVISIONS
------------------------------------------------------------------
SINGLE PREMIUM FLEXIBLE PREMIUM
POLICIES POLICIES
------------------------------ ------------------------------
2000 1999 2000 1999
------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN TOTAL EQUITY:
Operations:
Net investment income (loss)......................... $ (934,095) $ (947,887) $ (187,635) $ (230,854)
Net realized gain (loss) on investments.............. 5,256,367 14,327,702 790,783 1,191,002
Realized gain distribution received.................. -- 13,279,222 -- 1,980,884
Change in unrealized appreciation (depreciation) on
investments........................................ (1,845,727) 8,518,794 (327,700) 2,078,624
Increase (decrease) attributable to mortality and
expense risks assumed by New York Life Insurance
and Annuity Corporation and retained by the
Separate Account................................... 35,303 (92,516) 7,354 (18,374)
------------ ------------ ------------ ------------
Net increase (decrease) in total equity resulting
from operations.................................. 2,511,848 35,085,315 282,802 5,001,282
------------ ------------ ------------ ------------
Contributions and (withdrawals):
Policyowners' premium payments....................... (40,157) 99,271 177,174 194,032
Policyowners' surrenders............................. (14,014,366) (20,510,328) (1,461,542) (1,956,076)
Policyowners' annuity and death benefits............. (760,231) (2,757,638) (132,001) (115,775)
Net transfers from (to) Fixed Account................ 754,974 813,884 54,502 (123,361)
Transfers between Investment Divisions............... 11,608,003 (13,096,677) 248,967 8,883
------------ ------------ ------------ ------------
Net contributions and (withdrawals)................ (2,451,777) (35,451,488) (1,112,900) (1,992,297)
------------ ------------ ------------ ------------
Increase (decrease) in total equity.............. 60,071 (366,173) (830,098) 3,008,985
TOTAL EQUITY:
Beginning of period.................................... 148,340,881 148,707,054 22,173,190 19,164,205
------------ ------------ ------------ ------------
End of period.......................................... $148,400,952 $148,340,881 $ 21,343,092 $ 22,173,190
============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
8
<PAGE> 10
NYLIAC MFA SEPARATE ACCOUNT-II
NON-QUALIFIED POLICIES
<TABLE>
<CAPTION>
BOND MONEY MARKET
INVESTMENT DIVISIONS INVESTMENT DIVISIONS
--------------------------------------------------------- ---------------------------------------------------------
SINGLE PREMIUM FLEXIBLE PREMIUM SINGLE PREMIUM FLEXIBLE PREMIUM
POLICIES POLICIES POLICIES POLICIES
--------------------------- --------------------------- --------------------------- ---------------------------
2000 1999 2000 1999 2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (231,916) $ 2,221,645 $ (39,644) $ 200,731 $ 115,834 $ 212,378 $ 13,642 $ 22,892
(1,342,229) (64,771) (34,981) 14,482 19 41 -- 4
-- 4,411 -- 452 -- 3 -- --
2,408,338 (3,590,007) 171,621 (390,084) -- (47) 2 (5)
(3,813) 900 (641) 102 (372) (671) (70) (117)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
830,380 (1,427,822) 96,355 (174,317) 115,481 211,704 13,574 22,774
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(3,259) 23,548 37,190 77,731 -- 48,287 5,972 13,471
(4,109,221) (6,463,773) (456,101) (558,266) (1,089,181) (2,181,374) (45,504) (91,760)
(455,691) (696,598) (39,963) (80,414) (9,985) (97,614) (3,599) (9,043)
98,477 (27,434) (19,575) 57,101 99,060 28,102 (5,682) 20,195
(11,743,806) 11,773,531 (47,847) (31,331) 138,232 1,318,201 (201,282) 22,591
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(16,213,500) 4,609,274 (526,296) (535,179) (861,874) (884,398) (250,095) (44,546)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(15,383,120) 3,181,452 (429,941) (709,496) (746,393) (672,694) (236,521) (21,772)
47,522,888 44,341,436 4,799,071 5,508,567 5,685,262 6,357,956 831,112 852,884
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 32,139,768 $ 47,522,888 $ 4,369,130 $ 4,799,071 $ 4,938,869 $ 5,685,262 $ 594,591 $ 831,112
============ ============ ============ ============ ============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
9
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-- Organization and Accounting Policies:
--------------------------------------------------------------------------------
NYLIAC MFA Separate Account-I ("Separate Account-I") and NYLIAC MFA Separate
Account-II ("Separate Account-II") were established on May 27, 1983, under
Delaware law by New York Life Insurance and Annuity Corporation ("NYLIAC"), a
wholly-owned subsidiary of New York Life Insurance Company. These accounts were
established to receive and invest net premium payments under Tax Qualified
Multi-Funded Retirement Annuity Policies ("Separate Account-I") and
Non-Qualified Multi-Funded Retirement Annuity Policies ("Separate Account-II")
issued by NYLIAC.
Separate Account-I and Separate Account-II are registered under the Investment
Company Act of 1940, as amended, as unit investment trusts. The assets of
Separate Account-I and Separate Account-II are invested exclusively in shares of
the MainStay VP Series Fund, Inc. (formerly, "New York Life MFA Series Fund,
Inc."), a diversified open-end management investment company, and are clearly
identified and distinguished from the other assets and liabilities of NYLIAC.
These assets are the property of NYLIAC; however, the portion of the assets
attributable to the policies will not be charged with liabilities arising out of
any other business NYLIAC may conduct. The Fixed Account represents the general
assets of NYLIAC. NYLIAC's Fixed Account may be charged with liabilities arising
out of other business NYLIAC may conduct. Effective December 19, 1994, sales of
all such policies were discontinued.
MacKay Shields LLC and Madison Square Advisors LLC provide investment advisory
services to the MainStay VP Series Funds for a fee. MacKay Shields LLC and
Madison Square Advisors LLC are wholly-owned subsidiaries of New York Life
Investment Management Holdings LLC, which is a wholly-owned subsidiary of New
York Life Insurance Company.
There are six Investment Divisions within both Separate Account-I and Separate
Account-II, three of which invest Single Premium Policy net premium payments and
three of which invest Flexible Premium Policy net premium payments. The Common
Stock Investment Divisions invest in the Growth Equity Portfolio, the Bond
Investment Divisions invest in the Bond Portfolio, and the Money Market
Investment Divisions invest in the Cash Management Portfolio. Net premium
payments received are allocated to the Investment Divisions of Separate
Account-I or Separate Account-II according to Policyowner instructions. In
addition, the Policyowner has the option to transfer amounts between the
Investment Divisions of Separate Account-I and Separate Account-II and the Fixed
Account of NYLIAC.
No Federal income tax is payable on investment income or capital gains of
Separate Account-I or Separate Account-II under current Federal income tax law.
Security Valuation--The investment in the MainStay VP Series Fund, Inc. 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 portfolio.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
10
<PAGE> 12
NYLIAC MFA SEPARATE ACCOUNTS-I AND -II
TAX-QUALIFIED AND NON-QUALIFIED POLICIES
NOTE 2--Investments (in 000's):
--------------------------------------------------------------------------------
At June 30, 2000, the investment in the MainStay VP Series Fund, Inc. by the
respective Investment Divisions of Separate Account-I and Separate Account-II is
as follows:
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT DIVISIONS INVESTMENT DIVISIONS INVESTMENT DIVISIONS
---------------------- ---------------------- ----------------------
SINGLE FLEXIBLE SINGLE FLEXIBLE SINGLE FLEXIBLE
PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM
POLICIES POLICIES POLICIES POLICIES POLICIES POLICIES
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Number of shares........................... 4,134 7,865 1,548 3,113 4,676 5,393
Identified cost*........................... $83,166 $149,694 $20,430 $40,486 $ 4,676 $ 5,393
SEPARATE ACCOUNT-II (NON-QUALIFIED
POLICIES)
Number of shares........................... 5,239 754 2,555 348 4,955 598
Identified cost*........................... $105,805 $15,030 $33,477 $ 4,543 $ 4,955 $ 598
</TABLE>
* The cost stated also represents the aggregate cost for Federal income tax
purposes.
Transactions in MainStay VP Series Fund, Inc. shares for the six months ended
June 30, 2000, were as follows:
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT DIVISIONS INVESTMENT DIVISIONS INVESTMENT DIVISIONS
---------------------- ---------------------- ----------------------
SINGLE FLEXIBLE SINGLE FLEXIBLE SINGLE FLEXIBLE
PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM PREMIUM
POLICIES POLICIES POLICIES POLICIES POLICIES POLICIES
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Purchases.................................. $ 3,622 $ 174 $ 117 $ 64 $ 2,159 $ 424
Proceeds from sales........................ 15,157 20,011 8,493 5,850 979 1,004
SEPARATE ACCOUNT-II (NON-QUALIFIED
POLICIES)
Purchases.................................. $ 8,507 $ 568 $ 60 $ 18 $ 700 $ 315
Proceeds from sales........................ 11,905 1,876 16,553 586 1,449 552
</TABLE>
--------------------------------------------------------------------------------
NOTE 3--Mortality and Expense Risk Charges:
--------------------------------------------------------------------------------
Separate Account-I and Separate Account-II are charged for administrative
services provided for Flexible Premium Policies, and Single and Flexible Premium
Policies are charged for the mortality and expense risks assumed by NYLIAC.
These charges are made daily at an annual rate of 1.25% of the daily net asset
value for Single Premium Policies and 1.75% of the daily net asset value for
Flexible Premium Policies of each Investment Division. The amounts of these
charges retained in the Investment Divisions represent funds of NYLIAC.
Accordingly, NYLIAC participates in the results of each Investment Division
ratably with the Policyowners.
--------------------------------------------------------------------------------
NOTE 4--Distribution of Net Income:
--------------------------------------------------------------------------------
Separate Account-I and Separate Account-II do not expect to declare dividends to
Policyowners from accumulated net investment income and realized gains. The
income and gains are distributed to Policyowners as part of withdrawals of
amounts (in the form of surrenders, death benefits, transfers, or annuity
payments) in excess of the net premium payments.
11
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 5--Unit Transactions (in 000's):
--------------------------------------------------------------------------------
Transactions in accumulation units for the six months ended June 30, 2000 and
the year ended December 31, 1999, were as follows:
<TABLE>
<CAPTION>
COMMON STOCK INVESTMENT DIVISIONS
-----------------------------------------------------
SINGLE PREMIUM FLEXIBLE PREMIUM
POLICIES POLICIES
----------------------- -----------------------
2000 1999 2000 1999
-----------------------------------------------------
<S> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Units issued on premium payments............................ 6 9 25 54
Units redeemed on surrenders................................ (185) (301) (266) (503)
Units redeemed on annuity and death benefits................ (4) (17) (17) (10)
Units issued (redeemed) on net transfers from (to)
Fixed Account............................................. 8 2 10 (5)
Units issued (redeemed) on transfers between
Investment Divisions...................................... 42 (72) 11 (8)
----- ----- ----- -----
Net increase (decrease)................................. (133) (379) (237) (472)
Units outstanding, beginning of period...................... 1,555 1,934 3,171 3,643
----- ----- ----- -----
Units outstanding, end of period............................ 1,422 1,555 2,934 3,171
===== ===== ===== =====
SEPARATE ACCOUNT-II (NON-QUALIFIED POLICIES)
Units issued on premium payments............................ -- 1 2 3
Units redeemed on surrenders................................ (174) (297) (19) (30)
Units redeemed on annuity and death benefits................ (9) (41) (2) (2)
Units issued (redeemed) on net transfers from (to)
Fixed Account............................................. 9 12 1 (2)
Units issued (redeemed) on transfers between
Investment Divisions...................................... 145 (200) 3 --
----- ----- ----- -----
Net increase (decrease)................................. (29) (525) (15) (31)
Units outstanding, beginning of period...................... 1,831 2,356 296 327
----- ----- ----- -----
Units outstanding, end of period............................ 1,802 1,831 281 296
===== ===== ===== =====
</TABLE>
12
<PAGE> 14
NYLIAC MFA SEPARATE ACCOUNTS-I AND -II
TAX-QUALIFIED AND NON-QUALIFIED POLICIES
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BOND INVESTMENT DIVISIONS MONEY MARKET INVESTMENT DIVISIONS
----------------------------------------- -----------------------------------------
SINGLE PREMIUM FLEXIBLE PREMIUM SINGLE PREMIUM FLEXIBLE PREMIUM
POLICIES POLICIES POLICIES POLICIES
------------------- ------------------- ------------------- -------------------
2000 1999 2000 1999 2000 1999 2000 1999
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5 7 13 30 2 1 5 13
(95) (203) (150) (254) (20) (103) (42) (95)
(6) (12) (7) (6) -- -- (2) (1)
(5) 11 (3) (7) (2) 2 (1) (1)
(150) 101 (32) (9) 70 50 6 38
----- ----- ----- ----- ----- ----- ----- -----
(251) (96) (179) (246) 50 (50) (34) (46)
836 932 1,454 1,700 162 212 299 345
----- ----- ----- ----- ----- ----- ----- -----
585 836 1,275 1,454 212 162 265 299
===== ===== ===== ===== ===== ===== ===== =====
-- 1 1 3 -- 2 -- 1
(125) (196) (15) (18) (50) (103) (2) (5)
(14) (21) (1) (3) (1) (4) -- --
3 (1) (1) 2 5 1 (1) 1
(359) 352 (2) (1) 6 62 (10) 1
----- ----- ----- ----- ----- ----- ----- -----
(495) 135 (18) (17) (40) (42) (13) (2)
1,456 1,321 160 177 264 306 42 44
----- ----- ----- ----- ----- ----- ----- -----
961 1,456 142 160 224 264 29 42
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 6--Selected Per Unit Data+:
--------------------------------------------------------------------------------
The following table presents selected per accumulation unit income and capital
changes (for an accumulation unit outstanding throughout each period) with
respect to each Investment Division of Separate Account-I and Separate
Account-II:
<TABLE>
<CAPTION>
SINGLE PREMIUM POLICIES
------------------------------------------------------------------
COMMON STOCK INVESTMENT DIVISIONS 2000 1999 1998 1997 1996 1995
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Unit value, beginning of period............................. $81.03 $63.13 $50.50 $40.34 $32.81 $25.72
Net investment income (loss)................................ (0.50) (0.46) (0.27) (0.24) (0.12) --
Net realized and unrealized gains (losses) on security
transactions and realized gain distributions received
(includes the effect of capital share transactions)....... 1.84 18.36 12.90 10.40 7.65 7.09
------ ------ ------ ------ ------ ------
Unit value, end of period................................... $82.37 $81.03 $63.13 $50.50 $40.34 $32.81
====== ====== ====== ====== ====== ======
SEPARATE ACCOUNT-II (NON-QUALIFIED POLICIES)
Unit value, beginning of period............................. $81.03 $63.13 $50.50 $40.34 $32.81 $25.72
Net investment income (loss)................................ (0.50) (0.47) (0.26) (0.23) (0.12) --
Net realized and unrealized gains (losses) on security
transactions and realized gain distributions received
(includes the effect of capital share transactions)....... 1.84 18.37 12.89 10.39 7.65 7.09
------ ------ ------ ------ ------ ------
Unit value, end of period................................... $82.37 $81.03 $63.13 $50.50 $40.34 $32.81
====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM POLICIES
------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Unit value, beginning of period............................. $74.80 $58.57 $47.08 $37.80 $30.90 $24.34
Net investment income (loss)................................ (0.65) (0.74) (0.50) (0.44) (0.29) (0.14)
Net realized and unrealized gains (losses) on security
transactions and realized gain distributions received
(includes the effect of capital share transactions)....... 1.69 16.97 11.99 9.72 7.19 6.70
------ ------ ------ ------ ------ ------
Unit value, end of period................................... $75.84 $74.80 $58.57 $47.08 $37.80 $30.90
====== ====== ====== ====== ====== ======
SEPARATE ACCOUNT-II (NON-QUALIFIED POLICIES)
Unit value, beginning of period............................. $74.80 $58.57 $47.08 $37.80 $30.90 $24.34
Net investment income (loss)................................ (0.65) (0.74) (0.50) (0.43) (0.29) (0.14)
Net realized and unrealized gains (losses) on security
transactions and realized gain distributions received
(includes the effect of capital share transactions)....... 1.69 16.97 11.99 9.71 7.19 6.70
------ ------ ------ ------ ------ ------
Unit value, end of period................................... $75.84 $74.80 $58.57 $47.08 $37.80 $30.90
====== ====== ====== ====== ====== ======
</TABLE>
+ Per unit data based on average monthly units outstanding during each period.
