<PAGE> 1
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
MFA SEPARATE ACCOUNTS-I AND II
UNAUDITED SEMI-ANNUAL REPORT
MAINSTAY
VP SERIES FUND, INC.
June 30, 1999
This is a Report by the
MainStay VP Series
Fund,
Inc. for the general
information of Multi-
Funded Annuity policy-
owners. This Report
does
not offer for sale
or solicit orders to
purchase securities.
NEW YORK LIFE
INSURANCE
AND ANNUITY
CORPORATION
NY Life Logo
<PAGE> 2
LETTER FROM THE PRESIDENT
- --------------------------------------------------------------------------------
I am pleased to present the unaudited Semi-Annual Report for the six-month
period ended June 30, 1999. This Semi-Annual Report contains valuable financial
information including current performance data and separate account financial
statements for each of the investment divisions that are available within our
Facilitator(R) Variable Annuity contract.
ECONOMIC ENVIRONMENT MID-YEAR REVIEW
Growth remained quite robust in the first half of 1999, while inflation picked
up a bit. This, along with an easing of the Asian crisis, prompted a back-up in
bond yields by more than a full percentage point and a quarter point rise in the
Federal Reserve's target for the Federal Funds rate.
Real Gross Domestic Product (GDP) grew at an annual rate of 4.3% in the first
quarter, as surging consumer spending, housing, capital spending, and government
purchases more than made up for a further deterioration in the trade balance.
Second quarter growth slowed noticeably to a 2.3% pace. Consumer spending
moderated, but buoyed by record low unemployment and a still rising stock
market, exceeded income to create a negative savings rate.
Inflation began to pick up a bit as oil and other commodity prices rebounded
from severely depressed levels and the dollar stopped rising against the yen.
Consumer prices spiked in April, as temporary disinflationary forces reversed,
but were unchanged in May and June. The Consumer Price Index (CPI)(1) in June
was up 2.0% from a year-ago vs. just 1.6% in December.
Over the rest of the year, the economy is expected to continue slowing to a more
sustainable pace, as a temporary spurt in income from record tax refunds
subsides and a slowdown in construction spending in response to higher mortgage
rates spreads to housing-related consumer durables. The Asian crisis has
subsided, and many countries are showing signs of recovery, but economic
conditions remain quite weak in Japan, Europe, and Latin America. As a result,
the trade balance is expected to remain a net drag on the U.S. economy until
next year.
The unemployment rate, which declined from 4.7% to 4.3% last year, was unchanged
during the first half of 1999 and should begin to rise again as the economy
slows. This should help moderate any further rise in inflation. Strong
productivity growth, during the first half of 1999, should also help by reducing
the amount of slowing required.
The Federal Reserve made the smallest possible monetary policy tightening move
in June, raising its target Federal Funds rate by a quarter of a percentage
point, while leaving its discount rate unchanged. At the same time, it shifted
its bias from tightening to neutral, indicating that it believes it is just as
likely to ease as to tighten in the near future. If the economy slows as
expected in the second half of the year, the Federal Reserve may not have to do
much further tightening over the rest of the year. If so, Treasury bond yields
should end the year well below 6.0% after backing up to 6.2% in June.
The stock market continued its spectacular advance in the first half of the
year, with the Dow Jones Industrial Average(2) returning 20.5%, following an
18.1% gain in 1998. The S&P 500 Index(3) achieved a total return of 12.4% for
the same period, after showing a larger 28.6% gain in 1998. Corporate earnings
growth has rebounded from last year's miserable performance in response to
strong productivity growth in the U.S. and signs of recovering economic
conditions and currencies abroad. This appears to have nullified any negative
impact on the stock market from rising bond yields.
Over the rest of the year, the stock market dynamics should be favorable if
growth slows as expected and Federal Reserve tightening is mild. On the other
hand, historically high valuations provide a good reason for investors to be
cautious.
VARIABLE ANNUITIES IN GENERAL
For the first half of 1999, the United States variable annuity industry set
another record with $57.2 billion in variable annuity sales representing an
increase of 21% versus first half 1998 results.
Variable annuities are viewed as an effective financial vehicle to help
Americans live comfortably during their retirement years. In addition to
providing a choice of investment divisions from an array of cash, bond and
equity sectors covering markets throughout the United States and abroad,
variable annuities offer additional
1
<PAGE> 3
features and benefits including tax deferral, the opportunity to elect an option
of income payments for life, a guaranteed fixed interest account, and a
guaranteed death benefit provision.
New York Life Insurance and Annuity Corporation (NYLIAC) recorded $1.13 billion
in variable annuity premiums during the first half of 1999, representing a 12%
increase versus the first half of 1998.
YEAR 2000 READINESS
Year 2000 or Y2K refers to a problem which computer systems could encounter at
the turn of the century in misinterpreting a two digit reference to the year
(e.g., "00" could be interpreted as 1900 instead of 2000) which could cause a
computer to malfunction. NYLIAC, and its parent company New York Life Insurance
Company, have made this issue a top priority and developed a comprehensive
century change strategy. Our internal systems have been upgraded and tested and
we continue to monitor changes to existing systems as well as new additions to
maintain our preparedness. We are in communication with our primary third party
providers of goods and services and continue to monitor their Y2K readiness. To
prepare for the unexpected, and to keep our operations running smoothly, our
business contingency plans are being refined.
Thank you for making us "The Company You Keep(R)".
/s/ FREDERICK J. SIEVERT
Frederick J. Sievert
President
New York Life Insurance and Annuity Corporation
(A Delaware Corporation)
(1) The Consumer Price Index (CPI) is a commonly used measure of the rate of
inflation.
(2) The Dow Jones Industrial Average is a trademark of, and the property of, Dow
Jones and Co., Inc. The DJIA Index is a price-weighted average of 30
actively traded blue chip stocks, primarily industrials, but also including
financial, leisure, and other service-oriented firms.
(3) "Standard and Poor's 500 Composite Stock Price Index(R)" and "S&P 500(R)"
are registered trademarks of The McGraw-Hill Companies, Inc. The product is
not sponsored, endorsed, sold or promoted by Standard & Poor's Corporation.
The S&P 500 is an unmanaged index considered generally representative of the
U.S. stock market. Results assume the reinvestment of all income and capital
gains distributions.
2
<PAGE> 4
NYLIAC MFA SEPARATE ACCOUNT-I
TAX-QUALIFIED POLICIES
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999
(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............ $118,733,695 $221,535,984 $ 31,456,795 $ 47,510,633 $ 4,072,795 $ 6,331,071
LIABILITIES:
Liability to New York Life Insurance
and Annuity Corporation for
mortality and expense risk
charges............................. 399,994 1,035,766 100,208 213,253 12,975 27,911
------------ ------------ ------------ ------------ ------------ ------------
Total equity...................... $118,333,701 $220,500,218 $ 31,356,587 $ 47,297,380 $ 4,059,820 $ 6,303,160
============ ============ ============ ============ ============ ============
TOTAL EQUITY REPRESENTED BY:
Equity of Policyowners:
Variable accumulation units
outstanding: 1,671,163; 3,364,975;
961,644; 1,567,423; 192,088;
322,270, respectively............. $118,333,701 $220,500,218 $ 31,356,587 $ 47,297,380 $ 4,059,820 $ 6,303,160
============ ============ ============ ============ ============ ============
Variable accumulation unit value.... $ 70.81 $ 65.53 $ 32.61 $ 30.18 $ 21.14 $ 19.56
============ ============ ============ ============ ============ ============
Identified Cost of Investment........... $ 80,844,901 $146,483,414 $ 32,091,333 $ 47,313,783 $ 4,072,776 $ 6,331,042
============ ============ ============ ============ ============ ============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(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....................... $ -- $ -- $ 834 $ 1,269 $ 94,800 $ 145,385
Mortality and expense risk charges.... (737,034) (1,875,397) (200,757) (437,137) (26,106) (56,089)
------------ ------------ ------------ ------------ ------------ ------------
Net investment income (loss)...... (737,034) (1,875,397) (199,923) (435,868) 68,694 89,296
------------ ------------ ------------ ------------ ------------ ------------
REALIZED AND UNREALIZED
GAIN (LOSS):
Proceeds from sale of investments..... 18,434,840 19,579,675 3,414,093 4,683,033 1,387,393 1,197,274
Cost of investments sold.............. (11,681,506) (11,087,366) (3,408,737) (4,271,560) (1,387,384) (1,197,279)
------------ ------------ ------------ ------------ ------------ ------------
Net realized gain (loss)
on investments.................. 6,753,334 8,492,309 5,356 411,473 9 (5)
Realized gain distribution received... -- -- 2,753 4,188 2 3
Change in unrealized appreciation
(depreciation) on investments....... 7,663,892 17,781,192 (632,611) (1,355,939) (14) (1)
------------ ------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments.... 14,417,226 26,273,501 (624,502) (940,278) (3) (3)
------------ ------------ ------------ ------------ ------------ ------------
Decrease attributable to funds of
New York Life Insurance and Annuity
Corporation retained by Separate
Account............................. (44,427) (111,675) (84) (379) (222) (472)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in total
equity resulting from
operations...................... $ 13,635,765 $ 24,286,429 $ (824,509) $ (1,376,525) $ 68,469 $ 88,821
============ ============ ============ ============ ============ ============
</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, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
COMMON STOCK
INVESTMENT DIVISIONS
------------------------------------------------------------------
SINGLE PREMIUM FLEXIBLE PREMIUM
POLICIES POLICIES
------------------------------ ------------------------------
1999 1998 1999 1998
------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN TOTAL EQUITY:
Operations:
Net investment income (loss).................... $ (737,034) $ (566,336) $ (1,875,397) $ (1,948,673)
Net realized gain (loss) on investments......... 6,753,334 6,358,217 8,492,309 13,009,953
Realized gain distribution received............. -- 9,090,185 -- 15,881,971
Change in unrealized appreciation (depreciation)
on investments................................ 7,663,892 11,324,734 17,781,192 17,478,811
Decrease attributable to funds of New York
Life Insurance and Annuity Corporation
retained by Separate Account.................. (44,427) (70,695) (111,675) (170,653)
------------ ------------ ------------ ------------
Net increase (decrease) in total equity
resulting
from operations............................. 13,635,765 26,136,105 24,286,429 44,251,409
------------ ------------ ------------ ------------
Contributions and withdrawals:
Policyowners' premium payments.................. 440,408 867,915 2,033,052 3,915,025
Policyowners' surrenders........................ (11,569,333) (17,529,095) (17,965,813) (31,093,451)
Policyowners' annuity and death benefits........ (642,495) (328,002) (366,287) (909,451)
Net transfers from (to) Fixed Account........... (51,223) 636,061 (438,395) 887,298
Transfers between Investment Divisions.......... (5,561,623) (1,288,107) (432,472) 210,211
------------ ------------ ------------ ------------
Net contributions and withdrawals............. (17,384,266) (17,641,228) (17,169,915) (26,990,368)
------------ ------------ ------------ ------------
Increase (decrease) in total equity......... (3,748,501) 8,494,877 7,116,514 17,261,041
TOTAL EQUITY:
Beginning of period............................. 122,082,202 113,587,325 213,383,704 196,122,663
------------ ------------ ------------ ------------
End of period................................... $118,333,701 $122,082,202 $220,500,218 $213,383,704
============ ============ ============ ============
</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
--------------------------- --------------------------- --------------------------- ---------------------------
1999 1998 1999 1998 1999 1998 1999 1998
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ (199,923) $ 1,235,939 $ (435,868) $ 1,797,254 $ 68,694 $ 177,364 $ 89,296 $ 226,891
5,356 238,703 411,473 1,141,108 9 3 (5) (85)
2,753 802,262 4,188 1,353,476 2 -- 3 --
(632,611) 108,930 (1,355,939) (453,461) (14) 27 (1) 126
(84) (5,876) (379) (14,113) (222) (549) (472) (1,129)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(824,509) 2,379,958 (1,376,525) 3,824,264 68,469 176,845 88,821 225,803
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
185,985 380,797 580,503 1,248,734 19,171 22,211 186,150 256,021
(3,647,891) (6,440,695) (4,435,983) (9,697,341) (1,380,176) (1,384,586) (1,136,410) (1,679,773)
(275,432) (97,091) (74,119) (254,292) -- 1,261 (20,051) (68,684)
158,559 117,867 (52,824) 129,666 (14,479) (5,137) 8,597 1,871
4,601,157 997,456 (84,268) (565,295) 964,083 276,610 516,714 357,038
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
1,022,378 (5,041,666) (4,066,691) (9,138,528) (411,401) (1,089,641) (445,000) (1,133,527)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
197,869 (2,661,708) (5,443,216) (5,314,264) (342,932) (912,796) (356,179) (907,724)
31,158,718 33,820,426 52,740,596 58,054,860 4,402,752 5,315,548 6,659,339 7,567,063
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 31,356,587 $ 31,158,718 $ 47,297,380 $ 52,740,596 $ 4,059,820 $ 4,402,752 $ 6,303,160 $ 6,659,339
============ ============ ============ ============ ============ ============ ============ ============
</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
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999
(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............................... $142,420,127 $ 20,641,284 $ 50,244,861 $ 5,152,906 $ 6,177,963 $ 820,909
LIABILITIES:
Liability to New York Life Insurance
and Annuity Corporation for
mortality and expense risk
charges............................. 479,622 96,115 160,212 22,975 19,168 3,250
------------ ------------ ------------ ------------ ------------ ------------
Total equity...................... $141,940,505 $ 20,545,169 $ 50,084,649 $ 5,129,931 $ 6,158,795 $ 817,659
============ ============ ============ ============ ============ ============
TOTAL EQUITY REPRESENTED BY:
Equity of Policyowners:
Variable accumulation units
outstanding: 2,004,546; 313,532;
1,530,206; 169,741; 291,398;
41,806, respectively.............. $141,940,505 $ 20,545,169 $ 50,084,649 $ 5,129,931 $ 6,158,795 $ 817,659
============ ============ ============ ============ ============ ============
Variable accumulation
unit value........................ $ 70.81 $ 65.53 $ 32.73 $ 30.22 $ 21.14 $ 19.56
============ ============ ============ ============ ============ ============
Identified Cost of Investment........... $ 97,745,599 $ 14,058,144 $ 51,239,570 $ 5,197,693 $ 6,177,930 $ 820,911
============ ============ ============ ============ ============ ============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999
(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....................... $ -- $ -- $ 1,336 $ 137 $ 139,674 $ 17,683
Mortality and expense risk charges.... (884,401) (172,505) (312,274) (46,606) (38,454) (6,816)
------------ ------------ ------------ ------------ ------------ ------------
Net investment income (loss)...... (884,401) (172,505) (310,938) (46,469) 101,220 10,867
------------ ------------ ------------ ------------ ------------ ------------
REALIZED AND UNREALIZED
GAIN (LOSS):
Proceeds from sale of investments..... 24,981,929 1,291,380 3,781,764 364,572 1,123,572 240,760
Cost of investments sold.............. (16,011,973) (795,762) (3,835,613) (357,850) (1,123,559) (240,756)
------------ ------------ ------------ ------------ ------------ ------------
Net realized gain (loss) on
investments..................... 8,969,956 495,618 (53,849) 6,722 13 4
