<PAGE>
SOUND INVESTING IN
A SEA OF CHANGE
- --------------------------------------------------------------------------------
1995 ANNUAL REPORT
- --------------------------------------------------------------------------------
MAINSTAY
INSTITUTIONAL FUNDS INC.
<PAGE>
Performance Highlights--Total Returns/4/
12 Months Ended December 31, 1995
<TABLE>
<CAPTION>
-----------------------
SEC Average Annual
Total Returns
as of December 31, 1995
- ---------------------------------------------------------------------------------------------------------------------------------
Funds 1991 1992 1993 1994 1995 1 Year 5 Year Since Inception
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Funds
- ---------------------------------------------------------------------------------------------------------------------------------
EAFE Index (Instl. Class)/2/ 10.10% -12.22% 28.97% 6.83% 9.03% 9.03% 7.74% 7.74%
- ---------------------------------------------------------------------------------------------------------------------------------
EAFE Index (Serv. Class)/1/ 10.10 -12.22 28.97 6.83 8.63 8.63 7.66 7.66
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Equity (Instl. Class)/2/ 67.00 5.63 9.59 -2.23 37.88 37.88 21.12 21.12
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Equity (Serv. Class)/1/ 67.00 5.63 9.59 -2.23 37.50 37.50 21.05 21.05
- ---------------------------------------------------------------------------------------------------------------------------------
Indexed Equity (Instl. Class)/2/ 29.80 7.19 9.41 0.90 36.88 36.88 16.02 16.02
- ---------------------------------------------------------------------------------------------------------------------------------
Indexed Equity (Serv. Class)/1/ 29.80 7.19 9.41 0.90 36.70 36.70 15.99 15.99
- ---------------------------------------------------------------------------------------------------------------------------------
International Equity (Instl. Class)/3/ N/A N/A N/A N/A 7.17 7.17 N/A 7.17
- ---------------------------------------------------------------------------------------------------------------------------------
International Equity (Serv. Class)/3/ N/A N/A N/A N/A 6.86 6.86 N/A 6.86
- ---------------------------------------------------------------------------------------------------------------------------------
Multi-Asset (Instl. Class)/2/ 17.90 7.09 8.79 -0.86 26.81 26.81 11.55 11.55
- ---------------------------------------------------------------------------------------------------------------------------------
Multi-Asset (Serv. Class)/1/ 17.90 7.09 8.79 -0.86 26.70 26.70 11.53 11.53
- ---------------------------------------------------------------------------------------------------------------------------------
Value Equity (Instl. Class)/2/ 36.60 20.71 14.90 1.22 29.42 29.42 19.94 19.94
- ---------------------------------------------------------------------------------------------------------------------------------
Value Equity (Serv. Class)/1/ 36.60 20.71 14.90 1.22 29.32 29.32 19.92 19.92
- ---------------------------------------------------------------------------------------------------------------------------------
Fixed Income Funds
- ---------------------------------------------------------------------------------------------------------------------------------
Bond (Instl. Class)/2/ 14.00% 6.39% 9.74% -3.31% 17.88% 17.88% 8.69% 8.69%
- ---------------------------------------------------------------------------------------------------------------------------------
Bond (Serv. Class)/1/ 14.00 6.39 9.74 -3.31 17.55 17.55 8.63 8.63
- ---------------------------------------------------------------------------------------------------------------------------------
Indexed Bond (Instl. Class)/2/ 14.70 7.09 9.64 -3.44 18.07 18.07 8.95 8.95
- ---------------------------------------------------------------------------------------------------------------------------------
Indexed Bond (Serv. Class)/1/ 14.70 7.09 9.64 -3.44 17.97 17.97 8.94 8.94
- ---------------------------------------------------------------------------------------------------------------------------------
International Bond (Instl. Class)/3/ N/A N/A N/A N/A 18.46 18.46 N/A 18.46
- ---------------------------------------------------------------------------------------------------------------------------------
International Bond (Serv. Class)/3/ N/A N/A N/A N/A 18.26 18.26 N/A 18.26
- ---------------------------------------------------------------------------------------------------------------------------------
Money Market5 (Instl. Class)/2/ 5.95 3.66 2.89 3.88 5.63 5.63 4.39 4.39
- ---------------------------------------------------------------------------------------------------------------------------------
Money Market5 (Serv. Class)/1/ 5.95 3.66 2.89 3.88 5.46 5.46 4.36 4.36
- ---------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond (Instl. Class)/2/ 11.30 5.94 5.67 0.11 10.27 10.27 6.58 6.58
- ---------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond (Serv. Class)/1/ 11.30 5.94 5.67 0.11 10.07 10.07 6.54 6.54
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Performance figures for the Service Class, first offered to the public on
1/1/95, include the historical performance of the Institutional Class from
the Funds' inception (1/2/91) up to December 31, 1994. Performance figures
for these two Classes after this date will vary based on differences in
their expense structures.
/2/ The inception date of these Institutional Class shares and the date such
shares were first offered to the public is 1/2/91.
/3/ The inception date of the International Equity Fund and International Bond
Fund shares and the date such shares were first offered to the public is
1/1/95.
/4/ The total return reflects the annual return on an investment including
appreciation and dividends or interest. Total returns shown herein include
the change in share price and reinvestment of capital gains distributions
and dividends, and, for the Service Class shares, include the service fee of
.25%.
/5/ The Money Market Fund-Institutional Class had an effective 7-day yield of
5.48% with an average 7-day yield of 5.34%, both as of 12/27/95. The Money
Market Fund-Service Class had an effective 7-day yield of 5.21% with an
average 7-day yield of 5.08%, both as of 12/27/95. The Administrator has
agreed to assume a portion of the expenses for these Funds. Had certain
expenses not been assumed by the Administrator, the effective 7-day yield
and the average 7-day yield would have been 5.34% and 5.21%, respectively,
for the Institutional Class and 5.08% and 4.95%, respectively, for the
Service Class.
Investments in the Money Market Fund are neither insured nor guaranteed by
the U.S. Government, and there is no assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that upon redemption, shares may be worth
more or less than their original cost.
Performance figures for each Fund reflect the waiver (through 1993 for the
Value Equity Fund and Growth Equity Fund) of a portion of New York Life
Insurance Company's fees (up to the amount of such fees), received as
Administrator for each Fund, to the extent necessary to limit the total
operating expenses of such Funds. As a result, total return figures, which
take into account this fee waiver, would have been lower had New York Life
not waived its administrative fees.
The Funds currently offer two Classes of shares. Investors should consider,
when deciding whether to purchase a particular Class of shares, the services
desired and other relevant factors.
See prospectus for more detailed information. The Funds' prospectus contains
more information about advisory fees, other expenses and share classes.
Please read it carefully before you invest or send money.
The Institutional Class shares are sold with no sales charge. The Service
Class shares, first offered 1/1/95, are sold with no initial or contingent
deferred sales charge, but are subject to an annual shareholder service fee
of .25%.
Foreign investing may be subject to greater risks than domestic investing.
These may include securities markets that are less efficient, less liquid
and more volatile than those in the United States, as well as foreign
currency fluctuations and different governmental regulatory concerns.
<PAGE>
----------------------------------------
TABLE OF CONTENTS
----------------------------------------
Contents
Chairperson's Letter 2
PORTFOLIO MANAGERS' COMMENTS
&
FINANCIAL STATEMENTS
EQUITY FUNDS
EAFE Index Fund 4
Growth Equity Fund 18
Indexed Equity Fund 25
International Equity Fund 38
Multi-Asset Fund 51
Value Equity Fund 66
FIXED INCOME FUNDS
Bond Fund 73
Indexed Bond Fund 80
International Bond Fund 89
Money Market Fund 97
Short-Term Bond Fund 105
Note 1 Organization and Business 111
Note 2 Significant Accounting Policies 112
Note 3 Fees and Related Party Policies 115
Note 4 Federal Income Tax 117
Note 5 Financial Investments 118
Note 6 Purchase and Sales of Securities 120
Note 7 Capital Share Transactions 120
Report of Independent Accountants 122
<PAGE>
----------------------------------------
CHAIRPERSON'S
LETTER
----------------------------------------
[PHOTO OF ALICE T. KANE APPEARS HERE]
Alice T. Kane, Chairperson
REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
We are pleased to report to you on the activities and investment results of the
MainStay(R) Institutional Funds for the twelve months ended December 31, 1995.
The U.S. capital markets provided an extraordinary and unexpected feast for
investors in 1995. After a gloomy 1994, the stock market advanced rapidly,
providing its best returns since 1975: the S&P 500 Stock Index+ returned 37.53%
for 1995. The Dow Jones Industrial Average broke the 4000 and 5000 barriers, to
return 36.94% -- its biggest jump in the post-World War II era. The NASDAQ
Composite Index, which is composed of smaller capitalization issues, finished
the year with a robust return of 39.92%, led by soaring technology stocks.* (S)
These advances were helped by positive fundamentals: low inflation, strong
productivity gains, solid profit growth, moderate economic growth, and lower
interest rates. Technology stocks were strong from January through most of the
third quarter, and financial, airlines, and healthcare were among the leading
industries throughout the year.
Bond investors also had reasons to celebrate, enjoying the strongest year in 10
years and the third best annual total return since records have been kept. The
Lehman Brothers Government/Corporate Bond Index,++ for example, returned a
remarkable 19.24% for 1995. The elusive "soft landing" became a reality and
provided an environment of slowing economic growth and falling inflation. This,
combined with fiscal restraint, consequently drove interest rates down and bond
prices up. The resulting rise in bond prices helped advance total returns in
most of our fixed-income portfolios.
Around the globe, interest rates in Europe headed lower as the global economy
faltered, Japanese bond yields were very low, and the dollar showed signs of
reversing a long-term downward spiral. Most world stock markets could not keep
pace with the U.S. stock markets. On average, European stocks rose 12.3%. Asian
markets were mixed, with the important Japanese market reaching its low in July
and rallying in the second half of 1995, but ending the year with less than a 1%
total return. During 1995, Latin America was the worst performing region, with
Mexico, Brazil and Colombia posting double-digit losses.
FUND PERFORMANCE AND MORNINGSTAR RECOGNITION
In this market context, we are pleased to report that all of the MainStay
Institutional Funds provided positive total returns for the year ended 12/31/95.
Four of the Funds posted their highest annual total returns since their
inception. Year-end 1995 was a milestone for most of our Institutional Funds
which have been in operation since 1/2/91, and we are now able to report a five-
year performance history. 1995 also represented the first full year of operation
for the International Equity and International Bond Funds.
As of 12/31/95, Morningstar, Inc.** rated the MainStay Institutional Value
Equity Fund five-stars overall among all equity funds, placing it among the top
10% of all equity funds. Both the Bond Fund and the Indexed Bond Fund received
four-star ratings overall from Morningstar in the fixed-income category, to rank
among the top 33% of all fixed-income funds. The Value Equity Fund ranking is
based on the three-year period from December 31, 1992 to December 31, 1995 among
1,394 equity funds and on the five-year period from December 31, 1990 to
December 31, 1995 among 950 equity funds. The Bond Fund and Indexed Bond Fund
ratings are based on the same three-year and five-year periods among 765 and 439
fixed income funds, respectively.
2
<PAGE>
MARKET OUTLOOK
Looking ahead to the coming year, we feel it is unlikely to conjure a repeat of
the returns of 1995. However, we believe the case for the continuation of the
same positive fundamentals which gave vibrancy to the market of 1995 will depend
on continued low inflation aided by strong productivity gains, steady, moderate
economic growth and low interest rates. The consensus view in the marketplace is
that 1996 may be more realistic in terms of the historical norms for stock and
bond returns (i.e., approximately 10% for stocks and 8% for bonds)(S)(S).
However, we believe wise investors should ponder the risks they face in 1996 and
not become overly complacent.
At MainStay Institutional Funds, we remain committed to helping our shareholders
pursue their investment goals. As a MainStay shareholder, you have played an
important role in our success, and we look forward to serving your investment
needs for many years to come.
Sincerely,
/s/ Alice T. Kane
Alice T. Kane January 1996
- --------------------------------------------------------------------------------
* Past performance is no guarantee of future results.
+ The S&P 500 Stock Index is a registered trademark of Standard & Poor's
Corporation. S&P 500 Stock Index is an unmanaged index that is considered
representative of the U.S. stock market.
(S) Performance for funds other than MainStay Institutional Funds is based on
data from Lipper Analytical Services, Inc. and Ibbotson Associates'
EnCorr Software. Both Lipper and Ibbotson are independent monitors of
mutual fund performance. Results do not reflect any deduction of sales
charges and are based on total returns with capital gains and dividends
reinvested.
++ The Lehman Brothers Government/Corporate Bond Index is an unmanaged index
generally considered representative of the U.S. intermediate-term bond
index.
** Morningstar, Inc. is an independent fund performance monitor. Its ratings
reflect historic risk-adjusted performance, which does not include sales
charges, and may change monthly. Its ratings of 1 (low) and 5 (high)
stars are based on a fund's 3 and 5-year average annual returns with fee
adjustments, and a risk factor that reflects fund performance relative to
3-month Treasury bill monthly returns. As of 12/31/95, the Value Equity,
Bond, and Indexed Bond Funds' three- and five-year ratings were 4 and 5
stars out of 1,394 and 950 funds in the equity category, and 4 and 4
stars, and 4 and 4 stars out of 765 and 439 funds in the fixed-income
category, respectively. Only 10% of the funds in an investment category
may receive 5 stars, 22.5% may receive 4 stars, 35% may receive 3 stars,
and 22.5% may receive 2 stars. Ratings reflect Institutional Class
performance only. Service Class shares, the International Equity Fund and
the International Bond Fund, all introduced January 1, 1995, will not be
rated by Morningstar until they have a three-year operating history.
(S)(S) Source: (C) Ibbotson Associates' EnCorr Software, U.S. Investment
Benchmarks: Chicago, IL. Used with permission. All rights reserved.
3
<PAGE>
----------------------------------------
PORTFOLIO MANAGERS'
COMMENTS
----------------------------------------
--------------------
EAFE Index Fund
--------------------
In 1995, the U.S. stock market soared, while many Pacific-based markets
languished through much of the year. European bourses posted quite respectable
gains, but except for the Swiss market, they lagged the S&P 500 Index+ by a good
margin.
Early in the year, as the U.S. market began its upward trajectory, Japanese
exporters were hit hard by the persistent strength of the yen. The situation
worsened before it got better, as the Japanese market was beset by a banking
crisis. If it weren't for particularly strong returns in December, the Japanese
stock market may have posted a loss for the year. As it was, it remained
essentially flat, returning just 0.69% in dollar terms.
In Europe, the picture was much brighter. The same factor that helped boost
returns on U.S. stocks -- low interest rates -- worked wonders across most of
the continent. Notable exceptions were Finland, Italy, and Austria. The Finnish
market fell apart in the fourth quarter, with Nokia (one of Finland's largest
corporate entities) losing almost 30%. This brought Finland's annual return down
to 4.6%. Italy fared even worse, as one political scandal after another pummeled
the market. The only Morgan Stanley Capital International (MSCI) Europe,
Australia, Far East (EAFE) Index(S) market to actually turn in a loss for the
year in U.S. dollar terms, however, was Austria. As a whole, the European
portion of the EAFE Index returned an impressive 21.6%.
Unfortunately for Fund investors, Europe makes up only slightly more than half
of the EAFE Index. Poor performance of Japanese stocks -- which make up 41% of
the Index -- depressed returns substantially. For the year, the MainStay
Institutional EAFE Index Fund gained 9.03% and 8.63% (Institutional Class and
Service Class shares, respectively) while the MSCI EAFE Index returned 11.21%.
The difference in returns between the Fund and the Index may be attributed to
the Fund's fees and expenses and negative tracking error. Some of the negative
tracking error experienced in 1995 was due to changes in the Index which
necessitated re-balancing of the portfolio. As the Fund's assets continue to
grow, the tracking error should diminish.
Holly V. Cox
James A. Mehling, CFA
Portfolio Managers
Note: Foreign investing may be subject to greater risks than domestic investing.
These may include securities markets that are less efficient, less liquid and
more volatile than those in the United States, as well as foreign currency
fluctuations and different governmental regulatory concerns.
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
EAFE INDEX FUND VS MSCI EAFE INDEX
INSTITUTIONAL CLASS SHARES
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
EAFE
Index MSCI
Fund EAFE Index
<S> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $11,010 $11,213
4Q 1992 $9,665 $9,848
4Q 1993 $12,464 $13,054
4Q 1994 $13,315 $14,070
4Q 1995 $14,517 $15,646
</TABLE>
- --------------------------------------------------------------------------------
[ ] EAFE Index Fund [ ] MSCI EAFE Index
Source: (C) Ibbotson Associates EnCorr Software
These graphs assume a $10,000 investment made on 1/2/91.
Note: See following page for additional footnotes regarding these performance
figures.
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
EAFE INDEX FUND VS MSCI EAFE INDEX
SERVICE CLASS SHARES
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
EAFE
Index MSCI
Fund EAFE Index
<C> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $11,010 $11,213
4Q 1992 $9,665 $9,848
4Q 1993 $12,464 $13,054
4Q 1994 $13,315 $14,070
4Q 1995 $14,464 $15,646
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
+ The S&P 500 Stock Index is a registered trademark of Standard & Poor's
Corporation. S&P 500 Stock Index is an unmanaged index that is considered
representative of the U.S. stock market.
(S) The MSCI EAFE Index is an unmanaged index generally considered
representative of the international stock market.
4
<PAGE>
<TABLE>
<CAPTION>
Total Return* SEC Average Annual Total Return*
Performance as of December 31, 1995 as of December 31, 1995
- -----------------------------------------------------------------------------------------------------------------
1995 One Year Five Year Since Inception
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EAFE Index Fund Institutional Class 9.03% 9.03% 7.74% 7.74%
EAFE Index Fund Service Class** 8.63% 8.63% 7.66% 7.66%
Average Lipper++ International Fund 9.41% 9.41% 10.16% 10.16%
MSCI EAFE Index 11.21% 11.21% 9.37% 9.37%
</TABLE>
Year-By-Year Performance
- --------------------------------------------------------------------------------
[BAR GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Institutional Class Shares
<S> <C>
Total Return %*
1991 10.10
1992 -12.22
1993 28.97
1994 6.83
1995 9.03
</TABLE>
Portfolio Composition (% of net assets as of December 31, 1995)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Common Stocks 98.15%
Cash & Equivalents 0.45%
Other 1.40%
</TABLE>
Top 10 Holdings
(% of net assets as of December 31, 1995)
1. Toyota Motor Corp. 1.53%
2. Royal Dutch Petroleum Co. 1.30%
3. US Treasury Bill 1.30%
4. Industrial Bank of Japan, Ltd. 1.28%
5. Sumitomo Bank, Ltd. 1.22%
6. Fuji Bank, Ltd. 1.21%
7. Roche Holdings AG 1.14%
8. Dai-Ichi Kangyo Bank, Ltd. 1.10%
9. British Petroleum Co. Plc 0.97%
10. Nestle SA Registered 0.90%
Top 5 Countries
(% of net assets as of December 31, 1995)
1. Japan 40.46%
2. United Kingdom 16.19%
3. Germany 7.12%
4. France 5.88%
5. Switzerland 5.81%
- --------------------------------------------------------------------------------
** Performance figures for the Service Class, first offered to the public on
1/1/95, include the historical performance of the Institutional Class from
the Funds' inception (1/2/91) up to December 31, 1994. Performance figures
for these two Classes after this date will vary based on differences in their
expense structures.
* The total return reflects the annual return on an investment including
appreciation and dividends or interest. Total returns shown herein include
the change in share price and reinvestment of capital gains distributions and
dividends, and, for the Service Class shares, include the service fee of
.25%.
++ Lipper Analytical Services Inc. is an independent monitor of mutual fund
performance. Lipper results do not reflect any deduction of sales charges and
are based on total returns with capital gains and dividends reinvested.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that upon redemption, shares may be worth
more or less than their original cost.
The Institutional Class shares are sold with no sales charge. The Service
Class shares, first offered 1/1/95, are sold with no initial or contingent
deferred sales charge, but are subject to an annual shareholder service fee
of .25%.
Unlike other funds which generally seek to "beat" the market, index funds
seek to "match" their respective indices.
5
<PAGE>
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
COMMON STOCKS (98.2%)+
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
AUSTRALIA (2.6%)
Boral, Ltd. (building materials & components).............. 12,500 $ 31,614
Broken Hill Proprietary Co., Ltd. (energy sources)......... 17,270 244,084
Coles Myer, Ltd. (merchandising)........................... 40,137 125,099
CRA, Ltd. (metals-nonferrous).............................. 16,447 241,513
National Australian Bank, Ltd. (banking)................... 42,900 386,130
News Corp., Ltd.
(broadcasting & publishing)............................... 33,000 176,250
Pacific Dunlop, Ltd.
(multi-industry).......................................... 25,200 59,046
Pioneer International, Ltd. (building materials &
components)............................................... 42,400 109,443
Smith (Howard), Ltd.
(multi-industry).......................................... 20,900 98,721
Westpac Banking Corp., Ltd. (banking)...................... 70,800 313,885
WMC, Ltd. (metals-nonferrous).............................. 44,600 286,644
-----------
2,072,429
-----------
AUSTRIA (0.5%)
Bank Austria AG (banking).................................. 1,750 141,456
Creditanstalt-Bankverein Stamm (banking)................... 700 38,857
EA-Generali AG (insurance)................................. 500 149,946
Flughafen Wien AG
(transportation-airlines)................................. 700 46,573
-----------
376,832
-----------
BELGIUM (1.3%)
Electrabel, SA
(utilities-electrical & gas).............................. 1,800 428,148
Fortis AG (insurance)...................................... 3,200 389,274
Petrofina, SA (energy sources)............................. 820 251,051
-----------
1,068,473
-----------
DENMARK (0.8%)
Dampskibsselskabet AF 1912 AS Class B
(transportation-shipping)................................. 7 133,892
Dampskibsselskabet Svendborg AS Class B
(transportation-shipping)................................. 4 110,433
Den Danske Bank (banking).................................. 1,800 124,400
FLS Industries AS Class B (machinery & engineering)........ 700 54,315
Novo Nordisk AS Class B
(health & personal care).................................. 1,400 191,995
-----------
615,035
-----------
FINLAND (0.7%)
Kesko
(food & household products)............................... 3,400 42,363
</TABLE>
- --------
+ Percentages indicated are based on Fund net assets.