14
<PAGE> 16
NYLIAC MFA SEPARATE ACCOUNTS-I AND -II
TAX-QUALIFIED AND NON-QUALIFIED POLICIES
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE PREMIUM POLICIES
------------------------------------------------------------------
BOND INVESTMENT DIVISIONS 2000 1999 1998 1997 1996 1995
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Unit value, beginning of period............................. $32.52 $33.44 $31.03 $28.66 $28.44 $24.34
Net investment income (loss)................................ (0.20) 1.33 1.25 1.42 1.29 1.30
Net realized and unrealized gains (losses) on security
transactions and realized gain distributions received
(includes the effect of capital share transactions)....... 1.00 (2.25) 1.16 0.95 (1.07) 2.80
------ ------ ------ ------ ------ ------
Unit value, end of period................................... $33.32 $32.52 $33.44 $31.03 $28.66 $28.44
====== ====== ====== ====== ====== ======
SEPARATE ACCOUNT-II (NON-QUALIFIED POLICIES)
Unit value, beginning of period............................. $32.64 $33.57 $31.15 $28.76 $28.54 $24.43
Net investment income (loss)................................ (0.20) 1.49 1.23 1.42 1.30 1.31
Net realized and unrealized gains (losses) on security
transactions and realized gain distributions received
(includes the effect of capital share transactions)....... 1.00 (2.42) 1.19 0.97 (1.08) 2.80
------ ------ ------ ------ ------ ------
Unit value, end of period................................... $33.44 $32.64 $33.57 $31.15 $28.76 $28.54
====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM POLICIES
------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Unit value, beginning of period............................. $30.02 $31.02 $28.93 $26.85 $26.78 $23.03
Net investment income (loss)................................ (0.26) 1.14 0.98 1.18 1.14 1.16
Net realized and unrealized gains (losses) on security
transactions and realized gain distributions received
(includes the effect of capital share transactions)....... 0.92 (2.14) 1.11 0.90 (1.07) 2.59
------ ------ ------ ------ ------ ------
Unit value, end of period................................... $30.68 $30.02 $31.02 $28.93 $26.85 $26.78
====== ====== ====== ====== ====== ======
SEPARATE ACCOUNT-II (NON-QUALIFIED POLICIES)
Unit value, beginning of period............................. $30.06 $31.07 $28.98 $26.89 $26.82 $23.07
Net investment income (loss)................................ (0.26) 1.18 1.00 1.20 1.13 1.15
Net realized and unrealized gains (losses) on security
transactions and realized gain distributions received
(includes the effect of capital share transactions)....... 0.93 (2.19) 1.09 0.89 (1.06) 2.60
------ ------ ------ ------ ------ ------
Unit value, end of period................................... $30.73 $30.06 $31.07 $28.98 $26.89 $26.82
====== ====== ====== ====== ====== ======
</TABLE>
+ Per unit data based on average monthly units outstanding during each period.
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 6--Selected Per Unit Data+ (Continued):
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE PREMIUM POLICIES
------------------------------------------------------------------
MONEY MARKET INVESTMENT DIVISIONS 2000 1999 1998 1997 1996 1995
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Unit value, beginning of period............................. $21.53 $20.80 $20.02 $19.26 $18.57 $17.81
Net investment income (loss)................................ 0.48 0.73 0.78 0.76 0.69 0.76
------ ------ ------ ------ ------ ------
Unit value, end of period................................... $22.01 $21.53 $20.80 $20.02 $19.26 $18.57
====== ====== ====== ====== ====== ======
SEPARATE ACCOUNT-II (NON-QUALIFIED POLICIES)
Unit value, beginning of period............................. $21.53 $20.80 $20.02 $19.26 $18.57 $17.81
Net investment income (loss)................................ 0.48 0.73 0.78 0.76 0.69 0.76
------ ------ ------ ------ ------ ------
Unit value, end of period................................... $22.01 $21.53 $20.80 $20.02 $19.26 $18.57
====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM POLICIES
------------------------------------------------------------------
2000 1999 1998 1997 1996 1995
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Unit value, beginning of period............................. $19.88 $19.29 $18.66 $18.05 $17.48 $16.85
Net investment income (loss)................................ 0.39 0.59 0.63 0.61 0.57 0.63
------ ------ ------ ------ ------ ------
Unit value, end of period................................... $20.27 $19.88 $19.29 $18.66 $18.05 $17.48
====== ====== ====== ====== ====== ======
SEPARATE ACCOUNT-II (NON-QUALIFIED POLICIES)
Unit value, beginning of period............................. $19.88 $19.29 $18.66 $18.05 $17.48 $16.85
Net investment income (loss)................................ 0.39 0.59 0.63 0.61 0.57 0.63
------ ------ ------ ------ ------ ------
Unit value, end of period................................... $20.27 $19.88 $19.29 $18.66 $18.05 $17.48
====== ====== ====== ====== ====== ======
</TABLE>
+ Per unit data based on average monthly units outstanding during each period.
16
<PAGE> 18
(THIS PAGE INTENTIONALLY LEFT BLANK)
17
<PAGE> 19
(THIS PAGE INTENTIONALLY LEFT BLANK)
18
<PAGE> 20
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
VLI SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT INVESTMENT INVESTMENT
DIVISION DIVISION DIVISION
<S> <C> <C> <C>
--------------------------------------------
ASSETS:
Investment in MainStay VP Series Fund, Inc., at net asset
value................................................... $43,897,002 $ 8,938,988 $ 1,643,904
LIABILITIES:
Liability to New York Life Insurance and Annuity
Corporation for mortality and expense risk charges...... 35,800 7,828 1,352
----------- ----------- -----------
Total equity.......................................... $43,861,202 $ 8,931,160 $ 1,642,552
=========== =========== ===========
TOTAL EQUITY REPRESENTED BY:
Equity of Policyowners.................................... $43,861,202 $ 8,931,160 $ 1,642,552
=========== =========== ===========
Identified Cost of Investment............................... $29,867,428 $ 9,320,597 $ 1,643,894
=========== =========== ===========
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT INVESTMENT INVESTMENT
DIVISION DIVISION DIVISION
<S> <C> <C> <C>
--------------------------------------------
INVESTMENT INCOME (LOSS):
Dividend income........................................... $ -- $ -- $ 46,203
Mortality and expense risk charges........................ (75,749) (15,432) (2,763)
----------- ----------- -----------
Net investment income (loss).......................... (75,749) (15,432) 43,440
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS):
Proceeds from sale of investments......................... 1,802,944 451,238 129,042
Cost of investments sold.................................. (1,001,619) (495,515) (129,041)
----------- ----------- -----------
Net realized gain (loss) on investments............... 801,325 (44,277) 1
Change in unrealized appreciation (depreciation) on
investments............................................. 174,203 315,146 4
----------- ----------- -----------
Net gain (loss) on investments........................ 975,528 270,869 5
----------- ----------- -----------
Increase (decrease) attributable to mortality and expense
risks assumed by New York Life Insurance and Annuity
Corporation and retained by the Separate Account........ 2,881 (249) (31)
----------- ----------- -----------
Net increase (decrease) in total equity resulting from
operations.......................................... $ 902,660 $ 255,188 $ 43,414
=========== =========== ===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
19
<PAGE> 21
STATEMENT OF CHANGES IN TOTAL EQUITY
For the six months ended June 30, 2000
and the year ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION
------------------------- ------------------------- -------------------------
2000 1999 2000 1999 2000 1999
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------
INCREASE (DECREASE) IN TOTAL EQUITY:
Operations:
Net investment income (loss)........... $ (75,749) $ 100,531 $ (15,432) $ 507,320 $ 43,440 $ 70,338
Net realized gain (loss) on
investments.......................... 801,325 1,191,060 (44,277) (23,018) 1 (1)
Realized gain distribution received.... -- 3,943,796 -- 774 -- 1
Change in unrealized appreciation
(depreciation) on investments........ 174,203 5,025,527 315,146 (655,165) 4 (1)
Increase (decrease) attributable to
mortality and expense risks assumed
by New York Life Insurance and
Annuity Corporation and retained by
the Separate Account................. 2,881 (7,088) (249) 39 (31) (49)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in total
equity resulting from operations... 902,660 10,253,826 255,188 (170,050) 43,414 70,288
----------- ----------- ----------- ----------- ----------- -----------
Contributions and (withdrawals):
Policyowners' premium payments......... 882,517 1,813,607 373,602 810,916 64,369 139,304
Cost of insurance...................... (372,411) (547,746) (93,622) (104,553) (19,702) (28,765)
Policyowners' surrenders............... (1,764,430) (3,153,097) (573,353) (835,408) (67,165) (115,775)
(Withdrawals), net of repayments, due
to policy loans...................... (135,186) (384,046) 113,917 111,344 (7,448) 15,745
Policyowners' death benefits........... (78,764) (161,320) (15,723) (56,688) (1,078) (5,080)
Transfers between Investment
Divisions............................ 106,206 192,603 (81,525) (187,889) (24,954) (4,989)
----------- ----------- ----------- ----------- ----------- -----------
Net contributions and
(withdrawals)...................... (1,362,068) (2,239,999) (276,704) (262,278) (55,978) 440
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in total
equity........................... (459,408) 8,013,827 (21,516) (432,328) (12,564) 70,728
TOTAL EQUITY:
Beginning of period.................... 44,320,610 36,306,783 8,952,676 9,385,004 1,655,116 1,584,388
----------- ----------- ----------- ----------- ----------- -----------
End of period.......................... $43,861,202 $44,320,610 $ 8,931,160 $ 8,952,676 $ 1,642,552 $ 1,655,116
=========== =========== =========== =========== =========== ===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
20
<PAGE> 22
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
VLI SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 ("NYLIAC"), 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 NYLIAC. Effective July 1, 1988, sales of such policies were
discontinued.
The VLI Separate Account is registered under the Investment Company Act of
1940, as amended, as a unit investment trust. The assets of the VLI Separate
Account are invested in shares of the MainStay VP Series Fund, Inc. (formerly,
"New York Life MFA Series Fund, Inc."), a diversified open-end management
investment company, and are clearly identified and distinguished from the other
assets and liabilities of NYLIAC. These assets are the property of NYLIAC;
however, the portion of the assets attributable to the policies will not be
charged with liabilities arising out of any other business NYLIAC may conduct.
The Fixed Account represents the general assets of NYLIAC. NYLIAC's Fixed
Account may be charged with liabilities arising out of other business NYLIAC may
conduct.
MacKay Shields LLC and Madison Square Advisors LLC provide investment advisory
services to the MainStay VP Series Funds for a fee. MacKay Shields LLC and
Madison Square Advisors LLC are wholly-owned subsidiaries of New York Life
Investment Management Holdings LLC, which is a wholly-owned subsidiary of New
York Life Insurance Company.
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 MainStay VP Series Fund, Inc. 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 portfolios.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
--------------------------------------------------------------------------------
NOTE 2--Investments (in 000's):
--------------------------------------------------------------------------------
At June 30, 2000, the investment in the Mainstay VP Series Fund, Inc. by the
respective Investment Divisions of the VLI Separate Account is as follows:
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION
<S> <C> <C> <C>
--------------------------------------------------------------
Number of shares................................. 1,545 708 1,644
Identified cost*................................. $29,867 $ 9,321 $ 1,644
</TABLE>
* The cost stated also represents the aggregate cost for Federal income tax
purposes.