Realized gain distributions
received............................ -- -- 4,411 452 3 --
Change in unrealized appreciation
(depreciation) on investments....... 8,309,106 1,933,433 (944,898) (108,930) (19) (4)
------------ ------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments.... 17,279,062 2,429,051 (994,336) (101,756) (3) --
------------ ------------ ------------ ------------ ------------ ------------
Decrease attributable to funds of
New York Life Insurance and Annuity
Corporation retained by Separate
Account............................. (53,374) (10,203) (56) (35) (324) (57)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in total
equity resulting from
operations...................... $ 16,341,287 $ 2,246,343 $ (1,305,330) $ (148,260) $ 100,893 $ 10,810
============ ============ ============ ============ ============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
6
<PAGE> 8
NYLIAC MFA SEPARATE ACCOUNT-II
NON-QUALIFIED POLICIES
(THIS PAGE INTENTIONALLY LEFT BLANK)
7
<PAGE> 9
STATEMENT OF CHANGES IN TOTAL EQUITY
For the six months ended June 30, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
COMMON STOCK
INVESTMENT DIVISIONS
------------------------------------------------------------------
SINGLE PREMIUM FLEXIBLE PREMIUM
POLICIES POLICIES
------------------------------ ------------------------------
1999 1998 1999 1998
------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN TOTAL EQUITY:
Operations:
Net investment income (loss)........................ $ (884,401) $ (650,333) $ (172,505) $ (173,745)
Net realized gain (loss) on investments............. 8,969,956 5,393,836 495,618 1,049,228
Realized gain distribution received................. -- 11,049,518 -- 1,423,685
Change in unrealized appreciation (depreciation) on
investments....................................... 8,309,106 15,285,530 1,933,433 1,681,228
Decrease attributable to funds of New York
Life Insurance and Annuity Corporation retained by
Separate Account.................................. (53,374) (83,962) (10,203) (15,209)
------------ ------------ ------------ ------------
Net increase (decrease) in total equity resulting
from operations................................. 16,341,287 30,994,589 2,246,343 3,965,187
------------ ------------ ------------ ------------
Contributions and withdrawals:
Policyowners' premium payments...................... 17,780 13,517 121,508 219,509
Policyowners' surrenders............................ (10,986,664) (14,197,642) (849,820) (1,843,270)
Policyowners' annuity and death benefits............ (1,753,318) (1,742,537) (83,366) (239,308)
Net transfers from (to) Fixed Account............... 618,543 1,087,585 (43,455) (34,395)
Transfers between Investment Divisions.............. (11,004,177) (644,487) (10,246) (213,208)
------------ ------------ ------------ ------------
Net contributions and withdrawals................. (23,107,836) (15,483,564) (865,379) (2,110,672)
------------ ------------ ------------ ------------
Increase (decrease) in total equity............. (6,766,549) 15,511,025 1,380,964 1,854,515
TOTAL EQUITY:
Beginning of period................................... 148,707,054 133,196,029 19,164,205 17,309,690
------------ ------------ ------------ ------------
End of period......................................... $141,940,505 $148,707,054 $ 20,545,169 $ 19,164,205
============ ============ ============ ============
</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
--------------------------- --------------------------- --------------------------- ---------------------------
1999 1998 1999 1998 1999 1998 1999 1998
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (310,938) $ 1,741,673 $ (46,469) $ 188,479 $ 101,220 $ 247,868 $ 10,867 $ 24,959
(53,849) 136,214 6,722 126,842 13 17 4 3
4,411 1,134,926 452 141,013 3 -- -- --
(944,898) 394,096 (108,930) (61,254) (19) 23 (4) 1
(56) (8,365) (35) (1,451) (324) (758) (57) (121)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(1,305,330) 3,398,544 (148,260) 393,629 100,893 247,150 10,810 24,842
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(3,137) (83,812) 42,650 82,767 50,502 24,345 7,658 14,107
(3,139,639) (6,156,145) (270,272) (730,095) (700,727) (998,881) (51,529) (147,788)
(384,095) (600,364) (49,005) (132,284) (68,319) (53,573) (8,615) (120)
5,717 281,773 40,398 4,704 (14,001) 12,618 2,000 1,306
10,569,697 328,723 5,853 9,933 432,491 314,490 4,451 202,684
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
7,048,543 (6,229,825) (230,376) (764,975) (300,054) (701,001) (46,035) 70,189
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
5,743,213 (2,831,281) (378,636) (371,346) (199,161) (453,851) (35,225) 95,031
44,341,436 47,172,717 5,508,567 5,879,913 6,357,956 6,811,807 852,884 757,853
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 50,084,649 $ 44,341,436 $ 5,129,931 $ 5,508,567 $ 6,158,795 $ 6,357,956 $ 817,659 $ 852,884
============ ============ ============ ============ ============ ============ ============ ============
</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, a wholly-owned
subsidiary of New York Life Insurance Company. These accounts were established
to receive and invest net premium payments under Qualified Multi-Funded
Retirement Annuity Policies ("Separate Account-I") and Non- Qualified
Multi-Funded Retirement Annuity Policies ("Separate Account-II") issued by New
York Life Insurance and Annuity Corporation.
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., a diversified open-end management
investment company, and are clearly identified and distinguished from the other
assets and liabilities of New York Life Insurance and Annuity Corporation.
Effective December 19, 1994, sales of all such Policies were discontinued.
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 New York Life Insurance and Annuity Corporation.
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, 1999, 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>
GROWTH EQUITY CASH MANAGEMENT
PORTFOLIO BOND PORTFOLIO PORTFOLIO
---------------------- ---------------------- ----------------------
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........................... 4,455 8,312 2,424 3,661 4,073 6,331
Identified cost*........................... $80,845 $146,483 $32,091 $47,314 $ 4,073 $ 6,331
SEPARATE ACCOUNT-II (NON-QUALIFIED
POLICIES)
Number of shares........................... 5,344 774 3,872 397 6,178 821
Identified cost*........................... $97,746 $14,058 $51,240 $ 5,198 $ 6,178 $ 821
</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, 1999 were as follows:
<TABLE>
<CAPTION>
GROWTH EQUITY CASH MANAGEMENT
PORTFOLIO BOND PORTFOLIO PORTFOLIO
---------------------- ---------------------- ----------------------
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.................................. $ 267 $ 486 $ 4,243 $ 163 $ 1,044 $ 841
Proceeds from sales........................ 18,435 19,580 3,414 4,683 1,387 1,197
SEPARATE ACCOUNT-II (NON-QUALIFIED
POLICIES)
Purchases.................................. $ 932 $ 252 $10,542 $ 87 $ 924 $ 205
Proceeds from sales........................ 24,982 1,291 3,782 365 1,124 241
</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 New York
Life Insurance and Annuity Corporation. 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 New York Life Insurance and Annuity Corporation.
Accordingly, New York Life Insurance and Annuity Corporation participates in the
results of each Investment Division ratably with the Policyowners.
- --------------------------------------------------------------------------------
NOTE 4--Distribution of Net Income:
- --------------------------------------------------------------------------------
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-- Cost to Policyowners (in 000's):
- --------------------------------------------------------------------------------
At June 30, 1999, the cost to Policyowners for accumulation units outstanding,
with adjustments for net investment income (loss), market appreciation
(depreciation) and deduction for expenses is as follows:
<TABLE>
<CAPTION>
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)
Cost to Policyowners (net of withdrawals).... $(15,998) $(18,795) $ 1,252 $ 1,041 $(1,156) $ 174
Accumulated net investment income (loss)..... 1,087 (5,193) 27,731 42,000 5,246 6,182
Accumulated net realized gain (loss) on
investments and realized gain distributions
received................................... 95,724 170,357 3,175 4,398 (1) (1)
Unrealized appreciation (depreciation) on
investments................................ 37,889 75,053 (634) 197 -- --
Decrease attributable to funds of New York
Life Insurance and Annuity Corporation
retained by Separate Account............... (368) (922) (167) (339) (29) (52)
-------- -------- -------- -------- -------- --------
Net amount applicable to Policyowners........ $118,334 $220,500 $31,357 $47,297 $ 4,060 $ 6,303
======== ======== ======== ======== ======== ========
SEPARATE ACCOUNT-II (NON-QUALIFIED POLICIES)
Cost to Policyowners (net of withdrawals).... $(8,582) $ (414) $ 7,996 $ (251) $ (90) $ 56
Accumulated net investment income (loss)..... 879 (443) 39,124 4,796 6,288 772
Accumulated net realized gain (loss) on
investments and realized gain distributions
received................................... 105,385 14,900 4,237 677 (1) --
Unrealized appreciation (depreciation) on
investments................................ 44,675 6,583 (995) (45) -- --
Decrease attributable to funds of New York
Life Insurance and Annuity Corporation
retained by Separate Account............... (416) (81) (277) (47) (38) (10)
-------- -------- -------- -------- -------- --------
Net amount applicable to Policyowners........ $141,941 $20,545 $50,085 $ 5,130 $ 6,159 $ 818
======== ======== ======== ======== ======== ========
</TABLE>
12
<PAGE> 14
NYLIAC MFA SEPARATE ACCOUNTS-I AND -II
TAX-QUALIFIED AND NON-QUALIFIED POLICIES
(THIS PAGE INTENTIONALLY LEFT BLANK)
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 6--Unit Transactions (in 000's):
- --------------------------------------------------------------------------------
Transactions in accumulation units for the six months ended June 30, 1999 and
for the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
COMMON STOCK INVESTMENT DIVISIONS
-----------------------------------------------------
SINGLE PREMIUM FLEXIBLE PREMIUM
POLICIES POLICIES
----------------------- -----------------------
1999 1998 1999 1998
-----------------------------------------------------
<S> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Units issued on premium payments............................ 7 15 33 76
Units redeemed on surrenders................................ (173) (316) (291) (611)
Units redeemed on annuity and death benefits................ (10) (3) (6) (8)
Units issued (redeemed) on net transfers from (to)
Fixed Account............................................. (1) 12 (7) 17
Units issued (redeemed) on transfers between
Investment Divisions...................................... (86) (23) (7) 3
----- ----- ----- -----
Net increase (decrease)................................. (263) (315) (278) (523)
Units outstanding, beginning of period...................... 1,934 2,249 3,643 4,166
----- ----- ----- -----
Units outstanding, end of period............................ 1,671 1,934 3,365 3,643
===== ===== ===== =====
SEPARATE ACCOUNT-II (NON-QUALIFIED POLICIES)
Units issued (redeemed) on premium payments................. -- 1 2 4
Units redeemed on surrenders................................ (162) (258) (13) (38)
Units redeemed on annuity and death benefits................ (27) (30) (1) (2)
Units issued (redeemed) on net transfers from (to)
Fixed Account............................................. 9 19 (1) (1)
Units issued (redeemed) on transfers between
Investment Divisions...................................... (171) (14) -- (4)
----- ----- ----- -----
Net increase (decrease)................................. (351) (282) (13) (41)
Units outstanding, beginning of period...................... 2,356 2,638 327 368
----- ----- ----- -----
Units outstanding, end of period............................ 2,005 2,356 314 327
===== ===== ===== =====
</TABLE>
14
<PAGE> 16
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
------------------- ------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998 1999 1998
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 12 19 42 1 1 10 14
(110) (202) (145) (331) (66) (68) (59) (90)
(8) (1) (2) (3) -- -- (1) (2)
5 4 (2) 4 (1) -- -- --
138 29 (3) (19) 46 13 27 18
----- ----- ----- ----- ----- ----- ----- -----
30 (158) (133) (307) (20) (54) (23) (60)
932 1,090 1,700 2,007 212 266 345 405
----- ----- ----- ----- ----- ----- ----- -----
962 932 1,567 1,700 192 212 322 345
===== ===== ===== ===== ===== ===== ===== =====
-- (2) 1 3 2 1 -- 1
(94) (192) (8) (27) (33) (48) (2) (9)
(12) (18) (1) (2) (3) (3) -- --
-- 9 1 -- (1) 1 -- --
315 10 -- -- 20 15 -- 11
----- ----- ----- ----- ----- ----- ----- -----
209 (193) (7) (26) (15) (34) (2) 3
1,321 1,514 177 203 306 340 44 41
----- ----- ----- ----- ----- ----- ----- -----
1,530 1,321 170 177 291 306 42 44
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
15
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 7--Selected Per Unit Data+:
- --------------------------------------------------------------------------------
The following table presents selected per accumulation unit income and capital
changes (for an accumulation unit outstanding throughout each period) with
respect to each Investment Division of Separate Account-I and Separate
Account-II:
<TABLE>
<CAPTION>
SINGLE PREMIUM POLICIES
----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ------------------------------------------------------
COMMON STOCK INVESTMENT DIVISIONS 1999 1998 1997 1996 1995 1994
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Unit value, beginning of period.................... $63.13 $50.50 $40.34 $32.81 $25.72 $25.73
Net investment income (loss)....................... (0.41) (0.27) (0.24) (0.12) -- 0.03
Net realized and unrealized gains (losses) on
security transactions and realized capital gain
distributions received (includes the effect of
capital share transactions)...................... 8.09 12.90 10.40 7.65 7.09 (0.04)
------ ------ ------ ------ ------ ------
Unit value, end of period.......................... $70.81 $63.13 $50.50 $40.34 $32.81 $25.72
====== ====== ====== ====== ====== ======
SEPARATE ACCOUNT-II (NON-QUALIFIED POLICIES)
Unit value, beginning of period.................... $63.13 $50.50 $40.34 $32.81 $25.72 $25.73
Net investment income (loss)....................... (0.41) (0.26) (0.23) (0.12) -- 0.03
Net realized and unrealized gains (losses) on
security transactions and realized capital gain
distributions received (includes the effect of
capital share transactions)...................... 8.09 12.89 10.39 7.65 7.09 (0.04)
------ ------ ------ ------ ------ ------
Unit value, end of period.......................... $70.81 $63.13 $50.50 $40.34 $32.81 $25.72
====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM POLICIES
----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ------------------------------------------------------
1999 1998 1997 1996 1995 1994
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Unit value, beginning of period.................... $58.57 $47.08 $37.80 $30.90 $24.34 $24.48
Net investment loss................................ (0.54) (0.50) (0.44) (0.29) (0.14) (0.09)
Net realized and unrealized gains (losses) on
security transactions and realized capital gain
distributions received (includes the effect of
capital share transactions)...................... 7.50 11.99 9.72 7.19 6.70 (0.05)
------ ------ ------ ------ ------ ------
Unit value, end of period.......................... $65.53 $58.57 $47.08 $37.80 $30.90 $24.34
====== ====== ====== ====== ====== ======
SEPARATE ACCOUNT-II (NON-QUALIFIED POLICIES)
Unit value, beginning of period.................... $58.57 $47.08 $37.80 $30.90 $24.34 $24.48
Net investment loss................................ (0.54) (0.50) (0.43) (0.29) (0.14) (0.09)
Net realized and unrealized gains (losses) on
security transactions and realized capital gain
distributions received (includes the effect of
capital share transactions)...................... 7.50 11.99 9.71 7.19 6.70 (0.05)
------ ------ ------ ------ ------ ------
Unit value, end of period.......................... $65.53 $58.57 $47.08 $37.80 $30.90 $24.34
====== ====== ====== ====== ====== ======
</TABLE>
+ Per unit data based on average monthly units outstanding during each period.