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
FINLAND (Continued)
Kone Corp. Class B
(transportation-shipping)................................. 1,900 $ 158,843
Metra Oy Class B
(machinery & engineering)................................. 2,300 94,818
Nokia AB Class A (electronic components & instruments)..... 4,500 177,222
Pohjola Insurance Group Class B (insurance)................ 4,600 59,327
-----------
532,573
-----------
FRANCE (5.9%)
Alcatel Alsthom
(electrical & electronics)................................ 2,500 215,832
AXA Groupe (insurance)..................................... 6,000 404,876
Compagnie de Saint Gobain
(misc.-materials & components)............................ 1,670 185,086
Compagnie Financiere de Paribas, SA Class A (banking)...... 3,400 186,673
Compagnie Fonciere International (banking)................. 50 3,578
Compagnie Generale de Geophysique (energy equipment &
service) (a).............................................. 300 9,876
Compagnie Generale des Eaux (business & public services)... 2,572 257,127
Credit National (banking).................................. 2,744 201,997
Dollfus-Mieg & Cie
(textiles & apparel)...................................... 2,450 100,146
Elf Aquitaine (energy sources)............................. 4,800 354,132
Etablissements Economiques du Casino Guichard-Perrachon
(merchandising)........................................... 6,100 177,248
Groupe Danone
(food & household products)............................... 1,675 276,748
LaFarge Coppee (building materials & components)........... 1,936 124,900
L'Air Liquide (chemicals).................................. 2,631 436,347
L'Oreal (health & personal care)........................... 1,300 348,501
LVMH-Moet Hennessy Louis Vuitton (beverages & tobacco)..... 2,310 481,803
Michelin (CGDE) Class B
(industrial components)................................... 3,200 127,794
PSA Peugeot Citroen, SA (automobiles)...................... 1,150 151,910
Sanofi SA (health & personal care)......................... 5,440 349,178
Societe Generale (banking)................................. 1,600 197,940
Union des Assurances de Paris (UAP) (insurance)............ 5,000 130,767
-----------
4,722,459
-----------
GERMANY (7.1%)
AGIV AG Fuer Industrie & Verkehrswesen (multi-industry).... 3,000 65,605
Allianz AG Holding (insurance)............................. 272 535,153
BASF AG (chemicals)........................................ 1,950 440,062
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
6
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
GERMANY (Continued)
Bayer AG (chemicals)....................................... 1,900 $ 505,507
Bayerische Hypotheken & Wechsel Bank AG (banking).......... 12,450 314,712
Bayerische Vereinsbank AG (banking)........................ 6,630 199,186
Beiersdorf AG
(health & personal care).................................. 200 137,639
Daimler Benz Aktiengesellschaft AG (automobiles)........... 920 465,375
Deutsche Bank AG (banking)................................. 8,100 385,397
Dresdner Bank AG (banking)................................. 600 16,118
Heidelberger Zement AG (building materials & components)... 110 69,015
Hochtief AG
(construction & housing).................................. 350 149,901
Mannesmann AG
(machinery & engineering)................................. 860 274,293
Muenchener Rueckversicherungs-Gesellschaft (insurance)..... 150 323,837
RWE AG
(utilities-electrical & gas).............................. 840 306,062
RWE AG Vorzug
(utilities-electrical & gas).............................. 800 223,577
Siemens AG
(electrical & electronics)................................ 1,150 633,141
Strabag AG
(construction & housing).................................. 500 88,907
VEBA AG
(utilities-electrical & gas).............................. 6,900 296,001
Viag AG (multi-industry)................................... 700 289,043
-----------
5,718,531
-----------
HONG KONG (3.0%)
Cathay Pacific Airways (transportation-airlines)........... 90,000 137,349
Cheung Kong (Holdings) Ltd. (construction & housing)....... 40,000 243,664
China Light & Power Co., Ltd. (utilities-electrical &
gas)...................................................... 31,200 143,651
Chinese Estates Holdings
(multi-industry).......................................... 60,000 39,186
Hang Lung Development Co.
(multi-industry).......................................... 38,000 60,450
Hang Seng Bank Ltd. (banking).............................. 32,000 286,602
Hong Kong & China Gas Co., Ltd. (utilities-electrical &
gas)...................................................... 61,344 98,776
Hong Kong Telecommunications Ltd. (telecommunications)..... 150,000 267,720
Hopewell Holdings Ltd. (construction & housing)............ 100,000 57,550
Hutchison Whampoa Ltd.
(multi-industry).......................................... 69,000 420,320
Miramar Hotel & Investment Ltd. (leisure & tourism)........ 50,000 105,405
New World Development Co., Ltd. (multi-industry)........... 34,000 148,189
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
HONG KONG (Continued)
Shangri-La Asia Ltd.
(multi-industry)........................................... 38,000 $ 46,444
Sun Hung Kai Properties Ltd. (construction & housing)....... 33,000 269,950
Swire Pacific Ltd. Class A
(multi-industry)........................................... 9,500 73,720
Winsor Industrial Corp., Ltd. (textiles & apparel).......... 30,000 25,413
-----------
2,424,389
-----------
IRELAND (0.4%)
Allied Irish Bank Plc (banking)............................. 12,000 65,008
Independent Newspapers Plc (broadcasting & publishing)...... 30,000 185,379
Irish Life Plc (insurance).................................. 15,000 56,977
-----------
307,364
-----------
ITALY (2.1%)
Alleanza Assicurazioni di Risp NC (insurance)............... 57 404
Assicurazioni Generali SPA (insurance)...................... 12,100 293,270
Banca Commerciale Italiana SPA (banking).................... 48,500 103,640
Cementir SPA (building materials & components).............. 62,000 49,240
Credito Italiano SPA (banking).............................. 66,000 76,963
Edison SPA (energy sources)................................. 18,200 78,471
Fiat SPA (automobiles)...................................... 36,000 117,094
Fiat SPA-Priv (automobiles)................................. 35,000 63,980
Fidis Finanziaria di Sviluppo SPA (financial services)...... 25,000 47,985
Istituto Mobiliare Italiano SPA (banking)................... 9,600 60,514
Istituto Nazionale delle Assicurazioni (INA) (insurance).... 65,700 87,177
Magneti Marelli SPA (automobiles)........................... 53,000 64,978
Mediobanca SPA
(financial services)....................................... 9,850 68,267
Montedison SPA
(multi-industry) (a)....................................... 70,000 46,949
Pirelli SPA
(industrial components) (a)................................ 72,000 93,038
SME Meridonale
(food & household products)................................ 45,000 92,048
Snia BPD SPA (multi-industry) (a)........................... 50,400 42,094
Telecom Italia SPA (telecommunications)..................... 90,000 140,121
Telecom Italia Mobile SPA (telecommunications) (a).......... 90,000 158,562
-----------
1,684,795
-----------
JAPAN (40.5%)
Ajinomoto Co., Inc.
(food & household products)................................ 5,000 55,743
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
7
<PAGE>
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
JAPAN (Continued)
Arabian Oil Co., Ltd.
(energy sources).......................................... 2,000 $ 83,372
Asahi Bank, Ltd. (banking)................................. 38,000 478,903
Asahi Breweries, Ltd.
(beverages & tobacco)..................................... 14,000 165,581
Asahi Chemical Industry Co., Ltd. (chemicals).............. 46,000 352,296
Asahi Glass Co., Ltd.
(misc.-materials & components)............................ 12,000 133,783
Ashikaga Bank Ltd. (banking)............................... 19,000 118,621
Bank of Tokyo (banking).................................... 31,000 543,954
Bank of Yokohama, Ltd. (banking)........................... 11,000 90,110
Banyu Pharmaceutical Co., Ltd. (health & personal care).... 15,000 184,679
Bridgestone Corp.
(industrial components)................................... 10,000 158,989
Brother Industries, Ltd. (appliances & household durables). 12,000 65,262
Canon, Inc. (recreation & other consumer goods)............ 18,000 326,315
Chiba Bank, Ltd. (banking)................................. 25,000 225,395
Chichibu Onoda Cement Corp. (building materials &
components)............................................... 22,000 117,515
Chiyoda Corp.
(machinery & engineering)................................. 5,000 49,442
Chugai Pharmaceutical Co., Ltd. (health & personal care)... 10,000 95,878
Citizen Watch Co., Ltd. (recreation & other consumer
goods).................................................... 19,000 145,513
Dai-Ichi Kangyo Bank, Ltd. (banking)....................... 45,000 885,587
Dai Nippon Printing Co., Ltd. (business & public
services)................................................. 7,000 118,757
Daiei, Inc. (merchandising)................................ 17,000 206,006
Daikin Industries Ltd.
(machinery & engineering)................................. 6,000 58,748
Dainippon Ink & Chemical Co., Ltd. (chemicals)............. 33,000 153,879
Daishowa Paper Manufacturing Co., Ltd.
(forest products & paper) (a)............................. 8,000 62,044
Daiwa House Industry Co., Ltd. (construction & housing).... 8,000 131,844
Daiwa Securities Co., Ltd.
(financial services)...................................... 23,000 352,296
Ebara Corp.
(machinery & engineering)................................. 6,000 87,832
Eisai Co., Ltd.
(health & personal care).................................. 6,000 105,281
Fanuc Co., Ltd. (electronic components & instruments)...... 5,000 216,671
Fuji Bank, Ltd. (banking).................................. 44,000 972,545
Fuji Photo Film Co., Ltd. (recreation & other consumer
goods).................................................... 13,000 375,562
Fujitsu, Ltd.
(data processing & reproduction).......................... 31,000 345,607
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
JAPAN (Continued)
Furukawa Electric Co., Ltd. (industrial components)........ 15,000 $ 73,436
Gakken (broadcasting &
publishing) (a)........................................... 13,000 85,699
Gunma Bank (banking)....................................... 14,000 150,651
Hitachi, Ltd.
(electrical & electronics)................................ 57,000 574,685
Hokuriku Bank (banking).................................... 27,000 169,352
Honda Motor Co., Ltd. (automobiles)........................ 19,000 392,335
Honshu Paper Co., Ltd.
(forest products & paper)................................. 14,000 85,775
Industrial Bank of Japan, Ltd. (banking)................... 34,000 1,031,682
Ito-Yokado Co., Ltd. (merchandising)....................... 7,000 431,597
Japan Air Lines Co., Ltd. (transportation-airlines) (a).... 36,000 239,065
Japan Energy Corp.
(energy sources).......................................... 34,000 114,043
Japan Steel Works (metals-steel)........................... 58,000 165,868
Jeol (electronic components & instruments) (a)............. 13,000 110,652
Joyo Bank, Ltd. (banking).................................. 18,000 144,835
Kajima Corp.
(construction & housing).................................. 20,000 197,766
Kamigumi Co., Ltd.
(business & public services).............................. 22,000 211,358
Kansai Electric Power Co., Inc. (utilities-ELECTRICAL &
GAS)...................................................... 8,888 215,410
Kao Corp.
(food & household products)............................... 4,000 49,636
Kawasaki Steel Corp. (metals-steel)........................ 66,000 230,340
Keihin Electric Express Railway (transportation-road &
rail)..................................................... 16,000 96,013
Kinki Nippon Railway Co., Ltd. (transportation-road &
rail)..................................................... 54,000 408,326
Kirin Brewery Co., Ltd.
(beverages & tobacco)..................................... 7,000 82,790
Kobe Steel, Ltd. (metals-steel) (a)........................ 48,000 148,440
Komatsu, Ltd.
(machinery & engineering)................................. 15,000 123,603
Kubota Corp.
(machinery & engineering)................................. 39,000 251,425
Kumagai Gumi Co., Ltd. (construction & housing)............ 33,000 132,766
Kurabo Industries
(textiles & apparel)...................................... 15,000 57,440
Kyocera Corp. (electronic components & instruments)........ 3,000 223,070
Kyowa Hakko Kogyo
(health & personal care).................................. 8,000 75,539
Makita Corp.
(electrical & electronics)................................ 4,000 63,983
Marubeni Corp.
(wholesale & international trade)......................... 16,000 86,707
Marui Co., Ltd. (merchandising)............................ 8,000 166,744
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
8
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
JAPAN (Continued)
Matsushita Electric Industrial Co., Ltd. (appliances &
household durables)....................................... 32,000 $ 521,171
Mitsubishi Chemical Corp. (chemicals)...................... 15,000 72,999
Mitsubishi Corp. (multi-industry).......................... 28,000 344,733
Mitsubishi Estate Co., Ltd. (construction & housing)....... 19,000 237,610
Mitsubishi Heavy Industries, Ltd. (machinery &
engineering).............................................. 72,000 574,452
Mitsubishi Oil Co.
(energy sources).......................................... 8,000 71,118
Mitsubishi Trust & Banking Corp. (financial services)...... 23,000 383,511
Mitsui & Co., Ltd.
(wholesale & international trade)......................... 23,000 202,011
Mitsui Fudosan Co., Ltd. (construction & housing).......... 15,000 184,679
Mitsui Marine & Fire Insurance Co., Ltd. (insurance)....... 3,000 21,405
Mitsui O.S.K. Lines, Ltd. (transportation-shipping)........ 49,000 157,231
Mitsui Trust & Banking Co., Ltd. (financial services)...... 19,000 208,139
Mitsukoshi, Ltd. (merchandising)........................... 24,000 225,686
NEC Corp.
(electrical & electronics)................................ 27,000 329,805
New Oji Paper Co., Ltd.
(forest products & paper)................................. 16,000 144,874
NGK Insulators
(industrial components)................................... 11,000 109,837
Niigata Engineering Co., Ltd. (machinery & engineering).... 11,000 34,763
Nippon Express Co., Ltd. (transportation-road & rail)...... 32,000 308,358
Nippon Fire & Marine Insurance Co., Ltd. (insurance)....... 3,000 20,358
Nippon Light Metal Co.
(metals-nonferrous)....................................... 22,000 126,260
Nippon Meat Packers, Inc.
(food & household products)............................... 12,000 174,499
Nippon Oil Co., Ltd.
(energy sources).......................................... 17,000 106,794
Nippon Steel Corp. (metals-steel).......................... 83,000 284,839
Nippondenso Co., Ltd.
(industrial components)................................... 23,000 430,337
Nissan Motor Co., Ltd. (automobiles)....................... 32,000 246,006
Nisshinbo Industries
(textiles & apparel)...................................... 17,000 164,805
Nissin Food Products
(food & household products)............................... 9,000 211,145
NKK Corp. (metals-steel) (a)............................... 66,000 177,870
Nomura Securities Co., Ltd. (financial services)........... 30,000 654,375
Obayashi Corp.
(construction & housing).................................. 28,000 222,583
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
JAPAN (Continued)
Olympus Optical Co., Ltd. (recreation & other
consumer goods)........................................... 20,000 $ 193,888
Orient Corp. (financial services).......................... 30,000 170,427
Osaka Gas Co., Ltd.
(utilities-electrical & gas).............................. 15,000 51,914
Penta-Ocean Construction (construction & housing).......... 10,000 77,555
Pioneer Electronic Corp. (appliances & household
durables)................................................. 5,000 91,613
Sakura Bank, Ltd. (banking)................................ 48,000 609,586
Sankyo Co., Ltd.
(health & personal care).................................. 11,000 247,402
Sanrio Co., Ltd.
(business & public services).............................. 5,000 57,682
Sanyo Electric Co., Ltd. (appliances & household
durables)................................................. 32,000 184,582
Sapporo Breweries
(beverages & tobacco)..................................... 28,000 260,585
Seven-Eleven of Japan Co., Ltd. (merchandising)............ 6,000 423,454
Sharp Corp. (appliances & household durables).............. 18,000 287,924
Shimizu Corp.
(construction & housing).................................. 18,000 183,224
Shin-Etsu Chemical Co. (chemicals)......................... 11,000 228,207
Shionogi & Co., Ltd.
(health & personal care).................................. 9,000 75,820
Shiseido Co., Ltd.
(health & personal care).................................. 13,000 155,013
Shizuoka Bank, Ltd. (banking).............................. 16,000 201,643
Shochiku Co., Ltd.
(leisure & tourism)....................................... 5,000 54,774
Sony Corp. (appliances & household durables)............... 4,400 264,038
Sumitomo Bank, Ltd. (banking).............................. 46,000 976,617
Sumitomo Chemical Co., Ltd. (chemicals).................... 30,000 149,778
Sumitomo Corp.
(wholesale & international trade)......................... 34,000 346,089
Sumitomo Electric Industries, Ltd. (industrial
components)............................................... 21,000 252,443
Sumitomo Marine & Fire Insurance Co., Ltd. (insurance)..... 9,000 73,988
Sumitomo Metal Industries, Ltd. (metals-steel) (a)......... 38,000 115,303
Sumitomo Metal Mining Co., Ltd. (metals-nonferrous)........ 14,000 125,950
Taisei Corp.
(construction & housing).................................. 7,000 46,756
Taisho Pharmaceutical Co., Ltd. (health & personal care)... 10,000 197,767
Taiyo Yuden Co., Ltd. (electronic components &
instruments).............................................. 11,000 118,369
Takashimaya Co. (merchandising)............................ 13,000 207,945
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
9
<PAGE>
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
JAPAN (Continued)
Takeda Chemical Industries, Ltd. (health & personal care).. 13,000 $ 214,247
Teikoku Oil (energy sources)............................... 20,000 134,946
Tobu Railway Co., Ltd. (transportation-road & rail)........ 16,000 100,202
Tohoku Electric Power Co., Inc. (utilities-electrical &
gas)...................................................... 6,060 146,284
Tokai Bank, Ltd. (banking)................................. 29,000 404,840
Tokio Marine & Fire Insurance Co., Ltd. (insurance)........ 34,000 444,975
Tokyo Dome Corp.
(leisure & tourism)....................................... 6,000 102,955
Tokyo Electric Power Co., Inc. (utilities-electrical &
gas)...................................................... 13,130 351,315
Tokyo Electron, Ltd. (electronic components &
instruments).............................................. 5,000 193,889
Tokyo Gas Co., Ltd.
(utilities-electrical & gas).............................. 68,000 239,952
Tokyu Corp.
(transportation-road & rail).............................. 18,000 127,210
Toppan Printing Co., Ltd.
(business & public services).............................. 22,000 290,057
Tostem Corp. (building materials & components)............. 5,000 166,260
Toto, Ltd. (building materials & components)............... 3,000 41,880
Toyo Kanetsu
(energy equipment & service).............................. 11,000 56,411
Toyo Seikan Kaisha
(misc.-materials & components)............................ 6,000 179,735
Toyoda Automatic Loom Works, Ltd. (machinery &
engineering).............................................. 4,000 71,739
Toyota Motor Corp. (automobiles)........................... 58,000 1,231,386
Ube Industries, Ltd. (misc.-materials & components) (a).... 44,000 166,355
Yamaha Corp. (recreation & other consumer goods)........... 11,000 198,348
Yamaichi Securities Co., Ltd. (financial services)......... 10,000 77,846
Yamanouchi Pharmaceutical Co., Ltd. (health & personal
care)..................................................... 2,000 43,043
Yasuda Trust & Banking Co., Ltd. (financial services)...... 15,000 88,850
-----------
32,510,355
-----------
MALAYSIA (2.2%)
Golden Hope Plantations Berhad (food & household
products)................................................. 40,000 66,800
Hong Leong Properties Berhad (construction & housing)...... 60,000 62,388
Kuala Lumpur Kepong Berhad
(forest products & paper)................................. 47,000 149,018
Leader Universal Holdings Berhad (electrical &
electronics).............................................. 30,000 68,532
Malayan Banking Berhad (banking)........................... 22,000 185,434
Malaysia International Shipping Berhad (transportation-
shipping)................................................. 37,333 97,784
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
MALAYSIA (Continued)
Malaysian Airline System Berhad (transportation-airlines).. 50,000 $ 162,470
Malaysian Helicopter Services Berhad (transportation-
airlines)................................................. 11,600 14,985
Malaysian Resources Corp. Berhad (construction & housing).. 19,000 30,531
Metroplex Berhad
(construction & housing).................................. 80,000 65,224
Multi-Purpose Holdings Berhad (multi-industry)............. 27,000 39,560
Perlis Plantations Berhad
(multi-industry).......................................... 25,000 78,280
Resorts World Berhad
(leisure & tourism)....................................... 18,000 96,419
Sime Darby Berhad
(multi-industry).......................................... 80,000 212,688
Technology Resources Industries Berhad (multi-industry)
(a)....................................................... 29,000 85,666
Telekom Malaysia Berhad (telecommunications)............... 30,000 233,958
Tenaga Nasional Berhad
(utilities-electrical & gas).............................. 29,000 114,222
-----------
1,763,959
-----------
NETHERLANDS (3.9%)
ABN Amro Holding NV (banking).............................. 4,400 200,650
Elsevier NV
(broadcasting & publishing)............................... 29,670 396,094
Hollandsche Benton Groep NV (construction & housing)....... 1,000 152,840
Internationale Nederlanden Groep NV (insurance)............ 6,193 427,479
Koninklijke Hoogovens
(metals-steel)............................................ 1,000 33,500
Koninklijke KNP BT
(forest products & paper)................................. 3,200 82,246
Koninklijke Nedlloyd Groep NV (transportation-shipping).... 2,000 45,415
Koninklijke Pakhoed NV (transportation-shipping)........... 1,000 27,511
Philips Electronics NV (appliances & household durables)... 6,500 235,186
Royal Dutch Petroleum Co.
(energy sources).......................................... 7,455 1,042,684
Stork NV (multi-industry).................................. 2,700 67,037
Unilever NV
(food & household products)............................... 3,083 433,700
-----------
3,144,342
-----------
NEW ZEALAND (0.3%)
Carter Holt Harvey Ltd.
(forest products & paper)................................. 23,100 49,834
Fletcher Challenge Ltd.
(forest products & paper)................................. 35,100 81,000
Fletcher Forestry Shares
(forest products & paper)................................. 30,174 43,001
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
10
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
NEW ZEALAND (Continued)
Telecom Corp. of New Zealand Ltd. (telecommunications)..... 24,000 $ 103,553
-----------
277,388
-----------
NORWAY (0.4%)
Elkem AS Class A
(metals-nonferrous)....................................... 5,600 63,376
Norsk Hydro AS (energy sources)............................ 6,800 286,299
-----------
349,675
-----------
SINGAPORE (0.9%)
City Developments, Ltd.
(real estate)............................................. 29,000 211,172
Development Bank of Singapore, Ltd. Foreign Registered
(banking)................................................. 8,750 108,874
First Capital Corp., Ltd.