Transactions in MainStay VP Series Fund, Inc. shares for the six months ended
June 30, 2000, were as follows:
<TABLE>
<CAPTION>
COMMON STOCK BOND MONEY MARKET
INVESTMENT DIVISION INVESTMENT DIVISION INVESTMENT DIVISION
<S> <C> <C> <C>
--------------------------------------------------------------
Purchases........................................ $ 364 $ 159 $ 116
Proceeds from sales.............................. 1,803 451 129
</TABLE>
21
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 3--Mortality and Expense Risk Charges:
--------------------------------------------------------------------------------
The VLI Separate Account is charged for the mortality and expense risks assumed
by NYLIAC. These charges are made daily at an annual rate of 0.35% of the daily
net asset value of each Investment Division. NYLIAC 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 NYLIAC. Accordingly,
NYLIAC participates in the results of each Investment Division ratably with the
Policyowners.
--------------------------------------------------------------------------------
NOTE 4--Distribution of Net Income:
--------------------------------------------------------------------------------
The 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
surrenders, death benefits, policy loans, or transfers) in excess of the net
premium payments.
22
<PAGE> 24
(THIS PAGE INTENTIONALLY LEFT BLANK)
23
<PAGE> 25
--------------------------------------------------------------------------------
To Policyowners:
The assets of NYLIAC Variable Annuity Separate Account-I, NYLIAC Variable
Annuity Separate Account-II, NYLIAC Variable Annuity Separate Account-III,
NYLIAC Variable Universal Life Separate Account-I, NYLIAC Corporate Sponsored
Variable Universal Life Separate Account-I, New York Life Insurance and Annuity
Corporation MFA Separate Account-I, New York Life Insurance and Annuity
Corporation MFA Separate Account-II and New York Life Insurance and Annuity
Corporation VLI Separate Account are invested in shares of MainStay VP Series
Fund, Inc.
In addition, the assets of NYLIAC Variable Annuity Separate Account-I, NYLIAC
Variable Annuity Separate Account-II, NYLIAC Variable Annuity Separate
Account-III, NYLIAC Variable Universal Life Account-I may be invested in shares
of the Alger American Fund, the Calvert Variable Series, Inc., the Fidelity
Variable Insurance Products Fund, the Fidelity Variable Insurance Products
Fund-II, the Janus Aspen Series, MFS(R) Variable Insurance Trust(SM), The
Universal Institutional Funds, Inc., the T. Rowe Price Equity Series Inc., and
Van Eck Worldwide Insurance Trust, which are not affiliated with the MainStay VP
Series Fund Inc. or NYLIAC and any of its subsidiaries.
At the Annual Meeting of the Board of Directors of the fund held on November 16,
1999, executive officers of the Fund were elected. On May 17, 2000, a dividend
distribution was paid to NYLIAC Variable Annuity Separate Account-I, NYLIAC
Variable Annuity Separate Account-II, NYLIAC Variable Annuity Separate
Account-III, NYLIAC Variable Universal Life Separate Account-I, NYLIAC Corporate
Sponsored Variable Universal Life Separate Account-I, New York Life Insurance
and Annuity Corporation MFA Separate Account-I, New York Life Insurance and
Annuity Corporation MFA Separate Account-II and New York Life Insurance and
Annuity Corporation VLI Separate Account as the sole shareholders of record of
MainStay VP Series Fund, Inc.
The financial information included herein as of June 30, 2000, 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. Kerman Jr.
Chairman of the Board
and Chief Executive Officer
MAINSTAY VP SERIES FUND, INC.
24
<PAGE> 26
MAINSTAY VP CASH MANAGEMENT PORTFOLIO
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Like most other Y2K fears, money-market liquidity concerns proved to be for
naught, as the new century rolled in without a hitch. During the six months
ended June 30, 2000, two major factors combined to push yields on short-term
money market securities significantly higher -- the ongoing strength of the U.S.
economy and three successive tightening moves by the Federal Reserve.
Consumer spending was strong through the first half of 2000, and unemployment
reached its lowest level in almost thirty years. At the same time, productivity
improvements and competitive pressures held prices steady, keeping inflation
benign. Nominal GDP, however, continued to surge, pushing the first quarter
annualized growth rate to 5.5%, following a 7.3% annualized growth rate in the
fourth quarter of 1999.
The Federal Reserve continued to take a hard stance against inflation and argued
that extremely tight labor markets and enhanced productivity could not
indefinitely support the pace of the economy. Following its cumulative 0.75%
rate increase in 1999, the Federal Reserve raised the targeted federal funds
rate by 0.25% on February 2 and again on March 21. Stronger economic numbers in
April led policymakers to believe that inflation was accelerating and the
economy was not slowing. Abandoning its gradualistic approach, the Federal
Reserve tightened more aggressively with a 0.50% move on May 16, boosting the
targeted federal funds rate to 6.50%.
In response to a more aggressive Federal Reserve, the Treasury yield curve
became significantly inverted for the first time since 1990. This means that
longer-term maturities were yielding less than shorter-term maturities. With
increased budget surpluses projected over the next ten years, the government
reduced new Treasury issuance and began buying back outstanding U.S. Treasury
securities. These factors also contributed to the inversion of the Treasury
yield curve.
At its June meeting, the Federal Reserve refrained from raising interest rates,
as a number of economic reports showed an economy slowing from its torrid pace.
The debate now centers on whether the observed slowdown will be transient or
sustainable. In June, the two-year Treasury note rallied, with yields falling by
0.30% on expectations that the Federal Reserve had accomplished its task.
STRONG RELATIVE PERFORMANCE
For the seven-day period ended June 30, 2000, the MainStay VP Cash Management
Portfolio provided an effective yield of 6.38% and a current yield of 6.19%. For
the six months ended June 30, 2000 the Portfolio returned 2.83%, exceeding the
2.80% return of the average Lipper(1) Variable Products Money Market Portfolio.
STRATEGIC MATURITY AND SECTOR POSITIONING
During the first half of the year, we maintained the average maturity of the
portfolio at a substantially shorter position than the average money-market
fund. This strategy proved effective in a rising interest rate environment. As
of June 30, 2000, the Portfolio's average maturity stood at 39 days.
Portfolio performance also benefited from our investment in higher yielding
asset-backed commercial paper and one-year maturity floating-rate securities.
While past performance is no guarantee of future results, in times of economic
uncertainty, floating-rate notes have historically outperformed other
money-market securities, as their coupon rates tend to correspond to market
levels much sooner than fixed-rate investments.
HIGH CREDIT QUALITY
The Portfolio's investments throughout the semi-annual period centered on
floating-rate notes, bank certificates of deposit (CDs), commercial paper, and
asset-backed commercial paper. By industry, the Portfolio mainly invested in
securities of banks and bank holding companies, as well as finance, insurance,
brokerage, telecommunications, and industrial companies. We closely followed the
Portfolio's disciplined investment process by purchasing only high-quality
instruments throughout the reporting period. All of the securities purchased for
the portfolio were rated A-1/P-1 or higher. These are first-tier
securities -- or generally those money-market instruments in the highest rating
category. The Portfolio was not invested in any second-tier securities nor did
it invest in split-rated issues (those rated in the highest rating category by
one credit rating agency and in the second-highest rating category by another).
The Portfolio's concentration on the highest quality securities helped manage
portfolio risk.
LOOKING AHEAD
Economic indicators announced late in the semi-annual period were a little
weaker than those reported in prior months. The market is responding to a weaker
National Purchasing Manager's report and a cooler labor market,
25
<PAGE> 27
as reported in weekly jobless claims. However, we believe that the current
slowdown in U.S. economic growth is temporary and that growth may pick up again.
Since labor is still in short supply, we believe that inflation risks remain.
Thus, while softer economic numbers may allow the Federal Reserve to stay on
hold for a couple of months, we are not convinced that it has completed its
cycle of interest-rate increases. In our view, the Federal Reserve will likely
resume tightening later in the summer.
To prepare for this possibility, we intend to maintain the Portfolio's
shorter-than-benchmark average-maturity position for the near term. We also
intend to remain focused on quality, as the Portfolio seeks as high a level of
current income as is considered consistent with the preservation of capital and
liquidity.
MacKay Shields LLC
(1) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
Though an investment in a money market portfolio is generally considered to
be protected from market risk, this investment is neither insured nor
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Portfolio seeks to preserve the value of
your investment, it is possible to lose money by investing in this
Portfolio.
Total returns for the Portfolio shown indicate past performance and are not
indicative of future results. Investment return and principal value will
fluctuate so that shares, upon redemption, may be worth more or less than their
original cost. These results do not reflect any deduction of sales charges,
mortality and expense charges, contract charges, or administrative charges.
26
<PAGE> 28
MAINSTAY VP BOND PORTFOLIO
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
As the year began, the Federal Reserve Bank was in a restrictive mode. During
the first quarter, the Federal Funds target was raised 50 basis points. The
expectation of continued Fed tightening moves put pressure on the short end of
the yield curve. The long end of the curve improved significantly as investors
anticipated a reduction in outstanding long-term U.S. Treasury debt. These
counteracting forces caused the yield curve to invert during the first quarter.
In May the Fed raised short-term rates an additional 50 basis points, continuing
its restrictive policy. As the first half of the year drew to a close, market
participants began anticipating the possibility of a soft landing for the U.S.
economy. The expectation of slower economic growth altered the market's
near-term perception of Federal Reserve policy from restrictive to neutral. This
change in market sentiment caused the yield curve to shift during the second
quarter. The inversion of the yield curve became less pronounced.
PERFORMANCE/MARKET REVIEW
For the six months ended June 30, 2000, the MainStay VP Bond Portfolio had a
return of 3.09%, compared to the average portfolio in its Lipper(1) peer group
(Corporate Debt A Rated), which returned 3.23%. Market risk was limited by
maintaining a relatively neutral duration posture throughout the first half of
the year. Credit risk was limited by maintaining an average quality of the
investments in the Portfolio of at least AA(2) throughout the first half of the
year.
Expectations of a restrictive Federal Reserve Bank and reduced long-term U.S.
Treasury debt assisted in putting pressure on the shape of the yield curve in
the first half of 2000. During the first six months of the year, the Fed
tightened three times, raising the Federal Funds target to 6.50%. The
commencement of the U.S. Treasury's buy-back program along with reduced supply
in long U.S. Treasury debt caused the thirty-year U.S. Treasury bond to rally 58
basis points in the first half of 2000. At the beginning of the year the
Treasury curve was positively sloped with the thirty-year bond yielding 24 basis
points more than the two-year note. By mid-year, the two-year note yielded 46
basis points more than the thirty-year bond.
PORTFOLIO STRATEGY
During the first half of the year, the Portfolio experienced negative cash flow.
Most of the Portfolio's cash needs were met by liquidations in U.S. Treasury and
Agency securities. The Government sector afforded the Portfolio the best
execution in a volatile market environment. The net effect of our activity
reduced the Portfolio's allocation to the Government sector slightly. We also
increased the Portfolio's cash allocation marginally. This action provides
additional liquidity, as negative cash flow within the Portfolio persists.
Within the Corporate sector, we increased our concentration in higher-quality
assets. The spread relationship of certain higher-quality assets have widened a
comparable amount to weaker credits. If the spreads of these securities compress
in a similar fashion, the higher-quality assets afford the Portfolio greater
liquidity and less credit risk, along with similar total return characteristics.
The Portfolio's overall structure continues to be consistent with our long term
conservative approach to management. We will continue to monitor trends in the
market and make the appropriate Portfolio adjustments.
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<PAGE> 29
LOOKING AHEAD
If economic statistics continue their recent trend suggesting a slowdown, we
could see the Federal Reserve Bank shift from a restrictive to a neutral mode.
We view current corporate spread levels as a long-term investment opportunity.
However, with pressure on equity prices the specter of shareholder enhancement
activity looms over the corporate bond market. With this in mind, all corporate
security investment decisions will consider the perils of event risk.
Albert R. Corapi, Jr.
Donald F. Serek
Portfolio Managers
Madison Square Advisors LLC
(1) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
(2) Debt rated AA by Standard & Poor's differs from the highest rated issues
only in small degree.
Included is the reinvestment of all distributions at net asset value and the
change in share price for the stated period. Total returns for the Portfolio
shown indicate past performance and are not indicative of future results.
Investment return and principal value will fluctuate so that shares, upon
redemption, may be worth more or less than their original cost. These results do
not reflect any deduction of sales charges, mortality and expense charges,
contract charges, or administrative charges.
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<PAGE> 30
MAINSTAY VP GROWTH EQUITY PORTFOLIO
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
The U.S. equity market struggled during the first six months of 2000, with the
S&P 500(R)(1) turning in a virtually flat return of -0.42%.
Among the most significant factors influencing the U.S. equity market during
this semi-annual period were the Federal Reserve Board's moves to slow the
economy through incremental increases in the targeted federal funds rate. The
Fed's aggressive tightening posture dampened equity returns, despite robust
growth in gross domestic product and corporate profits. As the first half of
2000 came to an end, it became apparent that the rising cost of capital brought
about by six Fed tightenings in twelve months had begun to impact certain
segments of the economy. On the positive side, Federal Reserve action has
lowered prices among many speculative stocks that had reached excessive
valuations.
PERFORMANCE REVIEW
For the six months ended June 30, 2000, the MainStay VP Growth Equity Portfolio
returned 2.28%. This outperformed the S&P 500(R) return of -0.42% but
underperformed the average Lipper(2) Variable Products Growth Portfolio return
of 3.29%.
The Portfolio's performance benefited from a neutral weighting in most sectors
throughout much of the first half of 2000. While the uncertainty surrounding
rising interest rates made it difficult to emphasize any particular sector, this
environment enabled us to participate in two of the best performing sectors for
the semi-annual period, health care and utilities. More importantly, our stock
selection within the technology and financial service sectors enhanced the
Portfolio's overall performance.
STRATEGIC STYLE ALLOCATION AND STOCK SELECTION
The Portfolio entered 2000 with a bias toward stocks with strong revenue growth.