16
<PAGE> 18
NYLIAC MFA SEPARATE ACCOUNTS-I AND -II
TAX-QUALIFIED AND NON-QUALIFIED POLICIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE PREMIUM POLICIES
----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ------------------------------------------------------
BOND INVESTMENT DIVISIONS 1999 1998 1997 1996 1995 1994
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Unit value, beginning of period.................... $33.44 $31.03 $28.66 $28.44 $24.34 $25.51
Net investment income (loss)....................... (0.21) 1.25 1.42 1.29 1.30 1.22
Net realized and unrealized gains (losses) on
security transactions and realized capital gain
distributions received (includes the effect of
capital share transactions)...................... (0.62) 1.16 0.95 (1.07) 2.80 (2.39)
------ ------ ------ ------ ------ ------
Unit value, end of period.......................... $32.61 $33.44 $31.03 $28.66 $28.44 $24.34
====== ====== ====== ====== ====== ======
SEPARATE ACCOUNT-II (NON-QUALIFIED POLICIES)
Unit value, beginning of period.................... $33.57 $31.15 $28.76 $28.54 $24.43 $25.60
Net investment income (loss)....................... (0.21) 1.23 1.42 1.30 1.31 1.19
Net realized and unrealized gains (losses) on
security transactions and realized capital gain
distributions received (includes the effect of
capital share transactions)...................... (0.63) 1.19 0.97 (1.08) 2.80 (2.36)
------ ------ ------ ------ ------ ------
Unit value, end of period.......................... $32.73 $33.57 $31.15 $28.76 $28.54 $24.43
====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM POLICIES
----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ------------------------------------------------------
1999 1998 1997 1996 1995 1994
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Unit value, beginning of period.................... $31.02 $28.93 $26.85 $26.78 $23.03 $24.26
Net investment income (loss)....................... (0.27) 0.98 1.18 1.14 1.16 1.11
Net realized and unrealized gains (losses) on
security transactions and realized capital gain
distributions received (includes the effect of
capital share transactions)...................... (0.57) 1.11 0.90 (1.07) 2.59 (2.34)
------ ------ ------ ------ ------ ------
Unit value, end of period.......................... $30.18 $31.02 $28.93 $26.85 $26.78 $23.03
====== ====== ====== ====== ====== ======
SEPARATE ACCOUNT-II (NON-QUALIFIED POLICIES)
Unit value, beginning of period.................... $31.07 $28.98 $26.89 $26.82 $23.07 $24.30
Net investment income (loss)....................... (0.27) 1.00 1.20 1.13 1.15 1.10
Net realized and unrealized gains (losses) on
security transactions and realized capital gain
distributions received (includes the effect of
capital share transactions)...................... (0.58) 1.09 0.89 (1.06) 2.60 (2.33)
------ ------ ------ ------ ------ ------
Unit value, end of period.......................... $30.22 $31.07 $28.98 $26.89 $26.82 $23.07
====== ====== ====== ====== ====== ======
</TABLE>
+ Per unit data based on average monthly units outstanding during each period.
17
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 7--Selected Per Unit Data+ (Continued):
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINGLE PREMIUM POLICIES
----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ------------------------------------------------------
MONEY MARKET INVESTMENT DIVISIONS 1999 1998 1997 1996 1995 1994
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Unit value, beginning of period.................... $20.80 $20.02 $19.26 $18.57 $17.81 $17.36
Net investment income.............................. 0.34 0.78 0.76 0.69 0.76 0.45
------ ------ ------ ------ ------ ------
Unit value, end of period.......................... $21.14 $20.80 $20.02 $19.26 $18.57 $17.81
====== ====== ====== ====== ====== ======
SEPARATE ACCOUNT-II (NON-QUALIFIED POLICIES)
Unit value, beginning of period.................... $20.80 $20.02 $19.26 $18.57 $17.81 $17.36
Net investment income.............................. 0.34 0.78 0.76 0.69 0.76 0.45
------ ------ ------ ------ ------ ------
Unit value, end of period.......................... $21.14 $20.80 $20.02 $19.26 $18.57 $17.81
====== ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
FLEXIBLE PREMIUM POLICIES
----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ------------------------------------------------------
1999 1998 1997 1996 1995 1994
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT-I (TAX-QUALIFIED POLICIES)
Unit value, beginning of period.................... $19.29 $18.66 $18.05 $17.48 $16.85 $16.51
Net investment income.............................. 0.27 0.63 0.61 0.57 0.63 0.34
------ ------ ------ ------ ------ ------
Unit value, end of period.......................... $19.56 $19.29 $18.66 $18.05 $17.48 $16.85
====== ====== ====== ====== ====== ======
SEPARATE ACCOUNT-II (NON-QUALIFIED POLICIES)
Unit value, beginning of period.................... $19.29 $18.66 $18.05 $17.48 $16.85 $16.51
Net investment income.............................. 0.27 0.63 0.61 0.57 0.63 0.34
------ ------ ------ ------ ------ ------
Unit value, end of period.......................... $19.56 $19.29 $18.66 $18.05 $17.48 $16.85
====== ====== ====== ====== ====== ======
</TABLE>
+ Per unit data based on average monthly units outstanding during each period.
18
<PAGE> 20
NYLIAC MFA SEPARATE ACCOUNTS-I AND -II
TAX-QUALIFIED AND NON-QUALIFIED POLICIES
(THIS PAGE INTENTIONALLY LEFT BLANK)
19
<PAGE> 21
- --------------------------------------------------------------------------------
To Policyowners:
The assets of NYLIAC Variable Annuity Separate Account-I, NYLIAC Variable
Annuity Separate Account-II, NYLIAC Variable Annuity Separate Account-III,
NYLIAC Variable Universal Life Separate Account-I, NYLIAC Corporate Sponsored
Variable Universal Life Separate Account-I, New York Life Insurance and Annuity
Corporation MFA Separate Account-I, New York Life Insurance and Annuity
Corporation MFA Separate Account-II and New York Life Insurance and Annuity
Corporation VLI Separate Account are invested in shares of MainStay VP Series
Fund, Inc. In addition, the assets of NYLIAC Variable Annuity Separate
Account-I, NYLIAC Variable Annuity Separate Account-II, NYLIAC Variable Annuity
Separate Account-III, NYLIAC Variable Universal Life Separate Account-I and
NYLIAC Corporate Sponsored Variable Universal Life Separate Account-I may be
invested in shares of the Alger American Fund, the Calvert Variable Series,
Inc., Fidelity Variable Insurance Products Fund, Fidelity Variable Insurance
Products Fund II, the Janus Aspen Series, MFS Variable Insurance Trust, Morgan
Stanley Dean Witter Universal Funds, Inc., T. Rowe Price Equity Series, Inc.,
and Van Eck Worldwide Insurance Trust, which are not affiliated with MainStay VP
Series Fund, Inc. or NYLIAC and any of its subsidiaries.
At the Annual Meeting of the Board of Directors of the Fund held on November 17,
1998, executive officers of the Fund were elected. On May 19, 1999, a dividend
distribution was paid to NYLIAC Variable Annuity Separate Account-I, NYLIAC
Variable Annuity Separate Account-II, NYLIAC Variable Annuity Separate
Account-III, NYLIAC Variable Universal Life Separate Account-I, NYLIAC Corporate
Sponsored Variable Universal Life Separate Account-I, New York Life Insurance
and Annuity Corporation MFA Separate Account-I, New York Life Insurance and
Annuity Corporation MFA Separate Account-II and New York Life Insurance and
Annuity Corporation VLI Separate Account as the sole shareholders of record of
MainStay VP Series Fund, Inc.
The financial information included herein as of June 30, 1999, and for the
period then ended, is taken from the records of the Fund without examination by
independent accountants who do not express an opinion thereon.
/s/ Richard M. Kernan Jr.
Chairman of the Board
and Chief Executive Officer
MAINSTAY VP SERIES FUND, INC.
20
<PAGE> 22
- --------------------------------------------------------------------------------
MAINSTAY VP SERIES FUND, INC. PORTFOLIOS
MACKAY-SHIELDS FINANCIAL CORPORATION
ADVISER'S REPORT
Market Overview
For the past several years many investors have taken advantage of stellar
returns provided by domestic large capitalization growth stocks. Through the
first quarter of 1999, it appeared that the best performing investments were
large capitalization, high multiple issues. In fact, generally, the larger and
more expensive, the better. Most dramatically, Internet-related investments
posted triple-digit returns even though many of these companies did not have
earnings. However, market sentiment forced a dramatic rotation out of these
domestic large growth stocks in the second quarter. Instead, many traditional
industrial and cyclical issues which were significantly undervalued and had
grossly underperformed over the past several years posted the best results.
Money managers investing in those parts of the markets benefited their
portfolios handsomely. The second quarter of 1999 provided confirmation that it
can be imprudent to chase hot-performing investment vehicles, whether they are
mutual funds or individual stocks.
Various market indices confirmed this market trend. The S&P 500(1) returned
7.06% in the second quarter, similar to the 7.07% return of the Lipper(2)
average growth fund. The Dow Jones Industrial Average(3) rose to the
unprecedented 10000 level during the first quarter of 1999 and the DJIA Index
advanced 12.53% during the second quarter. The Russell 2000(4) (representative
of small-capitalization stocks) rose 15.55%, during the second quarter, not far
ahead of the average small capitalization fund which returned 15.36%. According
to Lipper, the average active equity growth fund during the second quarter of
1999 returned 10.16%, with 69% of these funds beating the S&P 500. This compares
with only 25.7% of active equity growth funds, which outperformed the S&P 500
during the first quarter of 1999.
While the stock market continued its positive run, the bond market saw interest
rates rise, and hence, prices decline. (Bond prices generally move inversely
with interest rates.) According to Lipper, the benchmark 30-year U.S. Treasury
bond ended the first quarter generally yielding 5.62% but rose to 6.00% by the
end of the second quarter. Correspondingly, the price declined from $94.61 at
the end of the first quarter to $89.71 by June 30, 1999. The average U.S.
taxable bond fund declined 0.27% in the second quarter, while the average
long-term corporate and long-term U.S. Treasury bond funds fared more poorly,
declining 1.41% and 1.46%, respectively, according to Lipper.
On the international front, stock markets were mixed in the first quarter with
Europe (-5%), underperforming Japan (+12%) and Emerging Markets (+12.4%) in U.S.
dollar terms. According to Lipper, international funds, with Pacific or Emerging
Market exposure, posted the most positive results relative to all international
fund categories in the second quarter. Europe posted the weakest second quarter
result, with the average European Securities mutual fund returning 1.02%.
21
<PAGE> 23
- --------------------------------------------------------------------------------
Looking forward, we believe that the market may experience some volatility in
the months ahead. Investors may need to tread cautiously when chasing returns
and a disciplined and appropriate asset allocation plan might be the best course
to follow.
Ravi Akhoury
Chairman and Chief Executive Officer
MacKay-Shields Financial Corporation
(1) "Standard and Poor's 500 Composite Stock Price Index(R)" and "S&P 500(R)"
are registered trademarks of The McGraw-Hill Companies, Inc. The product is
not sponsored, endorsed, sold or promoted by Standard & Poor's Corporation.
The S&P 500 is an unmanaged index considered generally representative of the
U.S. stock market. Results assume the reinvestment of all income and capital
gains distributions.
(2) Lipper Analytical Services, Inc. is an independent monitor of mutual fund
performance.
(3) The Dow Jones Industrial Average is a trademark of, and the property of, Dow
Jones and Co., Inc. The DJIA Index is a price-weighted average of 30
actively traded blue chip stocks, primarily industrials, but also including
financial, leisure, and other service-oriented firms.
(4) The Russell 2000 Growth Index measures the performance of those companies in
the Russell 2000 with higher price-to-book ratios and higher forecasted
earnings growth values. The Index is unmanaged, does not reflect fees or
expenses, and is not available for direct investment.
22
<PAGE> 24
- --------------------------------------------------------------------------------
MADISON SQUARE ADVISORS, INC.
ADVISER'S REPORT
Market Overview
The first half of 1999 has been a period of rising global economic confidence.
Asian economies stabilized while U.S. corporate earnings displayed impressive
growth. U.S. economic leadership continued to be recognized globally as
illustrated by the strength of the dollar against the Euro.
The U.S. stock market reached historically high levels during the first half of
the year. Market gains were somewhat moderated by rising interest rates that
accompanied the acceleration in earnings growth and inflation fears. The
prospect of stronger economic growth and Asian recovery enabled the rebound of
cyclical industries such as energy, paper, and chemicals.
Meanwhile, continued top and bottom-line growth in technology and communications
has enabled the leading companies in this sector to enjoy expanded valuation
multiples. The stock market has also been bolstered by continued merger and
acquisition activity.
Market experience in the bond market was not as favorable. Rising interest rates
associated with accelerated economic growth and fears of potential Federal
Reserve tightening produced negative returns in most fixed income sectors. In
addition, investor appetite for credit risk remained relatively low in the face
of strong corporate new issue supply. As a result, the mortgage-backed sector
turned in the best relative performance within the investment grade fixed income
market as higher rates reduced prepayment fears.
Looking forward, we maintain a positive outlook for the stock market given the
impressive growth and, in our view, earnings quality of the leading
corporations. Our outlook for the fixed income market is stable. Caveats to this
picture would be a major upward shift in interest rates due to inflation or
pressure on the dollar. Comments from our portfolio managers follow.
Jean E. Hoysradt
President, Madison Square Advisors, Inc.
Senior Vice President
in Charge of the Investment Department,
New York Life Insurance Company
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MAINSTAY VP CASH MANAGEMENT PORTFOLIO
MARKET RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
The first half of 1999 saw a shift in the Federal Reserve Board's interest rate
policy. During the first four months of the year, the Federal Reserve maintained
a neutral bias on interest rates as inflation remained benign even as the
economy continued to grow strongly. As economic growth started accelerating in
Asia and the U.S. economy showed no signs of slowing, interest rates rose as
investors felt that the Federal Reserve would have to raise rates. In May, the
Federal Reserve shifted its stance to a bias toward raising interest rates. At
the end of June, it raised the target rate for Federal Funds to 5%, while
leaving the discount rate unchanged at 4.5%.
Since the beginning of the year, the rate on one-year U.S. Treasury bills rose
nearly half a percent to 5.06% on June 30, 1999, while the rate on twelve-month
LIBOR(1) rose three-quarters of a percent to 5.84% over the same period. These
rising rates affected the yields available on both domestic and international
money market instruments.
PORTFOLIO RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
For the six months ended June 30, 1999, the Portfolio returned 2.26%, exceeding
the 2.21% return of the average Lipper(2) Variable Products money market
portfolio over the same period.