(multi-industry).......................................... 24,000 66,511
Singapore Airlines, Ltd. Foreign Registered
(transportation-airlines)................................. 15,000 139,982
United Overseas Bank, Ltd. Foreign Registered (banking).... 20,250 194,702
-----------
721,241
-----------
SPAIN (1.8%)
Banco Bilbao Vizcaya, SA (banking)......................... 6,367 229,349
Banco Espanol de Credito, SA (Banesto) (banking)........... 1,033 7,152
Banco Santander, SA (banking).............................. 3,100 155,618
Compania Sevillana de Electricidad (utilities-electrical &
gas)...................................................... 6,049 46,969
Empresa Nacional de Cellulosas SA (forest products &
paper).................................................... 1,000 16,239
Empresa Nacional de Electricidad, SA (utilities-electrical
& gas).................................................... 4,300 243,504
Gas Natural SDG, SA
(utilities-electrical & gas).............................. 1,200 186,950
Iberdrola, SA
(utilities-electrical & gas).............................. 18,500 169,268
Repsol, SA (energy sources)................................ 4,200 137,616
Telefonica de Espana (telecommunications).................. 19,056 263,889
-----------
1,456,554
-----------
SWEDEN (1.8%)
ASEA AB Class B
(utilities-electrical & gas).............................. 2,500 243,692
Astra AB Class A
(health & personal care).................................. 8,205 328,088
Stadshypotek AB (banking).................................. 3,000 60,206
Svenska Cellulosa AB Class B
(forest products & paper)................................. 10,000 155,419
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
SWEDEN (Continued)
Telefonaktiebolaget LM Ericsson Class B
(telecommunications)...................................... 19,672 $ 385,888
Volvo AB Class B (automobiles)............................. 13,030 267,394
-----------
1,440,687
-----------
SWITZERLAND (5.8%)
Ciba-Geigy AG Bearer (chemicals)........................... 315 276,496
Ciba-Geigy AG Registered (chemicals)....................... 285 251,401
CS Holding AG Registered
(financial services)...................................... 3,750 385,380
Grands Magasins Jelmoli SA (merchandising)................. 300 135,575
Holderbank Financiere Glarus AG Bearer (building materials
& components)............................................. 125 96,141
Holderbank Financiere Glarus AG Registered (building
materials & components)................................... 1,200 184,591
Nestle SA Registered
(food & household products)............................... 650 720,810
Roche Holding AG
(health & personal care).................................. 115 911,984
Sandoz AG Bearer
(health & personal care).................................. 75 69,222
Sandoz AG Registered
(health & personal care).................................. 670 614,887
Schindler Holding AG Participating (misc.-materials &
components)............................................... 125 129,818
Schindler Holding AG Registered (misc.-materials &
components)............................................... 75 80,824
Schweizerischer Bankverein Bearer (banking)................ 535 218,993
SGS Societe Generale de Surveillance Holding SA Bearer
(business & public services).............................. 110 218,920
SGS Societe Generale de Surveillance Holding SA Registered
(business & public services).............................. 250 85,821
Sika Finanz AG Registered (building materials &
components)............................................... 2,400 96,988
SMH AG Registered (recreation & other consumer goods)...... 500 65,615
Sulzer AG Participating
(industrial components)................................... 100 53,448
Sulzer AG Registered
(industrial components)................................... 125 71,699
-----------
4,668,613
-----------
UNITED KINGDOM (16.2%)
Abbey National Plc (banking)............................... 39,100 386,093
Associated British Foods Plc
(food & household products)............................... 29,400 168,433
Barclays Plc (banking)..................................... 25,211 289,263
Bass British Plc
(beverages & tobacco)..................................... 14,600 162,981
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
11
<PAGE>
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
UNITED KINGDOM (Continued)
BAT Industries Plc
(beverages & tobacco)..................................... 44,666 $ 393,552
Boots Co. Plc (merchandising).............................. 19,101 173,785
British Gas Plc (energy sources)........................... 82,100 323,770
British Petroleum Co. Plc
(energy sources).......................................... 93,553 782,898
British Sky Broadcasting Group Plc (broadcasting &
publishing)............................................... 40,000 252,452
British Steel Plc (metals-steel)........................... 54,500 137,711
British Telecommunications Plc (telecommunications)........ 99,095 544,646
BTR Plc (multi-industry)................................... 63,495 324,334
Cable & Wireless Plc (telecommunications).................. 40,976 292,646
Chubb Security Plc
(business & public services).............................. 20,520 101,471
Coats Viyella Plc
(textiles & apparel)...................................... 23,900 64,936
Costain Group Plc
(construction & housing) (a).............................. 13,050 14,385
Courtaulds Plc (chemicals)................................. 5,663 35,785
De La Rue Plc
(forest products & paper)................................. 7,300 73,784
Forte Plc (leisure & tourism).............................. 42,788 219,558
General Accident Plc (insurance)........................... 16,500 166,772
General Electric Co. Plc
(electrical & electronics)................................ 56,040 308,876
Glaxo Wellcome Plc
(health & personal care).................................. 48,208 684,852
Grand Metropolitan Plc
(multi-industry).......................................... 48,764 351,296
Guardian Royal Exchange Plc (insurance).................... 31,700 135,838
Guinness Plc
(beverages & tobacco)..................................... 25,386 186,823
Hanson Trust Plc (multi-industry).......................... 37,470 111,987
Harrisons & Crosfield Plc
(misc.-materials & components)............................ 29,200 72,536
HSBC Holding Plc (HKD par) (financial services)............ 28,300 431,476
Imperial Chemical Industries Plc (chemicals)............... 20,553 243,477
Kingfisher Plc (merchandising)............................. 16,000 134,640
Ladbroke Group Plc
(leisure & tourism)....................................... 65,000 147,842
LASMO Plc (energy sources)................................. 29,400 79,880
Lloyds TSB Group Plc (banking)............................. 53,328 274,508
Marks & Spencer Plc (merchandising)........................ 67,789 473,621
National Grid Group Plc
(utilities-electrical & gas).............................. 4,447 13,774
National Power Plc
(utilities-electrical & gas).............................. 25,000 174,473
Next Plc (merchandising)................................... 15,000 106,197
Northern Electricity Plc
(utilities-electrical & gas).............................. 4,158 40,474
Prudential Corp. Plc (insurance)........................... 38,200 246,130
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
UNITED KINGDOM (Continued)
Racal Electronics Plc
(multi-industry).......................................... 25,020 $ 110,711
Rank Organisation Plc
(leisure & tourism)....................................... 40,500 293,022
Reuters Holdings Plc
(broadcasting & publishing)............................... 37,000 338,931
Rolls-Royce Plc (aerospace & military technology).......... 61,985 181,889
Royal Bank of Scotland Group Plc (banking)................. 25,900 235,643
Royal Insurance Holdings Plc (insurance)................... 24,800 147,086
RTZ Corp. Plc (metals-nonferrous).......................... 21,400 310,991
Sainsbury Plc (merchandising).............................. 30,082 183,551
SmithKline Beecham Class A
(health & personal care).................................. 19,800 218,263
SmithKline Beecham/Beckman Units (health & personal care).. 23,000 250,681
Tarmac Plc (building materials & components)............... 29,168 46,643
Tesco Plc (merchandising).................................. 50,058 230,827
Thames Water Plc
(utilities-electrical & gas).............................. 14,000 122,158
Trafalgar House Plc
(multi-industry).......................................... 99,147 42,713
Unilever Plc
(food & household products)............................... 10,089 207,236
United Biscuits (Holdings) Plc
(food & household products)............................... 10,091 40,108
Vodafone Group Plc
(multi-industry).......................................... 95,135 340,460
Williams Holdings Plc (building materials & components).... 37,000 188,423
Wilson Connolly Holdings Plc (construction & housing)...... 46,300 120,408
Zeneca Group Plc (chemicals)............................... 13,553 262,187
-----------
12,999,886
-----------
Total Common Stocks
(Cost $62,697,655)........................................ 78,855,580
-----------
PREFERRED STOCKS (0.1%)
AUSTRALIA (0.1%)
News Corp. Ltd.-Preference Shares (broadcasting &
publishing)............................................... 16,500 77,202
-----------
UNITED KINGDOM (0.0%) (b)
Northern Electricity Plc
(utilities-electrical & gas).............................. 4,700 7,863
-----------
Total Preferred Stocks
(Cost $66,263)............................................ 85,065
-----------
WARRANTS (0.0%) (b)
SWITZERLAND (0.0%) (b)
Grands Magasins Jelmoli SA (merchandising) (a)............. 750 33
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
12
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
WARRANTS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------
<S> <C> <C>
SWITZERLAND (Continued)
Holderbank Financiere Glarus AG (building materials
& components) (a).................................. 1,825 $ 1,665
-----------
1,698
-----------
UNITED KINGDOM (0.0%) (b)
BTR Plc (Bonus Warrants)
(multi-industry) (a)............................... 418 425
BTR Plc (Bonus Warrants--expire 1996/7) (multi-
industry) (a)...................................... 418 442
BTR Plc (Bonus Warrants--expire 1998) (multi-
industry) (a)...................................... 1,227 395
-----------
1,262
-----------
Total Warrants...................................... 2,960
-----------
SHORT-TERM
INVESTMENT (1.3%)
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
U.S. GOVERNMENT (1.3%)
United States Treasury Bill
4.94%, due 3/7/96.................................. $1,050,000 1,040,737
-----------
Total Short-Term Investment
(Cost $1,040,737).................................. 1,040,737
-----------
Total Investments
(Cost $63,804,655) (c)............................. 99.6% 79,984,342(d)
Cash and Other Assets,
Less Liabilities................................... 0.4 360,102
---------- -----------
Net Assets.......................................... 100.0% $80,344,444
========== ===========
</TABLE>
- --------
(a) Non-income producing securities.
(b) Less than one tenth of a percent.
(c) The cost for Federal income tax purposes is $64,115,717.
(d) At December 31, 1995 net unrealized appreciation for securities was
$15,868,625, 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 $18,390,827 and aggregate
gross unrealized depreciation for all investments on which there was an
excess of cost over market value of $2,522,202.
(e) Foreign cash held at December 31, 1995:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
- ------------- -------- --------
<S> <C> <C>
FF 638,811 $126,849 $130,628
IL190,369,857 117,949 119,933
(Pounds)1,079 1,734 1,675
-------- --------
$246,532 $252,236
======== ========
</TABLE>
(f) The following abbreviations are used in the above footnote:
FF--French Franc
IL--Italian Lira
(Pounds)--Pound Sterling
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
13
<PAGE>
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
THE TABLE BELOW SETS FORTH THE DIVERSIFICATION OF EAFE INDEX FUND INVESTMENTS
BY INDUSTRY.
COMMON STOCKS,
PREFERRED STOCKS,
WARRANTS &
SHORT-TERM INVESTMENT
<TABLE>
<CAPTION>
VALUE PERCENT +
---------------------
<S> <C> <C>
Aerospace & Military Technology........................... $ 181,889 0.2%
Appliances & Household Durables........................... 1,649,776 2.1
Automobiles............................................... 3,000,458 3.7
Banking................................................... 12,653,862 15.8
Beverages & Tobacco....................................... 1,734,115 2.2
Broadcasting & Publishing................................. 1,512,007 1.9
Building Materials & Components........................... 1,324,318 1.7
Business & Public Services................................ 1,341,193 1.7
Chemicals................................................. 3,408,421 4.2
Construction & Housing.................................... 2,670,531 3.3
Data Processing & Reproduction............................ 345,607 0.4
Electrical & Electronics.................................. 2,194,854 2.7
Electronic Components & Instruments....................... 1,039,873 1.3
Energy Equipment & Service................................ 66,287 0.1
Energy Sources............................................ 4,091,158 5.1
Financial Services........................................ 2,868,552 3.6
Food & Household Products................................. 2,539,269 3.2
Forest Products & Paper................................... 943,234 1.2
Health & Personal Care.................................... 5,499,959 6.8
Industrial Components..................................... 1,371,021 1.7
Insurance................................................. 4,115,039 5.1
Leisure & Tourism......................................... 1,019,975 1.3
Machinery & Engineering................................... 1,675,430 2.1
Merchandising............................................. 3,402,008 4.2
</TABLE>
<TABLE>
<CAPTION>
VALUE PERCENT +
---------------------
<S> <C> <C>
Metals-Nonferrous......................................... $ 1,154,734 1.4%
Metals-Steel.............................................. 1,293,871 1.6
Miscellaneous-Materials & Components...................... 948,137 1.2
Multi-Industry............................................ 3,567,005 4.4
Real Estate............................................... 211,172 0.3
Recreation & Other Consumer Goods......................... 1,305,241 1.6
Telecommunications........................................ 2,390,983 3.0
Textiles & Apparel........................................ 412,740 0.5
Transportation-Airlines................................... 740,424 0.9
Transportation-Road & Rail................................ 1,040,109 1.3
Transportation-Shipping................................... 731,109 0.9
U.S. Government........................................... 1,040,737 1.3
Utilities-Electrical & Gas................................ 3,864,437 4.8
Wholesale & International Trade........................... 634,807 0.8
----------- -----
79,984,342 99.6
Cash and Other Assets,
Less Liabilities......................................... 360,102 0.4
----------- -----
Net Assets................................................ $80,344,444 100.0%
=========== =====
</TABLE>
- --------
+ Percentages indicated are based on Fund net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
14
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
EAFE INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$63,804,655).................................................... $79,984,342
Cash denominated in foreign currencies (identified cost
$246,532)....................................................... 252,236
Cash............................................................. 39,227
Receivables:
Dividends and interest........................................... 317,296
Investment securities sold....................................... 55,508
Fund shares sold................................................. 21,341
-----------
Total assets................................................... 80,669,950
-----------
LIABILITIES:
Payables:
Investment securities purchased.................................. 244,798
Administrator.................................................... 24,429
Adviser.......................................................... 9,978
Custodian........................................................ 8,947
Fund shares redeemed............................................. 5,140
Transfer agent................................................... 3,102
Directors........................................................ 515
Accrued expenses................................................. 28,438
Dividend payable................................................. 159
-----------
Total liabilities.............................................. 325,506
-----------
Net assets....................................................... $80,344,444
===========
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class.............................................. $ 5,908
Institutional Service Class...................................... 19
Additional paid-in capital....................................... 63,371,622
Accumulated distribution in excess of net investment income...... (182,088)
Accumulated undistributed net realized gain on investments....... 954,599
Net unrealized appreciation on investments....................... 16,179,687
Net unrealized appreciation on translation of assets and
liabilities in foreign currencies............................... 14,697
-----------
Net assets....................................................... $80,344,444
===========
Institutional Class
Net assets applicable to outstanding shares...................... $80,087,463
===========
Shares of capital stock outstanding.............................. 5,907,913
===========
Net asset value per share outstanding............................ $ 13.56
===========
Institutional Service Class
Net assets applicable to outstanding shares...................... $ 256,981
===========
Shares of capital stock outstanding.............................. 19,017
===========
Net asset value per share outstanding............................ $ 13.51
===========
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a).................................................... $1,403,364
Interest......................................................... 170,273
----------
Total income................................................... 1,573,637
----------
Expenses: (Note 2)
Administration (Note 3).......................................... 615,986
Advisory (Note 3)................................................ 115,497
Custodian........................................................ 55,201
Registration..................................................... 26,248
Legal............................................................ 19,929
Transfer agent................................................... 17,785
Auditing......................................................... 16,311
Shareholder communication........................................ 10,606
Amortization of organization expense............................. 6,135
Directors........................................................ 3,480
Service (Note 3)................................................. 128
Miscellaneous.................................................... 71,806
----------
Total expenses before
reimbursement................................................. 959,112
Expense reimbursement from Administrator (Note 3)................ (165,321)
----------
Net expenses................................................... 793,791
----------
Net investment income............................................ 779,846
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Security transactions............................................ 1,262,880
Futures transactions............................................. 501,297
Foreign currency transactions.................................... (631,201)
----------
Net realized gain on investments and foreign currency
transactions.................................................... 1,132,976
----------
Net change in unrealized appreciation (depreciation) on
investments:
Security transactions............................................ 4,882,948
Futures transactions............................................. (8,839)
Translation of assets and liabilities in foreign currencies...... 10,506
----------
Net unrealized gain on investments and foreign currencies........ 4,884,615
----------
Net realized and unrealized gain on investments and foreign
currency transactions........................................... 6,017,591
----------
Net increase in net assets resulting from operations............. $6,797,437
==========
</TABLE>
- --------
(a) Dividends recorded net of foreign withholding taxes of $209,663.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
15
<PAGE>
EAFE INDEX FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and December 31, 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income............................. $ 779,846 $ 405,028
Net realized gain on investments.................. 1,764,177 769,629
Net realized gain (loss) on foreign currency
transactions..................................... (631,201) 144,384
Net change in unrealized appreciation on
investments...................................... 4,874,109 2,452,422
Net change in unrealized appreciation on
translation of assets and liabilities in foreign
currencies....................................... 10,506 25,485
------------ ------------
Net increase in net assets resulting from
operations....................................... 6,797,437 3,796,948
------------ ------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class.............................. (229,241) (481,632)
Institutional Service Class...................... (736) --
From net realized gain on investments and foreign
currency transactions:
Institutional Class.............................. (812,185) (765,211)
Institutional Service Class...................... (2,606) --
In excess of net investment income:
Institutional Class.............................. (181,506) --
Institutional Service Class...................... (582) --
------------ ------------
Total dividends and distributions to
shareholders................................... (1,226,856) (1,246,843)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class.............................. 24,179,826 40,356,042
Institutional Service Class...................... 248,855 --
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions:
Institutional Class.............................. 1,222,774 1,246,571
Institutional Service Class...................... 3,923 --
------------ ------------
25,655,378 41,602,613
Cost of shares redeemed:
Institutional Class.............................. (23,146,316) (25,601,634)
------------ ------------
Increase in net assets derived from capital
share transactions.............................. 2,509,062 16,000,979
------------ ------------
Net increase in net assets....................... 8,079,643 18,551,084
NET ASSETS:
Beginning of year................................. 72,264,801 53,713,717
------------ ------------
End of year....................................... $ 80,344,444 $ 72,264,801
============ ============
Accumulated undistributed net investment
income/(excess distribution)..................... $ (182,088) $ 51,040
============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
16
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
EAFE INDEX FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL
INSTITUTIONAL SERVICE
CLASS CLASS INSTITUTIONAL CLASS
------------- ------------- ----------------------------------------------
YEAR ENDED DECEMBER 31 JANUARY 2, 1991(A)
----------------------------------------------------- THROUGH
1995 1994 1993 1992 DECEMBER 31, 1991
--------------------------- ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period.... $ 12.63 $12.63 $ 12.03 $ 9.60 $ 11.01 $ 10.00
------- ------ ------- ------- ------- -------
Net investment income... 0.13 0.14 0.10 0.06 0.08 0.08
Net realized and
unrealized gain (loss)
on investments......... 1.11 1.05 0.70 2.71 (1.41) 0.93
Net realized and
unrealized gain (loss)
on foreign currency
transactions........... (0.10) (0.10) 0.03 (0.01) (0.01) --
------- ------ ------- ------- ------- -------
Total from investment
operations............. 1.14 1.09 0.83 2.76 (1.34) 1.01
------- ------ ------- ------- ------- -------
Less dividends and
distributions:
From net investment
income................. (0.04) (0.04) (0.09) (0.14) (0.07) --
From net realized gain
on investments and
foreign currency
transactions........... (0.14) (0.14) (0.14) (0.19) -- --
In excess of net
investment income ..... (0.03) (0.03) -- -- -- --
------- ------ ------- ------- ------- -------
Total dividends and
distributions.......... (0.21) (0.21) (0.23) (0.33) (0.07) --
------- ------ ------- ------- ------- -------
Net asset value at end
of period.............. $ 13.56 $13.51 $ 12.63 $ 12.03 $ 9.60 $ 11.01
======= ====== ======= ======= ======= =======
Total investment
return................. 9.03% 8.63% 6.83% 28.97% (12.22%) 10.10%
Ratios (to average net
assets)/
Supplemental Data:
Net investment income.. 1.01% 0.76% 0.57% 0.53% 0.76% 0.71%
Net expenses........... 1.03% 1.28% 1.26% 1.27% 1.32% 1.40%
Expenses (before
reimbursement)........ 1.24% 1.49% 1.26% 1.27% 1.32% 1.40%
Portfolio turnover
rate................... 6% 6% 7% 16% 1% 1%
Net assets at end of
period (in 000's)...... $80,087 $ 257 $72,265 $53,714 $40,531 $45,160
</TABLE>
- --------
(a) Commencement of operations.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
17
<PAGE>
--------------------
Growth Equity Fund
--------------------
For the twelve month period ended December 31, 1995, investors in the MainStay
Institutional Growth Equity Fund enjoyed robust total returns of 37.88% and
37.50% for Institutional Class and Service Class shares, respectively. Although
these results were on par with the 37.53% return of the S&P 500+, they were well
ahead of the average Lipper(S) growth fund which earned 30.79% for the year
(based on 566 funds in the Lipper growth fund category from 12/31/94 to
12/31/95).
These outstanding returns reflected unusually favorable market conditions which
we believe are unlikely to be repeated in 1996. Throughout the year, low
inflation, low interest rates, and steady but slowing economic growth provided
an ideal environment for growth investing. The major contributors to the Fund's
exceptional 1995 performance came from a broad cross section of holdings,
including financial services, healthcare, technology, and selected consumer
discretionary stocks.
In managing the Fund, we followed strict diversification disciplines, in sharp
contrast with some managers who allocated huge amounts of their portfolios in
the technology sector. Our strategy served us well throughout the year,
especially in the last four months, when commodity-based semiconductor stocks,
which had risen dramatically, underwent a sharp correction. Our top ten
performing stocks for the year were broadly diversified across industries in the
growth spectrum, enabling us to manage downside risk and achieve capital
appreciation while we accumulated capital for our investors.
Careful individual security selection and ongoing portfolio review also
contributed to our positive performance. In 1995, our decisions to buy or hold
healthcare issues, especially pharmaceuticals (Amgen, Teva) and medical devices
(Medtronic and Cordis), selected consumer discretionary stocks (HFS and News
Corp.) and technology companies (Computer Associates, Sun Microsystems, Oracle
and 3Com) helped fuel the portfolio's strong performance. Our choices among
financial service issues, including First Interstate, Travelers, and
SunAmerica, also proved to be a boon to performance as interest rates decreased
and industry consolidation continued. Selected building stocks, such as Lennar,
also did well in the low interest rate environment.
Beginning in mid-September, concern about potential pricing weakness and
possible excess capacity led to a sharp correction of semiconductor stocks. In
the latter part of the year, this gave investors a reason to sell stocks that
had been strong performers. We own three semiconductor stocks: Micron
Technology, Lam Research, and Intel Corporation, and are currently reviewing the
investment merits of each. We continue to believe that the fundamental outlook
for many of our other technology stocks remains bright, including 3Com, Oracle
Corporation, and Computer Associates. Our rigorous stock selection process will
continue to guide us in evaluating technology issues.
Consumer stocks remain a difficult group and we would not be surprised to see
further consolidation and retail store closings over the next few months. Even
so, our best performing stock for the fourth quarter and the year was HFS, with
a 1995 gain of 208%. This lodging industry franchiser is now branching into real
estate with recent acquisitions of Century 21 and ERA. We continue to focus on
companies with restructuring and margin improvement stories, such as Nine West
and Warnaco, and retailers that have demonstrated an ability to gain market
share without sacrificing profitability, such as Kohl's Corporation and Bed Bath
& Beyond.
Going forward, we believe that as long as low inflation, declining interest
rates, and slow-but-steady economic growth continue, they should provide a
positive backdrop for growth stocks.
Edmund Spelman
Rudy Carryl
Portfolio Managers
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
+ The S&P 500 Stock Index is a registered trademark of Standard & Poor's
Corporation. S&P 500 Stock Index is an unmanaged index that is considered
representative of the U.S. stock market.
(S) Lipper Analytical Services Inc. is an independent monitor of mutual fund
performance. Results do not reflect any deduction of sales charges and are
based on total returns with capital gains and dividends reinvested.
CONSUMER DISCRETIONARY STOCKS Shares of companies that manufacture and/or
distribute nonessential items that are typically purchased with excess
disposable income.
DIVERSIFICATION A technique for managing risk by purchasing securities of
various issuers, industries, asset classes, or geographic locations.
EXCESS CAPACITY Excess capacity refers to underutilized manufacturing resources.
This generally occurs when inventory levels exceed the demand for goods and
services.
CORRECTION A reverse movement, usually downward, in the price of an individual
stock, bond, commodity or index.
18
<PAGE>
$10,000 Invested in Mainstay Institutional
Growth Equity Fund vs S&P 500 Index
Institutional Class Shares
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Growth Equity Fund S&P 500
<S> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $16,700 $13,055
4Q 1992 $17,640 $14,056
4Q 1993 $19,333 $15,460
4Q 1994 $18,901 $15,663
4Q 1995 $26,063 $21,525
</TABLE>
- -------------------------------------------------------------------------------
[ ] Growth Equity Fund [ ] S&P 500
Source: (C) Ibbotson Associates EnCorr Software
These graphs assume a $10,000 investment made on 1/2/91.
$10,000 Invested in Mainstay Institutional
Growth Equity Fund vs S&P 500 Index
Service Class Shares
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Growth Equity Fund S&P 500
<C> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $16,700 $13,055
4Q 1992 $17,640 $14,056
4Q 1993 $19,333 $15,460
4Q 1994 $18,901 $15,663
4Q 1995 $25,989 $21,525
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Total Return* SEC Average Annual Total Return*
Performance as of December 31, 1995 as of December 31, 1995
- -----------------------------------------------------------------------------------------------------------------
1995 One Year Five Year Since Inception
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Equity Fund Institutional Class 37.88% 37.88% 21.12% 21.12%
Growth Equity Fund Service Class** 37.50% 37.50% 21.05% 21.05%
Average Lipper Growth Fund 30.79% 30.79% 16.01% 16.01%
S&P 500 Index 37.53% 37.53% 16.56% 16.56%
</TABLE>
Year-By-Year Performance
- --------------------------------------------------------------------------------
[BAR GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Institutional Class Shares
Total Return%*
<S> <C>
1991 67.00
1992 5.63
1993 9.59
1994 -2.23
1995 37.88
</TABLE>
Portfolio Composition (% of net assets as of December 31, 1995)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Common Stocks 97.97%
Cash & Equivalents 1.61%
Preferred Stock--Non-Convertible 0.42%
</TABLE>
Top 10 Holdings
(% of net assets as of December 31, 1995)
1. HFS Inc. 3.49%
2. 3Com Corp. 3.32%
3. Amgen, Inc. 2.73%
4. Computer Associates Intl., Inc. 2.71%
5. First Interstate Bancorp 2.51%
6. Medtronics, Inc. 2.49%
7. Green Tree Financial Corp. 2.39%
8. SunAmerica Inc. 2.39%
9. United Healthcare Corp. 2.22%
10. Alco Standard Corp. 2.21%
Top 5 Industry Holdings
(% of net assets as of December 31, 1995)
1. Technology 10.82%
2. Drugs 10.23%
3. Finance 8.87%
4. Computers & Office Equipment 7.45%
5. Healthcare 7.28%
- --------------------------------------------------------------------------------
** Performance figures for the Service Class, first offered to the public on
1/1/95, include the historical performance of the Institutional Class from
the Funds' inception (1/2/91) up to December 31, 1994. Performance figures
for these two Classes after this date will vary based on differences in their
expense structures.