When the valuations of some of the Portfolio's growth-oriented holdings exceeded
our expectations early in the first quarter, however, we lowered exposure to
these stocks. Given the Federal Reserve's resolve to slow the economy, we
slightly shifted our focus toward companies with historically consistent
earnings growth in periods of decelerating corporate earnings and that were
still trading well below the valuation of the overall market. For example, we
maintained a market weighting in the technology sector through the first half of
the year, believing that technology should continue to produce superior relative
earnings gains. However, we shifted our emphasis within the sector toward less
cyclical companies. We also maintained some exposure to value stocks, but again,
lowered the Portfolio's exposure to cyclical stocks during the semi-annual
period.
During the first six months of 2000, one of the Portfolio's best-performing
holdings was Advanced Micro Devices (+166%), a semiconductor manufacturer that
benefited from wide acceptance of its new products. Another strong performer for
the Portfolio was ADC Telecommunications (+131%), a communications-equipment
provider that has benefited from demand for broadband connectivity. Coastal
(+72%), a natural-gas utility in the process of merging with El Paso Energy
Corp., capitalized on the upward move in natural gas prices. Finally, two of the
Portfolio's pharmaceutical holdings, Eli Lilly (+51%) and Pfizer, Inc. (+48%),
performed well primarily due to strong new product pipelines.
The most important purchase we made for the Portfolio during the first half of
the year was Corning (+105%), a fiber-optics manufacturer that has benefited
from explosive growth in the fiber-optics industry. Another strong performer and
new purchase was Convergys Corp. (+51%). Convergys, a billing and customer
service provider for the telecommunications industry, has benefited from the
worldwide growth in wireless communications and its own high-quality customer
support.
Two of the worst performing stocks in the Portfolio were Microsoft (-31%) and
QUALCOMM (-65%), both in the technology sector. Microsoft, the world's largest
software company, suffered from the much-publicized court ruling to split the
company into two separate entities. We sold our Microsoft position in May for a
tax loss, but repurchased it in June when we believed its valuation made the
stock attractive again. QUALCOMM, a digital communications products company and
a top-performing stock in 1999, suffered from difficult year-over-year earnings
comparisons. Another poor performer for the Portfolio was Cendant (-47%), a
franchisor and direct marketing company. Interestingly, Cendant actually
exceeded earnings expectations in the first half of 2000, making it difficult to
assess why the stock has declined. We continue to hold both QUALCOMM and Cendant
in the Portfolio, as we believe both are attractively valued and have strong
upside potential.
Early in the year, we sold the Portfolio's holdings in Yahoo! and America
Online, two of the largest Internet companies. Both stocks subsequently
underperformed. While these two companies continue to have profitable
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<PAGE> 31
businesses, we believed their valuations were excessive and symptomatic of
speculative trading among Internet stocks.
LOOKING AHEAD
We maintain a positive outlook for the second half of 2000, as we believe that
the Federal Reserve's interest-rate tightening cycle may be nearly complete.
Even though the Fed's recent actions should result in slower economic growth, a
more benign interest-rate environment would, in our view, be favorable for U.S.
equities. We also believe that companies that are able to demonstrate strong
earnings growth independent of general economic conditions should outperform.
The fact that the U.S. equity market has historically performed well during
presidential election years is another reason for optimism.
We will remain attentive to valuations as we search for attractive growth stocks
trading at discounts to their true potential. No matter where the markets may
move, the Portfolio will continue to seek long-term growth of capital, with
income as a secondary consideration.
James Agostisi
Patricia S. Rossi
Portfolio Managers
Madison Square Advisors LLC
(1) "Standard and Poor's 500 Composite Stock Price Index(R)" and "S&P 500(R)"
are registered trademarks of The McGraw-Hill Companies, Inc. The product is
not sponsored, endorsed, sold or promoted by Standard & Poor's Corporation.
The S&P 500 is an unmanaged index considered generally representative of the
U.S. stock market. Results assume the reinvestment of all income and capital
gains distributions.
(2) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
Included is the reinvestment of all distributions at net asset value and the
change in share price for the stated period. Total returns for the Portfolio
shown indicate past performance and are not indicative of future results.
Investment return and principal value will fluctuate so that shares, upon
redemption, may be worth more or less than their original cost. These results do
not reflect any deduction of sales charges, mortality and expense charges,
contract charges, or administrative charges.
30
<PAGE> 32
GLOSSARY
AGENCY SECURITIES: Bonds issued by government-sponsored agencies and federally
related institutions.
ALLOCATION: An investment technique that diversifies a portfolio among
different types of assets such as stocks, bonds, cash equivalents, precious
metals, real estate and collectibles.
ANTITRUST LAW: Any law that encourages competition by limiting unfair business
practices and curbing monopolies' power.
ASSET BACKED SECURITIES: Securities backed by loan paper, receivables, or an
anticipated income stream from the sale of merchandise or services. The
securities are generally originated by banks, credit card companies, or other
providers of credit and often "enhanced" by a bank letter of credit or by
insurance from an institution other than the issuer.
BASIS POINTS: One hundredth of one percent in the yield of an investment, i.e.,
100 basis points equals 1%.
BLUE CHIP: Stocks of companies known for their long-established record of
earning profits and paying dividends. Blue chips tend to be large, stable and
well known.
CAPITAL INTENSIVE: Requiring large investments in capital assets to provide an
acceptable return on investment.
COLLATERALIZED SECURITIES: Securities that require some kind of collateral,
i.e., cash or assets.
COMMON STOCKS: Equity securities representing shares of ownership in a company
and usually carrying voting rights and earning dividends. Dividends on common
stock are not fixed but are declared at the discretion of the issuer's board of
directors.
CONVERTIBLE SECURITIES: Preferred stocks or bonds that pay a fixed dividend or
interest payment and are convertible into common stock at a specified price or
conversion ratio.
CORRECTION: A downward movement in the price of an individual stock, bond,
commodity, index or the stock market as a whole.
COUPON RATE: The stated interest rate on a bond when first issued. A $1,000
bond with a coupon of 6% will pay $60 a year until its maturity. However, the
actual dividend yield from a bond on the secondary market can vary greatly from
the coupon rate because the bond can sell above or below its face value.
CYCLICALS: A security or stock that tends to rise quickly with economic upturns
and fall quickly when the economy slows. Examples are housing, steel,
automobiles, and paper. Noncyclical industries, such as food, insurance, and
pharmaceuticals, are likely to have more consistent performance regardless of
economic changes.
DEFENSIVE: Stocks with investment returns that do not tend to decline as much
as the market in general in times when stock prices are falling. These include
companies with earnings that tend to grow despite the business cycle, such as
food and drug firms, or companies that pay relatively high dividends like
utilities.
DISCIPLINED: An investment strategy that follows specific guidelines,
procedures and rules in making decisions.
EURO: The Euro became the official unit of currency of the European Union on
January 1, 1999. It is currently used in 11 of the member states and has a fixed
conversion rate against their national currencies. It is currently used only for
"paper transactions" and will not be in circulation until 2002.
FEDERAL FUNDS RATE: The interest rate that banks charge each other for the use
of federal funds. This rate is used for overnight loans to banks that need more
cash to meet bank reserve requirements. It changes daily and is the most
sensitive indicator of general interest rate trends. The rate is not set
directly by the Federal Reserve, but fluctuates in response to changes in supply
and demand for funds.
FEDERAL RESERVE BOARD (THE FED): The seven member governing board of the
Federal Reserve System, which is the central bank of the United States. The
Board sets policies on reserve requirements, bank regulations, sets the discount
rate, tightens or loosens the availability of credit in the economy and
regulates the purchase of securities on margin.
FEDERAL RESERVE BANK: The central bank of the U.S. that sets monetary value.
The Federal Reserve oversees money supply, interest rates and credit with the
goal of keeping the U.S. economy and currency stable. Governed by a seven-member
board, the system includes 12 regional Federal Reserve Banks, 25 branches and
all national and state banks that are part of the system. Also called the Fed.
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FIXED-RATE INVESTMENTS: A security that pays a fixed rate of return. This
usually refers to government, corporate or municipal bonds, which pay a fixed
rate of interest until the bonds mature, and to preferred stock, paying a fixed
dividend.
FLOATING RATE SECURITY: Debt instrument with a variable interest rate. They
provide protection against rising interest rates, but pay lower yields than
fixed rate notes of the same maturity. Also known as a floater.
FUNDAMENTAL ANALYSIS: Fundamental analysis asserts that a stock's price is
determined by the future course of its earnings and dividends. The fundamental
analyst tries to determine what the intrinsic value of a stock's underlying
business is by looking at its financial statements and its competitive position
within its industry. Also called "bottom-up" investing.
HIGH-COUPON: A bond that pays a high interest rate.
IPO: Initial Public Offering. The first time a company issues stock to the
public, also known as "going public". They are frequently offered by young,
growing companies who need to seek outside equity capital in the public market.
IPOs can offer the possibility of large gains, coupled with very high risk.
LARGE-CAP: A share of a large publicly traded corporation, typically with a
total market capitalization of greater than $5 billion. (Also called large-cap
stocks, large caps and blue chips.) Because of their size, large caps tend to
grow more slowly than small-cap stocks, but they also tend to be much more
stable.
LIQUIDITY: Securities are said to be liquid when they can be easily bought or
sold in large volume without substantially affecting their price. Some
securities, such as private placements or stocks that have few shares
outstanding are considered illiquid either because there are few market
participants interested in buying or selling the securities or because purchases
and sales may cause wide price swings.
LOCAL CURRENCY TERMS: Returns expressed in local currency terms show what
investors using that currency would have earned, without any adjustment for
differences in currency values. Returns expressed in U.S. dollar terms reflect
any differences in the relative value of the local currency and the U.S. dollar.
LONG-TERM: Treasury bonds with maturities of more than 10 years; corporate
bonds with maturities more than 15 years. Long-term bonds pay higher yields but
have greater inflation and credit risk.
MARKET CAPITALIZATION: The total market value of a company or stock. Market
capitalization is calculated by multiplying the number of outstanding shares by
their current market price. Investors generally divide the U.S. market into
three basic market caps: large-cap, mid-cap and small-cap.
MONEY MARKET: A type of mutual fund that invests in stable, short-term
securities. Money-market funds are easily convertible into cash and usually
maintain an unchanged value of $1 a share, but they are not insured by the
federal government.
MORTGAGE-BACKED SECURITIES: Securities representing interests in "pools" of
mortgages in which principal and interest payments by the holders of underlying
fixed-or adjustable-rate mortgages are, in effect, "passed through" to investors
(net of fees paid to the issuer or guarantor of the securities).
NEW ECONOMY: The recent growth in the economy which is sustained by technology
and the internet.
OVERWEIGHT/UNDERWEIGHT: The proportion of a portfolio allocated to a specific
security, market sector or country, i.e., a portfolio is said to be overweighed
in a sector or country when that portion of the portfolio is greater than the
sector's general relationship to the market as a whole or the country's total
equities relative to the international equity markets as a whole.
P/E RATIO: Price-to-earnings ratio. The price of a stock divided by its
earnings per share.
POSITION: An investor's stake in a particular security or market.
TIGHTEN/LOOSEN/EASE: When the Federal Reserve Board moves to raise interest
rates, it is said to be "tightening" or making borrowing more expensive. When it
moves to lower rates, it is said to be "loosening", "easing" or making borrowing
more affordable.
TOTAL RETURN: The performance of an investment with all income and capital
gains reinvested.
U.S. TREASURY DEBT: Debt incurred by the U.S. Treasury by way of selling U.S.
Treasury bonds to the public.
VALUE-ORIENTED, VALUE INVESTING, VALUE APPROACH: A style of investing which
looks for companies that have been overlooked or undervalued by the market, but
with underlying sound fundamentals. Value investors
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typically buy stocks with high dividend yields, or ones that trade at a low
price-to-earnings ratio (P/E) or low price-to-book ratio (P/B).
VOLATILITY: Fluctuations in the price of securities or markets, up or down,
over a short period of time.
YANKEE BONDS: Dollar-denominated bonds sold in the U.S. by foreign companies or
government entities.
YIELD: The income per share (or current value of a security) paid to investors
over a specified period of time. It is expressed as a percentage of the cost of
the security, generally obtained by dividing the current market price for a
stock or bond into the annual dividend or interest payment. As the price of a
stock or bond declines, its yield rises. Mutual fund yields are expressed as a
percentage of the fund's current price per share.
YIELD CURVE: This is a graph showing the yields for bonds of different
maturities. When interest rates available from various short-, intermediate-,
and long-term securities are plotted on a graph, the resulting line is known as
a yield curve.
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CASH MANAGEMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS (100.2%)+
PRINCIPAL AMORTIZED
AMOUNT COST
----------------------
<S> <C> <C>
ASSET-BACKED SECURITIES (2.6%)
Chevy Chase Auto Receivables Trust
Series 2000-1 Class A1
6.87%, due 7/12/01 (c)........... $3,000,000 $ 3,000,000
CNH Equipment Trust
Series 2000-A Class A1
6.18%, due 4/9/01 (c)............ 2,206,498 2,206,498
Ford Credit Auto Owner Trust
Series 2000-C Class A1
6.62%, due 10/15/00 (c).......... 3,000,000 3,000,000
------------
8,206,498
------------
BANK NOTES (3.6%)
Bank of North America
6.90%, due 12/6/00 (b)(c)........ 4,000,000 4,002,463
First Union National Bank
6.70%, due 5/4/01 (b)(c)......... 4,000,000 4,002,564
6.96%, due 11/13/00 (b)(c)....... 3,000,000 3,002,450
------------
11,007,477
------------
CERTIFICATES OF DEPOSIT (7.1%)
Bayerische Landesbank New York
6.58%, due 12/15/00 (b)(c)....... 3,000,000 2,999,530
British Telecommunications PLC
6.62%, due 2/27/01 (b)(c)........ 4,000,000 4,000,000
Commerzbank AG New York
6.60%, due 4/26/01 (b)(c)........ 4,000,000 3,999,043
Lloyds Banks PLC New York
5.65%, due 7/17/00 (c)........... 3,000,000 2,999,956
UBS AG Stamford Connecticut
6.24%, due 12/6/00 (c)........... 5,000,000 4,999,570
Westdeutsche Landesbank New York
6.57%, due 3/23/01 (b)(c)........ 3,000,000 2,998,919
------------
21,997,018
------------
COMMERCIAL PAPER (73.9%)
Alliance & Leicester PLC
6.58%, due 8/22/00 (a)........... 3,000,000 2,972,583
Allianz of America Finance Corp.