PORTFOLIO MATURITY
During the first half of the year, the maturity of the Portfolio ranged from
fifty-five to seventy-nine days. Interest rates rose in February as investors
believed that the Federal Reserve would raise interest rates to restrain the
rate of economic growth. We believed that the Federal Reserve would remain on
hold and we lengthened the maturity of the Portfolio to seventy-nine days. As
May approached, we became defensive and let the maturity of the Portfolio drift
downward to sixty days.
In late May, interest rates rose and we viewed this as another opportunity to
extend the maturity of the Portfolio, anticipating that the Federal Reserve
would be unlikely to raise rates as much as it lowered them in 1998. The
Portfolio's performance benefited from our decisions on the maturity of the
Portfolio.
HIGH CREDIT QUALITY AND LIQUIDITY
The Portfolio continued to invest only in first-tier securities, or generally
those money market instruments in the highest rating category. The Portfolio did
not invest in any second-tier securities nor did it invest in split-rated issues
(those rated in the highest rating category by one credit rating agency and in
the second-highest rating category by another). Investments included bank
certificates of deposit (CDs), commercial paper, floating rate notes, and
asset-backed commercial paper. The Portfolio did not invest in securities
containing embedded put and call options. The concentration on the highest
quality and more liquid securities helped manage the Portfolio's risk.
SECTOR ALLOCATION
During the reporting period, the Portfolio focused its investments on securities
of banks and bank holding companies and those of finance, brokerage, and
industrial companies. To lengthen the maturity of the Portfolio, we increased
the Portfolio's allocation to CDs by purchasing one-year CDs issued by the
largest and very highly rated European banks. The steepness of the yield curve
made the yields in the one-year sector far more attractive than shorter
maturities on the curve. Securities issued by the European banks also offered a
slightly higher yield.
LOOKING FORWARD
At its June 30, 1999 meeting, the Federal Reserve raised the target rate for
Federal Funds to 5% and moved to a neutral stance regarding the future direction
of interest rates. The Portfolio is positioned accordingly. As the interest rate
outlook changes, we will make appropriate adjustments to the Portfolio.
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During the second half of 1999, the Portfolio intends to remain focused on
quality as it seeks as high a level of current income as is considered
consistent with the preservation of capital and liquidity.
Edward Munshower
Claude Athaide
Portfolio Managers
MacKay-Shields Financial Corporation
(1) LIBOR is the London Interbank Offered Rate, or the rate the most
credit-worthy international banks dealing in Eurodollars charge each other
for large loans.
(2) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
Total returns for the Portfolio shown indicate past performance and are not
indicative of future results. Investment return and principal value will
fluctuate so that shares, upon redemption, may be worth more or less than their
original cost. These results do not reflect any deduction of sales charges,
mortality and expense charges, contract charges, or administrative charges.
Though an investment in a money market portfolio is generally considered to be
protected from market risk, this investment is neither insured nor guaranteed by
the Federal Deposit Insurance Corporation or any other government agency.
Although the Portfolio seeks to preserve the value of your investment, it is
possible to lose money by investing in this Portfolio.
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MAINSTAY VP BOND PORTFOLIO
MARKET RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
- - Expectations of a restrictive Federal Reserve Bank assisted in pushing
interest rates higher in the first half of the year.
- - At the end of the second quarter, the Federal Reserve Bank increased the
Federal Funds target by 25 basis points to 5.00%, while leaving the Discount
Rate unchanged at 4.50%.
- - The Federal Reserve Bank's policy directive included a neutral bias concerning
near term policy action.
- - The U.S. bond market experienced a significant trade off in the first half of
1999. The yield on the ten-year U.S. Treasury note increased by 114 basis
points.
PORTFOLIO RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
- - For the six months ended June 30, 1999, the MainStay VP Bond Portfolio had a
return of -1.88%, outperforming the average portfolio in its Lipper(1) peer
group (Corporate Debt A Rated), which returned -2.20%.
- - Market risk was limited by maintaining a relatively neutral duration posture
throughout the first half of the year.
- - Credit risk was limited by maintaining an average quality of the investments
in the Portfolio of at least AA(2) throughout the first half of the year.
MANAGEMENT DISCUSSION AND ANALYSIS
Early in 1999, robust domestic economic statistics, along with rising oil
prices, altered investor sentiment from an accommodating/neutral Federal Reserve
Bank to a restrictive Federal Reserve Bank. At the end of the second quarter,
the Federal Reserve Bank increased the Federal Funds target by 25 basis points.
The market's anticipation of pending tightening moves by the Federal Reserve
Bank put constant pressure on the domestic bond market during the first half of
the year. In this same period, the additional income generated by corporate
bonds contributed to this sector's strong performance relative to U.S. Treasury
securities.
TO WHAT DO YOU ATTRIBUTE THE PORTFOLIO'S RELATIVE PERFORMANCE?
The Portfolio maintained a concentration in lower quality investment grade
corporate bonds. This asset allocation worked well as these securities
outperformed in their sector.
WHAT WAS YOUR PRIMARY STRATEGY DURING THE FIRST HALF OF 1999?
The Portfolio shifted assets from the U.S. Treasury sector to the
mortgage-backed sector during the first six months of 1999. We did so because of
our belief that reduced prepayments in the mortgage-backed sector associated
with rising interest rates, generally result in a strong relative performance
versus U.S. Treasuries.
WHERE DO YOU PERCEIVE RISK IN THE PORTFOLIO?
Our adjustments to the Portfolio during the first half of the year added some
call risk to the Portfolio. However, the Portfolio's overall structure continues
to be consistent with our long-term conservative approach to managing the
Portfolio. We will continue to monitor the Portfolio and make the necessary
adjustments that our interest rate forecast dictates.
WHAT IS YOUR OUTLOOK FOR THE FIXED INCOME MARKET IN THE SECOND HALF OF 1999?
The increase in U.S. interest rates may be the first step towards tighter global
monetary conditions. But, the steps are likely to be modest and gradual. We
expect U.S. growth to moderate and as such, we believe, there is a
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good chance that there will be no further Federal Reserve Bank tightening in the
near term. We also believe current bond market expectations are overly
pessimistic regarding a continued tightening bias by the Federal Reserve Bank.
In our opinion, U.S. Treasury yields may decrease by September 30, 1999.
Albert R. Corapi, Jr.
Celia M. Holtzberg
Joseph DePasquale
Portfolio Managers
Madison Square Advisors, Inc.
(1) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
(2) Debt rated AA by Standard & Poor's differs from the highest rated issues
only in small degree.
Total returns for the Portfolio shown indicate past performance and are not
indicative of future results. Investment return and principal value will
fluctuate so that shares, upon redemption, may be worth more or less than their
original cost. These results do not reflect any deduction of sales charges,
mortality and expense charges, contract charges, or administrative charges.
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MAINSTAY VP GROWTH EQUITY PORTFOLIO
MARKET RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
The most significant factor influencing the stock market during the first six
months of 1999 was the impressive improvement in U.S. corporate earnings. The
acceleration of earnings growth begun in the first quarter caused the stock
market to focus away from traditional growth stocks toward more value oriented
stocks. Albeit, market gains were somewhat moderated by rising interest rates
that accompanied stronger corporate earnings growth.
PORTFOLIO RECAP FOR THE SIX-MONTH PERIOD ENDED 6/30/99
The MainStay VP Growth Equity Portfolio returned 12.86% for the six-month period
ended 6/30/99. The Portfolio outperformed the Lipper(1) Variable Products growth
fund average, which returned 12.62%. The Portfolio benefited from its holdings
in the technology and communication services sectors, which generated impressive
results in the first half of 1999. In addition, the Portfolio's energy and basic
materials holdings rebounded sharply off depressed valuation levels.
BRIEFLY DESCRIBE ANY MAJOR PORTFOLIO MANAGEMENT DECISIONS DURING THE FIRST HALF
OF 1999.
As a blended Portfolio, our primary focus is setting an optimal asset allocation
between growth and value stocks. As we entered 1999, the MainStay VP Growth
Equity Portfolio was structured with a strong bias toward the growth segment of
the market. However, we shifted the Portfolio toward a more neutral weighting
between growth and value stocks at the end of the first quarter. This decision
was based on our expectation for improving corporate earnings in the first half
of 1999. As a result of our repositioning, the Portfolio was able to withstand
the sharp market rotation into more cyclical and value stocks that occurred in
the second quarter of 1999.
COULD YOU GIVE US SOME OF THE PORTFOLIO'S BEST PERFORMING STOCKS IN THE FIRST
HALF OF THE YEAR?
Two of our best performers, Nortel Networks and Tellabs, are in the
telecommunications equipment industry. Both companies benefited from the strong
demand for its product offerings in the telecommunications infrastructure
segment of the economy. MediaOne Group, a cable systems operator, also generated
strong returns in the first half of the year, appreciating as two suitors
attempted to acquire the company. Global Crossing, a leading independent
provider of undersea fiber optic telecommunications systems, also provided
strong results for the Portfolio, primarily due to the anticipated growth of
intercontinental communication demand over the next decade. Halliburton, one of
the world's largest oil service companies, and Texas Instruments, a leading
semiconductor manufacturer, were other impressive performers for the Portfolio.
The former rebounded off depressed valuation levels as the steady increase in
oil prices positively impacted the company's growth prospects. The latter
continued to benefit from its strong competitive position in a crowded but
fast-growing industry.
WHAT WERE SOME OF THE PORTFOLIO'S WORST PERFORMERS?
Two stocks that significantly held back performance in the first half of the
year were Service Corp. International, one of the world's largest operators of
funeral homes and Rite Aid, one of the largest drug store chains. Both companies
surprised investors with earnings disappointments that severely hurt their
stocks' prices. We sold both of these positions at a loss to the Portfolio,
believing that negative earnings surprises generally erode management
credibility and that recovery may take several years. Eli Lilly, the leading
pharmaceuticals company also underperformed to a lesser degree. Its performance
lagged with most of its industry as investors rotated out of the group and into
industries with better relative earnings growth.
CAN YOU MENTION SOME SIGNIFICANT BUYS IN THE FIRST HALF OF THE YEAR?
We added Alcoa, AlliedSignal, Smurfit-Stone Container and Eaton as we positioned
the Portfolio into some more value oriented holdings. The business of each of
these companies is cyclical in nature and, we believe, is poised to show
improving earnings growth throughout the next year. The performance of these
stocks was highly beneficial to the Portfolio's performance in the first half of
the year.
WERE THERE ANY SIGNIFICANT SELLS IN THE FIRST HALF OF THE YEAR?
We avoided one significant loss by selling our position in Network Associates, a
maker of security software products. Soon after our sale, the company began a
string of negative announcements concerning some of its accounting treatments
followed by a sizable earnings disappointment in the second quarter of the year.
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WHAT ARE THE PORTFOLIO'S CURRENT SECTOR WEIGHTINGS?
We have moved the Portfolio to a neutral weighting among all sectors with the
exception of consumer staples, financial and health care that are slightly
underweighted. Our strategy is based on our outlook for a continued improvement
in corporate earnings, which generally benefits the more cyclical or value
oriented stocks. Such an environment generally does not usually coincide with
lower interest rates that tend to benefit the sectors we are underemphasizing.
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
We expect corporate earnings to continue to meet or exceed estimates through the
remainder of 1999, and thus our strategic outlook going forward remains
positive. In our opinion, the improvement in corporate earnings may broaden what
has been an extremely narrow market performance. On the other hand, continued
earnings growth may also cause interest rates to trend upward in the near term,
although we do not expect the move to be significant.
ARE THERE ANY OTHER COMMENTS YOU WOULD LIKE TO MAKE ABOUT THE PORTFOLIO?
We believe that the benefit of investing in this Portfolio was displayed in the
month of April when the market made a sharp rotation toward value stocks. As a
blended Portfolio, it was able to benefit from this move immediately. The end
result was that we were able to maintain the above average returns versus our
peers with a lower volatility in relative performance.
James Agostisi
Patricia S. Rossi
Portfolio Managers
Madison Square Advisors, Inc
(1) The Lipper Variable Insurance Products Performance Analysis Service
(L-VIPPAS) ranks the portfolios that invest in the separate accounts of
insurance companies. Its rankings are based on total returns with capital
gains and dividends reinvested. Results do not reflect any deduction of
sales charges.
Total returns for the Portfolio shown indicate past performance and are not
indicative of future results. Investment return and principal value will
fluctuate so that shares, upon redemption, may be worth more or less than their
original cost. These results do not reflect any deduction of sales charges,
mortality and expense charges, contract charges, or administrative charges.
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GLOSSARY
ASSET ALLOCATION: The systematic and thoughtful placement of investment dollars
into various classes of investments, such as stocks, bonds, real estate,
insurance, and cash equivalents.
ASSET-BACKED SECURITIES: Securities backed by loan paper, receivables, or an
anticipated income stream from the sale of merchandise or services. The
securities are generally originated by banks, credit card companies, or other
providers of credit and often "enhanced" by a bank letter of credit or by
insurance from an institution other than the issuer.
BOTTOM-UP INVESTING: Security selection based on the specific portfolio
fundamental merits of individual issues. The opposite of "top-down" investing,
which starts with general economic trends, compares market sectors, and uses
relative security values to narrow the range of issues to examine.
BULL MARKET/BEAR MARKET: A bull market occurs when security prices are rising;
a bear market occurs when security prices decline. A bullish attitude therefore
suggests a positive outlook, while a bearish attitude represents a negative view
of the market or the opportunities it may present.
CALL OPTION: Right to buy 100 shares of a particular stock or stock index at a
predetermined price before a preset deadline, in exchange for a premium. For
buyers who think a stock will go up dramatically, call options permit a profit
from a smaller investment than it would take to buy the stock. These options can
also produce extra income for the seller, who gives up ownership of the stock if
the option is exercised.
CALL RISK: A bondholder's risk that the bond may be redeemed by the issuer
prior to maturity.
CAPITALIZATION: The amount of outstanding equity and debt a company has issued.
Companies may vary greatly in the amount of equity capital they have raised, and
their capitalization may change with new issues or stock repurchases.
COMMERCIAL PAPER: Short-term obligations with maturities ranging from 2 to 270
days issued by banks, corporations, and other borrowers to investors with
temporarily idle cash. Such instruments are unsecured and usually discounted,
although some are interest-bearing. They can be issued directly - direct issuers
do it that way - or through brokers equipped to handle the enormous clerical
volume involved. Issuers like commercial paper because the maturities are
flexible and because the rates are usually marginally lower than bank rates.
Investors - actually lenders, since commercial paper is a form of debt - like
the flexibility and safety of an instrument that is issued only by top-rated
concerns and is nearly always backed by bank lines of credit. Both Moody's and
Standard & Poor's assign ratings to commercial paper.
COMMODITIES: Bulk goods, such as grains, precious metals, industrial metals,
and foods traded on a commodities exchange.
CREDIT RISK: The risk that the issuer of a security may go into bankruptcy or
default on payments, causing the investor to lose all or part of the investment.