* The total return reflects the annual return on an investment including
appreciation and dividends or interest. Total returns shown herein include
the change in share price and reinvestment of capital gains distributions and
dividends, and, for the Service Class shares, include the service fee of
.25%.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that upon redemption, shares may be worth
more or less than their original cost.
The Institutional Class shares are sold with no sales charge. The Service
Class shares, first offered 1/1/95, are sold with no initial or contingent
deferred sales charge, but are subject to an annual shareholder service fee
of .25%.
19
<PAGE>
GROWTH EQUITY FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
COMMON STOCKS (98.0%)+
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
AIRLINES (1.2%)
Atlantic Southeast Airlines, Inc...................... 102,200 $ 2,197,300
Southwest Airlines Co................................. 129,100 3,001,575
------------
5,198,875
------------
AUTO PARTS (0.9%)
Lear Seating Corp. (a)................................ 135,000 3,915,000
------------
BANKS (5.9%)
Bank of New York Co., Inc............................. 123,000 5,996,250
Barnett Banks, Inc.................................... 82,500 4,867,500
First Interstate Bancorp.............................. 76,200 10,401,300
NationsBank Corp...................................... 45,000 3,133,125
------------
24,398,175
------------
BROKERAGE (2.0%)
Schwab (Charles) Corp................................. 405,000 8,150,625
------------
BUILDINGS (1.8%)
Lennar Corp........................................... 107,000 2,688,375
Oakwood Homes Corp.................................... 130,000 4,988,750
------------
7,677,125
------------
COMPUTERS & OFFICE EQUIPMENT (7.4%)
Alco Standard Corp.................................... 201,100 9,175,187
Danka Business Systems Plc
ADR (b).............................................. 113,100 4,184,700
EMC Corp. (a)......................................... 156,500 2,406,188
Hewlett-Packard Co.................................... 68,000 5,695,000
Seagate Technology, Inc. (a).......................... 47,000 2,232,500
Sun Microsystems, Inc. (a)............................ 158,000 7,208,750
------------
30,902,325
------------
CONSUMER DURABLES (1.3%)
Black & Decker Corp................................... 151,100 5,326,275
------------
CONSUMER FINANCIAL SERVICES (1.2%)
First Data Corp....................................... 76,700 5,129,312
------------
CONSUMER SERVICES(0.3%)
CUC International Inc. (a)............................ 35,000 1,194,375
------------
CONSUMER STAPLES (0.9%)
Service Corporation International..................... 82,500 3,630,000
------------
DOMESTIC OILS (1.3%)
Triton Energy Corp. (a)............................... 97,800 5,611,275
------------
DRUGS (10.2%)
Amgen, Inc. (a)....................................... 190,400 11,305,000
Elan Corp. Plc ADR (a)(b)............................. 101,500 4,935,437
Genzyme Corp. (a)..................................... 86,200 5,376,725
Mylan Laboratories Inc................................ 226,750 5,328,625
Pharmacia & Upjohn, Inc............................... 117,000 4,533,750
- -------------
+ Percentages indicated are based on Fund net assets.
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
DRUGS (Continued)
Schering-Plough Corp.................................... 122,000 $ 6,679,500
Teva Pharmaceutical Industries Ltd. ADR (b)............. 92,000 4,266,500
------------
42,425,537
------------
ELECTRONICS (1.3%)
Vishay Intertechnology, Inc. (a)........................ 168,000 5,292,000
------------
FINANCE (8.9%)
Federal National Mortgage Association................... 56,000 6,951,000
Green Tree Financial Corp............................... 376,000 9,917,000
Household International, Inc............................ 109,800 6,491,925
MGIC Investment Corp.................................... 90,600 4,915,050
Travelers Group Inc..................................... 135,233 8,502,775
------------
36,777,750
------------
FINANCIAL SERVICES (3.8%)
First USA, Inc.......................................... 129,800 5,759,875
SunAmerica Inc.......................................... 208,500 9,903,750
------------
15,663,625
------------
HEALTH CARE (7.3%)
Columbia/HCA Healthcare Corp............................ 141,592 7,185,794
HealthCare COMPARE
Corp. (a).............................................. 81,600 3,549,600
HEALTHSOUTH Corp. (a)................................... 138,000 4,019,250
Humana, Inc. (a)........................................ 102,000 2,792,250
OrNda HealthCorp. (a)................................... 149,000 3,464,250
United Healthcare Corp.................................. 140,500 9,202,750
------------
30,213,894
------------
INSURANCE (2.0%)
American International
Group, Inc............................................. 89,550 8,283,375
------------
INTERNATIONAL OILS (1.0%)
British Petroleum Company, Plc ADR (b).................. 41,696 4,258,204
------------
MEDIA (1.8%)
Viacom Inc. Class A (a)................................. 15,944 731,431
Viacom Inc. Class B (a)................................. 139,805 6,623,262
------------
7,354,693
------------
MEDICAL EQUIPMENT (4.9%)
Cordis Corp. (a)........................................ 77,000 7,738,500
Medtronic, Inc.......................................... 184,800 10,325,700
Waters Corp. (a)........................................ 115,000 2,098,750
------------
20,162,950
------------
PUBLISHING (1.1%)
News Corp. Ltd. ADR (b)................................. 212,600 4,544,325
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
20
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
RESTAURANTS & LODGING (3.5%)
HFS Inc. (a)........................................... 177,000 $ 14,469,750
------------
RETAIL (7.3%)
Bed Bath & Beyond Inc. (a)............................. 55,000 2,134,687
Cato Corp. Class A..................................... 165,950 1,286,112
Circuit City Stores, Inc............................... 112,400 3,105,050
Home Depot, Inc. (The)................................. 105,500 5,050,813
Kohl's Corp. (a)....................................... 70,000 3,675,000
Kroger Co. (The) (a)................................... 139,000 5,212,500
Lowe's Companies, Inc.................................. 176,500 5,912,750
Office Depot, Inc. (a)................................. 190,000 3,752,500
------------
30,129,412
------------
SOFTWARE (5.0%)
Computer Associates International, Inc................. 198,000 11,261,250
Mircosoft Corp. (a).................................... 29,000 2,544,750
Oracle Corp. (a)....................................... 160,500 6,801,188
------------
20,607,188
------------
TECHNOLOGY (10.8%)
General Motors Corp. Class E........................... 80,000 4,160,000
Intel Corp............................................. 160,000 9,080,000
Lam Research Corp. (a)................................. 122,500 5,604,375
Micron Technology Inc.................................. 168,300 6,668,888
Molecular Devices Corp. (a)............................ 120,000 1,260,000
Motorola, Inc.......................................... 76,500 4,360,500
3Com Corp. (a)......................................... 295,000 13,754,375
------------
44,888,138
------------
TELECOMMUNICATION EQUIPMENT (0.5%)
General Instrument Corp. (a)........................... 60,300 1,409,513
Scientific-Atlanta, Inc................................ 46,400 696,000
------------
2,105,513
------------
TELECOMMUNICATION SERVICES (2.3%)
Tele-Communications International, Inc. Class A (a).... 120,000 2,730,000
WorldCom, Inc. (a)..................................... 189,544 6,681,426
------------
9,411,426
------------
TEXTILE & APPAREL (2.1%)
Nine West Group Inc. (a)............................... 123,100 4,616,250
Warnaco Group, Inc. (The) Class A...................... 164,000 4,100,000
------------
8,716,250
------------
Total Common Stocks
(Cost $259,614,558)................................... 406,437,392
------------
</TABLE>
PREFERRED STOCK (0.4%)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------------
<S> <C> <C>
PUBLISHING (0.4%)
News Corp. Ltd. ADR-- Preference Shares (b)......... 91,300 $ 1,757,525
------------
Total Preferred Stock
(Cost $1,378,044).................................. 1,757,525
------------
SHORT-TERM INVESTMENTS (1.3%)
<CAPTION>
PRINCIPAL
AMOUNT
---------------
<S> <C> <C>
COMMERCIAL PAPER (1.3%)
American Express Credit Corp.
5.55%, due 1/2/96.................................. $1,279,000 1,279,000
Smith Barney Inc.
5.95%, due 1/2/96.................................. 4,311,000 4,311,000
------------
Total Short-Term Investments
(Cost $5,590,000).................................. 5,590,000
------------
Total Investments
(Cost $266,582,602) (c)............................ 99.7% 413,784,917(d)
Cash and Other Assets,
Less Liabilities................................... 0.3 1,072,749
---------- ------------
Net Assets.......................................... 100.0% $414,857,666
========== ============
</TABLE>
- --------
(a) Non-income producing securities.
(b) ADR--American Depository Receipts.
(c) The cost stated also represents the aggregate cost for Federal income tax
purposes.
(d) At December 31, 1995 net unrealized appreciation was $147,202,315, 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 $153,049,594 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $5,847,279.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
21
<PAGE>
GROWTH EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2)
(identified cost $266,582,602)................................. $413,784,917
Cash............................................................ 964
Receivables:
Investment securities sold...................................... 2,812,278
Fund shares sold................................................ 851,117
Dividends and interest.......................................... 237,637
------------
Total assets................................................... 417,686,913
------------
LIABILITIES:
Payables:
Fund shares redeemed............................................ 2,272,320
Administrator................................................... 210,153
Investment securities purchased................................. 165,300
Adviser......................................................... 87,564
Custodian....................................................... 7,128
Transfer agent.................................................. 4,650
Directors....................................................... 1,443
Accrued expenses................................................ 78,147
Dividend payable................................................ 2,542
------------
Total liabilities.............................................. 2,829,247
------------
Net assets...................................................... $414,857,666
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized
Institutional Class............................................. $ 21,878
Institutional Service Class..................................... 145
Additional paid-in capital...................................... 267,907,253
Accumulated distribution in excess of net investment income..... (2,542)
Accumulated distribution in excess of net realized gain on
investments.................................................... (271,383)
Unrealized appreciation on investments.......................... 147,202,315
------------
Net assets...................................................... $414,857,666
============
Institutional Class
Net assets applicable to outstanding shares..................... $412,129,116
============
Shares of capital stock outstanding............................. 21,877,559
============
Net asset value per share outstanding........................... $ 18.84
============
Institutional Service Class
Net assets applicable to outstanding shares..................... $ 2,728,550
============
Shares of capital stock outstanding............................. 145,162
============
Net asset value per share outstanding........................... $ 18.80
============
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)................................................... $ 2,375,015
Interest........................................................ 1,319,237
------------
Total income................................................... 3,694,252
------------
Expenses: (Note 2)
Administration (Note 3)......................................... 2,110,442
Advisory (Note 3)............................................... 879,351
Legal........................................................... 82,355
Shareholder communication....................................... 43,810
Custodian....................................................... 39,652
Auditing........................................................ 36,341
Transfer agent.................................................. 32,010
Registration.................................................... 27,466
Directors....................................................... 14,640
Amortization of organization expense............................ 6,286
Service (Note 3)................................................ 1,707
Miscellaneous................................................... 7,699
------------
Total expenses................................................. 3,281,759
------------
Net investment income........................................... 412,493
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized loss on investments................................ (174,620)
Net change in unrealized appreciation on investments............ 110,020,858
------------
Net realized and unrealized gain on investments................. 109,846,238
------------
Net increase in net assets resulting from operations............ $110,258,731
============
</TABLE>
- --------
(a) Dividends recorded net of foreign withholding taxes of $7,890.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
22
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
GROWTH EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and December 31, 1994
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income........................... $ 412,493 $ 114,237
Net realized gain (loss) on investments......... (174,620) 8,471,110
Net change in unrealized appreciation on
investments.................................... 110,020,858 (14,273,694)
------------- -------------
Net increase (decrease) in net assets resulting
from operations................................ 110,258,731 (5,688,347)
------------- -------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class............................ (411,584) (114,186)
Institutional Service Class.................... (960) --
From net realized gain on investments:
Institutional Class............................ -- (7,924,115)
In excess of net investment income
Institutional Class............................ (2,536) --
Institutional Service Class.................... (6) --
In excess of net realized gain on investments:
Institutional Class............................ (81,570) (95,309)
Institutional Service Class.................... (527) --
------------- -------------
Total dividends and distributions to
shareholders................................. (497,183) (8,133,610)
------------- -------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class............................ 156,413,353 213,081,844
Institutional Service Class.................... 2,609,492 --
Net asset value of shares issued to
shareholders in reinvestment of dividends and
distributions:
Institutional Class............................ 571,650 8,054,417
Institutional Service Class.................... 1,493 --
------------- -------------
159,595,988 221,136,261
Cost of shares redeemed:
Institutional Class............................ (138,869,720) (181,677,457)
Institutional Service Class.................... (17,893) --
------------- -------------
Increase in net assets derived from capital
share transactions............................ 20,708,375 39,458,804
------------- -------------
Net increase in net assets..................... 130,469,923 25,636,847
NET ASSETS:
Beginning of year............................... 284,387,743 258,750,896
------------- -------------
End of year..................................... $ 414,857,666 $ 284,387,743
============= =============
Accumulated undistributed net investment
income/(excess distribution)................... $ (2,542) $ 51
============= =============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
23
<PAGE>
GROWTH EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL
INSTITUTIONAL SERVICE
CLASS CLASS INSTITUTIONAL CLASS
------------- ------------- -----------------------------------------------------
YEAR ENDED DECEMBER 31 JANUARY 2, 1991(A)
--------------------------------------------------------------- THROUGH
1995 1994 1993 1992 DECEMBER 31, 1991
----------------------------- -------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period.... $ 13.68 $13.68 $ 14.40 $ 14.71 $ 16.70 $ 10.00
-------- ------ -------- -------- -------- --------
Net investment income
(loss)................. 0.02 (0.01) 0.01 (0.01) (0.03) 0.01
Net realized and
unrealized gain (loss)
on investments......... 5.16 5.14 (0.33) 1.41 0.80 6.69
-------- ------ -------- -------- -------- --------
Total from investment
operations............. 5.18 5.13 (0.32) 1.40 0.77 6.70
-------- ------ -------- -------- -------- --------
Less dividends and
distributions:
From net investment
income................. (0.02) (0.01) (0.01) -- (0.02) --
From net realized gain
on investments......... -- -- (0.39) (1.68) (2.74) --
In excess of net
investment income...... (0.00)(b) (0.00)(b) -- -- -- --
In excess of net
realized gain on
investments............ (0.00)(b) (0.00)(b) (0.00)(b) (0.03) -- --
-------- ------ -------- -------- -------- --------
Total dividends and
distributions.......... (0.02) (0.01) (0.40) (1.71) (2.76) --
-------- ------ -------- -------- -------- --------
Net asset value at end
of period.............. $ 18.84 $18.80 $ 13.68 $ 14.40 $ 14.71 $ 16.70
======== ====== ======== ======== ======== ========
Total investment
return................. 37.88% 37.50% (2.23%) 9.59% 5.63% 67.00%
Ratios (to average net
assets)/
Supplemental Data:
Net investment income
(loss)................ 0.12% (0.13%) 0.04% (0.07%) (0.19%) 0.13%
Net expenses........... 0.93% 1.18% 0.92% 0.90% 0.90% 0.90%
Expenses (before
reimbursement)........ 0.93% 1.18% 0.92% 0.93% 0.95% 0.99%
Portfolio turnover
rate................... 33% 33% 37% 81% 121% 225%
Net assets at end of
period (in 000's)...... $412,129 $2,729 $284,388 $258,751 $212,619 $191,495
</TABLE>
- --------
(a) Commencement of operations.
(b) Less than one cent per share.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
24
<PAGE>
---------------------
Indexed Equity Fund
---------------------
The stock market roared ahead throughout 1995. While equity mutual funds
followed suit, the MainStay Institutional Indexed Equity Fund managed to outpace
most other mutual funds in the Lipper(S) equity fund universe by a substantial
margin. The Fund, seeking to replicate the S&P 500 Index+, outperformed most
other broad stock market measures this year (except for the technology-laden
NASDAQ composite index). These results reflected unusually favorable market
conditions which are unlikely to be repeated in 1996.
Slow economic growth, low interest rates and strong corporate profits pushed
stock markets ahead. Technology stocks were among the big winners this year, and
many mutual funds benefited from large weights in that sector. Index funds do
not attempt to enhance performance by strategic allocations to particular stocks
or market sectors. Our diversification across industries enabled the Indexed
Equity Fund to reap rewards not only from technology stocks, but in many other
top-performing sectors that received less attention from active managers.
Additionally, index funds typically do not build up large cash positions but
seek to remain fully invested at all times. In a rising market, such as that of
1995, an index fund will participate as fully as possible when stock prices
climb. Of course, because the intent of indexation is to ensure market returns,
the fund will participate fully in a bear market as well.
While past performance is no guarantee of future results, indexing to the S&P
500 Index has proven to be an extremely successful investment strategy. In 1995
(12/31/94 to 12/31/95), the Fund's total return beat 86% of all 3,131 equity
funds tracked by Lipper(S). Over the five year period (12/31/90 to 12/31/95) the
Fund beat 61% of all 1,113 equity funds tracked by Lipper. In general, for the
ten years ended December 31, 1995, funds seeking to track the S&P 500 Index beat
roughly 80% of actively managed funds.
The performance of the S&P 500 Index surpassed so many market measures (like the
Wilshire 5000, Russell 2000, and NYSE Composite indices) because it contains a
relatively greater proportion of large capitalization stocks. These stocks, many
of which represent the large blue-chip multi-national corporations in America,
were among the best performing securities in the world last year. They propelled
the S&P 500 Index to a spectacular 37.53% annual return. After accounting for
fees and expenses, the MainStay Institutional Indexed Equity Fund tracked its
benchmark almost perfectly, with gains of 36.88% and 36.70% (Institutional Class
and Service Class shares, respectively) for the one year period ending December
31, 1995. The Fund substantially outperformed the average Lipper equity fund,
which returned 24.81%, for the same twelve month period (12/31/94 to 12/31/95).
Holly V. Cox
James A. Mehling, CFA
Portfolio Managers
$10,000 Invested in Mainstay Institutional
Indexed Equity Fund vs S&P 500 Index
Institutional Class Shares
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Indexed Equity
Fund S&P 500
<S> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $12,980 $13,055
4Q 1992 $13,913 $14,056
4Q 1993 $15,222 $15,460
4Q 1994 $15,359 $15,663
4Q 1995 $21,025 $21,525
- --------------------------------------------------------------------------------
</TABLE>
[ ] Indexed Equity Fund [ ] S&P 500 Index
Source: (C) Ibbotson Associates En Corr Software
These graphs assume a $10,000 investment made on 1/2/91.
Note: See following page for additional footnotes regarding these performance
figures.
$10,000 Invested in Mainstay Institutional
Indexed Equity Fund vs S&P 500 Index
Service Class Shares
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Indexed Equity
Fund S&P 500
<C> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $12,980 $13,055
4Q 1992 $13,913 $14,056
4Q 1993 $15,222 $15,460
4Q 1994 $15,359 $15,663
4Q 1995 $20,995 $21,525
- --------------------------------------------------------------------------------
</TABLE>
Past performance is no guarantee of future results.
+ The S&P 500 Stock Index is a registered trademark of Standard & Poor's
Corporation. S&P 500 Stock Index is an unmanaged index that is considered
representative of the U.S. stock market.
(S) Lipper Analytical Services Inc. is an independent monitor of mutual fund
performance. Results do not reflect any deduction of sales charges and are
based on total returns with capital gains and dividends reinvested. Based on
total returns for the 1-year and 5-year periods ended 12/31/95, the MainStay
Institutional Indexed Equity Fund ranked 409 out of 3,131 equity funds and
427 out of 1,113 equity funds, respectively.
25
<PAGE>
<TABLE>
<CAPTION>
Total Return* SEC Average Annual Total Return*
Performance as of December 31, 1995 as of December 31, 1995
- -----------------------------------------------------------------------------------------------------------------
1995 One Year Five Year Since Inception
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Indexed Equity Fund Institutional Class 36.88% 36.88% 16.02% 16.02%
Indexed Equity Fund Service Class** 36.70% 36.70% 15.99% 15.99%
Average Lipper S&P 500 Index Fund 36.84% 36.84% 16.00% 16.00%
S&P 500 Index 37.53% 37.53% 16.56% 16.56%
</TABLE>
Year-By-Year Performance
- --------------------------------------------------------------------------------
[BAR GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Institutional Class Shares
Total Return % *
<S> <C>
1991 29.80
1992 7.19
1993 9.41
1994 0.90
1995 36.88
</TABLE>
Portfolio Composition (% of net assets as of December 31, 1995)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Common Stocks 95.79%
Cash & Equivalents 4.21%
</TABLE>
Top 10 Holdings
(% of net assets as of December 31, 1995)
1. General Electric Company 2.53%
2. AT&T Corp. 2.13%
3. Exxon Corp. 2.06%
4. Coca Cola Company 1.94%
5. Merck & Co., Inc. 1.68%
6. Philip Morris Cos. Inc. 1.57%
7. Royal Dutch Petroleum Company 1.57%
8. Procter & Gamble Company 1.18%
9. Johnson & Johnson 1.15%
10. IBM Corporation 1.08%
Top 5 Industry Holdings
(% of net assets as of December 31, 1995)
1. Utilities--Telephone 8.14%
2. Banks 6.47%
3. Petroleum--International 5.69%
4. Healthcare--Drugs 4.96%
5. Finance Companies 3.81%
- --------------------------------------------------------------------------------
** Performance figures for the Service Class, first offered to the public on
1/1/95, include the historical performance of the Institutional Class from
the Funds' inception (1/2/91) up to December 31, 1994. Performance figures
for these two Classes after this date will vary based on differences in their
expense structures.
* The total return reflects the annual return on an investment including
appreciation and dividends or interest. Total returns shown herein include
the change in share price and reinvestment of capital gains distributions and
dividends, and, for the Service Class shares, include the service fee of
.25%.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that upon redemption, shares may be worth
more or less than their original cost.
The Institutional Class shares are sold with no sales charge. The Service
Class shares, first offered 1/1/95, are sold with no initial or contingent
deferred sales charge, but are subject to an annual shareholder service fee
of .25%.
Unlike other funds which generally seek to "beat" the market, index funds
seek to "match" their respective indices.
26
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
COMMON STOCKS (95.8%)+
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
AIR TRANSPORTATION (0.3%)
AMR Corp. (a).......................................... 5,684 $ 422,037
Delta Air Lines, Inc................................... 3,720 274,815
Pittston Services Group................................ 3,051 95,725
Southwest Airlines Co.................................. 10,646 247,519
USAir Group, Inc. (a).................................. 4,558 60,394
------------
1,100,490
------------
AIRCRAFT (1.4%)
Boeing Company (The)................................... 25,208 1,975,677
Lockheed Martin Corp................................... 14,867 1,174,493
McDonnell Douglas Corp................................. 8,335 766,820
Northrop Grumman Corp.................................. 3,609 230,976
United Technologies Corp............................... 9,188 871,712
------------
5,019,678
------------
ALUMINUM (0.4%)
Alcan Aluminum Limited................................. 16,773 522,060
Aluminum Co. of America................................ 13,200 697,950
Reynolds Metals Company................................ 4,684 265,231
------------
1,485,241
------------
APPAREL (0.4%)
Brown Group, Inc....................................... 1,315 18,739
Fruit Of The Loom Inc.