6.55%, due 8/8/00 (a)............ 4,000,000 3,973,800
6.57%, due 7/6/00 (a)............ 3,000,000 2,998,358
6.60%, due 8/22/00 (a)........... 2,000,000 1,981,667
6.62%, due 9/11/00 (a)........... 3,000,000 2,961,383
American Express Credit Corp.
6.53%, due 7/20/00............... 3,000,000 2,990,749
6.54%, due 8/9/00................ 3,000,000 2,979,835
6.56%, due 7/24/00............... 3,000,000 2,988,520
American General Finance Corp.
6.55%, due 7/28/00............... 3,000,000 2,986,354
6.58%, due 7/13/00............... 3,000,000 2,994,517
Associates Corp. of North America
6.53%, due 7/19/00............... 2,000,000 1,994,196
Associates First Capital Corp.
6.52%, due 7/5/00................ 3,000,000 2,998,913
6.55%, due 7/10/00 - 7/17/00..... 6,000,000 5,988,537
Atlantis One Funding Corp.
6.56%, due 8/3/00................ 3,000,000 2,983,053
6.58%, due 8/18/00............... 3,000,000 2,974,777
AT&T Corp.
6.52%, due 8/21/00............... 3,000,000 2,973,377
BCI Funding Corp.
6.53%, due 7/7/00................ 3,200,000 3,197,678
6.58%, due 9/5/00................ 3,000,000 2,964,907
Bell Atlantic Financial Services
6.55%, due 7/19/00............... 3,000,000 2,991,267
6.56%, due 7/24/00............... 4,000,000 3,984,693
BellSouth Telecommunications Inc.
6.50%, due 7/10/00............... 5,000,000 4,993,681
6.52%, due 8/2/00................ 3,000,000 2,983,700
British Telecommunications PLC
6.10%, due 9/6/00................ 3,000,000 2,966,958
Cregem North America Inc.
6.53%, due 8/14/00............... 3,000,000 2,977,145
6.54%, due 7/3/00................ 3,000,000 3,000,000
6.58%, due 9/11/00............... 2,900,000 2,862,896
Deutsche Bank New York
6.54%, due 8/17/00 - 8/25/00..... 7,000,000 6,938,415
Dresdner Finance Inc.
6.56%, due 7/25/00............... 4,000,000 3,983,964
Edison International
6.60%, due 7/5/00 (a)............ 3,000,000 2,998,900
Ford Motor Credit Co.
6.54%, due 7/11/00 - 8/18/00..... 5,600,000 5,573,913
6.55%, due 7/7/00................ 3,000,000 2,997,817
Formosa Plastics Corp. USA
6.22%, due 8/14/00............... 3,000,000 2,978,230
Franklin Resources Inc.
6.62%, due 9/6/00 (a)............ 3,000,000 2,964,142
General Electric Capital Corp.
6.22%, due 1/2/01 (b)(c)......... 2,000,000 1,999,501
6.54%, due 8/11/00............... 4,000,000 3,971,660
6.60%, due 9/8/00................ 2,000,000 1,975,433
Goldman Sachs Group L.P. (The)
6.25%, due 7/10/00............... 4,000,000 3,995,139
6.58%, due 7/6/00 - 7/27/00...... 6,000,000 5,985,195
Halifax PLC
6.54%, due 8/29/00............... 4,000,000 3,958,580
6.60%, due 9/6/00................ 3,000,000 2,964,250
Idaho Power Co.
6.52%, due 7/13/00............... 4,000,000 3,992,756
KFW International Finance Inc.
6.55%, due 7/10/00............... 3,000,000 2,996,179
Lloyds Banks PLC
6.58%, due 9/8/00................ 3,000,000 2,963,262
</TABLE>
------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
34
<PAGE> 36
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS (CONTINUED)
PRINCIPAL AMORTIZED
AMOUNT COST
----------------------
<S> <C> <C>
COMMERCIAL PAPER (Continued)
Merrill Lynch & Co. Inc.
6.57%, due 7/12/00............... $3,000,000 $ 2,995,073
6.58%, due 8/10/00............... 3,000,000 2,979,163
Morgan Stanley Dean Witter & Co.
6.58%, due 7/26/00............... 3,000,000 2,987,388
National Rural Utilities
Cooperative Finance Corp.
6.10%, due 9/12/00............... 3,000,000 2,963,908
Nationwide Building Society
6.59%, due 9/6/00................ 3,000,000 2,964,304
Petrobras International Finance
Co.
6.53%, due 7/21/00............... 3,000,000 2,990,205
Portland General Electric
6.65%, due 8/3/00................ 3,600,000 3,579,385
Prudential Funding Corp.
6.55%, due 7/18/00............... 4,000,000 3,989,083
Quebec (Province of)
6.57%, due 9/8/00................ 4,000,000 3,951,090
Rabobank Netherland N.V.
6.55%, due 7/5/00................ 3,000,000 2,998,908
Receivables Capital Corp.
6.58%, due 7/11/00 (a)........... 3,600,000 3,594,736
Rio Tinto America Inc.
6.55%, due 8/18/00 (a)........... 3,000,000 2,974,892
6.60%, due 9/14/00 (a)........... 3,500,000 3,453,158
Salomon Smith Barney Holdings Inc.
6.25%, due 7/12/00............... 4,000,000 3,993,750
6.56%, due 7/31/00-8/2/00........ 7,000,000 6,962,826
San Paolo U.S. Financial Co.
6.55%, due 8/1/00................ 3,000,000 2,984,170
6.56%, due 7/18/00............... 4,000,000 3,989,066
SBC Communications Inc.
6.53%, due 8/4/00 (a)............ 3,000,000 2,982,587
6.55%, due 7/19/00 (a)........... 4,000,000 3,988,356
UBS Finance LLC
6.44%, due 9/5/00................ 3,000,000 2,964,800
Unifunding Inc.
6.59%, due 9/18/00............... 3,000,000 2,957,715
Wells Fargo & Co.
6.60%, due 7/3/00................ 3,000,000 3,000,000
Wood Street Funding Corp.
6.60%, due 7/14/00 (a)........... 3,000,000 2,993,950
6.61%, due 7/17/00 (a)........... 3,000,000 2,992,288
------------
228,131,681
------------
CORPORATE BONDS (2.3%)
AT&T Corp.
6.24%, due 7/13/00 (a)(b)(c)..... $3,000,000 $ 2,999,967
6.68%, due 8/7/00 (a)(b)(c)...... 4,000,000 3,999,968
------------
6,999,935
------------
MEDIUM-TERM NOTES (10.7%)
Abbey National Treasury Services
6.55%, due 6/15/01 (b)(c)........ 3,000,000 2,998,046
Bank of America Corp.
6.96%, due 2/9/01 (b)(c)......... 3,000,000 3,004,137
IBM Credit Corp.
5.898%, due 8/7/00 (c)........... 3,000,000 2,999,911
Merrill Lynch & Co. Inc.
6.89%, due 5/21/01 (b)(c)........ 2,000,000 2,001,936
Morgan (J.P.) & Co. Inc.
6.38%, due 7/6/00 (b)(c)......... 3,000,000 2,999,979
Morgan Stanley Dean Witter & Co.
6.23%, due 3/13/01 (b)(c)........ 3,000,000 3,001,454
6.36%, due 4/16/01 (b)(c)........ 3,000,000 3,002,823
National Rural Utilities
Cooperative Finance Corp.
6.29%, due 7/14/00 (b)(c)........ 4,000,000 3,999,942
Prudential Funding Corp.
6.85%, due 12/21/00 (b)(c)....... 4,000,000 4,000,587
Xerox Corp.
5.64%, due 7/14/00 (c)........... 2,000,000 1,999,974
Wells Fargo & Co.
6.71%, due 7/16/01 (b)(c)........ 3,000,000 2,999,364
------------
33,008,153
------------
Total Short-Term Investments
(Amortized Cost $309,350,762)
(d).............................. 100.2% 309,350,762
Liabilities in Excess of Cash and
Other Assets..................... (0.2) (761,881)
--------- ------------
Net Assets........................ 100.0% $308,588,881
========= ============
</TABLE>
------------
(a) May be sold to institutional investors only.
(b) Floating rate. Rate shown is the rate in effect at June 30, 2000.
(c) Interest bearing security.
(d) The cost stated also represents the aggregate cost for federal income tax
purposes.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
35
<PAGE> 37
CASH MANAGEMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 2000 (Unaudited)
The table below sets forth the diversification of Cash
Management Portfolio investments by industry.
INDUSTRY
DIVERSIFICATION
<TABLE>
<CAPTION>
AMORTIZED
COST PERCENT+
------------------------
<S> <C> <C>
Auto Leases................. $ 14,571,729 4.7%
Banks #..................... 86,882,311 28.1
Chemicals--Specialty........ 2,978,230 1.0
Computer Systems............ 2,999,911 1.0
Diversified Financial
Services.................. 19,892,648 6.4
Electric Power Companies.... 6,578,285 2.1
Finance..................... 26,868,360 8.7
Foreign Government.......... 3,951,090 1.3
Insurance................... 19,904,877 6.4
Investment Bank/Brokerage... 40,904,726 13.2
Metals--Miscellaneous....... 6,428,050 2.1
Office Equipment &
Supplies.................. 1,999,974 0.6
Oil--Intergrated
International............. 2,990,205 1.0
Special Purpose Finance..... 29,543,057 9.6
Telecommunication--Long
Distance.................. 6,999,935 2.3
Telecommunication
Services.................. 2,973,377 1.0
Telephone................... 28,891,241 9.4
Utilities--Electric......... 3,992,756 1.3
----------- --------
309,350,762 100.2
Liabilities in Excess of
Cash and Other Assets..... (761,881) (0.2)
------------ --------
Net Assets.................. $308,588,881 100.0%
============ ========
</TABLE>
------------
+ Percentages indicated are based on Portfolio net assets.
# The Portfolio will invest more than 25% of the market value of its total
assets in the securities of banks and bank holding companies, including
certificates of deposit, bankers' accept-ances 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.
36
<PAGE> 38
MAINSTAY VP SERIES FUND, INC.
CASH MANAGEMENT PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(amortized cost $309,350,762).......... $309,350,762
Cash..................................... 67,967
Receivables:
Fund shares sold....................... 13,198,739
Investment securities sold............. 5,900,000
Interest receivable.................... 1,071,526
------------
Total assets..................... 329,588,994
------------
LIABILITIES:
Payables:
Investment securities purchased........ 18,446,590
Fund shares redeemed................... 590,268
Adviser................................ 68,983
Administrator.......................... 55,186
Custodian.............................. 18,706
Directors.............................. 1,394
Accrued expenses......................... 136,386
Dividend payable......................... 1,682,600
------------
Total liabilities................ 21,000,113
------------
Net assets applicable to outstanding
shares................................. $308,588,881
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 700 million shares authorized... $ 3,085,901
Additional paid-in capital............... 305,501,700
Accumulated net realized gain on
investments............................ 1,280
------------
Net assets applicable to outstanding
shares................................. $308,588,881
============
Shares of capital stock outstanding...... 308,590,100
============
Net asset value per share outstanding.... $ 1.00
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................... $ 10,732,270
------------
Expenses:
Advisory............................... 435,680
Administration......................... 348,544
Shareholder communication.............. 83,145
Professional........................... 24,925
Custodian.............................. 22,336
Directors.............................. 7,591
Miscellaneous.......................... 7,102
------------
Total expenses................... 929,323
------------
Net investment income.................... 9,802,947
------------
REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments......... 1,310
------------
Net increase in net assets resulting from
operations............................. $ 9,804,257
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
37
<PAGE> 39
CASH MANAGEMENT PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 (Unaudited)
and the year ended December 31, 1999
<TABLE>
<CAPTION>
2000 1999
--------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income..................................... $ 9,802,947 $ 15,498,879
Net realized gain (loss) on investments................... 1,310 (30)
------------- -------------
Net increase in net assets resulting from operations...... 9,804,257 15,498,849
------------- -------------
Dividends and distributions to shareholders:
From net investment income................................ (9,802,947) (15,498,879)
From net realized gain on investments..................... -- (141)
------------- -------------
Total dividends and distributions to shareholders....... (9,802,947) (15,499,020)
------------- -------------
Capital share transactions:
Net proceeds from sale of shares.......................... 528,996,329 977,607,004
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. 8,121,986 16,403,044
------------- -------------
537,118,315 994,010,048
Cost of shares redeemed................................... (683,000,974) (771,091,687)
------------- -------------
Increase (decrease) in net assets derived from capital
share transactions...................................... (145,882,659) 222,918,361
------------- -------------
Net increase (decrease) in net assets....................... (145,881,349) 222,918,190
NET ASSETS:
Beginning of period......................................... 454,470,230 231,552,040
------------- -------------
End of period............................................... $ 308,588,881 $ 454,470,230
============= =============
</TABLE>
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31
2000* 1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------ ------------ ------------ ------------ ------------
Net investment income........ 0.03 0.05 0.05 0.05 0.05 0.05
------------ ------------ ------------ ------------ ------------ ------------
Less dividends and
distributions:
From net investment
income................... (0.03) (0.05) (0.05) (0.05) (0.05) (0.05)
From net realized gain on
investments.............. -- (0.00)(a) (0.00)(a) -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions.............. (0.03) (0.05) (0.05) (0.05) (0.05) (0.05)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value at end of
period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ ============ ============ ============ ============ ============
Total investment return...... 2.83%(b) 4.84% 5.18% 5.25% 4.95% 5.59%
Ratios (to average net
assets)/ Supplemental Data:
Net investment income...... 5.68%+ 4.79% 5.05% 5.13% 4.92% 5.44%
Net expenses............... 0.54%+ 0.51% 0.54% 0.54% 0.62% 0.62%
Expenses (before
reimbursement)........... 0.54%+ 0.51% 0.54% 0.54% 0.64% 0.94%
Net assets at end of period
(in 000's)................. $ 308,589 $ 454,470 $ 231,552 $ 140,782 $ 118,347 $ 87,839
</TABLE>
------------
(a) Less than one cent per share.