CYCLICALS (CYCLICAL STOCK): A security or stock that tends to rise quickly with
economic upturns and fall quickly when the economy slows. Noncyclical
industries, such as food, insurance, and pharmaceuticals, are likely to have
more consistent performance regardless of economic changes.
EARNINGS PER SHARE: The portion of a company's profit allocated to each share
of outstanding common stock.
EMERGING MARKETS: Countries with smaller or more recently established capital
markets.
FEDERAL RESERVE BOARD: The seven member governing board of the Federal Reserve
System, which is the central bank of the United States. The Board sets policies
on reserve requirements, bank regulations, sets the discount rate, tightens or
loosens the availability of credit in the economy and regulates the purchase of
securities on margin.
FIRST-TIER/SECOND-TIER: Money market instruments in the highest rating category
by two or more major rating agencies are called first-tier or top-tier
securities, while securities in the second-highest rating category by two or
more major rating agencies are referred to as second-tier securities.
FLOATING RATE NOTE: Debt instrument with a variable interest rate. Interest
adjustments are made periodically, often every six months, and are tied to a
money-market index such as Treasury bill rates. Floating rate notes usually have
a maturity of about five years. They provide holders with protection against
rises in interest rates, but pay lower yields than fixed rate notes of the same
maturity. Also known as a FLOATER.
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GROSS DOMESTIC PRODUCT (GDP): The total value of goods and services produced in
the U.S. economy over a particular period of time, usually one year. The GDP
growth rate measures strictly domestic output and is a primary indicator of the
status of the economy.
GROWTH VERSUS VALUE: Growth investments typically include stocks with rising
prices and positive earnings trends. Value investments typically include
equities that are currently trading below their fair market value, even if they
have the potential to increase in value over time.
INFLATION/DEFLATION: Inflation is an increase in the cost of goods and services
over time. As prices rise, the purchasing power of the dollar declines.
Deflation is a reduction in the cost of goods over time. When deflation occurs,
the purchasing power of the dollar increases.
LIQUIDITY: Securities are said to be liquid when they can be easily bought or
sold in large volume without substantially affecting their price. Some
securities, such as private placements or stocks that have few shares
outstanding are considered illiquid either because there are few market
participants interested in buying or selling the securities or because purchases
and sales may cause wide price swings.
MERGERS AND ACQUISITIONS: A merger is a combination of two companies. An
acquisition is the purchase of a company, division, or business unit. Companies
that engage in mergers and acquisitions often pay shareholders a premium, or an
amount over the current share price, to complete the transaction quickly and
under favorable terms.
MORTGAGE-BACKED SECURITIES: Securities representing interests in "pools" of
mortgages in which principal and interest payments by the holders of underlying
fixed- or adjustable-rate mortgages are, in effect, "passed through" to
investors (net of fees paid to the issuer or guarantor of the securities).
PREPAYMENT: When mortgage or loan holders repay their obligations before they
mature, shortening the stream of interest payments investors receive.
PUT OPTION: Contract that grants the right to sell at a specified price a
specific number of shares by a certain date. The put option buyer gains this
right in return for payment of an OPTION PREMIUM. The put option seller grants
this right in return for receiving this premium. For instance, a buyer of an XYZ
May 70 put has the right to sell 100 shares of XYZ at $70 to the put seller at
any time until the contract expires in May. A put option buyer hopes the stock
will drop in price, while the put option seller (called a writer) hopes the
stock will remain stable, rise, or drop by an amount less than his or her profit
on the premium.
SPLIT ISSUES (SPLIT-RATED ISSUES): Securities rated top tier by one credit
rating agency and second tier by another.
SUPPLY AND DEMAND: In the bond market, supply is influenced by the amount of
new securities issued and the amount of bonds investors wish to sell. Demand
reflects the amount of bonds investors wish to buy, which may decrease when
other markets offer greater opportunities.
In the stock market, an oversupply of a product or service can reduce demand and
lower stock prices. When demand increases relative to supply, stock prices may
recover.
TIGHTEN/EASE: When the Federal Reserve Board moves to raise interest rates, it
is said to be "tightening" or making borrowing more expensive. When it moves to
lower rates, it is said to be "easing" or making borrowing more affordable.
TOTAL RETURN: The performance of an investment with all income and capital
gains reinvested.
VOLATILITY: Fluctuations in the price of securities or markets, up or down,
over a short period of time.
YIELD: The income per share (or current value of a security) paid to investors
over a specified period of time as a percentage of the cost of the security.
Mutual fund yields are expressed as a percentage of the fund's current price per
share.
YIELD CURVE: When interest rates available from various short-, intermediate-,
and long-term securities are plotted on a graph, the resulting line is known as
a yield curve.
Y2K: A reference to the Year 2000.
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CASH MANAGEMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS (100.1%)+
PRINCIPAL AMORTIZED
AMOUNT COST
-------------------------
<S> <C> <C>
ASSET-BACKED SECURITY (0.9%)
Bishop's Gate Residential
Mortgage Trust
Series 1998-2A Class A1
5.13%, due 11/22/99 (a)(b)(c).... $3,000,000 $ 3,000,000
------------
CERTIFICATES OF DEPOSIT (13.9%)
ABN AMRO New York
4.94%, due 12/2/99 (c)........... 1,300,000 1,297,752
5.50%, due 6/5/00 (c)............ 2,000,000 1,999,106
Bayerische Landesbank New York
4.88%, due 7/26/99 (b)(c)........ 2,000,000 1,999,856
5.12%, due 3/21/00 (b)(c)........ 2,000,000 1,996,945
Commerzbank AG New York
4.87%, due 4/10/00 (b)(c)........ 2,000,000 1,999,383
5.01%, due 1/10/00 (b)(c)........ 2,000,000 1,999,898
5.09%, due 2/16/00 (b)(c)........ 2,000,000 1,999,575
5.16%, due 2/25/00 (b)(c)........ 2,000,000 1,999,474
Deutsche Bank New York
5.02%, due 1/11/00 (c)........... 2,000,000 2,000,403
5.06%, due 2/8/00 (c)............ 2,000,000 1,999,589
5.25%, due 5/18/00 (c)........... 2,000,000 1,996,824
Dresdner Bank AG
4.95%, due 11/9/99 (c)........... 2,000,000 2,000,194
Nationsbank North America
4.99%, due 1/11/00 (c)........... 2,000,000 1,999,897
Rabobank Nederland N.V. New York
4.83%, due 10/6/99 (c)........... 2,000,000 1,999,997
5.29%, due 5/19/00 (c)........... 2,000,000 1,999,064
5.60%, due 6/14/00 (c)........... 2,000,000 1,999,083
5.64%, due 7/30/99 (c)........... 2,000,000 2,000,872
Societe Generale New York
5.29%, due 3/3/00 (c)............ 2,000,000 1,999,093
Svenska Handelsbanken Inc.
5.23%, due 3/1/00 (c)............ 2,000,000 1,999,228
UBS AG Stamford CT
5.29%, due 3/1/00 (c)............ 2,000,000 1,999,540
5.34%, due 5/30/00 (c)........... 2,000,000 1,999,121
Westdeutsche Landesbank
4.89%, due 7/7/99 (c)............ 2,000,000 1,999,999
4.90%, due 7/7/99 (c)............ 2,000,000 2,000,006
------------
45,284,899
------------
COMMERCIAL PAPER (82.5%)
ABN AMRO North America
Finance Inc.
5.17%, due 9/2/99................ 3,000,000 2,972,857
Abbey National North America
4.81%, due 7/8/99................ 2,000,000 1,998,129
4.88%, due 9/3/99................ 2,000,000 1,982,667
4.95%, due 8/5/99................ 2,000,000 1,990,375
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
-------------------------
<S> <C> <C>
COMMERCIAL PAPER (Continued)
Alliance & Leicester PLC
4.84%, due 7/6/99 (a)............ 4,000,000 3,997,312
5.14%, due 11/24/99 (a).......... 3,000,000 2,937,463
5.20%, due 8/5/99 (a)............ 3,000,000 2,984,833
Allianz of America Finance Corp.
4.81%, due 7/16/99 (a)........... $2,000,000 $ 1,995,992
4.83%, due 7/12/99 (a)........... 2,000,000 1,997,048
5.05%, due 9/20/99 (a)........... 2,000,000 1,977,275
Allomon Funding Corp.
5.05%, due 7/21/99 (a)........... 3,000,000 2,991,583
5.05%, due 7/28/99 (a)........... 3,000,000 2,988,638
American Express Credit Corp.
4.95%, due 8/6/99................ 3,000,000 2,985,150
4.97%, due 7/14/99............... 2,165,000 2,161,114
5.00%, due 7/7/99................ 3,000,000 2,997,500
5.25%, due 7/1/99................ 3,000,000 3,000,000
American General Finance Corp.
4.90%, due 7/30/99............... 2,000,000 1,992,106
4.96%, due 7/23/99............... 2,000,000 1,993,938
5.06%, due 8/6/99................ 3,000,000 2,984,820
Associates First Capital Corp.
4.92%, due 7/14/99............... 2,000,000 1,996,447
5.00%, due 8/16/99............... 2,000,000 1,987,222
5.05%, due 9/13/99............... 3,000,000 2,968,858
AT&T Corp.
5.13%, due 7/27/99............... 2,862,000 2,851,396
5.18%, due 7/15/99............... 3,000,000 2,993,957
BankAmerica Corp.
4.81%, due 11/3/99............... 2,000,000 1,966,597
4.82%, due 10/6/99............... 2,000,000 1,974,026
Barclays US Funding Corp.
4.84%, due 7/6/99................ 2,000,000 1,998,656
BCI Funding Corp.
5.08%, due 8/23/99............... 3,000,000 2,977,563
BellSouth Telecommunications Inc.
4.85%, due 7/14/99............... 2,000,000 1,996,497
4.85%, due 7/16/99............... 2,000,000 1,995,958
4.95%, due 7/20/99............... 2,000,000 1,994,775
5.11%, due 9/3/99................ 3,000,000 2,972,747
5.20%, due 9/7/99................ 3,000,000 2,970,533
Bil North America Inc.
4.81%, due 7/20/99............... 2,000,000 1,994,923
4.88%, due 8/13/99............... 2,000,000 1,988,342
British Telecommunications PLC
4.78%, due 7/26/99............... 2,000,000 1,993,361
BTR Dunlop Finance Inc.
5.03%, due 7/23/99 (a)........... 3,000,000 2,990,778
Caisse Centrale Desjardins du
Quebec
4.81%, due 7/12/99............... 2,000,000 1,997,061
4.92%, due 10/29/99.............. 2,000,000 1,967,867
Chevron USA Inc.
4.92%, due 7/16/99............... 2,000,000 1,995,900
5.01%, due 8/2/99................ 3,000,000 2,986,640
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
32
<PAGE> 34
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS (CONTINUED)
PRINCIPAL AMORTIZED
AMOUNT COST
-------------------------
<S> <C> <C>
COMMERCIAL PAPER (Continued)
Cregem North America Inc.
4.82%, due 7/12/99............... $2,000,000 $ 1,997,054
4.84%, due 10/25/99.............. 2,000,000 1,968,809
4.87%, due 8/3/99................ 2,000,000 1,991,072
Dresdner US Finance Inc.
5.03%, due 8/9/99................ 2,000,000 1,989,102
5.15%, due 8/11/99............... 2,000,000 1,988,269
Ford Motor Credit Co.
4.84%, due 7/8/99................ 4,000,000 3,996,247
4.87%, due 7/19/99............... 2,900,000 2,892,938
4.92%, due 7/26/99............... 2,000,000 1,993,167
Franklin Resources Inc.
5.05%, due 8/13/99 (a)........... 3,000,000 2,981,904
General Electric Capital Corp.
4.81%, due 7/13/99............... 2,000,000 1,996,793
4.81%, due 9/10/99............... 2,000,000 1,981,027
4.85%, due 7/15/99............... 2,000,000 1,996,228
4.85%, due 7/28/99............... 2,000,000 1,992,725
Generale Bank Inc.
4.81%, due 7/9/99................ 2,400,000 2,397,435
4.88%, due 8/2/99................ 2,000,000 1,991,324
Goldman Sachs Group L.P. (The)
4.82%, due 10/28/99.............. 2,000,000 1,968,134
5.10%, due 7/29/99............... 3,000,000 2,988,100
5.10%, due 9/22/99............... 3,000,000 2,964,725
Halifax PLC
4.75%, due 7/1/99................ 2,000,000 2,000,000
4.80%, due 10/1/99............... 2,000,000 1,975,467
5.40%, due 7/8/99................ 1,785,000 1,783,126
ING America Insurance Holdings
Inc.
4.83%, due 9/15/99............... 2,000,000 1,979,607
International Nederlanden (U.S.)
Funding Corp.
4.83%, due 7/6/99................ 3,000,000 2,997,988
KFW International Finance Inc.
4.82%, due 7/19/99............... 1,150,000 1,147,229
5.57%, due 7/1/99................ 3,000,000 3,000,000
Merrill Lynch & Co. Inc.
4.87%, due 7/21/99............... 2,000,000 1,994,589
4.92%, due 7/14/99............... 2,000,000 1,996,447
5.00%, due 7/30/99............... 3,000,000 2,987,917
Morgan (J.P.) & Co. Inc.
4.80%, due 10/15/99.............. 2,000,000 1,971,733
4.82%, due 7/15/99............... 2,000,000 1,996,251
4.85%, due 8/20/99............... 2,000,000 1,986,528
Morgan Stanley, Dean Witter
Discover & Co.
5.00%, due 7/2/99................ 3,000,000 2,999,583
5.00%, due 8/19/99............... 3,000,000 2,979,583
5.01%, due 8/17/99............... 3,000,000 2,980,378
National Rural Utilities
Cooperative Finance Corp.
4.80%, due 7/27/99............... 2,000,000 1,993,067
4.84%, due 7/26/99............... 2,600,000 2,591,261
4.85%, due 7/23/99............... 2,000,000 1,994,072
5.18%, due 8/12/99............... 3,000,000 2,981,870
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
-------------------------
<S> <C> <C>
COMMERCIAL PAPER (Continued)
Nationwide Building Society
4.85%, due 7/27/99............... $2,000,000 $ 1,992,994
4.86%, due 9/8/99................ 2,000,000 1,981,370
Pemex Capital Inc.
5.13%, due 9/20/99............... 3,000,000 2,965,373
Prudential Finance (Jersey) Ltd.
4.80%, due 7/15/99............... 2,000,000 1,996,267
Prudential Funding Corp.
4.85%, due 7/9/99................ 2,000,000 1,997,844
4.86%, due 7/21/99............... 2,400,000 2,393,520
4.97%, due 7/29/99............... 2,000,000 1,992,269
5.01%, due 8/4/99................ 3,000,000 2,985,805
Quebec (Province of)
4.75%, due 7/6/99................ 2,000,000 1,998,680
4.82%, due 12/17/99.............. 2,000,000 1,954,745
Receivables Capital Corp.
4.94%, due 7/22/99 (a)........... 2,200,000 2,193,660
4.94%, due 8/3/99 (a)............ 2,000,000 1,990,943
Rio Tinto America Inc.