Class A (a)........................................... 5,600 136,500
Liz Claiborne, Inc..................................... 5,917 164,197
Nike, Inc.............................................. 10,558 735,100
Reebok International Ltd............................... 6,051 170,941
Russell Corp........................................... 2,953 81,946
Stride Rite Corp....................................... 3,722 27,915
VF Corp................................................ 4,905 258,739
------------
1,594,077
------------
BANKS (6.1%)
Banc One Corp.......................................... 29,317 1,106,717
Bank of Boston Corp.................................... 8,342 385,817
Bank of New York Company,
Inc. (The)............................................ 14,400 702,000
BankAmerica Corp....................................... 27,883 1,805,424
Bankers Trust New York Corp............................ 5,919 393,613
Barnett Banks, Inc..................................... 7,322 431,998
Boatmen's Bancshares, Inc.............................. 9,543 390,070
Chase Manhattan Corp. (The)............................ 12,908 782,548
Chemical Banking Corp.................................. 18,785 1,103,619
Citicorp............................................... 29,379 1,975,738
Comerica Inc........................................... 8,100 325,012
CoreStates Financial Corp.............................. 10,305 390,302
First Bank System, Inc................................. 10,500 521,063
First Chicago Corp..................................... 23,435 925,682
First Fidelity Bancorp................................. 5,986 451,195
First Interstate Bancorp............................... 5,595 763,718
First Union Corp....................................... 12,738 708,551
Fleet Financial Group, Inc............................. 19,037 775,758
KeyCorp................................................ 16,989 615,851
</TABLE>
- --------
+ Percentages indicated are based on Fund net assets.
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
BANKS (Continued)
MBNA Corp.............................................. 11,100 $ 409,312
Mellon Bank Corp....................................... 10,790 579,963
Morgan (J.P.) & Company, Inc........................... 13,924 1,117,401
NationsBank Corp....................................... 20,050 1,395,981
Norwest Corp........................................... 24,293 801,669
PNC Bank Corp.......................................... 17,478 563,666
Republic New York Corp................................. 4,200 260,925
Suntrust Banks, Inc.................................... 8,487 581,359
U.S. Bancorp (Portland, OR)............................ 7,386 248,354
Wachovia Corp.......................................... 12,814 586,241
Wells Fargo & Company.................................. 3,545 765,720
------------
21,865,267
------------
BEVERAGES (3.5%)
Anheuser-Busch Companies, Inc.......................... 19,028 1,272,497
Brown-Forman Corp...................................... 5,194 189,581
Coca-Cola Company (The)................................ 92,866 6,895,300
Coors (Adolph) Co...................................... 2,837 62,769
PepsiCo, Inc........................................... 57,955 3,238,236
Seagram Company Ltd.................................... 27,870 964,999
------------
12,623,382
------------
BROADCASTING (1.4%)
Capital Cities/ABC, Inc................................ 11,462 1,414,124
Comcast Corp. Class A.................................. 17,777 323,319
Tele-Communications TCI Group, Class A (a)............. 48,682 967,555
Tellabs, Inc. (a)...................................... 6,500 240,500
U.S. West Media Group (a).............................. 35,033 665,627
Viacom Inc. Class B (a)................................ 26,938 1,276,188
------------
4,887,313
------------
BUSINESS EQUIPMENT & SERVICES (1.5%)
Block (H & R), Inc..................................... 7,878 319,059
Browning-Ferris Industries, Inc........................ 15,839 467,250
Ceridian Corp. (a)..................................... 4,881 201,341
Deluxe Corp............................................ 6,228 180,612
Donnelley (R.R.) & Sons Company........................ 11,599 456,711
Dun & Bradstreet Corp. (The)........................... 12,689 821,613
Federal Express Corp. (a).............................. 4,150 306,581
Harland (John H.) Co. (The)............................ 2,307 48,159
Interpublic Group of Cos., Inc......................... 5,682 246,457
Moore Corp. Ltd........................................ 7,422 138,235
National Service Industries, Inc....................... 3,617 117,100
Ogden Corp............................................. 3,579 76,501
Pitney Bowes Inc....................................... 11,303 531,241
Ryder System, Inc...................................... 5,787 143,228
Safety-Kleen Corp...................................... 4,265 66,641
Service Corp. International............................ 7,032 309,408
WMX Technologies, Inc.................................. 36,189 1,081,146
------------
5,511,283
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
27
<PAGE>
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
CAPITAL EQUIPMENT (0.9%)
Caterpillar Inc........................................ 14,795 $ 869,206
Cincinnati Milacron Inc................................ 2,505 65,756
Cummins Engine Company, Inc............................ 3,043 112,591
Fluor Corp............................................. 6,222 410,652
Foster Wheeler Corp.................................... 2,725 115,812
General Signal Corp.................................... 3,489 112,956
Giddings & Lewis Inc................................... 2,610 43,065
Harnischfeger Industries, Inc.......................... 3,466 115,245
Illinois Tool Works Inc................................ 8,813 519,967
Ingersoll-Rand Company................................. 7,969 279,911
Paccar Inc............................................. 2,859 120,435
Parker Hannifin Corp................................... 5,518 188,992
Snap-On, Inc........................................... 3,178 143,805
Timken Company (The)................................... 2,394 91,571
Trinova Corp........................................... 2,181 62,431
------------
3,252,395
------------
CHEMICALS--PETROLEUM (2.0%)
Dow Chemical Company (The)............................. 20,042 1,410,456
Du Pont (E.I.) De Nemours & Company.................... 41,100 2,871,863
Goodrich (B.F.) Company................................ 1,964 133,797
Grace (W.R.) & Co...................................... 6,979 412,633
Hercules Inc........................................... 8,322 469,153
Monsanto Company....................................... 8,558 1,048,355
Rohm & Haas Company.................................... 5,126 329,986
Union Carbide Corp..................................... 10,135 380,063
------------
7,056,306
------------
CHEMICALS--SPECIALTY (0.9%)
Air Products & Chemicals, Inc.......................... 8,420 444,155
Avery Dennison Corp.................................... 4,070 204,009
Eastman Chemical Co.................................... 5,985 374,811
Ecolab, Inc............................................ 4,799 143,970
Engelhard Corp......................................... 10,703 232,790
Great Lakes Chemical Corp.............................. 4,958 356,976
Morton International, Inc.............................. 11,039 396,024
Nalco Chemical Company................................. 5,148 155,083
Pall Corp.............................................. 8,567 230,238
Praxair, Inc........................................... 10,048 337,864
Sigma-Aldrich Corp..................................... 3,620 179,190
------------
3,055,110
------------
COMMUNICATIONS EQUIPMENT (0.5%)
Andrew Corp. (a)....................................... 2,847 108,897
DSC Communications Corp. (a)........................... 8,360 308,275
General Dynamics Corp.................................. 4,791 283,268
Harris Corp............................................ 2,947 160,980
Northern Telecom Limited............................... 18,887 812,141
Scientific-Atlanta, Inc................................ 5,666 84,990
------------
1,758,551
------------
COMPUTERS--MAIN & MINI (3.1%)
Amdahl Corp. (a)....................................... 8,723 74,145
Cisco Systems, Inc. (a)................................ 20,131 1,502,276
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
COMPUTERS--MAIN & MINI (Continued)
Cray Research, Inc. (a)................................ 1,967 $ 48,683
Data General Corp. (a)................................. 2,717 37,359
Digital Equipment Corp. (a)............................ 10,950 702,169
Hewlett-Packard Company................................ 37,614 3,150,173
Honeywell Inc.......................................... 9,455 459,749
International Business Machines Corp................... 41,854 3,840,105
Tandem Computers Inc. (a).............................. 8,616 91,545
Unisys Corp. (a)....................................... 12,751 71,724
Xerox Corp............................................. 8,044 1,102,028
------------
11,079,956
------------
COMPUTERS--MICRO (0.5%)
Apple Computer Inc..................................... 9,049 288,437
Compaq Computer Corp. (a).............................. 19,471 934,608
Sun Microsystems Inc. (a).............................. 14,082 642,491
------------
1,865,536
------------
COMPUTERS--PERIPHERALS (2.6%)
Autodesk, Inc.......................................... 3,506 120,080
Cabletron Systems, Inc. (a)............................ 5,400 437,400
Computer Associates International Inc.................. 17,707 1,007,086
First Data Corp........................................ 16,500 1,103,438
Intergraph Corp. (a)................................... 3,399 53,534
Microsoft Corp. (a).................................... 43,090 3,781,147
Novell Inc. (a)........................................ 27,577 392,972
Oracle Corp. (a)....................................... 32,165 1,362,992
Silicon Graphics, Inc. (a)............................. 11,900 327,250
3Com Corp. (a)......................................... 11,700 545,513
------------
9,131,412
------------
CONSTRUCTION MATERIALS (0.4%)
Black & Decker Corp.................................... 6,332 223,203
Crane Co............................................... 2,241 82,637
PPG Industries Inc..................................... 15,054 688,720
Sherwin-Williams Company............................... 6,453 262,960
Stanley Works (The).................................... 3,291 169,487
------------
1,427,007
------------
CONSUMER ELECTRONICS (0.0%) (b)
Zenith Electronics Corp. (a)........................... 1,355 9,316
------------
CONSUMER SERVICES (0.1%)
CUC International Inc. (a)............................. 12,850 438,506
------------
CONTAINERS (0.1%)
Ball Corp.............................................. 2,281 62,728
Bemis Company, Inc..................................... 3,726 95,479
Crown Cork & Seal Company, Inc. (a).................... 6,663 278,180
------------
436,387
------------
COSMETICS & TOILETRIES (0.7%)
Alberto-Culver Company................................. 2,082 71,569
Avon Products, Inc..................................... 5,159 388,859
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
28
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
COSMETICS & TOILETRIES (Continued)
Gillette Company....................................... 32,902 $ 1,715,017
International Flavors & Fragrances, Inc................ 8,313 399,024
------------
2,574,469
------------
DEFENSE (0.6%)
EG & G, Inc............................................ 4,056 98,358
Loral Corp............................................. 12,632 446,857
Raytheon Company....................................... 18,022 851,540
Rockwell International Corp............................ 16,398 867,044
------------
2,263,799
------------
ELECTRICAL COMPONENTS (0.1%)
LSI Logic Corp. (a).................................... 9,700 317,675
------------
ELECTRICAL EQUIPMENT (3.5%)
Cooper Industries, Inc................................. 8,025 294,919
Dover Corp............................................. 8,430 310,856
Emerson Electric Co.................................... 16,727 1,367,432
General Electric Company............................... 124,654 8,975,088
Grainger (W.W.), Inc................................... 3,729 247,046
Johnson Controls, Inc.................................. 3,052 209,825
Tyco International Ltd................................. 11,496 409,545
Westinghouse Electric Corp............................. 29,119 480,464
------------
12,295,175
------------
ELECTRONIC COMPONENTS (2.6%)
Advanced Micro Devices,
Inc. (a).............................................. 7,977 131,620
AMP Inc................................................ 16,238 623,133
Applied Materials, Inc. (a)............................ 13,100 515,812
Intel Corp............................................. 60,610 3,439,618
Micron Technology Inc.................................. 15,300 606,263
Motorola, Inc.......................................... 43,500 2,479,500
National Semiconductor
Corp. (a)............................................. 9,319 207,348
Raychem Corp........................................... 3,161 179,782
Teledyne, Inc. (a)..................................... 4,152 106,395
Texas Instruments, Inc................................. 13,898 719,222
Thomas & Betts Corp.................................... 1,423 104,946
------------
9,113,639
------------
ELECTRONIC INSTRUMENTS (0.1%)
Perkin-Elmer Corp. (The)............................... 3,282 123,896
Tektronix, Inc......................................... 2,490 122,321
------------
246,217
------------
ENVIRONMENTAL CONTROL (0.1%)
Laidlaw, Inc. Class B.................................. 21,700 222,425
------------
FARM MACHINERY (0.2%)
Deere & Company........................................ 19,436 685,119
Navistar International Corp. (a)....................... 5,650 59,325
Varity Corp. (a)....................................... 3,254 120,805
------------
865,249
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
FINANCE COMPANIES (0.7%)
Beneficial Corp........................................ 3,832 $ 178,667
Household International Inc............................ 7,190 425,109
National City Corp..................................... 10,900 361,062
Travelers Group Inc.................................... 23,722 1,491,521
------------
2,456,359
------------
FOOD & RELATED (2.7%)
Archer Daniels Midland Company......................... 40,401 727,218
Campbell Soup Company.................................. 18,693 1,121,580
ConAgra, Inc........................................... 18,259 753,184
CPC International, Inc................................. 10,747 737,513
Fleming Companies, Inc................................. 2,731 56,327
General Mills, Inc..................................... 11,928 688,842
Heinz (H.J.) Company................................... 27,203 901,099
Hershey Foods Corp..................................... 5,763 374,595
Kellogg Company........................................ 16,381 1,265,432
Quaker Oats Company.................................... 10,000 345,000
Ralston Purina Group................................... 7,654 477,418
Sara Lee Corp.......................................... 35,754 1,139,659
SuperValu Inc.......................................... 5,358 168,777
Sysco Corp............................................. 13,682 444,665
Wrigley (Wm.) Jr. Company.............................. 8,739 458,798
------------
9,660,107
------------
FOOD PROCESSING (0.1%)
Pioneer Hi-Bred International, Inc..................... 6,314 351,216
------------
FOREST & PAPER PRODUCTS (1.6%)
Boise Cascade Corp..................................... 3,438 119,041
Champion International Corp............................ 7,187 301,854
Crown Vantage, Inc. (a)................................ 571 8,137
Federal Paper Board Company, Inc....................... 3,362 174,404
Georgia-Pacific Corp................................... 6,764 464,179
International Paper Company............................ 18,958 718,034
James River Corp. of Virginia.......................... 6,219 150,033
Kimberly-Clark Corp.................................... 19,298 1,596,946
Louisiana-Pacific Corp................................. 8,196 198,753
Mead Corp.............................................. 3,973 207,589
Potlatch Corp.......................................... 2,184 87,360
Stone Container Corp................................... 7,024 100,970
Temple-Inland Inc...................................... 4,152 183,207
Union Camp Corp........................................ 5,238 249,460
Westvaco Corp.......................................... 7,530 208,957
Weyerhaeuser Company................................... 15,058 651,259
Willamette Industries, Inc............................. 4,100 230,625
------------
5,650,808
------------
FURNITURE & FURNISHINGS (0.3%)
Armstrong World Industries, Inc........................ 2,833 175,646
Masco Corp............................................. 11,773 369,378
Newell Co.............................................. 11,903 307,990
Owens-Corning Fiberglas
Corp. (a)............................................. 3,676 164,960
------------
1,017,974
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
29
<PAGE>
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
GOLD & PRECIOUS METALS (0.2%)
Echo Bay Mines Ltd..................................... 8,404 $ 87,191
Homestake Mining Company............................... 10,273 160,516
Placer Dome Inc........................................ 17,804 429,522
------------
677,229
------------
HEALTH CARE--DRUGS (5.0%)
Abbott Laboratories.................................... 58,466 2,440,955
Allergan Inc........................................... 4,813 156,423
Alza Corp. (a)......................................... 6,194 153,302
Amgen Inc. (a)......................................... 19,716 1,170,637
Baxter International Inc............................... 20,575 861,578
Lilly (Eli) & Company.................................. 40,710 2,289,938
Merck & Co., Inc....................................... 91,061 5,987,261
Millipore Corp......................................... 3,258 133,985
Pfizer Inc............................................. 46,550 2,932,650
Schering-Plough Corp................................... 27,672 1,515,042
------------
17,641,771
------------
HEALTH CARE--GENERAL (3.7%)
American Home Products Corp............................ 22,959 2,227,023
Bausch & Lomb Inc...................................... 4,376 173,399
Becton, Dickinson & Company............................ 4,977 373,275
Biomet Inc. (a)........................................ 8,630 154,261
Bristol-Myers Squibb Company........................... 37,644 3,232,678
Johnson & Johnson...................................... 47,529 4,069,671
Mallinckrodt Group, Inc................................ 5,789 210,575
Pharmacia & Upjohn, Inc................................ 38,285 1,483,544
St. Jude Medical, Inc. (a)............................. 5,153 221,579
Warner-Lambert Company................................. 10,057 976,786
------------
13,122,791
------------
HOMEBUILDERS, MOBILE HOMES (0.1%)
Centex Corp............................................ 2,298 79,855
Fleetwood Enterprises, Inc............................. 3,394 87,396
Kaufman & Broad Home Corp.............................. 2,465 36,667
Pulte Corp............................................. 2,076 69,805
------------
273,723
------------
HOSPITAL SUPPLY & MANAGEMENT (1.1%)
Bard (C.R.), Inc....................................... 3,932 126,807
Beverly Enterprises, Inc. (a).......................... 7,296 77,520
Columbia/HCA Healthcare Corp........................... 33,012 1,675,359
Community Psychiatric
Centers (a)........................................... 3,230 39,567
Humana Inc. (a)........................................ 10,200 279,225
Manor Care, Inc........................................ 4,627 161,945
Medtronic, Inc......................................... 17,192 960,603
Shared Medical Systems Corp............................ 1,746 94,939
Tenet Healthcare Corp. (a)............................. 14,953 310,275
United States Surgical Corp............................ 4,255 90,951
------------
3,817,191
------------
HOTELS & GAMING (0.2%)
Bally Entertainment Corp. (a).......................... 3,498 48,972
Harrah's Entertainment, Inc. (a)....................... 7,500 181,875
Hilton Hotels Corp..................................... 3,507 215,681
Marriott International, Inc............................ 9,300 355,725
------------
802,253
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
HOUSEHOLD--GENERAL PRODUCTS (2.3%)
American Greetings Corp................................ 5,561 $ 153,623
Clorox Company (The)................................... 3,945 282,561
Colgate-Palmolive Company.............................. 10,687 750,762
Corning Inc............................................ 16,995 543,840
Jostens, Inc........................................... 2,892 70,131
Premark International, Inc............................. 4,702 238,039
Procter & Gamble Company (The)......................... 50,576 4,197,808
Rubbermaid, Inc........................................ 12,127 309,238
Unilever, N.V.......................................... 11,918 1,677,458
------------
8,223,460
------------
HOUSEHOLD--MAJOR APPLIANCES (0.2%)
Briggs & Stratton Corp................................. 2,194 95,165
Maytag Corp............................................ 7,981 161,615
Whirlpool Corp......................................... 5,551 295,591
------------
552,371
------------
INSURANCE--LIFE (1.1%)
American General Corp.................................. 15,260 532,192
Jefferson-Pilot Corp................................... 5,132 238,615
Loews Corp............................................. 8,800 689,700
Providian Corp......................................... 7,016 285,902
Torchmark Corp......................................... 5,468 247,427
United Healthcare Corp................................. 12,813 839,252
U.S. Healthcare, Inc................................... 11,486 534,099
UNUM Corp.............................................. 5,382 296,010
USLIFE Corp............................................ 3,370 100,679
------------
3,763,876
------------
INSURANCE--PROPERTY & CASUALTY (2.6%)
Aetna Life & Casualty Company.......................... 8,406 582,116
Allstate Corp. (The)................................... 33,331 1,370,737
American International Group, Inc...................... 34,898 3,228,065
Chubb Corp. (The)...................................... 6,554 634,099
CIGNA Corp............................................. 5,461 563,848
General Re Corp........................................ 6,133 950,615
ITT Hartford Group, Inc. (a)........................... 8,645 418,202
Lincoln National Corp.................................. 7,697 413,714
SAFECO Corp............................................ 9,596 331,062
St. Paul Companies, Inc. (The)......................... 6,325 351,828
Transamerica Corp...................................... 5,083 370,424
USF&G Corp............................................. 8,238 139,016
------------
9,353,726
------------
LEISURE TIME INDUSTRY (0.9%)
Brunswick Corp......................................... 7,102 170,448
Handleman Co........................................... 2,485 14,289
Hasbro Inc............................................. 6,553 203,143
Mattel, Inc............................................ 16,742 514,816
Outboard Marine Corp................................... 1,528 31,133
Walt Disney Company (The).............................. 38,565 2,275,335
------------
3,209,164
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
30
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
MEDICAL SUPPLIES (0.2%)
Boston Scientific Corp. (a)............................ 11,900 $ 583,100
------------
METALS--DIVERSIFIED (0.1%)
Freeport-McMoRan Copper & Gold Inc..................... 15,400 433,125
------------
MINING (0.6%)
Asarco, Inc............................................ 3,060 97,920
Barrick Gold Corp...................................... 26,093 688,203
Cyprus Amax Minerals Co................................ 6,934 181,151
INCO Limited........................................... 8,812 292,999
Nacco Industries, Inc.................................. 753 41,792
Newmont Mining Corp.................................... 6,465 292,541
Phelps Dodge Corp...................................... 5,153 320,774
Santa Fe Pacific Gold Corp............................. 9,785 118,643
------------
2,034,023
------------
MOTION PICTURES (0.0%) (b)
King World Productions, Inc. (a)....................... 2,735 106,323
------------
MOTOR VEHICLE PARTS (0.3%)
Dana Corp.............................................. 7,406 216,625
Eaton Corp............................................. 5,653 303,142
Echlin Inc............................................. 4,371 159,542
Genuine Parts Company.................................. 9,335 382,735
------------
1,062,044
------------
MOTOR VEHICLES (1.9%)
Chrysler Corp.......................................... 28,400 1,572,650
Ford Motor Company..................................... 79,580 2,307,820
General Motors Corp.................................... 54,991 2,907,649
------------
6,788,119
------------
MULTIPLE INDUSTRY (1.6%)
Alco Standard Corp..................................... 8,138 371,296
AlliedSignal, Inc...................................... 21,099 1,002,202
Dial Corp. (The)....................................... 6,899 204,383
FMC Corp. (a).......................................... 2,726 184,346
Harcourt General, Inc.................................. 5,433 227,507
ITT Corp. (New) (a).................................... 8,645 458,185
ITT Industries, Inc.................................... 8,645 207,480
Minnesota Mining & Manufacturing Company............... 31,249 2,070,246
Textron Inc............................................ 6,357 429,097
TRW Inc................................................ 4,903 379,983
Whitman Corp........................................... 7,876 183,117
------------
5,717,842
------------
PETROLEUM--DOMESTIC (2.5%)
Amerada Hess Corp...................................... 6,985 370,205
Amoco Corp............................................. 36,955 2,656,141
Ashland Inc............................................ 4,680 164,385
Atlantic Richfield Company............................. 12,017 1,330,883
Burlington Resources, Inc.............................. 9,612 377,271
Coastal Corp........................................... 7,815 291,109
Kerr-McGee Corp........................................ 3,818 242,443
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
PETROLEUM--DOMESTIC (Continued)
Louisiana Land & Exploration Company (The)............. 2,492 $ 106,844
Noram Energy Corp...................................... 9,172 81,402
Occidental Petroleum Corp.............................. 23,651 505,540
Oryx Energy Company (a)................................ 7,211 96,447
Pennzoil Company....................................... 3,367 142,256
Phillips Petroleum Company............................. 19,552 667,212
Santa Fe Energy Resources,
Inc. (a).............................................. 6,704 64,526
Sun Company, Inc....................................... 5,579 152,725
Tenneco, Inc........................................... 13,332 661,600
Unocal Corp............................................ 18,136 528,211
USX-Marathon Group..................................... 22,116 431,262
------------
8,870,462
------------
PETROLEUM--INTERNATIONAL (5.7%)
Chevron Corp........................................... 48,374 2,539,635
Exxon Corp............................................. 91,485 7,330,236
Mobil Corp............................................. 29,329 3,284,848
Royal Dutch Petroleum Company.......................... 39,504 5,575,002
Texaco Inc............................................. 19,142 1,502,647
------------
20,232,368
------------
PETROLEUM--SERVICES (0.8%)
Baker Hughes Inc....................................... 10,486 255,596
Dresser Industries, Inc................................ 13,482 328,624
Halliburton Company.................................... 8,517 431,173
Helmerich & Payne, Inc................................. 1,958 58,251
McDermott International, Inc........................... 4,036 88,792
Rowan Companies, Inc. (a).............................. 6,322 62,430
Schlumberger Limited................................... 17,942 1,242,483
Western Atlas, Inc. (a)................................ 3,893 196,596
------------
2,663,945
------------
PHOTOGRAPHIC EQUIPMENT (0.5%)
Eastman Kodak Company.................................. 25,344 1,698,048
Polaroid Corp.......................................... 3,461 163,965
------------
1,862,013
------------
PUBLISHING (1.0%)
Dow Jones & Company, Inc............................... 7,442 296,750
Gannett Company, Inc................................... 10,328 633,881
Knight-Ridder Inc...................................... 3,545 221,562
McGraw-Hill Companies, Inc............................. 3,615 314,957