(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.
38
<PAGE> 40
MAINSTAY VP SERIES FUND, INC.
BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
LONG-TERM BONDS (95.9%)+
CORPORATE BONDS (53.1%)
PRINCIPAL
AMOUNT VALUE
---------------------------
<S> <C> <C>
AUTOMOBILES (1.9%)
DaimlerChrysler North America
Holding Corp.
7.20%, due 9/1/09............... $ 5,000,000 $ 4,831,250
------------
BANKS--MAJOR REGIONAL (3.8%)
Fleet National Bank
5.75%, due 1/15/09.............. 5,000,000 4,362,500
Popular Inc.
6.20%, due 4/30/01.............. 5,000,000 4,937,500
------------
9,300,000
------------
BANKS--MONEY CENTER (1.6%)
Bank of America Corp.
7.75%, due 7/15/02.............. 4,000,000 4,025,000
------------
BANKS--SAVINGS & LOANS (0.4%)
Golden West Financial Corp.
10.25%, due 12/1/00 (a)......... 1,000,000 1,012,500
------------
BEVERAGE--SOFT DRINKS (2.5%)
Pepsi Bottling Group, Inc.
7.00%, due 3/1/29............... 7,000,000 6,282,500
------------
BROADCAST/MEDIA (1.7%)
News America Inc.
7.125%, due 4/8/28.............. 5,000,000 4,206,250
------------
CABLE TV (1.8%)
CSC Holdings Inc.
7.25%, due 7/15/08.............. 5,000,000 4,637,500
------------
CHEMICALS (0.8%)
Rohm & Haas Co.
6.95%, due 7/15/04.............. 2,000,000 1,987,500
------------
ELECTRIC POWER COMPANIES (5.2%)
Cleveland Electric Illuminating
Co.
7.88%, due 11/1/17.............. 5,000,000 4,775,000
Commonwealth Edison Co.
6.95%, due 7/15/18.............. 5,000,000 4,506,250
Niagara Mohawk Power Corp.
7.125%, due 7/1/01.............. 3,780,489 3,761,586
------------
13,042,836
------------
FINANCIAL--MISCELLANEOUS (20.5%)
CIT Group Inc.
6.50%, due 6/14/02.............. 3,000,000 2,940,000
7.125%, due 10/15/04............ 2,000,000 1,942,500
Finova Capital Corp.
7.25%, due 11/8/04.............. 5,000,000 4,406,250
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------------------------
<S> <C> <C>
Ford Motor Credit Corp.
7.375%, due 10/28/09............ $ 5,000,000 $ 4,842,100
7.50%, due 3/15/05.............. 5,000,000 4,975,000
General Electric Capital Corp.
7.25%, due 5/3/04............... 8,000,000 8,010,000
General Motors Acceptance Corp.
5.625%, due 2/15/01............. 6,000,000 5,947,500
Household Finance Corp.
7.875%, due 3/1/07.............. 7,000,000 6,965,000
John Deere Capital Corp.
5.35%, due 10/23/01............. 5,000,000 4,875,000
Norwest Financial, Inc.
6.85%, due 7/15/09.............. 7,000,000 6,580,000
------------
51,483,350
------------
OIL--INTEGRATED DOMESTIC (2.5%)
Phillips Petroleum Co.
8.50%, due 5/25/05.............. 6,000,000 6,210,000
------------
RAILROADS (5.4%)
CSX Corp.
7.05%, due 5/1/02............... 7,000,000 6,921,250
Norfolk Southern Corp.
7.80%, due 5/15/27.............. 7,000,000 6,728,750
------------
13,650,000
------------
RETAIL STORES--GENERAL
MERCHANDISE (1.9%)
Wal-Mart Stores, Inc.
6.875%, due 8/10/09............. 5,000,000 4,886,950
------------
TELECOMMUNICATIONS--
LONG DISTANCE (1.1%)
Sprint Capital Corp.
6.90%, due 5/1/19............... 3,000,000 2,662,500
------------
TELEPHONE (2.0%)
Deutsche Telekom International
Finance
8.25%, due 6/15/30.............. 5,000,000 5,077,900
------------
Total Corporate Bonds
(Cost $138,377,242)............. 133,296,036
------------
U.S. GOVERNMENT &
FEDERAL AGENCIES (42.8%)
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (2.7%)
5.91%, due 8/25/03.............. 7,000,000 6,766,410
------------
</TABLE>
------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
39
<PAGE> 41
BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
U.S. GOVERNMENT &
FEDERAL AGENCIES (CONTINUED)
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (MORTGAGE
PASS-THROUGH SECURITIES) (26.8%)
5.125%, due 2/15/04............. $12,000,000 $ 11,277,840
6.00%, due 2/1/14-10/1/28. ..... 12,512,108 11,581,513
6.50%, due 11/1/09-6/1/29....... 17,073,680 16,181,075
7.00%, due 2/1/27-1/1/28........ 14,474,740 13,968,125
7.50%, due 7/1/28 .............. 4,225,006 4,162,940
8.00%, due 5/1/25-12/1/29....... 10,168,488 10,209,773
------------
67,381,266
------------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION I
(MORTGAGE PASS-THROUGH
SECURITY) (0.6%)
9.00%, due 4/15/26.............. 1,469,444 1,519,037
------------
UNITED STATES TREASURY
BONDS (5.4%)
6.125%, due 8/15/29............. 9,000,000 9,097,830
7.125%, due 2/15/23............. 4,000,000 4,437,480
------------
13,535,310
------------
UNITED STATES TREASURY
NOTES (7.3%)
6.50%, due 8/15/05-2/15/10...... 18,000,000 18,379,960
------------
Total U.S. Government &
Federal Agencies
(Cost $110,228,912)............. 107,581,983
------------
Total Long-Term Bonds
(Cost $248,606,154)............. 240,878,019
------------
SHORT-TERM
INVESTMENTS (4.7%)
COMMERCIAL PAPER (4.7%)
Associates Corp. of North America
5.07%, due on demand (b)........ $ 3,470,000 $ 3,470,000
Goldman Sachs Group L.P.
6.88%, due 7/06/00.............. 2,312,000 2,309,790
Nestle Finance Co.
6.72%, due 7/07/00.............. 6,068,000 6,061,201
------------
Total Short-Term Investments
(Cost $11,840,991).............. 11,840,991
------------
Total Investments
(Cost $260,447,145) (c)......... 100.6% 252,719,010(d)
Liabilities in Excess of
Cash and Other Assets........... (0.6) (1,459,007)
---------- ------------
Net Assets....................... 100.0% $251,260,003
========== ============
</TABLE>
------------
(a) Long-term security maturing within the subsequent twelve month period.
(b) Adjustable rate. Rate shown is the rate in effect at June 30, 2000.
(c) The cost stated also represents the aggregate cost for federal income tax
purposes.
(d) At June 30, 2000, net unrealized depreciation was $7,728,135, 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 $824,205 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $8,552,340.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
40
<PAGE> 42
MAINSTAY VP SERIES FUND, INC.
BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $260,447,145)......... $252,719,010
Cash..................................... 1,245
Receivables:
Investment securities sold............. 5,269,070
Interest............................... 4,107,461
Fund shares sold....................... 25,414
------------
Total assets..................... 262,122,200
------------
LIABILITIES:
Payables:
Investment securities purchased........ 10,414,108
Fund shares redeemed................... 270,566
Shareholder communication.............. 55,747
Advisor................................ 51,376
Administrator.......................... 41,101
Directors.............................. 663
Accrued expenses......................... 28,636
------------
Total liabilities................ 10,862,197
------------
Net assets applicable to outstanding
shares................................. $251,260,003
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 200 million shares authorized... $ 199,076
Additional paid-in capital............... 257,560,328
Accumulated undistributed net investment
income................................. 8,344,824
Accumulated net realized loss on
investments............................ (7,116,090)
Net unrealized depreciation on
investments............................ (7,728,135)
------------
Net assets applicable to outstanding
shares................................. $251,260,003
============
Shares of capital stock outstanding...... 19,907,493
============
Net asset value per share outstanding.... $ 12.62
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................... $ 9,007,943
------------
Expenses:
Advisory............................... 325,458
Administration......................... 260,366
Shareholder communication.............. 36,374
Professional........................... 23,491
Directors.............................. 4,877
Portfolio pricing...................... 4,132
Miscellaneous.......................... 8,421
------------
Total expenses................... 663,119
------------
Net investment income.................... 8,344,824
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized loss on investments......... (3,664,807)
Net change in unrealized depreciation on
investments............................ 3,121,604
------------
Net realized and unrealized loss on
investments............................ (543,203)
------------
Net increase in net assets resulting from
operations............................. $ 7,801,621
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
41
<PAGE> 43
BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 (Unaudited)
and the year ended December 31, 1999
<TABLE>
<CAPTION>
2000 1999
---------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income..................................... $ 8,344,824 $ 17,141,455
Net realized loss on investments.......................... (3,664,807) (3,386,687)
Net change in unrealized appreciation (depreciation) on
investments............................................. 3,121,604 (18,241,917)
------------ ------------
Net increase (decrease) in net assets resulting from
operations.............................................. 7,801,621 (4,487,149)
------------ ------------
Dividends and distributions to shareholders:
From net investment income................................ -- (17,287,214)
From net realized gain on investments..................... -- (25,226)
------------ ------------
Total dividends and distributions to shareholders....... -- (17,312,440)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares.......................... 5,423,028 59,285,805
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. -- 17,312,440
------------ ------------
5,423,028 76,598,245
Cost of shares redeemed................................... (49,325,768) (44,829,765)
------------ ------------
Increase (decrease) in net assets derived from capital
share transactions...................................... (43,902,740) 31,768,480
------------ ------------
Net increase (decrease) in net assets....................... (36,101,119) 9,968,891
NET ASSETS:
Beginning of period......................................... 287,361,122 277,392,231
------------ ------------
End of period............................................... $251,260,003 $287,361,122
============ ============
Accumulated undistributed net investment income at end of
period.................................................... $ 8,344,824 $ --
============ ============
</TABLE>
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31
2000* 1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period.................. $ 12.24 $ 13.23 $ 13.14 $ 12.83 $ 13.42 $ 12.09
------------ ------------ ------------ ------------ ------------ ------------
Net investment income........ 0.42 0.78 0.74 0.88 0.87 0.88
Net realized and unrealized
gain (loss) on
investments................ (0.04) (0.99) 0.46 0.35 (0.59) 1.33
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations................. 0.38 (0.21) 1.20 1.23 0.28 2.21
------------ ------------ ------------ ------------ ------------ ------------
Less dividends and
distributions:
From net investment
income................... -- (0.78) (0.74) (0.88) (0.87) (0.88)
From net realized gain on
investments.............. -- (0.00)(a) (0.37) (0.04) -- --
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions.............. -- (0.78) (1.11) (0.92) (0.87) (0.88)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value at end of
period..................... $ 12.62 $ 12.24 $ 13.23 $ 13.14 $ 12.83 $ 13.42
============ ============ ============ ============ ============ ============
Total investment return...... 3.09%(b) (1.53%) 9.12% 9.65% 2.05% 18.31%
Ratios (to average net
assets)/ Supplemental Data:
Net investment income...... 6.41%+ 5.86% 5.86% 6.42% 6.31% 6.55%
Net expenses............... 0.51%+ 0.50% 0.52% 0.50% 0.58% 0.62%
Expenses (before
reimbursement)........... 0.51%+ 0.50% 0.52% 0.50% 0.58% 0.91%
Portfolio turnover rate...... 36% 161% 206% 187% 103% 81%
Net assets at end of period
(in 000's)................. $ 251,260 $ 287,361 $ 277,392 $ 228,949 $ 226,375 $ 235,030
</TABLE>
------------
(a) Less than one cent per share.
(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.
42
<PAGE> 44
MAINSTAY VP SERIES FUND, INC.
GROWTH EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (96.8%)+
SHARES VALUE
----------------------------
<S> <C> <C>
AEROSPACE/DEFENSE (1.1%)
Boeing Co. (The)................ 360,000 $ 15,052,500
--------------
ALUMINUM (0.7%)
Alcoa Inc. ..................... 350,000 10,150,000
--------------
BANKS (2.0%)
Bank of New York Co., Inc.
(The).......................... 370,000 17,205,000
Chase Manhattan Corp. (The)..... 240,000 11,055,000
--------------
28,260,000
--------------
BEVERAGES--ALCOHOLIC (1.1%)
Anheuser-Busch Cos., Inc. ...... 195,000 14,564,062
--------------
BEVERAGES--SOFT DRINKS (0.6%)
Coca-Cola Co. (The)............. 150,000 8,615,625
--------------
BIOTECHNOLOGY (0.9%)
Genentech, Inc. (a)............. 68,000 11,696,000
--------------
BROADCAST/MEDIA (2.8%)
AMFM Inc. (a)................... 100,578 6,939,882
Comcast Corp. Special Class A
(a)............................ 292,500 11,846,250
MediaOne Group Inc. (a)......... 180,000 11,957,850
USA Networks, Inc. (a).......... 394,000 8,520,250
--------------
39,264,232
--------------
CHEMICALS (1.2%)
Eastman Chemical Co. ........... 117,500 5,610,625
Praxair, Inc. .................. 125,000 4,679,687
Rohm & Haas Co. ................ 163,600 5,644,200
--------------
15,934,512
--------------
COMMUNICATIONS--EQUIPMENT (13.5%)
ADC Telecommunications, Inc.