4.84%, due 7/2/99 (a)............ 2,000,000 1,999,731
4.92%, due 8/9/99 (a)............ 2,000,000 1,989,340
Salomon Smith Barney Holdings Inc.
4.80%, due 7/19/99............... 2,000,000 1,995,200
4.89%, due 7/13/99............... 2,000,000 1,996,740
4.92%, due 7/22/99............... 2,000,000 1,994,260
5.00%, due 7/21/99............... 2,000,000 1,994,444
San Paolo U.S. Financial Co.
4.83%, due 8/10/99............... 2,000,000 1,989,267
5.09%, due 11/17/99.............. 2,000,000 1,960,694
Svenska Handelsbanken Inc.
5.11%, due 9/27/99............... 3,000,000 2,962,527
Transportadora De Gas Del Sur S.A.
(TGS)
5.12%, due 9/21/99............... 3,000,000 2,965,013
UBS Finance (Delaware) Inc.
4.81%, due 12/27/99.............. 2,325,000 2,269,394
5.23%, due 7/22/99............... 2,500,000 2,492,373
UNIfunding Inc.
4.82%, due 7/27/99............... 2,000,000 1,993,038
4.95%, due 7/9/99................ 2,000,000 1,997,800
5.00%, due 7/9/99................ 2,000,000 1,997,778
Wells Fargo & Co.
4.82%, due 8/11/99............... 2,000,000 1,989,021
4.83%, due 7/29/99............... 2,000,000 1,992,487
4.85%, due 7/20/99............... 2,000,000 1,994,881
5.00%, due 7/28/99............... 2,000,000 1,992,500
5.00%, due 8/2/99................ 2,000,000 1,991,111
Wood Street Funding Corp.
5.02%, due 8/13/99 (a)........... 2,000,000 1,988,008
5.04%, due 7/16/99 (a)........... 2,050,000 2,045,695
5.04%, due 7/26/99 (a)........... 1,542,000 1,536,603
Xerox Corp.
4.83%, due 7/13/99............... 2,000,000 1,996,780
5.10%, due 8/10/99............... 3,000,000 2,983,000
------------
268,451,808
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
33
<PAGE> 35
CASH MANAGEMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS (CONTINUED)
PRINCIPAL AMORTIZED
AMOUNT COST
-------------------------
<S> <C> <C>
FEDERAL AGENCY (0.9% )
Federal Home Loan Mortgage Corp.
(Discount Note)
5.03%, due 8/16/99............... $3,000,000 $ 2,980,718
------------
MEDIUM-TERM NOTES (1.9%)
First Union Corp.
4.99%, due 7/1/99 (b)(c)......... 2,000,000 2,000,000
National Rural Utilities
Cooperative Finance Corp.
4.97%, due 9/21/99 (b)(c)........ 2,000,000 2,000,000
Xerox Corp., Series F
5.64%, due 7/14/00 (b)(c)........ 2,000,000 1,999,094
------------
5,999,094
------------
Total Short-Term Investments
(Amortized Cost $325,716,519)
(d).............................. 100.1% 325,716,519
Liabilities in Excess of
Cash and Other Assets............ (0.1) (345,994)
---------- ------------
Net Assets........................ 100.0% $325,370,525
========== ============
</TABLE>
- ------------
(a) May be sold to institutional investors only.
(b) Floating rate. Rate shown is the rate in effect at June 30, 1999.
(c) Coupon interest bearing security.
(d) The cost stated also represents the aggregate cost for Federal income tax
purposes.
The table below sets forth the diversification of Cash Management Portfolio
investments by industry.
INDUSTRY
DIVERSIFICATION
<TABLE>
<CAPTION>
AMORTIZED
COST PERCENT +
-------------------------
<S> <C> <C>
Auto Finance................ $ 8,882,352 2.7%
Banks #..................... 135,660,782 41.7
Brokerage................... 35,987,329 11.1
Computers & Office Equipment 3,995,874 1.2
Conglomerates............... 7,966,773 2.4
Consumer Financial
Services.................. 11,143,764 3.4
Domestic Oils............... 4,982,540 1.5
Federal Agency.............. 2,980,718 0.9
Finance..................... 66,882,996 20.6
Foreign Government.......... 3,953,426 1.2
Insurance................... 8,950,470 2.8
Mortgage Loan............... 3,000,000 0.9
Telecommunication
Services.................. 19,769,225 6.1
Utilities................... 11,560,270 3.6
------------ ---------
325,716,519 100.1
Liabilities in Excess of
Cash and Other Assets..... (345,994) (0.1)
------------ ---------
Net Assets.................. $325,370,525 100.0%
============ =========
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
# The Portfolio will invest more than 25% of the market value of its total
assets in the securities of banks and bank holding companies, including
certificates of deposit, bankers' acceptances and securities guaranteed by
banks and bank holding companies.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
34
<PAGE> 36
MAINSTAY VP SERIES FUND, INC.
CASH MANAGEMENT PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(amortized cost $325,716,519).......... $325,716,519
Cash..................................... 247,653
Interest receivable...................... 889,965
------------
Total assets..................... 326,854,137
------------
LIABILITIES:
Payables:
Adviser................................ 64,125
Administrator.......................... 51,300
Custodian.............................. 9,115
Directors.............................. 284
Accrued expenses......................... 91,515
Dividend payable......................... 1,267,273
------------
Total liabilities................ 1,483,612
------------
Net assets applicable to outstanding
shares................................. $325,370,525
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 600 million shares authorized... $ 3,253,727
Additional paid-in capital............... 322,116,811
Accumulated net realized loss on
investments............................ (13)
------------
Net assets applicable to outstanding
shares................................. $325,370,525
============
Shares of capital stock outstanding...... 325,372,662
============
Net asset value per share outstanding.... $ 1.00
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................... $ 6,765,626
------------
Expenses:
Advisory............................... 336,172
Administration......................... 268,938
Shareholder communication.............. 38,925
Professional........................... 23,311
Custodian.............................. 13,293
Directors.............................. 6,052
Miscellaneous.......................... 7,449
------------
Total expenses................... 694,140
------------
Net investment income.................... 6,071,486
------------
REALIZED LOSS ON INVESTMENTS:
Net realized loss on investments......... (13)
------------
Net increase in net assets resulting from
operations............................. $ 6,071,473
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
35
<PAGE> 37
CASH MANAGEMENT PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999 1998
-----------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 6,071,486 $ 9,018,849
Net realized gain (loss) on investments................... (13) 2,765
------------- -------------
Net increase in net assets resulting from operations...... 6,071,473 9,021,614
------------- -------------
Dividends and distributions to shareholders:
From net investment income................................ (6,071,486) (9,018,849)
From net realized gain on investments..................... (141) (2,107)
------------- -------------
Total dividends and distributions to shareholders....... (6,071,627) (9,020,956)
------------- -------------
Capital share transactions:
Net proceeds from sale of shares.......................... 424,605,548 485,909,046
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. 5,707,240 8,752,871
------------- -------------
430,312,788 494,661,917
Cost of shares redeemed................................... (336,494,149) (403,892,045)
------------- -------------
Increase in net assets derived from capital share
transactions............................................ 93,818,639 90,769,872
------------- -------------
Net increase in net assets.................................. 93,818,485 90,770,530
NET ASSETS:
Beginning of period......................................... 231,552,040 140,781,510
------------- -------------
End of period............................................... $ 325,370,525 $ 231,552,040
============= =============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31
1999* 1998 1997 1996 1995 1994
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------ ------------ ------------ ------------ ------------
Net investment income....... 0.02 0.05 0.05 0.05 0.05 0.04
------------ ------------ ------------ ------------ ------------ ------------
Less dividends:
From net investment
income.................. (0.02) (0.05) (0.05) (0.05) (0.05) (0.04)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value at end of
period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ ============ ============ ============ ============ ============
Total investment return..... 2.26%(a) 5.18% 5.25% 4.95% 5.59% 3.82%
Ratios (to average net
assets)/ Supplemental
Data:
Net investment income..... 4.52%+ 5.05% 5.13% 4.92% 5.44% 3.97%
Net expenses.............. 0.52%+ 0.54% 0.54% 0.62% 0.62% 0.62%
Expenses (before
reimbursement).......... 0.52%+ 0.54% 0.54% 0.64% 0.94% 0.89%
Net assets at end of period
(in 000's)................ $ 325,371 $ 231,552 $ 140,782 $ 118,347 $ 87,839 $ 71,116
</TABLE>
- ------------
(a) Total return is not annualized.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
36
<PAGE> 38
MAINSTAY VP SERIES FUND, INC.
BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
LONG-TERM BONDS (96.0%)+
CORPORATE BONDS (51.8%)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
AIRPORT TRANSPORTATION (1.7%)
Delta Airlines, Inc.
6.65%, due 3/15/04.............. $ 5,000,000 $ 4,918,750
------------
BANKS (4.9%)
BankAmerica Corp.
7.75%, due 7/15/02.............. 4,000,000 4,150,000
Fleet National Bank
5.75%, due 1/15/09.............. 5,000,000 4,556,250
Golden West Financial Corp.
10.25%, due 12/1/00............. 1,000,000 1,051,250
Popular Inc.
6.20%, due 4/30/01.............. 5,000,000 4,956,250
------------
14,713,750
------------
CHEMICALS (1.0%)
Praxair, Inc.
6.15%, due 4/15/03.............. 3,000,000 2,947,500
------------
CONTAINERS (1.6%)
Owens-Illinois, Inc.
7.80%, due 5/15/18.............. 5,000,000 4,625,000
------------
ELECTRIC POWER COMPANIES (1.7%)
Niagara Mohawk Power Corp.
7.125%, due 7/1/01.............. 5,000,000 5,018,750
------------
ELECTRIC UTILITIES (3.4%)
Cleveland Electric Illuminating
Co.
7.88%, due 11/1/17.............. 5,000,000 5,081,250
Commonwealth Edison Co.
6.95%, due 7/15/18.............. 5,000,000 4,787,500
------------
9,868,750
------------
ELECTRONICS/ELECTRIC (3.0%)
Raytheon Co.
5.95%, due 3/15/01.............. 5,000,000 4,981,250
6.75%, due 3/15/18.............. 4,000,000 3,775,000
------------
8,756,250
------------
FINANCE (13.6%)
Chrysler Financial Corp.
5.875%, due 2/7/01.............. 5,000,000 4,993,750
CIT Group Inc.
6.50%, due 6/14/02.............. 3,000,000 3,003,750
Ford Motor Credit Corp.
5.80%, due 1/12/09.............. 5,000,000 4,568,750
General Motors Acceptance Corp.
5.625%, due 2/15/01............. 6,000,000 5,955,000
Household Finance Corp.
6.50%, due 11/15/08............. 5,000,000 4,768,750
John Deere Capital Corp.
5.35%, due 10/23/01............. 5,000,000 4,893,750
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
FINANCE (Continued)
Norwest Financial, Inc.
6.85%, due 7/15/09.............. $ 7,000,000 $ 6,938,750
Providian National Bank
6.75%, due 3/15/02.............. 5,000,000 4,975,000
------------
40,097,500
------------
MEDIA (1.6%)
News America Inc.
7.125%, due 4/8/28.............. 5,000,000 4,556,250
------------
OIL & GAS (3.0%)
Conoco, Inc.
6.95%, due 4/15/29.............. 5,000,000 4,687,500
Oryx Energy Co.
9.50%, due 11/1/99 (a).......... 4,235,000 4,272,056
------------
8,959,556
------------
PAPER/PRODUCTS (1.6%)
Champion International Corp.
9.875%, due 6/1/00.............. 4,500,000 4,640,625
------------
POLLUTION CONTROL (1.4%)
USA Waste Services, Inc.
7.00%, due 10/1/04.............. 4,000,000 4,025,000
------------
RAILROADS (4.1%)
CSX Corp.
7.05%, due 5/1/02............... 7,000,000 7,087,500
Norfolk Southern Corp.
7.80%, due 5/15/27.............. 5,000,000 5,193,750
------------
12,281,250
------------
RETAIL STORES (2.4%)
Harcourt General, Inc.
9.50%, due 3/15/00.............. 2,000,000 2,037,500
Penney (J.C.) Co., Inc.
6.95%, due 4/1/00............... 5,000,000 5,037,500
------------
7,075,000
------------
RETAIL -- FOOD (1.7%)
Kroger Co.
7.70%, due 6/1/29............... 5,000,000 4,962,500
------------
TELECOMMUNICATIONS (3.5%)
Sprint Capital Corp.
6.875%, due 11/15/28............ 6,000,000 5,482,500
Worldcom, Inc.
6.40%, due 8/15/05.............. 5,000,000 4,881,250
------------
10,363,750
------------
WHOLESALE--FOOD (1.6%)
Pepsi Bottling Group, Inc.
7.00%, due 3/1/29............... 5,000,000 4,693,750
------------
Total Corporate Bonds
(Cost $156,621,334)............. 152,503,931
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
37
<PAGE> 39
BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
U.S. GOVERNMENT &
FEDERAL AGENCIES (42.5%)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
FEDERAL HOME LOAN BANK (1.7%)
5.625%, due 3/19/01............. $ 5,000,000 $ 4,991,000
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (7.2%)
5.125%, due 2/13/04............. 15,000,000 14,372,400
5.91%, due 8/25/03.............. 7,000,000 6,913,480
------------
21,285,880
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (MORTGAGE PASS-THROUGH
SECURITIES) (18.0%)
6.00%, due 2/1/14-12/1/27....... 8,313,114 7,934,803
6.50%, due 6/1/09-1/1/28........ 18,975,348 18,417,517
7.00%, due 2/1/27-1/1/28........ 16,370,954 16,186,781
7.50%, due 7/1/28............... 5,036,608 5,088,536
8.00%, due 5/1/25............... 5,112,838 5,242,244
------------
52,869,881
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION I (MORTGAGE
PASS-THROUGH SECURITY) (0.7%)
9.00%, due 4/15/26.............. 2,051,641 2,178,576
------------
UNITED STATES TREASURY
BONDS (3.9%)
5.25%, due 11/15/28............. 8,000,000 7,091,280
7.125%, due 2/15/23............. 4,000,000 4,431,520
------------
11,522,800
------------
UNITED STATES TREASURY
NOTES (11.0%)
5.50%, due 3/31/03.............. 7,000,000 6,838,090
5.875%, due 11/15/05............ 5,000,000 5,000,000
6.125%, due 8/15/07............. 5,000,000 5,052,150
6.50%, due 8/15/05.............. 15,000,000 15,422,850
------------
32,313,090
------------
Total U.S. Government &
Federal Agencies
(Cost $126,727,861)............. 125,161,227
------------
</TABLE>
<TABLE>
<CAPTION>
YANKEE BONDS (1.7%)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
CRUDE PETROLEUM &
NATURAL GAS (1.7%)
Gulf Canada Resources Ltd.
9.00%, due 8/15/99 (a).......... 5,000,000 5,012,500
------------
Total Yankee Bonds
(Cost $5,011,404)............... 5,012,500
------------
Total Long-Term Bonds
(Cost $288,360,599)............. 282,677,658
------------
SHORT-TERM
INVESTMENTS (2.5%)
COMMERCIAL PAPER (2.5%)
Allergan, Inc.