Meredith Corp.......................................... 2,198 92,041
New York Times Company (The)........................... 7,169 212,382
Time Warner, Inc....................................... 28,738 1,088,452
Times Mirror Company................................... 8,322 281,908
Tribune Company........................................ 4,916 300,490
------------
3,442,423
------------
RAILROAD (1.1%)
Burlington Northern Santa Fe Corp...................... 10,424 813,072
Conrail, Inc........................................... 5,906 413,420
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
31
<PAGE>
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
RAILROAD (Continued)
CSX Corp............................................... 15,728 $ 717,590
Norfolk Southern Corp.................................. 9,780 776,287
Union Pacific Corp..................................... 15,298 1,009,668
------------
3,730,037
------------
RESTAURANTS (0.8%)
Darden Restaurants, Inc. (a)........................... 11,928 141,645
Luby's Cafeterias, Inc................................. 1,920 42,720
McDonald's Corp........................................ 51,147 2,308,009
Ryan's Family Steak Houses,
Inc. (a).............................................. 3,940 27,580
Shoney's, Inc. (a)..................................... 3,053 31,293
Wendy's International, Inc............................. 7,537 160,161
------------
2,711,408
------------
RETAIL--FOOD STORES (0.8%)
Albertson's, Inc....................................... 19,028 625,545
American Stores Co..................................... 11,110 297,193
Bruno's, Inc........................................... 152 1,634
Giant Food, Inc........................................ 4,477 141,025
Great Atlantic & Pacific Tea Company, Inc.............. 2,839 65,297
Kroger Company (The) (a)............................... 9,177 344,138
Longs Drug Stores Corp................................. 1,533 73,392
Rite Aid Corp.......................................... 6,451 220,947
Walgreen Company....................................... 18,454 551,313
Winn-Dixie Stores, Inc................................. 11,268 415,508
------------
2,735,992
------------
RETAIL--GENERAL MERCHANDISE (2.4%)
Dayton Hudson Corp..................................... 5,358 401,850
Dillard Department Stores, Inc......................... 8,415 239,827
Federated Department Stores, Inc. (a).................. 15,000 412,500
Kmart Corp............................................. 34,106 247,269
May Department Stores Company.......................... 18,569 784,540
Mercantile Stores Company, Inc......................... 2,732 126,355
Nordstrom, Inc......................................... 6,223 252,031
Penney (J.C.) Company, Inc............................. 17,088 813,816
Price/Costco, Inc. (a)................................. 14,565 222,116
Sears, Roebuck & Company............................... 28,913 1,127,607
TJX Companies, Inc. (The).............................. 5,467 103,190
Wal-Mart Stores, Inc................................... 169,106 3,783,747
Woolworth Corp......................................... 9,839 127,907
------------
8,642,755
------------
RETAIL--SPECIALTY STORES (1.2%)
Charming Shoppes, Inc.................................. 7,654 22,005
Circuit City Stores, Inc............................... 7,204 199,010
Gap, Inc. (The)........................................ 10,817 454,314
Home Depot, Inc. (The)................................. 35,267 1,688,408
Limited, Inc. (The).................................... 26,893 467,266
Lowe's Companies, Inc.................................. 11,863 397,410
Melville Corp.......................................... 7,969 245,047
Pep Boys-Manny, Moe & Jack............................. 4,585 117,491
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
RETAIL--SPECIALTY STORES (Continued)
Tandy Corp............................................. 4,900 $ 203,350
Toys "R" Us (a)........................................ 20,516 446,223
------------
4,240,524
------------
SAVINGS & LOANS (1.2%)
Ahmanson (H.F.) & Company.............................. 8,840 234,260
Federal Home Loan Mortgage Corp........................ 13,438 1,122,073
Federal National Mortgage Association.................. 20,036 2,486,968
Golden West Financial Corp............................. 4,396 242,879
Great Western Financial Corp........................... 10,039 255,995
------------
4,342,175
------------
SECURITY & COMMISSION BROKERS (1.1%)
Alexander & Alexander Services, Inc.................... 3,262 61,978
American Express Company............................... 36,284 1,501,250
Dean Witter Discover & Company......................... 12,726 598,122
Marsh & McLennan Companies, Inc........................ 5,470 485,463
Merrill Lynch & Co., Inc............................... 12,990 662,490
Morgan Stanley Group Inc............................... 5,600 451,500
Salomon Inc............................................ 7,896 280,308
------------
4,041,111
------------
STEEL (0.3%)
Armco Inc. (a)......................................... 7,862 46,189
Bethlehem Steel Corp. (a).............................. 8,117 113,638
Inland Steel Industries, Inc. (a)...................... 3,543 89,018
Nucor Corp............................................. 6,560 374,740
USX-U.S. Steel Group Inc............................... 6,079 186,929
Worthington Industries, Inc............................ 6,744 140,360
------------
950,874
------------
TEXTILE (0.0%) (b)
Springs Industries, Inc................................ 1,516 62,724
------------
TIMESHARING & SOFTWARE (0.3%)
Automatic Data Processing, Inc. ....................... 10,697 794,252
Computer Sciences Corp. (a)............................ 4,132 290,273
------------
1,084,525
------------
TIRE & RUBBER PRODUCTS (0.2%)
Cooper Tire & Rubber Company........................... 6,331 155,901
Goodyear Tire & Rubber Company......................... 11,430 518,636
------------
674,537
------------
TOBACCO (1.9%)
American Brands, Inc................................... 14,080 628,320
Philip Morris Companies, Inc........................... 61,826 5,595,253
Schweitzer-Mauduit
International, Inc. (a)............................... 1,142 26,409
UST Inc................................................ 14,516 484,471
------------
6,734,453
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
32
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
TRUCKING & SHIPPING (0.1%)
Consolidated Freightways, Inc.......................... 3,224 $ 85,436
Roadway Services, Inc.................................. 2,945 143,937
Yellow Corp............................................ 2,177 26,940
------------
256,313
------------
UTILITIES--ELECTRIC (3.6%)
American Electric Power Company, Inc................... 13,775 557,887
Baltimore Gas & Electric Company....................... 11,019 314,042
Carolina Power & Light Company......................... 11,623 400,993
Central & South West Corp.............................. 14,302 398,668
CINergy Corp........................................... 11,651 356,812
Consolidated Edison Company of New York................ 17,584 562,688
Detroit Edison Company................................. 10,932 377,154
Dominion Resources Inc................................. 12,804 528,165
Duke Power Company..................................... 15,298 724,743
Entergy Corp........................................... 17,040 498,420
FPL Group, Inc......................................... 13,674 634,132
General Public Utilities Corp.......................... 8,700 295,800
Houston Industries Inc. ............................... 19,458 471,856
Niagara Mohawk Power Corp.............................. 10,699 102,978
Northern States Power Company.......................... 5,013 246,264
Ohio Edison Company.................................... 11,464 269,404
Pacific Gas & Electric Company......................... 31,522 894,437
PacifiCorp............................................. 21,049 447,291
Peco Energy Company.................................... 16,605 500,226
PP&L Resources, Inc.................................... 11,300 282,500
Public Service Enterprise Group Inc.................... 18,335 561,509
SCEcorp................................................ 33,542 595,371
Southern Company (The)................................. 49,650 1,222,631
Texas Utilities Company................................ 16,910 695,424
Unicom Corp............................................ 15,960 522,690
Union Electric Company................................. 7,551 315,254
------------
12,777,339
------------
UTILITIES--GAS & PIPELINE (0.7%)
Columbia Gas System, Inc. (a).......................... 3,823 167,734
Consolidated Natural Gas Company....................... 6,985 316,944
Eastern Enterprises.................................... 1,541 54,320
Enron Corp............................................. 18,730 714,081
Enserch Corp........................................... 5,018 81,542
Nicor Inc. ............................................ 3,846 105,765
Oneok, Inc............................................. 2,069 47,328
Pacific Enterprises.................................... 6,315 178,399
Panhandle Eastern Corp. ............................... 11,243 313,399
Peoples Energy Corp.................................... 2,618 83,122
Sonat Inc. ............................................ 6,558 233,629
Williams Companies, Inc. (The)......................... 7,746 339,856
------------
2,636,119
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------------
<S> <C> <C>
UTILITIES--TELEPHONE (8.1%)
AT&T Corp.......................................... 116,794 $ 7,562,411
Airtouch Communications (a)........................ 36,887 1,042,058
Alltel Corp........................................ 14,100 415,950
Ameritech Corp. ................................... 41,164 2,428,676
Bell Atlantic Corp................................. 32,356 2,163,808
BellSouth Corp. ................................... 73,782 3,209,517
GTE Corp........................................... 71,393 3,141,292
MCI Communications Corp............................ 50,563 1,320,958
NYNEX Corp......................................... 31,731 1,713,474
Pacific Telesis Group.............................. 31,720 1,066,585
SBC Communications, Inc............................ 45,222 2,600,265
Sprint Corp. ...................................... 25,767 1,027,459
US West, Inc....................................... 35,033 1,252,430
------------
28,944,883
------------
Total Common Stocks
(Cost $225,128,125)............................... 340,431,436(c)
------------
PREFERRED STOCK (0.0%) (b)
ELECTRONIC COMPONENTS (0.0%) (b)
Teledyne, Inc.
$1.20, Series E................................... 115 1,653
------------
Total Preferred Stock
(Cost $1,692)..................................... 1,653
------------
SHORT-TERM
INVESTMENTS (4.0%)
<CAPTION>
PRINCIPAL
AMOUNT
-------------
<S> <C> <C>
COMMERCIAL PAPER (3.7%)
American Honda Finance Corp.
5.78%, due 1/10/96 (d)............................ $6,100,000 6,091,185
DIC Americas, Inc.
6.00%, due 1/26/96 (d)............................ 3,300,000 3,286,250
Mitsui & Co. (U.S.A) Inc.
5.82%, due 1/12/96 (d)............................ 1,100,000 1,098,044
Shinhan Bank
5.92%, due 1/22/96 (d)............................ 1,130,000 1,126,098
Strategic Asset Funding Corp.
5.97%, due 1/5/96 (d)............................. 1,690,000 1,688,879
------------
Total Commercial Paper
(Cost $13,290,456)................................ 13,290,456
------------
U.S. GOVERNMENT (0.3%)
United States Treasury Bills
4.81%, due 3/7/96 (d)............................. 1,090,000 1,079,826
------------
Total U.S. Government
(Cost $1,080,366)................................. 1,079,826
------------
Total Short-Term Investments
(Cost $14,370,822)................................ 14,370,282
------------
Total Investments
(Cost $239,500,639) (e)........................... 99.8% 354,803,371 (f)
Cash and Other Assets,
Less Liabilities.................................. 0.2 585,511
---------- ------------
Net Assets......................................... 100.0% $355,388,882
========== ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
33
<PAGE>
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
FUTURES CONTRACTS (0.0%) (b)
<TABLE>
<CAPTION>
CONTRACTS UNREALIZED
LONG APPRECIATION
----------------------------
<S> <C> <C>
Standard & Poor's 500
March 1996......................................... 44 $ 18,782(g)
------------
Total Futures Contracts
(Settlement Value $13,605,900)..................... $ 18,782
============
</TABLE>
- --------
(a) Non-income producing securities.
(b) Less than one tenth of a percent.
(c) The combined market value of common stocks and Standard & Poor's 500 Index
futures contracts represents 99.6% of net assets.
(d) Segregated as collateral for futures contracts.
(e) The cost for Federal income tax purposes is $239,750,795.
(f) At December 31, 1995 net unrealized appreciation was $115,052,576 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 $118,804,191 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $3,751,615.
(g) Represents the difference between the value of the contracts at the time
they were opened and the value at December 31, 1995.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
34
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$239,500,639)................................................... $354,803,371
Cash............................................................. 41,546
Receivables:
Fund shares sold................................................. 1,287,247
Dividends and interest........................................... 670,216
Variation margin receivable on futures contracts................. 16,630
------------
Total assets................................................... 356,819,010
------------
LIABILITIES:
Payables:
Fund shares redeemed............................................. 653,129
Investment securities purchased.................................. 546,975
Administrator.................................................... 91,491
Adviser.......................................................... 29,949
Custodian........................................................ 10,912
Transfer agent................................................... 4,806
Directors........................................................ 1,354
Accrued expenses................................................. 65,982
Dividend payable................................................. 25,530
------------
Total liabilities.............................................. 1,430,128
------------
Net assets....................................................... $355,388,882
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized
Institutional Class.............................................. $ 19,885
Institutional Service Class...................................... 54
Additional paid-in capital....................................... 239,294,136
Accumulated undistributed net realized gain on investments....... 753,293
Unrealized appreciation on investments........................... 115,321,514
------------
Net assets....................................................... $355,388,882
============
Institutional Class
Net assets applicable to outstanding shares...................... $354,420,235
============
Shares of capital stock outstanding.............................. 19,885,343
============
Net asset value per share outstanding............................ $ 17.82
============
Institutional Service Class
Net assets applicable to outstanding shares...................... $ 968,647
============
Shares of capital stock outstanding.............................. 54,393
============
Net asset value per share outstanding............................ $ 17.81
============
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)..................................................... $ 7,078,134
Interest.......................................................... 942,803
-----------
Total income.................................................... 8,020,937
-----------
Expenses: (Note 2)
Administration (Note 3)........................................... 1,181,947
Advisory (Note 3)................................................. 295,487
Legal............................................................. 70,377
Custodian......................................................... 45,222
Shareholder communication......................................... 36,970
Auditing.......................................................... 32,567
Transfer agent.................................................... 29,085
Registration...................................................... 28,768
Directors......................................................... 12,470
Amortization of organization expense.............................. 6,910
Service (Note 3).................................................. 744
Miscellaneous..................................................... 10,026
-----------
Total expenses before
reimbursement.................................................. 1,750,573
Expense reimbursement from Administrator (Note 3)................. (272,396)
-----------
Net expenses.................................................... 1,478,177
-----------
Net investment income............................................. 6,542,760
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from:
Security transactions............................................. 3,875,469
Futures transactions.............................................. 4,115,160
-----------
Net realized gain on investments.................................. 7,990,629
-----------
Net change in unrealized appreciation on investments:
Security transactions............................................. 76,768,492
Futures transactions.............................................. (117,943)
-----------
Net unrealized gain on investments................................ 76,650,549
-----------
Net realized and unrealized gain on investments................... 84,641,178
-----------
Net increase in net assets resulting from operations.............. $91,183,938
===========
</TABLE>
- --------
(a) Dividends recorded net of foreign withholding taxes of $46,212.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
35
<PAGE>
INDEXED EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and December 31, 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income............................. $ 6,542,760 $ 5,800,441
Net realized gain on investments.................. 7,990,629 1,845,740
Net change in unrealized appreciation on invest-
ments............................................ 76,650,549 (5,880,683)
------------ ------------
Net increase in net assets resulting from opera-
tions............................................ 91,183,938 1,765,498
------------ ------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class.............................. (6,591,393) (5,800,441)
Institutional Service Class...................... (16,388) --
From net realized gain on investments:
Institutional Class.............................. (6,792,059) (2,126,396)
Institutional Service Class...................... (17,654) --
In excess of net investment income:
Institutional Class.............................. -- (44,265)
In excess of net realized gain on investments:
Institutional Class.............................. -- (16,958)
Return of Capital:
Institutional Class.............................. -- (30,527)
------------ ------------
Total dividends and distributions to sharehold-
ers............................................ (13,417,494) (8,018,587)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class.............................. 78,587,684 121,810,064
Institutional Service Class...................... 897,435 --
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions:
Institutional Class.............................. 13,357,924 7,957,364
Institutional Service Class...................... 34,040 --
------------ ------------
92,877,083 129,767,428
Cost of shares redeemed:
Institutional Class.............................. (59,931,221) (98,180,324)
Institutional Service Class...................... (8,197) --
------------ ------------
Increase in net assets derived from capital
share transactions.............................. 32,937,665 31,587,104
------------ ------------
Net increase in net assets....................... 110,704,109 25,334,015
NET ASSETS:
Beginning of year................................. 244,684,773 219,350,758
------------ ------------
End of year....................................... $355,388,882 $244,684,773
============ ============
Accumulated distributions in excess of net invest-
ment income...................................... $ -- $ (44,265)
============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
36
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL
INSTITUTIONAL SERVICE
CLASS CLASS INSTITUTIONAL CLASS
------------- ------------- --------------------------------------------------
YEAR ENDED DECEMBER 31 JANUARY 2, 1991(A)
---------------------------------------------------------- THROUGH
1995 1994 1993 1992 DECEMBER 31, 1991
--------------------------- -------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period.... $ 13.53 $13.53 $ 13.86 $ 13.50 $ 12.98 $ 10.00
-------- ------ -------- -------- -------- --------
Net investment income... 0.35 0.33 0.33 0.30 0.30 0.32
Net realized and
unrealized gain (loss)
on investments......... 4.64 4.64 (0.20) 0.93 0.61 2.66
-------- ------ -------- -------- -------- --------
Total from investment
operations............. 4.99 4.97 0.13 1.23 0.91 2.98
-------- ------ -------- -------- -------- --------
Less dividends and
distributions:
From net investment
income................. (0.34) (0.33) (0.33) (0.61) (0.32) --
From net realized gain
on investments......... (0.36) (0.36) (0.13) (0.25) (0.07) --
In excess of net
realized gain on
investments............ -- -- 0.00(b) (0.01) -- --
-------- ------ -------- -------- -------- --------
Total dividends and
distributions.......... (0.70) (0.69) (0.46) (0.87) (0.39) --
-------- ------ -------- -------- -------- --------
Net asset value at end
of period.............. $ 17.82 $17.81 $ 13.53 $ 13.86 $ 13.50 $ 12.98
======== ====== ======== ======== ======== ========
Total investment
return................. 36.88% 36.70% 0.90% 9.41% 7.19% 29.80%
Ratios (to average net
assets)/
Supplemental Data:
Net investment income.. 2.21% 1.96% 2.43% 2.39% 2.52% 2.78%
Net expenses........... 0.50% 0.75% 0.50% 0.45% 0.45% 0.45%
Expenses (before
reimbursement)........ 0.59% 0.84% 0.58% 0.60% 0.62% 0.68%
Portfolio turnover
rate................... 4% 4% 5% 5% 4% 4%
Net assets at end of
period (in 000's)...... $354,420 $ 969 $244,685 $219,351 $164,858 $144,055
</TABLE>
- --------
(a) Commencement of operations.
(b) Less than one cent per share.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
37
<PAGE>
---------------------------
International Equity Fund
---------------------------
For the year ended December 31, 1995, the MainStay Institutional International
Equity Fund returned 7.17% and 6.86% for Institutional Class and Service Class
shares, respectively. During the same period (12/31/94 to 12/31/95), the average
Lipper international fund(S) returned 9.39% (among a universe of 255
international equity funds) and Morgan Stanley Capital International's (MSCI)
Europe, Australia, and Far East (EAFE) Index+ returned 11.21%.
While these overall results may appear somewhat disappointing, the Fund
outperformed its Lipper peer group in the second half of the year and surpassed
the EAFE Index in the fourth quarter.
The year began under very difficult conditions. In the early months,
international markets tumbled along with the U.S. dollar, which made it
difficult for international manufacturers to compete with those in the United
States. Although most European markets were down in local terms in the first
quarter, U.S. investors benefited from positive currency trends. Our best
decision in the first three months was to increase investments in France, which
rose 0.6% for the quarter, and move out of Germany, which fell 8.5% for the same
period.
Japan, the largest international equity market, was depressed during the first
half of the year by a string of bad news, including the Kobe earthquake, the
collapse of Barings Bank's huge stock futures position, and poison gas attacks
on innocent citizens. Our exposure to Japanese stocks had a negative impact on
performance in the first half of 1995, as did our underweighted positions in two
of the best performing international markets, Switzerland and the U.K.
Fortunately, negative conditions early in the year foretold excellent investment
opportunities. International markets soon rebounded, led by Europe in the second
quarter and then Japan, which recovered in the second half of the year. Market
upturns were encouraged by a more stable dollar, and by a declining trend in
interest rates worldwide.
Our portfolio performance recovered along with the markets in the second half of
the year. Our best decisions in 1995 were to emphasize interest-sensitive
securities in markets such as Spain (up 28% in U.S. dollar terms), Belgium (up
26%), and Hong Kong (up 23%). At the same time, we avoided blowups in markets
such as Finland where stocks, including a leader such as Nokia, plummeted late
in the year. Our decision to seek protection against a declining Japanese yen
helped minimize losses when the yen slid substantially during the summer months.
In 1996, we believe international equities offer substantial investment
opportunities. Foreign equity markets lagged the U.S. market in 1995 and may now
be poised to partake in the global equity bull market. The upbeat outlook for
international equities is enhanced by the declines in interest rates abroad,
which have been even more pronounced than in the U.S.
Going into 1996, the Fund has a diversified exposure in both Asia and Europe.
Our European investments include Austria, Belgium, Denmark, France, Italy, and
Spain -- all of which include many banks, insurers, and utility companies that
may benefit from declining interest rates. We have also raised our exposure to
energy and natural resources, with energy holdings in Norway (Norsk Hydro) and
the Netherlands (Royal Dutch) and natural resource exposure in Australia (mining
and metals) and New Zealand (forest products). We are also emphasizing the
highest growth markets of the world, located in Southeast Asia, with our
investments in Singapore and Hong Kong. Japanese interest rates are at
incredibly low levels, which could make the Japanese equity market the big
positive surprise of 1996.
Also in 1996 we expect continued foreign currency erosion and are actively
seeking to help protect the Fund from declines in the value of the Japanese yen
and European currencies. We continue to emphasize a disciplined process to
international investing, which focuses on country selection, currency risk
management, diversification, and high quality stocks.
Michael Perelstein
Shigemi Takagi
Portfolio Managers
Note: Foreign investing may be subject to greater risks than domestic investing.
These may include securities markets that are less efficient, less liquid and
more volatile than those in the United States, as well as foreign currency
fluctuations and different governmental regulatory concerns.
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
(S) Lipper Analytical Services Inc. is an independent monitor of mutual fund
performance. Results do not reflect any deduction of sales charges and are
based on total returns with capital gains and dividends reinvested.
+ The MSCI EAFE Index is an unmanaged index generally considered
representative of the international stock market.
WEIGHTING The portion of a portfolio allocated to a specific market sector or
country. A Fund is said to be overweighted in a country when that portion of the
portfolio is larger than the country's total equities relative to the
international equity markets as a whole.
EXPOSURE The amount invested in a specific security, market, country, or
currency. Participation in positive as well as negative events affecting a
security or sector generally increases with the level of exposure.
BULL MARKET A period during which security values in a specific market are
generally rising. Often contrasted with a "bear market," or period in which
security values are generally declining.
CURRENCY EROSION The risk that one currency's value will decline relative to the
value of others, decreasing the value of investments denominated in the original
currency. While steps can be taken that may help protect against currency risk,
there can be no assurance that currency hedging will be beneficial to investors.
38
<PAGE>
$10,000 Invested in Mainstay Institutional
International Equity Fund vs MSCI EAFE Index
Institutional Class Shares
- ---------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
INTERNATIONAL MSCI EAFE
EQUITY FUND INDEX
<S> <C> <C>
1/95 $10,000 $10,000
1Q 1995 $ 9,830 $10,186
2Q 1995 $ 9,490 $10,260
3Q 1995 $10,150 $10,688
4Q 1995 $10,717 $11,120
- ---------------------------------------------------------------------
</TABLE>
[ ] International Equity Fund [ ] MSCI EAFE Index
Source: (C) Ibbotson Associates EnCorr Software
These graphs assume a $10,000 investment made on 1/1/95.