(a)............................ 292,500 24,533,437
Andrew Corp. (a)................ 440,000 14,767,500
Cisco Systems, Inc. (a)......... 490,000 31,145,625
Corning Inc. ................... 85,000 22,939,375
Hughes Electronics Corp. (a).... 160,000 14,040,000
JDS Uniphase Corp. (a).......... 85,000 10,189,375
Nokia Corp. ADR (b)............. 300,000 14,981,250
Nortel Networks Corp. .......... 400,000 27,300,000
QUALCOMM Inc. (a)............... 134,000 8,040,000
Tellabs, Inc. (a)............... 299,000 20,462,813
--------------
188,399,375
--------------
COMPUTER SOFTWARE & SERVICES (5.3%)
ACNielsen Corp. (a)............. 230,000 5,060,000
Comdisco, Inc. ................. 325,000 7,251,562
First Data Corp. ............... 63,000 3,126,375
Keane, Inc. (a)................. 388,000 8,390,500
Microsoft Corp. (a)............. 180,000 14,400,000
<CAPTION>
SHARES VALUE
----------------------------
<S> <C> <C>
Oracle Corp. (a)................ 179,000 15,047,188
SunGard Data Systems Inc. (a)... 425,000 13,175,000
Symantec Corp. (a).............. 150,000 8,090,625
--------------
74,541,250
--------------
COMPUTER SYSTEMS (5.1%)
Compaq Computer Corp. .......... 522,000 13,343,625
EMC Corp. (a)................... 310,000 23,850,625
International Business Machines
Corp. ......................... 125,000 13,695,312
Sun Microsystems, Inc. (a)...... 230,000 20,915,625
--------------
71,805,187
--------------
COMPUTERS--NETWORKING (0.5%)
Sycamore Networks, Inc. (a)..... 60,000 6,622,500
--------------
COSMETICS/PERSONAL CARE (1.3%)
Avon Products, Inc. ............ 400,000 17,800,000
--------------
ELECTRIC POWER COMPANIES (0.4%)
Duke Energy Corp. .............. 100,000 5,637,500
--------------
ELECTRICAL EQUIPMENT (2.4%)
General Electric Co. ........... 630,000 33,390,000
--------------
ELECTRONICS--COMPONENTS (2.1%)
SCI Systems, Inc. (a)........... 300,000 11,756,250
SPX Corp. (a)................... 150,000 18,140,625
--------------
29,896,875
--------------
ELECTRONICS--SEMICONDUCTORS (7.5%)
Advanced Micro Devices, Inc.
(a)............................ 200,000 15,450,000
Applied Materials, Inc. (a)..... 149,300 13,530,312
Intel Corp. .................... 175,000 23,395,312
National Semiconductor Corp.
(a)............................ 225,000 12,768,750
Novellus Systems, Inc. (a)...... 193,000 10,916,563
Rambus Inc. (a)................. 80,000 8,240,000
Texas Instruments Inc. ......... 292,000 20,056,750
--------------
104,357,687
--------------
ENTERTAINMENT (3.4%)
Time Warner Inc. ............... 200,000 15,200,000
Viacom Inc. Class B (a)......... 260,400 17,756,025
Walt Disney Co. (The)........... 365,000 14,166,562
--------------
47,122,587
--------------
FINANCE (3.1%)
American Express Co. ........... 270,000 14,073,750
Citigroup Inc. ................. 237,000 14,279,250
Morgan Stanley Dean Witter &
Co. ........................... 184,000 15,318,000
--------------
43,671,000
--------------
FOOD & HEALTH CARE DISTRIBUTORS (1.1%)
SYSCO Corp. .................... 360,000 15,165,000
--------------
</TABLE>
------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
43
<PAGE> 45
GROWTH EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
HEALTH CARE--DRUGS (5.1%)
Lilly (Eli) & Co. .............. 200,000 $ 19,975,000
Pfizer Inc. .................... 624,937 29,997,000
Pharmacia Corp. ................ 349,300 18,054,443
SmithKline Beecham PLC ADR (b).. 49,700 3,239,819
--------------
71,266,262
--------------
HEALTH CARE--MEDICAL PRODUCTS (2.8%)
Guidant Corp. (a)............... 225,000 11,137,500
Medtronic, Inc. ................ 315,800 15,730,787
Stryker Corp. (a)............... 184,000 8,050,000
Sybron International Corp.
(a)............................ 240,000 4,755,000
--------------
39,673,287
--------------
HEALTH CARE--MISCELLANEOUS (2.6%)
Amgen Inc. (a).................. 260,000 18,265,000
Johnson & Johnson............... 180,000 18,337,500
--------------
36,602,500
--------------
INSURANCE (4.8%)
ACE Ltd. ....................... 475,000 13,300,000
American International Group,
Inc. .......................... 180,750 21,238,125
Marsh & McLennan Cos., Inc. .... 135,000 14,099,063
Radian Group Inc. .............. 124,000 6,417,000
St. Paul Cos., Inc. (The)....... 351,000 11,977,875
--------------
67,032,063
--------------
INTERNET SOFTWARE & SERVICES (1.2%)
Alteon Websystems, Inc. (a)..... 70,000 7,004,375
Genuity Inc. (a)................ 1,063,800 9,740,472
--------------
16,744,847
--------------
INVESTMENT BANK/BROKERAGE (1.0%)
Merrill Lynch & Co., Inc. ...... 124,500 14,317,500
--------------
MANUFACTURING (1.1%)
Tyco International Ltd. ........ 325,000 15,396,875
--------------
NATURAL GAS DISTRIBUTORS & PIPELINES (2.9%)
Coastal Corp. (The)............. 280,000 17,045,000
Enron Corp. .................... 190,000 12,255,000
Williams Cos., Inc. (The)....... 275,000 11,464,063
--------------
40,764,063
--------------
OIL & GAS SERVICES (1.0%)
Schlumberger Ltd. .............. 185,000 13,805,625
--------------
OIL--INTEGRATED DOMESTIC (0.6%)
Tosco Corp. .................... 300,000 8,493,750
--------------
OIL--INTEGRATED INTERNATIONAL (2.3%)
BP Amoco PLC ADR (b)............ 61,500 3,478,594
Chevron Corp. .................. 170,000 14,418,125
Exxon Mobil Corp. .............. 184,821 14,508,448
--------------
32,405,167
--------------
REAL ESTATE INVESTMENT/MANAGEMENT (1.1%)
First Industrial Realty Trust,
Inc. .......................... 350,000 $ 10,325,000
Liberty Property Trust.......... 166,500 4,318,594
--------------
14,643,594
--------------
RETAIL (5.3%)
CVS Corp. ...................... 354,000 14,160,000
Kroger Co. (The) (a)............ 540,000 11,913,750
RadioShack Corp. ............... 37,100 1,757,613
Target Corp. ................... 200,000 11,600,000
Walgreen Co. ................... 535,000 17,220,313
Wal-Mart Stores, Inc. .......... 300,000 17,287,500
--------------
73,939,176
--------------
SPECIALIZED SERVICES (1.6%)
Cendant Corp. (a)............... 700,000 9,800,000
Convergys Corp. (a)............. 250,000 12,968,750
--------------
22,768,750
--------------
TELECOMMUNICATIONS (3.2%)
Allegiance Telecom, Inc. (a).... 150,000 9,600,000
Dobson Communications Corp.
(a)............................ 135,000 2,598,750
Sprint Corp. (FON Group)........ 333,600 17,013,600
Sprint Corp. (PCS Group) (a).... 110,000 6,545,000
Time Warner Telecom Inc. Class A
(a)............................ 22,500 1,448,438
Western Wireless Corp. Class A
(a)............................ 146,000 7,957,000
--------------
45,162,788
--------------
TELEPHONE (3.9%)
ALLTEL Corp. ................... 175,000 10,839,063
Bell Atlantic Corp. ............ 200,000 10,162,500
GTE Corp. ...................... 30,000 1,867,500
Qwest Communications
International Inc. (a) (c)..... 400,000 19,875,000
SBC Communications Inc. ........ 271,096 11,724,902
--------------
54,468,965
--------------
TEXTILES (0.2%)
WestPoint Stevens Inc. ......... 260,000 2,892,500
--------------
Total Common Stocks (cost
$927,149,038).................. 1,352,323,604
--------------
<CAPTION>
SHORT-TERM
INVESTMENTS (3.6%)
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
COMMERCIAL PAPER (3.6%)
Associates Corp. of North
America 6.20%, due on demand
(d)............................ $10,917,000 10,917,000
Budget Funding Corp. 6.90%, due
7/05/00........................ 8,956,000 8,949,127
Goldman Sachs Group Inc. 6.95%,
due 7/03/00.................... 19,820,000 19,812,346
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
44
<PAGE> 46
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
COMMERCIAL PAPER (Continued)
Nordstrom Inc. 6.65%, due
7/11/00........................ $10,010,000 $ 9,991,496
--------------
Total Short-Term Investments
(Cost $49,669,969)............. 49,669,969
--------------
Total Investments (Cost
$976,819,007) (e).............. 100.4% 1,401,993,573(f)
Liabilities in Excess of Cash
and Other Assets............... (0.4) (4,711,516)
----------- --------------
Net Assets...................... 100.0% $1,397,282,057
=========== ==============
</TABLE>
------------
(a) Non-income producing security.
(b) ADR--American Depository Receipt.
(c) Represents security out on loan. (See Note 2J)
(d) Adjustable rate. Rate shown is the rate in effect at June 30, 2000.
(e) The cost for federal income tax purposes is $976,624,050.
(f) At June 30, 2000 net unrealized appreciation was $425,369,523, 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 $463,098,329 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $37,728,806.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
45
<PAGE> 47
GROWTH EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $976,819,007)....... $1,401,993,573
Collateral held for securities loaned
at value (Note 2J)................... 19,812,346
Cash................................... 330
Receivables:
Investment securities sold........... 66,356,275
Dividends and interest............... 834,410
Fund shares sold..................... 275,364
--------------
Total assets................... 1,489,272,298
--------------
LIABILITIES:
Securities lending collateral (Note
2J).................................. 19,812,346
Payables:
Investment securities purchased...... 70,920,003
Fund shares redeemed................. 432,064
Adviser.............................. 287,284
Shareholder communication............ 274,147
Administrator........................ 229,827
Custodian............................ 1,119
Directors............................ 868
Accrued expenses....................... 32,583
--------------
Total liabilities.............. 91,990,241
--------------
Net assets applicable to outstanding
shares............................... $1,397,282,057
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 200 million shares
authorized........................... $ 491,843
Additional paid-in capital............. 906,493,600
Accumulated undistributed net
investment income.................... 3,920,254
Accumulated undistributed net realized
gain on investments.................. 61,201,794
Net unrealized appreciation on
investments.......................... 425,174,566
--------------
Net assets applicable to outstanding
shares............................... $1,397,282,057
==============
Shares of capital stock outstanding.... 49,184,335
==============
Net asset value per share
outstanding.......................... $ 28.41
==============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 2000 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)........................ $ 5,686,436
Interest............................. 1,540,770
--------------
Total income................... 7,227,206
--------------
Expenses:
Advisory............................. 1,678,426
Administration....................... 1,342,740
Shareholder communication............ 190,990
Professional......................... 45,235
Directors............................ 22,215
Miscellaneous........................ 27,346
--------------
Total expenses................. 3,306,952
--------------
Net investment income.................. 3,920,254
--------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on investments....... 61,006,837
Net change in unrealized appreciation
on investments....................... (33,615,909)
--------------
Net realized and unrealized gain on
investments.......................... 27,390,928
--------------
Net increase in net assets resulting
from operations...................... $ 31,311,182
==============
</TABLE>
------------
(a) Dividends recorded net of foreign withholding taxes
in the amount of $46,659.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
46
<PAGE> 48
MAINSTAY VP SERIES FUND, INC.
GROWTH EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000 (Unaudited)
and the year ended December 31, 1999
<TABLE>
<CAPTION>
2000 1999
-------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 3,920,254 $ 6,930,558
Net realized gain on investments.......................... 61,006,837 116,289,799
Net change in unrealized appreciation on investments...... (33,615,909) 175,477,844
-------------- --------------
Net increase in net assets resulting from operations...... 31,311,182 298,698,201
-------------- --------------
Dividends and distributions to shareholders:
From net investment income................................ -- (6,931,381)
From net realized gain on investments..................... -- (116,319,036)
-------------- --------------
Total dividends and distributions to shareholders....... -- (123,250,417)
-------------- --------------
Capital share transactions:
Net proceeds from sale of shares.......................... 136,803,698 163,123,595
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. -- 123,250,417
-------------- --------------
136,803,698 286,374,012
Cost of shares redeemed................................... (83,738,301) (145,652,758)
-------------- --------------
Increase in net assets derived from capital share
transactions............................................ 53,065,397 140,721,254
-------------- --------------
Net increase in net assets.................................. 84,376,579 316,169,038
NET ASSETS:
Beginning of period......................................... 1,312,905,478 996,736,440
-------------- --------------
End of period............................................... $1,397,282,057 $1,312,905,478
============== ==============
</TABLE>
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31
2000* 1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period.................. $ 27.78 $ 23.62 $ 20.31 $ 18.63 $ 17.22 $ 14.69
------------ ------------ ------------ ------------ ------------ ------------
Net investment income........ 0.08 0.16 0.19 0.16 0.18 0.22
Net realized and unrealized
gain on investments........ 0.55 6.89 5.21 4.74 4.06 4.06
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations................. 0.63 7.05 5.40 4.90 4.24 4.28
------------ ------------ ------------ ------------ ------------ ------------
Less dividends and
distributions:
From net investment
income................... -- (0.16) (0.19) (0.16) (0.18) (0.22)
From net realized gain
on investments........... -- (2.73) (1.90) (3.06) (2.65) (1.53)
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions.............. -- (2.89) (2.09) (3.22) (2.83) (1.75)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value at end of
period..................... $ 28.41 $ 27.78 $ 23.62 $ 20.31 $ 18.63 $ 17.22
============ ============ ============ ============ ============ ============
Total investment return...... 2.28%(a) 29.96% 26.59% 26.75% 24.50% 29.16%
Ratios (to average net
assets)/ Supplemental Data:
Net investment income...... 0.58%+ 0.63% 0.84% 0.80% 0.98% 1.29%
Net expenses............... 0.52%+ 0.49% 0.51% 0.50% 0.58% 0.62%
Expenses (before
reimbursement)........... 0.52%+ 0.49% 0.51% 0.50% 0.58% 0.91%
Portfolio turnover rate...... 37% 71% 69% 103% 104% 104%
Net assets at end of period
(in 000's)................. $ 1,397,282 $ 1,312,905 $ 996,736 $ 759,054 $ 564,685 $ 427,507
</TABLE>
------------
(a) Total return is not annualized.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
47
<PAGE> 49
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-- Organization and Business:
--------------------------------------------------------------------------------
MainStay VP Series Fund, Inc. (the "Fund") was incorporated under Maryland
law on June 3, 1983. The Fund is registered under the Investment Company
Act of 1940, as amended ("Investment Company Act"), as an open-end
diversified management investment company. Cash Management Portfolio, which
commenced operations on January 29, 1993, and Bond and Growth Equity Portfolios,
which commenced operations on January 23, 1984, (the "Portfolios"; each
separately a "Portfolio") are separate Portfolios of the Fund. Shares of the
Portfolios are currently offered only to New York Life Insurance and Annuity
Corporation ("NYLIAC"), a wholly owned subsidiary of New York Life Insurance
Company ("New York Life"). NYLIAC allocates shares of the Portfolios to, among
others, New York Life Insurance and Annuity Corporation's MFA Separate
Account-I, MFA Separate Account-II and VLI Separate Account (collectively
"Separate Accounts"). 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.