5.20%, due 7/13/99.............. $ 1,100,000 $ 1,098,093
Associates Corp. of North America
4.708%, due on demand (b)....... 2,597,000 2,597,000
General Electric Capital Corp.
5.70%, due 7/1/99............... 3,511,000 3,511,000
------------
Total Short-Term Investments
(Cost $7,206,093)............... 7,206,093
------------
Total Investments
(Cost $295,566,692) (c)......... 98.5% 289,883,751(d)
Cash and Other Assets,
Less Liabilities................ 1.5 4,273,653
---------- ------------
Net Assets....................... 100.0% $294,157,404
========== ============
</TABLE>
- ------------
(a) Long-term security maturing within the subsequent twelve month period.
(b) Adjustable rate. Rate shown is the rate in effect at June 30, 1999.
(c) The cost for Federal income tax purposes is $295,667,597.
(d) At June 30, 1999 net unrealized depreciation was $5,783,846, based on cost
for Federal income tax purposes. This consisted of aggregate gross
unrealized appreciation for all investments on which there was an excess
of market value over cost of $940,795 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $6,724,641.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
38
<PAGE> 40
MAINSTAY VP SERIES FUND, INC.
BOND PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $295,566,692)......... $289,883,751
Cash..................................... 2,722
Receivables:
Interest............................... 4,577,882
Investment securities sold............. 3,350,000
Fund shares sold....................... 202,500
------------
Total assets..................... 298,016,855
------------
LIABILITIES:
Payables:
Investment securities purchased........ 3,510,444
Fund shares redeemed................... 143,781
Shareholder communication.............. 67,070
Adviser................................ 60,149
Administrator.......................... 48,120
Directors.............................. 164
Accrued expenses......................... 29,723
------------
Total liabilities................ 3,859,451
------------
Net assets applicable to outstanding
shares................................. $294,157,404
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 100 million shares authorized... $ 226,658
Additional paid-in capital............... 292,166,538
Accumulated undistributed net investment
income................................. 8,206,612
Accumulated net realized loss on
investments............................ (759,463)
Net unrealized depreciation on
investments............................ (5,682,941)
------------
Net assets applicable to outstanding
shares................................. $294,157,404
============
Shares of capital stock outstanding...... 22,665,778
============
Net asset value per share outstanding.... $ 12.98
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................... $ 8,960,244
------------
Expenses:
Advisory............................... 361,835
Administration......................... 289,468
Shareholder communication.............. 32,288
Professional........................... 27,863
Directors.............................. 6,619
Portfolio pricing...................... 3,392
Miscellaneous.......................... 6,941
------------
Total expenses................... 728,406
------------
Net investment income.................... 8,231,838
------------
REALIZED AND UNREALIZED LOSS ON
INVESTMENTS:
Net realized loss on investments......... (759,463)
Net change in unrealized appreciation on
investments............................ (13,075,119)
------------
Net realized and unrealized loss on
investments............................ (13,834,582)
------------
Net decrease in net assets resulting from
operations............................. $ (5,602,744)
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
39
<PAGE> 41
BOND PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999 1998
---------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 8,231,838 $ 14,515,227
Net realized gain (loss) on investments................... (759,463) 6,948,226
Net change in unrealized appreciation on investments...... (13,075,119) 19,352
------------ ------------
Net increase (decrease) in net assets resulting from
operations.............................................. (5,602,744) 21,482,805
------------ ------------
Dividends and distributions to shareholders:
From net investment income................................ (32,869) (14,391,518)
From net realized gain on investments..................... -- (7,064,292)
------------ ------------
Total dividends and distributions to shareholders....... (32,869) (21,455,810)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares.......................... 42,271,979 63,383,438
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. 32,869 21,455,810
------------ ------------
42,304,848 84,839,248
Cost of shares redeemed................................... (19,904,062) (36,423,049)
------------ ------------
Increase in net assets derived from capital share
transactions............................................ 22,400,786 48,416,199
------------ ------------
Net increase in net assets.................................. 16,765,173 48,443,194
NET ASSETS:
Beginning of period......................................... 277,392,231 228,949,037
------------ ------------
End of period............................................... $294,157,404 $277,392,231
============ ============
Accumulated undistributed net investment income at end of
period.................................................... $ 8,206,612 $ 7,643
============ ============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31
1999* 1998 1997 1996 1995 1994
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period.................. $ 13.23 $ 13.14 $ 12.83 $ 13.42 $ 12.09 $ 13.43
------------ ------------ ------------ ------------ ------------ ------------
Net investment income........ 0.36 0.74 0.88 0.87 0.88 0.88
Net realized and unrealized
gain (loss) on
investments................ (0.60) 0.46 0.35 (0.59) 1.33 (1.34)
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations................. (0.24) 1.20 1.23 0.28 2.21 (0.46)
------------ ------------ ------------ ------------ ------------ ------------
Less dividends and
distributions:
From net investment
income................... (0.01) (0.74) (0.88) (0.87) (0.88) (0.88)
From net realized gain
on investments........... -- (0.37) (0.04) -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions.............. (0.01) (1.11) (0.92) (0.87) (0.88) (0.88)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value at end of
period..................... $ 12.98 $ 13.23 $ 13.14 $ 12.83 $ 13.42 $ 12.09
============ ============ ============ ============ ============ ============
Total investment return...... (1.88%)(a) 9.12% 9.65% 2.05% 18.31% (3.39%)
Ratios (to average net
assets)/ Supplemental Data:
Net investment income...... 5.69%+ 5.86% 6.42% 6.31% 6.55% 6.53%
Net expenses............... 0.50%+ 0.52% 0.50% 0.58% 0.62% 0.62%
Expenses (before
reimbursement)........... 0.50%+ 0.52% 0.50% 0.58% 0.91% 0.67%
Portfolio turnover rate...... 129% 206% 187% 103% 81% 88%
Net assets at end of period
(in 000's)................. $ 294,157 $ 277,392 $ 228,949 $ 226,375 $ 235,030 $ 206,686
</TABLE>
- ------------
(a) Total return is not annualized.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
40
<PAGE> 42
MAINSTAY VP SERIES FUND, INC.
GROWTH EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30,1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (96.9%)+
SHARES VALUE
----------------------------
<S> <C> <C>
ALUMINUM (1.1%)
Alcoa Inc....................... 200,000 $ 12,375,000
--------------
BANKS--MAJOR REGIONAL (2.8%)
Bank of New York Co., Inc.
(The).......................... 300,000 11,006,250
Mellon Bank Corp................ 286,000 10,403,250
U.S. Bancorp.................... 310,000 10,540,000
--------------
31,949,500
--------------
BANKS--MONEY CENTER (1.0%)
Bank of America Corp............ 160,000 11,730,000
--------------
BEVERAGES--ALCOHOLIC (1.0%)
Anheuser-Busch Cos., Inc........ 160,000 11,350,000
--------------
BEVERAGES--SOFT DRINKS (0.4%)
Pepsi Bottling Group Inc........ 190,000 4,381,875
--------------
BROADCAST/MEDIA (6.4%)
Capstar Broadcasting Corp. Class
A (a).......................... 382,600 10,473,675
Clear Channel Communications,
Inc. (a)....................... 150,000 10,340,625
Comcast Corp. Special Class A... 450,000 17,296,875
MediaOne Group Inc. (a)......... 230,000 17,106,250
News Corp. Ltd. (The) ADR (b)... 310,000 10,946,875
USA Networks, Inc. (a).......... 147,000 5,898,375
--------------
72,062,675
--------------
CHEMICALS (0.6%)
IMC Global Inc.................. 300,000 5,287,500
Praxair Inc..................... 27,000 1,321,313
--------------
6,608,813
--------------
COMMUNICATIONS--EQUIPMENT MANUFACTURERS
(7.9%)
ADC Telecommunications, Inc.
(a)............................ 280,000 12,757,500
Cisco Systems, Inc. (a)......... 220,000 14,148,750
Lucent Technologies Inc. ....... 231,000 15,578,063
Nokia Corp. ADR (b)............. 200,000 18,312,500
Nortel Networks Corp. .......... 180,000 15,626,250
Tellabs, Inc. (a)............... 200,000 13,512,500
--------------
89,935,563
--------------
COMPUTER SOFTWARE & SERVICES
(4.0%)
America Online Inc. (a)......... 110,000 12,155,000
Ceridian Corp. (a).............. 280,000 9,152,500
Microsoft Corp. (a)............. 150,000 13,528,125
SunGard Data Systems Inc. (a)... 300,000 10,350,000
--------------
45,185,625
--------------
</TABLE>
- ----------
+ Percentages indicated are based on Portfolio net assets.
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------
<S> <C> <C>
COMPUTER SYSTEMS (4.4%)
Comdisco Inc. .................. 550,000 $ 14,093,750
EMC Corp. (a)................... 180,000 9,900,000
Hewlett-Packard Co. ............ 120,000 12,060,000
Sun Microsystems, Inc. (a)...... 200,000 13,775,000
--------------
49,828,750
--------------
CONTAINERS--PAPER (0.9%)
Smurfit-Stone Container Corp.
(a)............................ 500,000 10,281,250
--------------
ELECTRIC POWER COMPANIES (0.5%)
Duke Energy Corp................ 100,000 5,437,500
--------------
ELECTRICAL EQUIPMENT (2.9%)
Emerson Electric Co............. 170,000 10,688,750
General Electric Co............. 200,000 22,600,000
--------------
33,288,750
--------------
ELECTRONICS--SEMICONDUCTORS
(3.9%)
Applied Materials, Inc. (a)..... 160,000 11,820,000
Motorola, Inc................... 110,000 10,422,500
Texas Instruments Inc. ......... 110,000 15,950,000
Vitesse Semiconductor Corp.
(a)............................ 90,000 6,069,375
--------------
44,261,875
--------------
ENTERTAINMENT (1.3%)
Time Warner Inc................. 200,000 14,400,000
--------------
FINANCIAL--MISCELLANEOUS (5.1%)
American Express Co. ........... 90,000 11,711,250
American General Corp. ......... 120,000 9,045,000
Associates First Capital Corp.
Class A........................ 260,000 11,521,250
Citigroup Inc. ................. 300,000 14,250,000
Freddie Mac..................... 200,000 11,600,000
--------------
58,127,500
--------------
FOOD & HEALTH CARE DISTRIBUTORS
(1.7%)
Cardinal Health, Inc. .......... 135,000 8,656,875
SYSCO Corp...................... 360,000 10,732,500
--------------
19,389,375
--------------
HEALTH CARE--DIVERSIFIED (4.8%)
Abbott Laboratories............. 225,000 10,237,500
American Home Products Corp. ... 200,000 11,500,000
Bristol-Myers Squibb Co. ....... 190,000 13,383,125
Johnson & Johnson............... 120,000 11,760,000
Warner-Lambert Co............... 112,250 7,787,344
--------------
54,667,969
--------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
41
<PAGE> 43
GROWTH EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
----------------------------
<S> <C> <C>
HEALTH CARE--DRUGS (3.7%)
Glaxo Wellcome PLC ADR (b)...... 150,000 $ 8,493,750
Lilly (Eli) & Co. .............. 160,000 11,460,000
Pharmacia & Upjohn, Inc. ....... 200,000 11,362,500
SmithKline Beecham PLC ADR (b).. 157,300 10,391,631
--------------
41,707,881
--------------
HEALTH CARE--MEDICAL PRODUCTS
(1.0%)
Biomet, Inc..................... 150,000 5,962,500
Genzyme Corp.-- General Division
(a)............................ 100,000 4,850,000
Genzyme Surgical Products (a)... 35,802 157,754
--------------
10,970,254
--------------
HEAVY DUTY TRUCKS & PARTS (1.5%)
Eaton Corp...................... 180,000 16,560,000
--------------
INSURANCE BROKERS (0.9%)
Marsh & McLennan Cos., Inc...... 135,000 10,192,500
--------------
INSURANCE--LIFE (0.9%)
Provident Cos., Inc............. 260,000 10,400,000
--------------
INSURANCE--MULTI-LINE (1.0%)
American International Group,
Inc............................ 95,800 11,214,587
--------------
INSURANCE--PROPERTY & CASUALTY
(0.8%)
Allstate Corp. (The)............ 250,000 8,968,750
--------------
INTERNET SOFTWARE & SERVICES
(0.1%)
Rhythms NetConnections Inc.
(a)............................ 23,500 1,371,812
--------------
MACHINERY--DIVERSIFIED (0.5%)
Ingersoll-Rand Co............... 91,000 5,880,875
--------------
MANUFACTURING--DIVERSIFIED
(2.7%)
AlliedSignal Inc................ 260,000 16,380,000
Tyco International Ltd.......... 150,000 14,212,500
--------------
30,592,500
--------------
NATURAL GAS DISTRIBUTORS
& PIPELINES (2.0%)
Coastal Corp. (The)............. 280,000 11,200,000
Enron Corp...................... 135,000 11,036,250
--------------
22,236,250
--------------
OFFICE EQUIPMENT & SUPPLIES
(0.9%)
Xerox Corp...................... 180,000 10,631,250
--------------
OIL & GAS DRILLING (0.5%)
Transocean Offshore Inc......... 200,000 5,250,000
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------
<S> <C> <C>
OIL & GAS--EQUIPMENT & SERVICES
(1.6%)
Halliburton Co.................. 200,000 $ 9,050,000
Schlumberger Ltd................ 150,000 9,553,125
--------------
18,603,125
--------------
OIL--INTEGRATED DOMESTIC (0.7%)
USX-Marathon Group.............. 250,000 8,140,625
--------------
OIL--INTEGRATED INTERNATIONAL
(2.3%)
BP Amoco PLC ADR (b)............ 65,791 7,138,323
Conoco Inc. Class A............. 200,000 5,575,000
Mobil Corp...................... 140,000 13,860,000
--------------
26,573,323
--------------
PAPER & FOREST PRODUCTS (1.1%)
Boise Cascade Corp.............. 275,000 11,825,000
--------------
PUBLISHING (1.0%)
McGraw-Hill Cos., Inc. (The).... 214,000 11,542,625
--------------
RAILROADS (1.0%)
Union Pacific Corp.............. 185,000 10,787,812
--------------
REAL ESTATE INVESTMENT/
MANAGEMENT (1.1%)
Chelsea GCA Realty, Inc......... 96,300 3,575,138
First Industrial Realty Trust,
Inc............................ 175,000 4,801,562
Liberty Property Trust.......... 166,500 4,141,687
--------------
12,518,387
--------------
RETAIL STORES--DEPARTMENT (1.3%)
Federated Department Stores,
Inc. (a)....................... 275,000 14,557,813
--------------
RETAIL STORES--FOOD (2.4%)
Kroger Co. (The) (a)............ 540,000 15,086,250
Safeway Inc. (a)................ 220,000 10,890,000
Smart & Final Inc............... 163,000 1,711,500
--------------
27,687,750
--------------
RETAIL STORES--GENERAL
MERCHANDISE (1.3%)
Wal-Mart Stores, Inc............ 300,000 14,475,000
--------------
RETAIL STORES--SPECIALTY (1.9%)
Costco Cos., Inc. (a)........... 175,000 14,010,938
CVS Corp........................ 148,000 7,566,500
--------------
21,577,438
--------------
SPECIALIZED SERVICES (3.5%)
Acxiom Corp. (a)................ 200,000 4,987,500
Cendant Corp. (a)............... 560,000 11,480,000
Fiserv, Inc. (a)................ 250,000 7,828,125
ServiceMaster Co. (The)......... 400,000 7,500,000
Young & Rubicam Inc. (a)........ 175,000 7,951,563
--------------
39,747,188
--------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
42
<PAGE> 44
MAINSTAY VP SERIES FUND, INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
----------------------------
<S> <C> <C>
TELECOMMUNICATIONS--LONG
DISTANCE (6.3%)
Allegiance Telecom Inc. (a)..... 126,000 $ 6,914,250
AT&T Corp....................... 200,000 11,162,500
Global Crossing Ltd. (a)........ 163,744 6,969,354
MCI WorldCom, Inc. (a).......... 160,000 13,800,000
Qwest Communications
International Inc. (a)......... 300,000 9,918,750
Sprint Corp. (FON Group)........ 250,000 13,203,125
Sprint Corp. (PCS Group) (a).... 55,000 3,141,875
Time Warner Telecom Inc. Class A
(a)............................ 22,500 652,500
WinStar Communications, Inc.