$10,000 Invested in Mainstay Institutional
International Equity Fund vs MSCI EAFE Index
Service Class Shares
- ---------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
INTERNATIONAL MSCI EAFE
EQUITY FUND INDEX
<S> <C> <C>
1/95 $10,000 $10,000
1Q 1995 $ 9,830 $10,186
2Q 1995 $ 9,480 $10,260
3Q 1995 $10,120 $10,688
4Q 1995 $10,685 $11,120
- ---------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Total Return* SEC Average Annual Total Return*
Performance as of December 31, 1995 as of December 31, 1995
- ------------------------------------------------------------------------------------------------------------------
1995 One Year Five Year Since Inception
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
International Equity Fund Institutional Class 7.17% 7.17% N/A 7.17%
International Equity Fund Service Class 6.86% 6.86% N/A 6.86%
Average Lipper International Fund 9.39% 9.39% 10.16% 9.39%
MSCI EAFE Index 11.21% 11.21% 9.37% 11.21%
</TABLE>
Portfolio Composition (% of net assets as of December 31, 1995)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Common Stocks 95.24%
Cash & Equivalents 4.63
Other 0.13
</TABLE>
Top 10 Holdings
(% of net assets as of December 31, 1995)
1. Industrial Bank of Japan, Ltd. 1.44%
2. Sumitomo Bank, Ltd. 1.38%
3. Fuji Bank, Ltd. 1.30%
4. Toyota Motor Corp. 1.29%
5. Dai-Ichi Kangyo Bank, Ltd. 1.24%
6. Matsushita Electric Industrial Co., Ltd. 1.11%
7. Norsk Hydro AS 1.08%
8. Assicurazioni Generali SPA 1.02%
9. Teijin, Ltd. 0.93%
10. Royal Dutch Petroleum Co. 0.92%
Top 5 Countries
(% of net assets as of December 31, 1995)
1. Japan 37.68%
2. France 10.50%
3. United Kingdom 8.54%
4. Italy 4.90%
5. Singapore 4.12%
- --------------------------------------------------------------------------------
* The total return reflects the annual return on an investment including
appreciation and dividends or interest. Total returns shown herein include the
change in share price and reinvestment of capital gains distributions and
dividends, and, for the Service Class shares, include the service fee of .25%.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that upon redemption, shares may be worth
more or less than their original cost.
The Institutional Class shares are sold with no sales charge. The Service
Class shares are sold with no initial or contingent deferred sales charge, but
are subject to an annual shareholder service fee of .25%.
The inception date of the International Equity Fund and the date such shares
were first offered to the public was 1/1/95.
39
<PAGE>
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
COMMON STOCKS (95.2%)+
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
AUSTRALIA (3.7%)
Amcor, Ltd.
(forest products & paper)................................ 31,166 $ 220,242
Boral, Ltd.
(building materials & components)........................ 23,000 58,170
Brambles Industries, Ltd.
(business & public services)............................. 14,000 156,212
Broken Hill Proprietary Co., Ltd.
(energy sources)......................................... 57,779 816,625
Coles Myer, Ltd.
(merchandising).......................................... 63,136 196,783
CRA, Ltd.
(metals-nonferrous)...................................... 29,842 438,199
CSR, Ltd.
(multi-industry)......................................... 50,500 164,536
Foster's Brewing Group, Ltd.
(beverages & tobacco).................................... 41,927 68,926
M.I.M. Holdings, Ltd.
(metals-nonferrous)...................................... 32,643 45,165
National Australian Bank, Ltd.
(banking)................................................ 53,016 477,187
News Corp., Ltd.
(broadcasting & publishing).............................. 52,908 282,580
Pacific Dunlop, Ltd.
(multi-industry)......................................... 32,730 76,692
Santos, Ltd.
(energy sources)......................................... 18,500 54,083
Westpac Banking Corp., Ltd.
(banking)................................................ 50,370 223,313
WMC, Ltd.
(metals-nonferrous)...................................... 40,025 257,241
-----------
3,535,954
-----------
AUSTRIA (3.1%)
Austrian Airlines Oesterreichische Luftverkehrs AG
(transportation-airlines) (a)............................ 400 66,532
Bank Austria AG
(banking)................................................ 9,250 747,695
Creditanstalt-Bankverein Stamm
(banking)................................................ 6,950 385,793
EA-Generali AG
(insurance).............................................. 1,500 449,838
Oesterreichische Brau-Beteiligungs AG (beverages &
tobacco)................................................. 1,550 70,649
OMV AG (energy sources)................................... 5,100 443,135
Verbundgesellschaft-Oesterreichische
Elektrizitatswirtschafts AG Class A
(utilities-electrical & gas)............................. 6,300 379,115
Wienerberger Baustoffindustrie AG
(building materials & components)........................ 2,150 426,999
-----------
2,969,756
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
BELGIUM (2.8%)
Bekaert, SA
(industrial components).................................. 160 $ 131,842
Cimenteries CBR Cementbedrijven
(building materials & components)........................ 280 112,984
Delhaize-Le Lion, SA
(merchandising).......................................... 2,410 99,908
Electrabel, SA
(utilities-electrical & gas)............................. 2,460 585,136
Fortis AG
(insurance).............................................. 2,330 283,441
Fortis AG-VVPR
(insurance).............................................. 64 7,796
Generale de Banque, SA
(banking)................................................ 850 301,105
Groupe Bruxelles Lambert, SA
(multi-industry)......................................... 1,590 220,705
NV Union Miniere, SA
(metals-nonferrous)(a)................................... 1,500 100,411
Petrofina, SA
(energy sources)......................................... 1,190 364,330
Reunies Electrobel & Tractebel, SA
(multi-industry)......................................... 710 293,128
Solvay, SA Class A
(chemicals).............................................. 470 253,933
-----------
2,754,719
-----------
DENMARK (2.7%)
Carlsberg AS Class A
(beverages & tobacco).................................... 2,400 134,253
Carlsberg AS Class B
(beverages & tobacco).................................... 1,900 106,283
Dampskibsselskabet AF 1912 AS Class B
(transportation-shipping)................................ 15 286,911
Dampskibsselskabet Svendborg AS Class B
(transportation-shipping)................................ 11 303,692
Danisco AS
(food & household products).............................. 4,800 232,127
Den Danske Bank
(banking)................................................ 4,000 276,445
FLS Industries AS Class B
(machinery & engineering)................................ 1,000 77,592
Novo Nordisk AS Class B
(health & personal care)................................. 2,400 329,135
Sophus Berendsen AS Class B
(multi-industry)......................................... 2,000 225,559
Tele Danmark AS Class B
(telecommunications)..................................... 8,400 459,274
Unidanmark AS Class A
(banking)................................................ 3,900 193,529
-----------
2,624,800
-----------
FRANCE (10.5%)
Alcatel Alsthom
(electrical & electronics)............................... 5,002 431,836
</TABLE>
- --------
+Percentages indicated are based on Fund net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
40
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
FRANCE (Continued)
AXA Groupe
(insurance).............................................. 8,333 $ 562,306
Carrefour Supermarche
(merchandising).......................................... 1,080 656,120
Compagnie de Saint Gobain
(misc.-materials & commodities).......................... 4,254 471,470
Compagnie de Suez, SA
(banking)................................................ 7,242 299,135
Compagnie Financiere de Paribas, SA Class A
(banking)................................................ 3,970 217,968
Compagnie Francaise de Petroleum Total, SA Class B
(energy sources)......................................... 8,645 584,243
Compagnie Generale des Eaux
(business & public services)............................. 4,787 478,565
Elf Aquitaine
(energy sources)......................................... 8,525 628,953
Eridania Beghin-Say, SA
(food & household products).............................. 1,210 207,836
Groupe Danone
(food & household products).............................. 4,541 750,274
Havas
(business & public services)............................. 3,138 249,288
LaFarge Coppee
(building materials & components)........................ 5,190 334,830
L'Air Liquide
(chemicals).............................................. 5,387 893,357
L'Oreal
(health & personal care)................................. 3,120 836,401
LVMH-Moet Hennessy Louis Vuitton
(beverages & tobacco).................................... 3,440 717,490
Lyonnaise des Eaux, SA
(multi-industry)......................................... 1,457 140,475
Michelin (CGDE) Class B
(tire & rubber).......................................... 3,800 151,755
Pernod-Ricard
(beverages & tobacco).................................... 2,680 152,512
Pinault-Printemps, SA
(building materials & components)........................ 790 157,826
PSA Peugeot Citroen, SA
(automobiles)............................................ 1,620 213,996
Rhone-Poulenc Class A
(chemicals).............................................. 11,040 236,811
Societe Generale
(banking)................................................ 5,065 626,602
Spie Batignolles, SA
(machinery & engineering) (a)............................ 3,040 104,061
Thomson CSF, SA
(aerospace & military technology)........................ 3,495 77,970
-----------
10,182,080
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
GERMANY (3.5%)
Allianz AG Holding
(insurance).............................................. 250 $ 488,375
BASF AG
(chemicals).............................................. 800 178,582
Bayer AG
(chemicals).............................................. 850 224,782
Daimler Benz Aktiengesellschaft AG
(automobiles)............................................ 600 302,667
Deutsche Bank AG
(banking)................................................ 7,500 356,168
Dresdner Bank AG
(banking)................................................ 6,700 179,287
Karstadt AG
(merchandising).......................................... 150 61,309
Linde AG
(machinery & engineering)................................ 200 116,958
Mannesmann AG
(machinery & engineering)................................ 450 143,589
Muenchener Rueckversicherungs-Gesellschaft AG
(insurance).............................................. 109 237,606
Preussag AG
(multi-industry)......................................... 200 56,034
RWE AG
(utilities-electrical & gas)............................. 450 163,490
Siemens AG
(electrical & electronics)............................... 650 356,500
Thyssen AG
(metals-steel) (a)....................................... 450 81,934
VEBA AG
(utilities-electrical & gas)............................. 6,200 263,806
Viag AG
(multi-industry)......................................... 300 120,522
Volkswagen AG
(automobiles)............................................ 300 100,526
-----------
3,432,135
-----------
HONG KONG (3.5%)
Cheung Kong (Holdings) Ltd.
(real estate)............................................ 88,000 536,063
China Light & Power Co. Ltd.
(utilities-electrical & gas)............................. 60,500 278,560
Hang Seng Bank Ltd.
(banking)................................................ 52,100 466,627
Hong Kong Telecommunications Ltd.
(telecommunications)..................................... 318,800 568,997
Hutchison Whampoa Ltd.
(multi-industry)......................................... 107,000 651,804
Sun Hung Kai Properties Ltd.
(real estate)............................................ 68,000 556,266
Swire Pacific Ltd. Class A
(multi-industry)......................................... 43,000 333,682
-----------
3,391,999
-----------
ITALY (4.9%)
Assicurazioni Generali SPA
(insurance).............................................. 40,650 984,685
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
41
<PAGE>
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
ITALY (Continued)
Banca Commerciale Italiana SPA
(banking)................................................ 82,000 $ 175,127
Benetton Group SPA
(textiles & apparel)..................................... 8,000 95,206
Credito Italiano SPA
(banking)................................................ 114,000 132,867
Edison SPA
(energy sources)......................................... 33,000 142,204
Fiat SPA
(automobiles)............................................ 165,000 536,382
Fiat SPA di Risp
(automobiles)............................................ 56,000 98,960
Istituto Bancario San Paolo
di Torina SPA
(banking)................................................ 41,000 242,802
Italgas SPA
(utilities-electrical & gas)............................. 43,000 130,845
Mediobanca SPA
(financial services)..................................... 43,900 304,089
Montedison SPA
(multi-industry) (a)..................................... 285,000 191,041
Olivetti Group
(data processing &
reproduction) (a)........................................ 237,500 190,473
Parmalat Finanziaria SPA
(food & household products).............................. 70,000 60,770
Pirelli SPA
(industrial components).................................. 65,000 83,947
Riunione Adriatica di Sicurta SPA
(insurance).............................................. 16,000 181,894
Sirti SPA
(construction & housing)................................. 28,000 157,349
Telecom Italia di Risp
(telecommunications)..................................... 81,000 99,100
Telecom Italia SPA
(telecommunications)..................................... 308,000 479,279
Telecom Italia Mobile di Risp
(telecommunications) (a)................................. 55,000 57,865
Telecom Italia Mobile SPA
(telecommunications) (a)................................. 228,000 401,474
-----------
4,746,359
-----------
JAPAN (37.7%)
Ajinomoto Co., Inc.
(food & household products).............................. 26,000 289,851
Asahi Bank, Ltd.
(banking)................................................ 32,000 403,270
Asahi Chemical Industry Co., Ltd.
(chemicals).............................................. 32,000 245,064
Asahi Glass Co., Ltd.
(misc.-materials & components)........................... 50,000 557,405
Bank of Tokyo
(banking)................................................ 39,000 684,299
Bridgestone Corp.
(industrial components).................................. 30,000 476,945
Canon, Inc.
(recreation & other consumer goods)...................... 12,000 217,533
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
JAPAN (Continued)
Chiba Bank, Ltd.
(banking)................................................ 9,000 $ 81,139
Dai-Ichi Kangyo Bank, Ltd.
(banking)................................................ 61,000 1,200,408
Dai Nippon Printing Co., Ltd.
(business & public services)............................. 17,000 288,396
Daiei, Inc.
(merchandising).......................................... 18,000 218,115
Daiwa House Industry Co., Ltd.
(construction & housing)................................. 6,000 98,879
Fanuc Co., Ltd.
(electronic components & instruments).................... 5,000 216,661
Fuji Bank, Ltd.
(banking)................................................ 57,000 1,259,832
Fuji Photo Film Co., Ltd.
(recreation & other consumer goods)...................... 7,000 202,217
Fujitsu, Ltd.
(data processing & reproduction)......................... 45,000 501,664
Furukawa Electric Co., Ltd.
(industrial components).................................. 51,000 249,669
Hankyu Corp.
(transportation-road & rail) (a)......................... 21,000 115,019
Hitachi, Ltd.
(electrical & electronics)............................... 71,000 715,805
Honda Motor Co., Ltd.
(automobiles)............................................ 15,000 309,723
Industrial Bank of Japan, Ltd.
(banking)................................................ 46,000 1,395,742
Ito-Yokado Co., Ltd.
(merchandising).......................................... 7,000 431,577
Itochu Corp.
(wholesale & international trade)........................ 68,000 458,138
Japan Air Lines Co., Ltd.
(transportation-airlines) (a)............................ 47,000 312,098
Japan Energy Corp.
(energy sources)......................................... 86,000 288,455
Joyo Bank, Ltd.
(banking)................................................ 15,000 120,690
Kajima Corp.
(construction & housing)................................. 26,000 257,085
Kansai Electric Power Co., Inc.
(utilities-electrical & gas)............................. 26,200 634,957
Kao Corp.
(food & household products).............................. 27,000 335,025
Kawasaki Steel Corp.
(metals-steel)........................................... 45,000 157,043
Kirin Brewery Co., Ltd.
(beverages & tobacco).................................... 17,000 201,054
Kobe Steel, Ltd.
(metals-steel) (a)....................................... 34,000 105,141
Komatsu, Ltd.
(machinery & engineering)................................ 19,000 156,558
Kubota Corp.
(machinery & engineering)................................ 50,000 322,325
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
42
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
JAPAN (Continued)
Marubeni Corp.
(wholesale & international trade)........................ 46,000 $ 249,272
Marui Co., Ltd. (merchandising)........................... 10,000 208,421
Matsushita Electric Industrial Co., Ltd. (appliances &
household durables)...................................... 66,000 1,074,871
Mitsubishi Chemical Corp.
(chemicals).............................................. 99,000 481,772
Mitsubishi Corp. (multi-industry)......................... 33,000 406,276
Mitsubishi Electric Corp.
(electrical & electronics)............................... 68,000 489,780
Mitsubishi Estate Co., Ltd.
(construction & housing)................................. 28,000 350,147
Mitsubishi Heavy Industries, Ltd.
(machinery & engineering)................................ 105,000 837,707
Mitsubishi Trust & Banking Corp.
(financial services)..................................... 32,000 533,558
Mitsui Engineering & Shipbuilding Co., Ltd.
(machinery & engineering) (a)............................ 142,000 395,069
Mitsui Fudosan Co., Ltd.
(construction & housing)................................. 16,000 196,982
Mitsui Marine & Fire Insurance Co., Ltd. (insurance)...... 13,000 92,752
Mitsui Trust & Banking Co., Ltd.
(financial services)..................................... 28,000 306,718
Mitsukoshi, Ltd. (merchandising).......................... 26,000 244,483
NEC Corp.
(electrical & electronics)............................... 33,000 403,077
New Oji Paper Co., Ltd.
(forest products & paper)................................ 23,000 208,247
Nippon Express Co., Ltd.
(transportation-road & rail)............................. 33,000 317,983
Nippon Oil Co., Ltd.
(energy sources)......................................... 21,000 131,916
Nippon Paper Industries Co.
(forest products & paper)................................ 26,000 180,716
Nippon Steel Corp. (metals-steel)......................... 117,000 401,506
Nippon Yusen Kabushiki Kaish
(transportation-shipping)................................ 38,000 220,655
Nippondenso Co., Ltd.
(industrial components).................................. 9,000 168,385
Nissan Motor Co., Ltd.
(automobiles)............................................ 60,000 461,241
NKK Corp. (metals-steel) (a).............................. 80,000 215,595
Nomura Securities Co., Ltd.
(financial services)..................................... 40,000 872,460
Obayashi Corp.
(construction & housing)................................. 36,000 286,167
Osaka Gas Co., Ltd.
(utilities-electrical & gas)............................. 46,000 159,195
Sakura Bank, Ltd. (banking)............................... 54,000 685,754
Sankyo Co., Ltd.
(health & personal care)................................. 5,000 112,450
Sanyo Electric Co., Ltd. (appliances & household
durables)................................................ 55,000 317,236
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
JAPAN (Continued)
Sekisui Chemical Co. (building materials & components).... 13,000 $ 191,553
Sekisui House, Ltd.
(construction & housing)................................. 17,000 217,533
Seven-Eleven of Japan Co., Ltd. (merchandising)........... 7,000 494,006
Sharp Corp. (appliances & household durables)............. 23,000 367,887
Shimizu Corp.
(construction & housing)................................. 53,000 539,471
Shiseido Co., Ltd.
(health & personal care)................................. 17,000 202,702
Shizuoka Bank, Ltd. (banking)............................. 6,000 75,613
Sony Corp. (appliances & household durables).............. 6,200 372,036
Sumitomo Bank, Ltd. (banking)............................. 63,000 1,337,481
Sumitomo Chemical Co., Ltd. (chemicals)................... 38,000 189,712
Sumitomo Corp.
(wholesale & international trade)........................ 18,000 183,217
Sumitomo Electric Industries, Ltd. (industrial
components).............................................. 10,000 120,206
Sumitomo Marine & Fire Insurance Co., Ltd. (insurance).... 9,000 73,985
Sumitomo Metal Industries, Ltd. (metals-steel)............ 74,000 224,532
Sumitomo Metal Mining Co., Ltd. (metals-nonferrous)....... 10,000 89,960
Taisho Pharmaceutical Co., Ltd. (health & personal care).. 4,000 79,103
Takeda Chemical Industries, Ltd. (health & personal care). 30,000 494,394
Teijin, Ltd. (chemicals).................................. 176,000 900,844
Tobu Railway Co., Ltd. (transportation-road & rail)....... 19,000 118,984
Tohoku Electric Power Co., Inc. (utilities-electrical &
gas)..................................................... 9,090 219,415
Tokai Bank, Ltd. (banking)................................ 42,000 586,293
Tokio Marine & Fire Insurance Co., Ltd. (insurance)....... 32,000 418,781
Tokyo Dome Corp.
(leisure & tourism)...................................... 6,000 102,950
Tokyo Electric Power Co., Inc. (utilities-electrical &
gas)..................................................... 24,300 650,157
Tokyo Gas Co., Ltd.
(utilities-electrical & gas)............................. 151,000 532,821
Tokyu Corp.
(transportation-road & rail)............................. 27,000 190,807
Toppan Printing Co., Ltd.
(business & public services)............................. 40,000 527,354
Tostem Corp. (building materials & components)............ 5,000 166,252
Toto, Ltd. (building materials & components).............. 6,000 83,756
Toyoda Automatic Loom Works, Ltd. (machinery &
engineering)............................................. 5,000 89,669
Toyota Motor Corp. (automobiles).......................... 59,000 1,252,562
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
43
<PAGE>
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
JAPAN (Continued)
Yamaichi Securities Co., Ltd.
(financial services)..................................... 57,000 $ 443,704
Yamanouchi Pharmaceutical Co., Ltd. (health & personal
care).................................................... 9,000 193,686
Yamazaki Baking Co., Ltd.
(food & household products).............................. 6,000 111,675
Yasuda Trust & Banking Co., Ltd. (financial services)..... 28,000 165,845
-----------
36,527,119
-----------
NETHERLANDS (2.2%)
Elsevier NV
(broadcasting & publishing).............................. 10,900 145,516
Internationale Nederlanden Groep NV (insurance)........... 3,500 234,063
Koninklijke PTT Nederland NV (forest products & paper).... 7,100 258,224
Philips Electronics NV (appliances & household durables).. 4,400 159,203
Royal Dutch Petroleum Co.
(energy sources)......................................... 6,400 895,128
Unilever NV
(food & household products).............................. 2,200 309,485
Wolters Kluwer CVA
(broadcasting & publishing).............................. 900 85,228
-----------
2,086,847
-----------
NEW ZEALAND (2.0%)
Brierley Investments Ltd.
(multi-industry)......................................... 271,100 214,451
Carter Holt Harvey Ltd.
(forest products & paper)................................ 199,600 430,615
Fletcher Challenge Ltd.
(forest products & paper)................................ 150,400 347,086
Lion Nathan Ltd.
(beverages & tobacco).................................... 70,200 167,511
Telecom Corp. of New Zealand Ltd. (telecommunications).... 189,600 818,082
-----------
1,977,745
-----------
NORWAY (2.2%)
Bergesen d.y. AS Class A (transportation-shipping)........ 6,200 123,650
Bergesen d.y. AS Class B (transportation-shipping)........ 3,900 76,545
Dyno Industrier AS (chemicals)............................ 3,800 89,018
Hafslund Nycomed AS Class A (health & personal care)...... 6,600 172,891
Hafslund Nycomed AS Class B (health & personal care)...... 4,900 124,481
Kvaerner AS Class B
(machinery & engineering)................................ 3,000 100,667
Norsk Hydro AS (energy sources)........................... 24,900 1,048,365
Norske Skogindustrier AS Class A (forest products &
paper)................................................... 5,400 158,978
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
NORWAY (Continued)
Orkla Borregaard AS Class A
(multi-industry)......................................... 4,700 $ 234,337
-----------
2,128,932
-----------
SINGAPORE (4.1%)
City Developments, Ltd.
(real estate)............................................ 54,000 393,223
DBS Land, Ltd. (real estate).............................. 82,000 277,108
Development Bank of Singapore, Ltd. Foreign Registered
(banking)................................................ 40,000 497,715
Fraser & Neave, Ltd.
(beverages & tobacco).................................... 20,000 254,513
Keppel Corp., Ltd.
(machinery & engineering)................................ 39,000 347,410
Oversea-Chinese Banking Corp., Ltd. Foreign Registered
(banking)................................................ 51,000 638,192
Singapore Airlines, Ltd. Foreign Registered
(transportation-airlines)................................ 72,000 671,915
Singapore Press Holdings, Ltd. Foreign Registered
(broadcasting & publishing).............................. 20,400 360,560
Straits Steamship Land, Ltd.