The investment objectives for each of the Portfolios of the Fund 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
preservation of principal.
Growth Equity: to seek long-term growth of capital, with income as a secondary
consideration.
--------------------------------------------------------------------------------
NOTE 2--Significant Accounting Policies:
--------------------------------------------------------------------------------
The following is a summary of significant accounting policies followed by the
Fund:
(A)
VALUATION OF FUND SHARES. The net asset value per share of each Portfolio is
calculated on each day the New York Stock Exchange (the "Exchange") is open for
trading as of the close of regular trading on the Exchange. The net asset value
per share is calculated for each Portfolio by dividing the current market value
(amortized cost, in the case of Cash Management Portfolio) of the Portfolio's
total assets, less liabilities, by the total number of outstanding shares of
that Portfolio. Each Portfolio's net asset value will fluctuate, and although
the Cash Management Portfolio seeks to preserve the value of your investment of
$1.00 per share, an investor could lose money by investing in any Portfolio. An
investment in the Cash Management Portfolio is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
(B)
SECURITIES VALUATION. Portfolio securities of Cash Management Portfolio are
valued at amortized cost, which approximates market value. The amortized cost
method involves valuing a security at its cost on the date of purchase and
thereafter assuming a constant amortization to maturity of the difference
between such cost and the value on maturity date.
Securities of each of the other Portfolios are stated at value determined (a) by
appraising common and preferred stocks which are traded on the Exchange at the
last sale price on that day or, if no sale occurs, at the mean between the
closing bid and asked prices, (b) by appraising common and preferred stocks
traded on other United States national securities exchanges or foreign
securities exchanges as nearly as possible in the manner described in (a) by
reference to their principal exchange, including the National Association of
Securities Dealers National Market System, (c) by appraising over-the-counter
securities quoted on the National Association of Securities Dealers NASDAQ
system (but not listed on the National Market System) at the bid price supplied
through such system, (d) by appraising over-the-counter securities not quoted on
the National Association of Securities Dealers NASDAQ system and securities
listed or traded on certain foreign exchanges whose operations are similar to
the U.S. over-the-counter market, at prices supplied by the pricing agent or
brokers selected
48
<PAGE> 50
MAINSTAY VP SERIES FUND, INC.
by the Adviser (see Note 3) if these prices are deemed to be representative of
market values at the regular close of business of the Exchange, (e) by
appraising debt securities at prices supplied by a pricing agent selected by the
Adviser, whose prices reflect broker/dealer supplied valuations and electronic
data processing techniques if those prices are deemed by the Adviser to be
representative of market values at the regular close of business of the
Exchange, (f) by appraising options and futures contracts at the last sale price
on the market where such options or futures contracts are principally traded,
and (g) by appraising all other securities and other assets, including debt
securities for which prices are supplied by a pricing agent but are not deemed
by the Adviser to be representative of market values, but excluding money market
instruments with a remaining maturity of sixty days or less and including
restricted securities and securities for which no market quotations are
available, at fair value in accordance with procedures approved by the
Directors. Short-term securities which mature in more than 60 days are valued at
current market quotations. Short-term securities which mature in 60 days or less
are valued at amortized cost if their term to maturity at purchase was 60 days
or less, or by amortizing the difference between market value on the 61st day
prior to maturity and value on maturity date if their original term to maturity
at purchase exceeded 60 days.
Events affecting the values of certain portfolio securities that occur between
the close of trading on the principal market for such securities (foreign
exchanges and over-the-counter markets) and the regular close of the Exchange
will not be reflected in the Portfolios' calculations of net asset values unless
the Adviser believes that the particular event would materially affect net asset
value, in which case an adjustment may be made.
(C)
SECURITY TRANSACTIONS AND INVESTMENT INCOME. The Fund records security
transactions on the trade date. Realized gains and losses on security
transactions are determined using the identified cost method and include gains
and losses from repayments of principal on mortgage related and other
asset-backed securities. Dividend income is recognized on the ex-dividend date
and interest income is accrued daily except when collection is not expected.
Discounts on securities purchased for all Portfolios are accreted on the
constant yield method over the life of the respective securities or, if
applicable, over the period to the first call date. Premiums on securities
purchased are not amortized for any Portfolio except Cash Management Portfolio
which amortizes the premium on the constant yield method over the life of the
respective securities.
(D)
SECURITIES LENDING. The Portfolios may lend their securities to broker-dealers
and financial institutions. The loans are secured by collateral (cash or
securities) at least equal at all times to the market value of the securities
loaned. The Portfolios may bear the risk of delay in recovery of, or loss of
rights in, the securities loaned should the borrower of the securities
experience financial difficulty. The Portfolios receive compensation for lending
their securities in the form of fees or they retain a portion of interest on the
investment of any cash received as collateral. The Portfolios also continue to
receive interest and dividends on the securities loaned, and any gain or loss in
the market price of the securities loaned that may occur during the term of the
loan will be for the account of the Portfolios.
At June 30, 2000, Growth Equity Portfolio had portfolio securities on loan with
a market value of $19,875,000 to broker-dealers and government securities
dealers.
Cash collateral received by Growth Equity Portfolio is invested in investment
grade commercial paper, or other securities in accordance with the Portfolio's
Securities Lending Procedures. Such investments are included as an asset, and
the obligation to return the cash collateral is recorded as a liability in the
Statement of Assets and Liabilities. While the Portfolio invests cash collateral
in investment grade securities or other "high quality" investment vehicles, the
Portfolio bears the risk that liability for the collateral may exceed the value
of the investment.
Net income earned for securities lending transactions amounted to $123,799 net
of broker fees and rebates, for the Growth Equity Portfolio, for the six months
ended June 30, 2000, which is included as interest income on the Statement of
Operations.
49
<PAGE> 51
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
GROWTH EQUITY PORTFOLIO
Investments made with cash collateral at June 30, 2000:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -----------
<S> <C> <C>
SHORT-TERM COMMERCIAL PAPER
Goldman Sachs Group Inc.
6.95%, due 7/3/00......................................... $19,820,000 $19,812,346
===========
</TABLE>
(E)
FEDERAL INCOME TAXES. Each of the Portfolios is treated as a separate entity for
federal income tax purposes. The Fund's policy is to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of the taxable income to the shareholders of
each Portfolio within the allowable time limits. Therefore, no federal income
tax provision is required.
Investment income received by a Portfolio from foreign sources may be subject to
foreign income taxes withheld at the source.
(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 Portfolios intends to declare
and pay, as a dividend, substantially all of their net investment income and net
realized gains no less frequently than once a year. Income dividends and capital
gain distributions are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax differences" are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the capital accounts based on their federal tax basis
treatment; temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for federal tax purposes are reported
as dividends in excess of net investment income or distributions in excess of
net realized capital gains.
(G)
EXPENSES. Expenses with respect to the Fund are allocated to the individual
Portfolios in proportion to the net assets of the respective Portfolios when the
expenses are incurred except when direct allocations of expenses can be made.
(H)
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 LLC ("MacKay
Shields") acts as investment adviser to Cash Management Portfolio under an
Investment Advisory Agreement. MacKay Shields is a registered investment
adviser and an indirect wholly-owned subsidiary of New York Life. As of May 1,
1999, Madison Square Advisors LLC ("Madison Square Advisors") acts as investment
adviser to Bond and Growth Equity Portfolios under an Investment
50
<PAGE> 52
MAINSTAY VP SERIES FUND, INC.
Advisory Agreement. Madison Square Advisors is a registered investment adviser
and an indirect subsidiary of New York Life. Prior to May 1, 1999, New York Life
acted as investment adviser to the Bond and Growth Equity Portfolios and was
replaced by Madison Square Advisors under a Substitution Agreement. The
substitution had no effect on investment personnel, investment strategies or
fees of the Portfolios.
NYLIAC is Administrator for the Fund.
The Fund, on behalf of each Portfolio, pays the Advisers and Administrator a
monthly fee for the services performed and the facilities furnished at an
approximate annual rate of the average daily net assets of each Portfolio as
follows:
<TABLE>
<CAPTION>
ADVISER ADMINISTRATOR
------- -------------
<S> <C> <C>
Cash Management Portfolio................................... 0.25% 0.20%
Bond Portfolio.............................................. 0.25% 0.20%
Growth Equity Portfolio..................................... 0.25% 0.20%
</TABLE>
(B)
DIRECTORS FEES. Directors, other than those affiliated with New York Life,
MacKay Shields or NYLIFE Distributors, are paid an annual fee of $35,000, and
$1,500 for each Board meeting and each Committee meeting attended plus
reimbursement for travel and out-of-pocket expenses. The Fund allocates this
expense in proportion to the net assets of the respective Portfolios.
(C)
OTHER. Fees for the cost of legal services provided to the Fund by the Office of
General Counsel of New York Life are charged to the Portfolios. For the six
months ended June 30, 2000 these fees, in the following amounts, were included
in Professional fees shown on the Statement of Operations:
<TABLE>
<S> <C>
Cash Management Portfolio................................... $ 3,593
Bond Portfolio.............................................. 2,500
Growth Equity Portfolio..................................... 12,658
</TABLE>
--------------------------------------------------------------------------------
NOTE 4--Federal Income Tax:
--------------------------------------------------------------------------------
At December 31, 1999, for federal income tax purposes, capital loss
carryforwards were available to the extent provided by regulations to offset
future realized gains of Bond Portfolio, in the amount of approximately
$3,451,000, through the year 2007. 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.
--------------------------------------------------------------------------------
NOTE 5--Line of Credit:
--------------------------------------------------------------------------------
Bond and Growth Equity Portfolios participate in a line of credit of
$375,000,000 with a syndicate of banks in order to secure a source of funds
for temporary purposes to meet unanticipated or excessive shareholder
redemption requests. The Portfolios pay a commitment fee, at an annual rate
of 0.075% of the average commitment amount, regardless of usage to The Bank of
New York, which acts as agent to the syndicate. Such commitment fees are
allocated amongst the Portfolios based upon net assets and other factors.
Interest on any revolving credit loan is charged based upon the Federal Funds
Advances rate. There were no borrowings on this line of credit during the six
months ended June 30, 2000.
51
<PAGE> 53
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 6--Purchases and Sales of Securities (in 000's):
--------------------------------------------------------------------------------
During the six month period ended June 30, 2000, 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.................................. $ 36,827 $ 53,738 $ -- $ --
All others.................................................. 54,903 81,418 576,910 484,895
--------------------------------------------
Total....................................................... $ 91,730 $135,156 $576,910 $484,895
============================================
</TABLE>
--------------------------------------------------------------------------------
NOTE 7--Capital Share Transactions (in 000's):
--------------------------------------------------------------------------------
Transactions in capital shares for the six month period ended June 30, 2000
and the year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
CASH MANAGEMENT BOND GROWTH EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
2000 1999 2000 1999 2000 1999
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold.......................................... 528,998 977,614 437 4,522 4,936 6,274
Shares issued in reinvestment of
dividends and distributions........................ 8,122 16,403 -- 1,412 -- 4,477
--------------------------------------------------------------
537,120 994,017 437 5,934 4,936 10,751
Shares redeemed...................................... (683,003) (771,097) (4,002) (3,431) (3,021) (5,689)
--------------------------------------------------------------
Net increase (decrease).............................. (145,883) 222,920 (3,565) 2,503 1,915 5,062
==============================================================
</TABLE>
52
<PAGE> 54
MAINSTAY VP SERIES FUND, INC.
OFFICERS AND DIRECTORS
Richard M. Kernan, Jr., Chairman,
Chief Executive Officer and Director
Anne F. Pollack, President,
Chief Administrative Officer and Director
Michael J. Drabb, Director
Jill Feinberg, Director
Daniel Herrick, Director
Robert D. Rock, Director and Vice President
Roman L. Weil, Director
John Weisser, Director
John A. Flanagan, Treasurer
Joseph McBrien, Secretary
Richard D. Levy, Controller
INVESTMENT ADVISERS
MacKay Shields LLC
Madison Square Advisors LLC
ADMINISTRATOR
New York Life Insurance and Annuity Corporation
CUSTODIANS
The Bank of New York
The Chase Manhattan Bank, N.A.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers 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.
<PAGE> 55
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