(a)............................ 125,000 6,093,750
--------------
71,856,104
--------------
TELEPHONE (3.6%)
ALLTEL Corp..................... 175,000 12,512,500
Ameritech Corp.................. 206,000 15,141,000
Bell Atlantic Corp.............. 200,000 13,075,000
--------------
40,728,500
--------------
WASTE DISPOSAL (0.6%)
Republic Services, Inc. Class A
(a)............................ 273,500 6,769,125
--------------
Total Common Stocks (Cost
$762,414,402).................. 1,098,628,494
--------------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS (3.5%)
PRINCIPAL
AMOUNT VALUE
----------- --------------
<S> <C> <C>
COMMERCIAL PAPER (3.5%)
Associates Corp. of North
America
4.71%, due on demand (c)....... $16,100,000 $ 16,100,000
CIBA Specialty Chemical Corp.
5.45%, due 7/1/99.............. 21,390,000 21,390,000
General Electric Capital Corp.
5.70%, due 7/1/99.............. 2,539,000 2,539,000
--------------
Total Short-Term Investments
(Cost $40,029,000)............. 40,029,000
--------------
Total Investments
(Cost $802,443,402) (d)........ 100.4% 1,138,657,494(e)
Liabilities In Excess of
Cash and Other Assets.......... (0.4) (4,136,550)
---------- --------------
Net Assets...................... 100.0% $1,134,520,944
========== ==============
</TABLE>
- ------------
(a) Non-income producing security.
(b) ADR--American Depository Receipt.
(c) Adjustable rate. Rate shown is the rate in effect at June 30, 1999.
(d) The cost stated also represents the aggregate cost for Federal income tax
purposes.
(e) At June 30, 1999 net unrealized appreciation was $336,214,092, based on
cost for Federal income tax purposes. This consisted of aggregate gross
unrealized appreciation for all investments on which there was an excess of
market value over cost of $344,772,664 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $8,558,572.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
43
<PAGE> 45
GROWTH EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $802,443,402)....... $1,138,657,494
Cash................................... 2,276,104
Receivables:
Investment securities sold........... 11,538,743
Dividends and interest............... 916,488
Fund shares sold..................... 370,046
--------------
Total assets................... 1,153,758,875
--------------
LIABILITIES:
Payables:
Investment securities purchased...... 18,039,172
Fund shares redeemed................. 477,677
Shareholder communication............ 264,713
Adviser.............................. 226,190
Administrator........................ 180,952
Directors............................ 734
Accrued expenses....................... 48,493
--------------
Total liabilities.............. 19,237,931
--------------
Net assets applicable to outstanding
shares............................... $1,134,520,944
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.01 per
share) 100 million shares
authorized........................... $ 425,678
Additional paid-in capital............. 724,058,834
Accumulated undistributed net
investment income.................... 3,460,263
Accumulated undistributed net realized
gain on investments.................. 70,362,077
Net unrealized appreciation on
investments.......................... 336,214,092
--------------
Net assets applicable to outstanding
shares............................... $1,134,520,944
==============
Shares of capital stock outstanding.... 42,567,825
==============
Net asset value per share
outstanding.......................... $ 26.65
==============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)........................ $ 4,689,834
Interest............................. 1,355,711
--------------
Total income................... 6,045,545
--------------
Expenses:
Advisory............................. 1,302,510
Administration....................... 1,042,008
Shareholder communication............ 142,896
Professional......................... 50,916
Directors............................ 23,460
Miscellaneous........................ 23,492
--------------
Total expenses................. 2,585,282
--------------
Net investment income.................. 3,460,263
--------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on investments....... 70,362,077
Net change in unrealized appreciation
on investments....................... 52,901,461
--------------
Net realized and unrealized gain on
investments.......................... 123,263,538
--------------
Net increase in net assets resulting
from operations...................... $ 126,723,801
==============
</TABLE>
- ------------
(a) Dividends recorded net of foreign withholding taxes
in the amount of $35,451.
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.
GROWTH EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited)
and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999 1998
--------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 3,460,263 $ 7,259,332
Net realized gain on investments.......................... 70,362,077 73,678,921
Net change in unrealized appreciation on investments...... 52,901,461 123,768,075
---------------- -------------
Net increase in net assets resulting from operations...... 126,723,801 204,706,328
---------------- -------------
Dividends and distributions to shareholders:
From net investment income................................ -- (7,247,513)
From net realized gain on investments..................... -- (73,678,921)
---------------- -------------
Total dividends and distributions to shareholders....... -- (80,926,434)
---------------- -------------
Capital share transactions:
Net proceeds from sale of shares.......................... 92,717,744 121,819,072
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. -- 80,926,434
---------------- -------------
92,717,744 202,745,506
Cost of shares redeemed................................... (81,657,041) (88,843,247)
---------------- -------------
Increase in net assets derived from capital share
transactions............................................ 11,060,703 113,902,259
---------------- -------------
Net increase in net assets.................................. 137,784,504 237,682,153
NET ASSETS:
Beginning of period......................................... 996,736,440 759,054,287
---------------- -------------
End of period............................................... $ 1,134,520,944 $ 996,736,440
================ =============
Accumulated undistributed net investment income at end of
period.................................................... $ 3,460,263 $ --
================ =============
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(Selected Per Share Data and Ratios)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31
1999* 1998 1997 1996 1995 1994
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period.... $ 23.62 $ 20.31 $ 18.63 $ 17.22 $ 14.69 $ 15.64
----------- ------------- ------------- ------------- ------------- -------------
Net investment income.... 0.08 0.19 0.16 0.18 0.22 0.22
Net realized and
unrealized gain (loss)
on investments......... 2.95 5.21 4.74 4.06 4.06 (0.03)
----------- ------------- ------------- ------------- ------------- -------------
Total from investment
operations............. 3.03 5.40 4.90 4.24 4.28 0.19
----------- ------------- ------------- ------------- ------------- -------------
Less dividends and
distributions:
From net investment
income............... -- (0.19) (0.16) (0.18) (0.22) (0.22)
From net realized gain
on investments....... -- (1.90) (3.06) (2.65) (1.53) (0.92)
----------- ------------- ------------- ------------- ------------- -------------
Total dividends and
distributions.......... -- (2.09) (3.22) (2.83) (1.75) (1.14)
----------- ------------- ------------- ------------- ------------- -------------
Net asset value at end of
period................. $ 26.65 $ 23.62 $ 20.31 $ 18.63 $ 17.22 $ 14.69
=========== ============= ============= ============= ============= =============
Total investment
return................. 12.86%(a) 26.59% 26.75% 24.50% 29.16% 1.20%
Ratios (to average net
assets)/
Supplemental Data:
Net investment
income............... 0.66%+ 0.84% 0.80% 0.98% 1.29% 1.41%
Net expenses........... 0.50%+ 0.51% 0.50% 0.58% 0.62% 0.62%
Expenses (before
reimbursement)....... 0.50%+ 0.51% 0.50% 0.58% 0.91% 0.65%
Portfolio turnover
rate................... 32% 69% 103% 104% 104% 108%
Net assets at end of
period (in 000's)...... $1,134,521 $ 996,736 $ 759,054 $ 564,685 $ 427,507 $ 330,161
</TABLE>
- ------------
(a) Total return is not annualized.
+ Annualized.
* Unaudited.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
45
<PAGE> 47
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
46
<PAGE> 48
MAINSTAY VP SERIES FUND, INC.
National Association of Securities Dealers NASDAQ system and securities listed
or traded on certain foreign exchanges whose operations are similar to the U.S.
over-the-counter market, at prices supplied by the pricing agent or brokers
selected by the Adviser (see Note 3) if these prices are deemed to be
representative of market values at the regular close of business of the
Exchange, (e) by appraising debt securities at prices supplied by a pricing
agent selected by the Adviser, whose prices reflect broker/dealer supplied
valuations and electronic data processing techniques if those prices are deemed
by the Adviser to be representative of market values at the regular close of
business of the Exchange, (f) by appraising options and futures contracts at the
last sale price on the market where such options or futures contracts are
principally traded, and (g) by appraising all other securities and other assets,
including debt securities for which prices are supplied by a pricing agent but
are not deemed by the Adviser to be representative of market values, but
excluding money market instruments with a remaining maturity of sixty days or
less and including restricted securities and securities for which no market
quotations are available, at fair value in accordance with procedures approved
by the Directors. Short-term securities which mature in more than 60 days are
valued at current market quotations. Short-term securities which mature in 60
days or less are valued at amortized cost if their term to maturity at purchase
was 60 days or less, or by amortizing the difference between market value on the
61st day prior to maturity and value on maturity date if their original term to
maturity at purchase exceeded 60 days.
Events affecting the values of certain portfolio securities that occur between
the close of trading on the principal market for such securities (foreign
exchanges and over-the-counter markets) and the regular close of the Exchange
will not be reflected in the Portfolios' calculations of net asset values unless
the Adviser believes that the particular event would materially affect net asset
value, in which case an adjustment would be made.
(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)
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.
(E)
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
47
<PAGE> 49
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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.
(F)
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.
(G)
USE OF ESTIMATES. The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
- --------------------------------------------------------------------------------
NOTE 3--Fees and Related Party Policies:
- --------------------------------------------------------------------------------
(A)
INVESTMENT ADVISORY AND ADMINISTRATION FEES. MacKay-Shields Financial
Corporation ("MacKay-Shields") acts as investment adviser to Cash Management
Portfolio under an Investment Advisory Agreement. MacKay-Shields is a
registered investment adviser, a wholly-owned subsidiary of NYLIFE Inc. and an
indirect wholly-owned subsidiary of New York Life. As of May 1, 1999, Madison
Square Advisors, Inc. ("Madison Square Advisors") acts as investment adviser to
Bond and Growth Equity Portfolios under an Investment Advisory Agreement.
Madison Square Advisors is a registered investment adviser, a wholly-owned
subsidiary of NYLIFE Inc. and an indirect subsidiary of New York Life. Prior to
May 1, 1999, New York Life acted as investment adviser to the Bond and Growth
Equity Portfolios and was replaced by Madison Square Advisors under a
Substitution Agreement. The substitution had no effect on investment personnel,
investment strategies or fees of the Portfolios.
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.
48
<PAGE> 50
MAINSTAY VP SERIES FUND, INC.
(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, 1999, these fees in the following amounts, were included
in Professional fees shown on the Statement of Operations:
<TABLE>
<S> <C>
Cash Management Portfolio................................... $ 5,022
Bond Portfolio.............................................. 5,611
Growth Equity Portfolio..................................... 19,846
</TABLE>
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NOTE 4--Federal Income Tax:
- --------------------------------------------------------------------------------
Cash Management utilized $460 of capital loss carryforwards during the year
ended December 31, 1998.
- --------------------------------------------------------------------------------
NOTE 5--Line of Credit:
- --------------------------------------------------------------------------------
Bond and Growth Equity Portfolios maintain a line of credit of $375,000,000
with The Bank of New York in order to secure a source of funds for temporary
purposes to meet unanticipated or excessive shareholder redemption requests.
The Portfolios pay a commitment fee, at an annual rate of 0.065% of the average
commitment amount, regardless of usage. Such commitment fees are allocated
amongst the Portfolios based upon net assets and other factors. Interest on any
revolving credit loan is charged based upon the Federal Funds Advances rate.
There were no borrowings on this line of credit at June 30, 1999.
- --------------------------------------------------------------------------------
NOTE 6--Purchases and Sales of Securities (in 000's):
- --------------------------------------------------------------------------------
During the six month period ended June 30, 1999, purchases and sales of
securities, other than securities subject to repurchase transactions and
short-term securities, were as follows:
<TABLE>
<CAPTION>
BOND GROWTH EQUITY
PORTFOLIO PORTFOLIO
PURCHASES SALES PURCHASES SALES
<S> <C> <C> <C> <C>
--------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C>
U.S. Government Securities.................................. $198,109 $175,782 $ -- $ --
All others.................................................. 206,095 195,542 372,289 315,680
--------------------------------------------
Total....................................................... $404,204 $371,324 $372,289 $315,680
============================================
</TABLE>
- --------------------------------------------------------------------------------
NOTE 7--Capital Share Transactions (in 000's):
- --------------------------------------------------------------------------------
Transactions in capital shares for the six month period ended June 30, 1999 and
the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
CASH MANAGEMENT BOND GROWTH EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
1999 1998 1999 1998 1999 1998
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold.......................................... 424,608 485,911 3,209 4,582 3,658 5,372
Shares issued in reinvestment of
dividends and distributions........................ 5,707 8,753 2 1,627 -- 3,440
---------------------------------------------------------------
430,315 494,664 3,211 6,209 3,658 8,812
Shares redeemed...................................... (336,496) (403,894) (1,515) (2,659) (3,297) (3,977)
---------------------------------------------------------------
Net increase......................................... 93,819 90,770 1,696 3,550 361 4,835
===============================================================
</TABLE>
49
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50
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MAINSTAY VP SERIES FUND, INC.
(THIS PAGE INTENTIONALLY LEFT BLANK)
51
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(THIS PAGE INTENTIONALLY LEFT BLANK)
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
Anthony W. Polis, Treasurer
Sara L. Badler, Secretary
Richard D. Levy, Controller
INVESTMENT ADVISERS
MacKay-Shields Financial Corporation
Madison Square Advisors, Inc.
ADMINISTRATOR
New York Life Insurance and Annuity Corporation
CUSTODIANS
The Bank of New York
The Chase Manhattan Bank, N.A.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
* As of June 30, 1999.
The financial information included herein is taken from the records of the Funds
without examination by the Funds' independent accountants, who do not express an
opinion thereon.
<PAGE> 55
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