(multi-industry)......................................... 45,000 152,072
United Overseas Bank, Ltd. Foreign Registered (banking)... 42,000 403,827
-----------
3,996,535
-----------
SPAIN (3.8%)
Acerinox, SA (metals-steel)............................... 924 93,455
Autopistas Concesionaria Espanola, SA (business & public
services)................................................ 11,893 135,287
Banco Bilbao Vizcaya, SA (banking)........................ 10,490 377,870
Banco Central Hispanoamericano, SA (banking).............. 5,830 118,219
Banco Santander, SA (banking)............................. 6,940 348,387
Corporacion Bancaria de Espana, SA (banking).............. 6,380 262,952
Corporacion Mapfre CIA Internacional de Reaseguros, SA
(insurance).............................................. 1,890 105,783
Empresa Nacional de Electricidad, SA (utilities-electrical
& gas)................................................... 10,800 611,598
Fomento de Construcciones y Contratas, SA
(construction & housing)................................. 790 60,561
Gas Natural SDG, SA
(utilities-electrical & gas)............................. 1,580 246,153
Iberdrola, SA
(utilities-electrical & gas)............................. 40,380 369,466
Repsol, SA (energy sources)............................... 13,020 426,612
Telefonica de Espana (telecommunications)................. 38,330 530,803
-----------
3,687,146
-----------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
44
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
UNITED KINGDOM (8.5%)
Abbey National Plc (banking).............................. 22,958 $ 226,700
Barclays Plc (banking).................................... 25,046 287,371
Bass British Plc
(beverages & tobacco).................................... 13,628 152,132
BAT Industries Plc
(beverages & tobacco).................................... 36,405 320,765
BOC Group Plc (chemicals)................................. 9,097 127,257
Boots Co. Plc (merchandising)............................. 16,660 151,577
British Airways Plc
(transportation-airlines)................................ 20,650 149,405
British Gas Plc (energy sources).......................... 52,514 207,095
British Petroleum Co. Plc
(energy sources)......................................... 65,011 544,046
British Telecommunications Plc (telecommunications)....... 64,026 351,900
BTR Plc (multi-industry).................................. 66,632 340,360
Cable & Wireless Plc (telecommunications)................. 27,938 199,532
Commercial Union Plc (insurance).......................... 14,504 141,419
Forte Plc (leisure & tourism)............................. 29,810 152,966
General Electric Co. Plc
(electrical & electronics)............................... 39,157 215,823
GKN Plc
(machinery & engineering)................................ 6,037 73,016
Glaxo Wellcome Plc
(health & personal care)................................. 41,140 584,448
Grand Metropolitan Plc
(multi-industry)......................................... 37,062 266,997
Great Universal Stores Plc (merchandising)................ 8,956 95,250
Guinness Plc (beverages & tobacco)........................ 28,550 210,109
Hanson Trust Plc (multi-industry)......................... 58,604 175,153
HSBC Holdings Plc (GBP par) (financial services).......... 3,122 48,763
HSBC Holdings Plc (HKD par) (financial services).......... 14,373 219,139
Imperial Chemical Industries Plc (chemicals).............. 6,680 79,134
Kingfisher Plc (merchandising)............................ 5,783 48,665
Lloyds TSB Group Plc (banking)............................ 63,168 325,119
Marks & Spencer Plc (merchandising)....................... 40,409 282,326
MEPC Plc (real estate).................................... 6,204 38,048
National Power Plc
(utilities-electrical & gas)............................. 9,720 67,835
Peninsular & Oriental Steam Navigation Co. Deferred Stock
(transportation-shipping)................................ 5,720 42,273
Prudential Corp. Plc (insurance).......................... 39,119 252,055
Rank Organisation Plc
(leisure & tourism)...................................... 10,417 75,368
Redland Plc (building materials & components)............. 11,493 69,413
Reed International Plc
(broadcasting & publishing).............................. 22,326 340,395
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------------
<S> <C> <C>
UNITED KINGDOM (Continued)
Reuters Holdings Plc
(broadcasting & publishing).......................... 14,560 $ 133,375
RMC Group Plc (building materials & components)....... 4,593 70,669
RTZ Corp. Plc (metals-nonferrous)..................... 11,517 167,369
Sainsbury Plc (merchandising)......................... 24,220 147,784
Scottish Power Plc
(utilities-electrical & gas)......................... 47,860 274,938
Thorn Emi Plc (appliances & household durables)....... 7,618 179,427
Unilever Plc
(food & household products).......................... 14,361 294,988
Vodafone Group Plc
(multi-industry)..................................... 40,376 144,496
-----------
8,274,900
-----------
Total Common Stocks
(Cost $88,846,421)................................... 92,317,026
-----------
PREFERRED STOCK (0.1%)
AUSTRIA (0.1%)
Creditanstalt-Bankverein Vorzug (banking)............. 2,400 123,452
-----------
Total Preferred Stock
(Cost $140,470)...................................... 123,452
-----------
SHORT-TERM
INVESTMENT (0.3%)
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
COMMERCIAL PAPER (0.3%)
Gillette Co.
5.75%, due 1/4/96.................................... $250,000 249,880
-----------
Total Short-Term Investment
(Cost $249,880)...................................... 249,880
-----------
Total Investments
(Cost $89,236,771)(b)................................ 95.6% 92,690,358(c)
Cash and Other Assets,
Less Liabilities..................................... 4.4 4,237,333
-------- -----------
Net Assets............................................ 100.0% $96,927,691
======== ===========
</TABLE>
- --------
(a) Non-income producing securities.
(b) The cost for Federal income tax purposes is $89,493,109.
(c) At December 31, 1995 net unrealized appreciation for securities was
$3,197,249, based on cost for Federal income tax purposes. This consisted
of aggregate gross unrealized appreciation for all investments on which
there was an excess of market value over cost of $5,796,040 and aggregate
gross unrealized depreciation for all investments on which there was an
excess of cost over market value of $2,598,791.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
45
<PAGE>
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
(d) Forward Foreign Currency Contracts Open at December 31, 1995:
<TABLE>
<CAPTION>
GROSS
CONTRACT IN DELIVERY UNREALIZED
TO DELIVER EXCHANGE FOR DATE APPRECIATION
- ------------------ ------------------- -------- ------------
<S> <C> <C> <C>
BF68,325,000 DM 3,320,616 1/30/96 $ 1,976
DM8,541,600 $ 6,000,000 1/5/96 27,602
DM3,160,187 IL 3,585,000,000 1/23/96 37,277
DM3,900,661 FF 13,565,000 2/2/96 41,445
DM1,847,104 $ 1,330,000 2/5/96 35,250
DM1,554,071 DK 6,050,000 2/9/96 3,536
DM11,275,000 $ 7,996,454 4/18/96 75,281
DM12,310,000 $ 8,773,957 5/3/96 119,264
DM2,017,515 $ 1,425,000 6/20/96 3,182
IL 3,595,000,000 DM 3,223,232 1/23/96 614
(Yen)2,749,050,000 $ 27,139,711 2/5/96 339,223
(Yen)417,331,200 $ 4,160,000 7/2/96 9,224
N$3,104,390 $ 2,039,584 2/7/96 16,639
(Pounds)1,294,000 DM 2,881,233 1/3/96 5,326
$ 4,465,000 DM 6,492,557 1/5/96 74,680
$ 2,330,000 A$ 3,165,761 2/26/96 18,225
$ 1,991,840 (Pounds) 1,295,000 3/19/96 14,824
$ 1,870,000 A$ 2,527,308 4/2/96 1,775
--------
825,343
--------
<CAPTION>
GROSS
CONTRACT IN DELIVERY UNREALIZED
TO DELIVER EXCHANGE FOR DATE DEPRECIATION
- ------------------ ------------------- -------- ------------
<S> <C> <C> <C>
A$4,521,000 $ 3,345,540 2/26/96 7,943
DK13,250,000 DM 3,405,294 2/9/96 6,517
DM2,905,030 (Pounds) 1,294,000 1/3/96 21,961
DM12,325,259 $ 8,430,000 1/5/96 187,981
DM1,725,000 $ 1,165,541 2/5/96 43,619
DM10,283,784 $ 7,017,013 2/21/96 190,366
DM5,366,701 $ 3,710,000 3/25/96 55,867
DM2,868,425 (Pounds) 1,295,000 4/2/96 7,521
FF25,825,000 DM 7,394,734 2/2/96 100,865
$ 1,216,401 DM 1,688,000 1/5/96 36,130
$ 2,430,000 (Yen) 248,552,200 2/5/96 6,865
--------
665,635
--------
Net Appreciation......................................... $159,708
========
</TABLE>
(e) Foreign cash held at December 31, 1995:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
- ----------------- ---------- ----------
<S> <C> <C>
A$ 61,759 $ 46,342 $ 45,942
AS 55,479 5,524 5,509
BF 694,911 24,270 23,612
DK 43,796 7,832 7,903
DM 115,296 81,325 80,554
FF 3,436 703 703
HK 288,004 37,244 37,247
IL1,378,960 863 869
(Yen)126,872,826 1,255,493 1,229,905
NG 2,768 1,713 1,726
N$ 58,507 38,037 38,252
(Pounds)1,573,707 2,458,645 2,443,340
S$ 26,457 18,799 18,704
SP3,351,434 27,790 27,626
---------- ----------
$4,004,580 $3,961,892
========== ==========
</TABLE>
(f) The following abbreviations are used in footnotes (d) and (e):
A$--Australian Dollar
AS--Austrian Schilling
BF--Belgian Franc
DK--Danish Krone
DM--Deutsche Mark
FF--French Franc
HK--Hong Kong Dollar
IL--Italian Lira
(Yen)--Japanese Yen
NG--Netherland Guilder
N$--New Zealand Dollar
(Pounds)--Pound Sterling
S$--Singapore Dollar
SP--Spanish Peseta
$--U.S. Dollar
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
46
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
The table below sets forth the diversification of International Equity Fund
investments by industry.
COMMON STOCKS,
PREFERRED STOCK &
SHORT-TERM INVESTMENT
<TABLE>
<CAPTION>
VALUE PERCENT +
---------------------
<S> <C> <C>
Aerospace & Military Technology........................... $ 77,970 0.1%
Appliances & Household Durables........................... 2,470,660 2.5
Automobiles............................................... 3,276,056 3.4
Banking................................................... 16,741,977 17.3
Beverages & Tobacco....................................... 2,556,196 2.6
Broadcasting & Publishing................................. 1,347,654 1.4
Building Materials & Components........................... 1,672,453 1.7
Business & Public Services................................ 1,835,102 1.9
Chemicals................................................. 3,900,265 4.0
Construction & Housing.................................... 2,164,175 2.2
Data Processing & Reproduction............................ 692,137 0.7
Electrical & Electronics.................................. 2,612,820 2.7
Electronic Components & Instruments....................... 216,661 0.2
Energy Sources............................................ 6,575,190 6.8
Financial Services........................................ 2,894,275 3.0
Food & Household Products................................. 2,592,031 2.7
Forest Products & Paper................................... 1,804,107 1.9
Health & Personal Care.................................... 3,379,571 3.5
Industrial Components..................................... 1,230,994 1.3
Insurance................................................. 4,514,779 4.7
Leisure & Tourism......................................... 331,284 0.3
Machinery & Engineering................................... 2,764,623 2.9
Merchandising............................................. 3,336,323 3.4
Metals-Nonferrous......................................... 1,098,345 1.1
</TABLE>
<TABLE>
<CAPTION>
VALUE PERCENT +
---------------------
<S> <C> <C>
Metals-Steel.............................................. $ 1,279,206 1.3%
Miscellaneous-Materials & Commodities..................... 471,470 0.5
Miscellaneous-Materials & Components...................... 557,405 0.6
Multi-Industry............................................ 4,408,321 4.5
Real Estate............................................... 1,800,708 1.9
Recreation & Other Consumer Goods......................... 419,750 0.4
Telecommunications........................................ 3,966,306 4.1
Textiles & Apparel........................................ 95,206 0.1
Tire & Rubber............................................. 151,755 0.2
Transportation-Airlines................................... 1,199,951 1.2
Transportation-Road & Rail................................ 742,793 0.8
Transportation-Shipping................................... 1,053,726 1.1
Utilities-Electrical & Gas................................ 5,567,486 5.7
Wholesale & International Trade........................... 890,627 0.9
----------- -----
92,690,358 95.6
Cash and Other Assets,
Less Liabilities......................................... 4,237,333 4.4
----------- -----
Net Assets................................................ $96,927,691 100.0%
=========== =====
</TABLE>
- --------
+ Percentages indicated are based on Fund net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
47
<PAGE>
INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$89,236,771).................................................... $92,690,358
Cash denominated in foreign currencies (identified cost
$4,004,580)..................................................... 3,961,892
Cash............................................................. 42,628
Receivables:
Dividends and interest........................................... 160,567
Fund shares sold................................................. 21,398
Unrealized appreciation on foreign currency contracts............ 825,343
Unamortized organization expense (Note 2)........................ 48,802
-----------
Total assets.................................................... 97,750,988
-----------
LIABILITIES:
Payables:
Organization..................................................... 41,402
Administrator.................................................... 39,564
Adviser.......................................................... 28,193
Custodian........................................................ 8,000
Transfer agent................................................... 4,201
Directors........................................................ 953
Accrued expenses................................................. 35,349
Unrealized depreciation on foreign currency contracts............ 665,635
-----------
Total liabilities............................................... 823,297
-----------
Net assets....................................................... $96,927,691
===========
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class.............................................. $ 9,340
Institutional Service Class...................................... 21
Additional paid-in capital....................................... 93,068,696
Accumulated distribution in excess of net investment income...... (18,276)
Accumulated distribution in excess of net realized gain on
investments..................................................... (596,867)
Accumulated undistributed net realized gain on foreign currency
transactions.................................................... 893,753
Net unrealized appreciation on investments....................... 3,453,587
Net unrealized appreciation on translation of assets and
liabilities in foreign currencies............................... 117,437
-----------
Net assets....................................................... $96,927,691
===========
Institutional Class
Net assets applicable to outstanding shares...................... $96,714,361
===========
Shares of capital stock outstanding.............................. 9,340,535
===========
Net asset value per share outstanding............................ $ 10.35
===========
Institutional Service Class
Net assets applicable to outstanding shares...................... $ 213,330
===========
Shares of capital stock outstanding.............................. 20,654
===========
Net asset value per share outstanding............................ $ 10.33
===========
</TABLE>
STATEMENT OF OPERATIONS
For the period January 1, 1995
(Commencement of operations) through
December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)..................................................... $1,237,027
Interest.......................................................... 469,659
----------
Total income.................................................... 1,706,686
----------
Expenses: (Note 2)
Administration (Note 3)........................................... 415,395
Advisory (Note 3)................................................. 290,777
Custodian......................................................... 54,557
Registration...................................................... 36,751
Transfer agent.................................................... 23,548
Auditing.......................................................... 15,936
Legal............................................................. 14,736
Amortization of organization expense.............................. 12,198
Shareholder communication......................................... 7,799
Directors......................................................... 3,527
Service (Note 3).................................................. 233
Miscellaneous..................................................... 16,219
----------
Total expenses before
reimbursement.................................................. 891,676
Expense reimbursement from Administrator (Note 3)................. (60,652)
----------
Net expenses.................................................... 831,024
----------
Net investment income............................................. 875,662
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Security transactions............................................. (391,405)
Foreign currency transactions..................................... 3,113,934
----------
Net realized gain on investments and foreign currency
transactions..................................................... 2,722,529
----------
Net unrealized appreciation on investments:
Security transactions............................................. 3,453,587
Translation of assets and liabilities in foreign currencies....... 117,437
----------
Net unrealized gain on investments and foreign currencies......... 3,571,024
----------
Net realized and unrealized gain on investments and foreign
currency transactions............................................ 6,293,553
----------
Net increase in net assets resulting from operations.............. $7,169,215
==========
</TABLE>
- --------
(a) Dividends recorded net of foreign withholding taxes of $165,293.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
48
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period January 1, 1995 (Commencement of operations) through
December 31, 1995
<TABLE>
<CAPTION>
1995
-----------
<S> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income............................................ $ 875,662
Net realized loss on investments................................. (391,405)
Net realized gain on foreign currency transactions............... 3,113,934
Net unrealized appreciation on investments....................... 3,453,587
Net unrealized appreciation on translation of assets and
liabilities in foreign currencies............................... 117,437
-----------
Net increase in net assets resulting from operations............. 7,169,215
-----------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class............................................. (873,793)
Institutional Service Class..................................... (1,869)
From net realized gain on investments and foreign currency
transactions:
Institutional Class............................................. (2,420,451)
Institutional Service Class..................................... (5,192)
In excess of net investment income:
Institutional Class............................................. (18,237)
Institutional Service Class..................................... (39)
-----------
Total dividends and distributions to shareholders.............. (3,319,581)
-----------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class............................................. 23,192,754
Institutional Service Class..................................... 198,438
Net asset value of shares issued to shareholders in reinvestment
of dividends and distributions:
Institutional Class............................................. 3,312,479
Institutional Service Class..................................... 7,098
-----------
26,710,769
Cost of shares redeemed:
Institutional Class............................................. (197,898)
Institutional Service Class..................................... (1,689)
-----------
Increase in net assets derived from capital share
transactions................................................... 26,511,182
-----------
Net increase in net assets...................................... 30,360,816
NET ASSETS:
Beginning of period.............................................. 66,566,875
-----------
End of period.................................................... $96,927,691
===========
Accumulated distribution in excess of net investment income...... $ (18,276)
===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
49
<PAGE>
INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL
INSTITUTIONAL SERVICE
CLASS CLASS
------------- -------------
JANUARY 1, 1995(A)
THROUGH
DECEMBER 31, 1995
----------------------------
<S> <C> <C>
Net asset value at beginning of period........... $ 10.00 $10.00
------- ------
Net investment income............................ 0.36 0.35
Net realized and unrealized gain on investments.. 0.17 0.16
Net realized and unrealized gain on foreign
currency transactions........................... 0.18 0.17
------- ------
Total from investment operations................. 0.71 0.68
------- ------
Less dividends and distributions:
From net investment income....................... (0.10) (0.09)
From net realized gain on investments and foreign
currency transactions........................... (0.26) (0.26)
In excess of net investment income............... (0.00)(b) (0.00)(b)
------- ------
Total dividends and distributions................ (0.36) (0.35)
------- ------
Net asset value at end of period................. $ 10.35 $10.33
======= ======
Total investment return ......................... 7.17% 6.86%
Ratios (to average net assets)/Supplemental Data:
Net investment income........................... 1.05% 0.80%
Net expenses.................................... 1.00% 1.25%
Expenses (before reimbursement)................. 1.07% 1.32%
Portfolio turnover rate.......................... 26% 26%
Net assets at end of period (in 000's)........... $96,714 $ 213
</TABLE>
- --------
(a) Commencement of operations.
(b) Less than one cent per share.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
50
<PAGE>
--------------------
Multi-Asset Fund
--------------------
The stock market surged ahead throughout the year, and the MainStay
Institutional Multi-Asset Fund was well positioned to take advantage of this
prolonged equity rally. The average allocation to stocks, as represented by the
S&P 500 Index+, was 65%. This is a relatively high percentage for the Fund to
devote to stocks. The equity portion of the Fund may range from a maximum of 80%
to a minimum of 30% -- and an allocation of 60% to equities indicates a
perfectly neutral view on the stock market.
The Fund's focus on stocks was concentrated in the second half of the year.
Early in the year our models indicated that the outlook for bonds was very
favorable given relative risk levels. Bonds are considered less risky than
stocks because returns in the fixed-income market exhibit comparatively less
volatility. Bonds did indeed earn a robust return in the first half -- the
Salomon Brothers Broad Investment Grade++ Index gained 12.5%. Though this was
considerably less than the first half return of 20.2% for the S&P 500 Index,
bonds performed extraordinarily well on a risk-adjusted basis.
As the year progressed, increasingly more of the portfolio was allocated to the
stock market. The bond market rally in the first half left yields at very low
levels by historical standards, and the quantitative models that govern the
Fund's dynamic allocation process began to move away from fixed-income
investments. By July, the Fund's stock position accounted for 80% of total net
assets. This is the maximum allowable allocation to equities, and the Fund
maintained that position through the end of the year. Bonds, as measured by the
Index, continued to rise in the second half, gaining an additional 6.3%. But the
Fund's focus on equities paid off as the S&P 500 surged to new highs as the
Index returned 14.5% for the second half of 1995. Throughout the year, the
Fund's exposure to money market instruments averaged 11% -- very close to the
minimum required level of 10%. As such, the Fund was well positioned to reap the
rewards available to investors in one of the best years in recent history for
both stocks and bonds. The Multi-Asset Fund gained 26.81% (Institutional Class
shares) and 26.70% (Service Class shares) in 1995, surpassing the return of
25.08% for the average Lipper flexible portfolio(S) (among a universe of 145
funds from 12/31/94 to 12/31/95).
Holly V. Cox
James A. Mehling, CFA
Portfolio Managers
Note: Foreign investing may be subject to greater risks than domestic investing.
These may include securities markets that are less efficient, less liquid and
more volatile than those in the United States, as well as foreign currency
fluctuations and different governmental regulatory concerns.
$10,000 Invested in Mainstay Institutional
Multi-Asset Fund vs Lipper Flexible Portfolio Average
Institutional Class Shares
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Multi-Asset Lipper Flexible
Fund Portfolio Average
<S> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $11,790 $12,489
4Q 1992 $12,626 $13,484
4Q 1993 $13,736 $15,121
4Q 1994 $13,618 $14,794
4Q 1995 $17,267 $18,477
- --------------------------------------------------------------------------------
</TABLE>
[ ] Multi-Asset Fund [ ] Lipper Flexible Portfolio Average
Source: (C) Ibbotson Associates EnCorr Software
These graphs assume a $10,000 investment made on 1/2/91.
Note: See following page for additional footnotes regarding these performance
figures.
$10,000 Invested in Mainstay Institutional
Multi-Asset Fund vs Lipper Flexible Portfolio Average
Service Class Shares
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Multi-Asset Lipper Flexible
Fund Portfolio Average
<C> <C> <C>
1/91 $10,000 10,000
4Q 1991 $11,790 12,489
4Q 1992 $12,626 13,484
4Q 1993 $13,736 15,121
4Q 1994 $13,618 14,794
4Q 1995 $17,254 18,477
- --------------------------------------------------------------------------------
</TABLE>
Past performance is no guarantee of future results.
+ The S&P 500 Stock Index is a registered trademark of Standard & Poor's
Corporation. S&P 500 Stock Index is an unmanaged index that is considered
representative of the U.S. stock market.
++ The Salomon Brothers Broad Investment Grade Bond Index is an unmanaged index
generally considered representative of the U.S. bond market.
(S) Lipper Analytical Services Inc. is an independent monitor of mutual fund
performance. Results do not reflect any deduction of sales charges and are
based on total returns with capital gains and dividends reinvested.
51
<PAGE>
<TABLE>
<CAPTION>
Total Return* SEC Average Annual Total Return*
Performance as of December 31, 1995 as of December 31, 1995
- -----------------------------------------------------------------------------------------------------------------
1995 One Year Five Year Since Inception
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Multi-Asset Fund Institutional Class 26.81% 26.81% 11.55% 11.55%
Multi-Asset Fund Service Class** 26.70% 26.70% 11.53% 11.53%
Average Lipper Flexible Portfolio Fund 25.08% 25.08% 12.85% 12.85%
</TABLE>
Year-By-Year Performance
- --------------------------------------------------------------------------------
[BAR CHART APPEARS HERE]
Institutional Class Shares
<TABLE>
<CAPTION>
Total Return %*
---------------
<S> <C>
1991 17.90
1992 7.09
1993 8.79
1994 -0.86
1995 26.81
</TABLE>
Top 10 Holdings
(% of net assets as of December 31, 1995)
1. General Electric Company 1.49%
2. AT&T Corp. 1.25%
3. Exxon Corp. 1.21%
4. Coca Cola Company 1.14%
5. Merck & Co., Inc. 0.99%
6. Philip Morris Companies, Inc. 0.93%
7. Royal Dutch Petroleum Company 0.93%
8. FNCL, 9.0%, 10/1/22 0.76%
9. FNCI, 8.0, 9/1/07 0.75%
10. Proctor & Gamble Company 0.70%
Top 5 Industry Holdings (Excluding Government)
(% of net assets as of December 31, 1995)
1. Finance Companies 15.61%
2. Banks 5.96%
3. Utilities--Telephone 5.19%
4. Food, Beverage & Tobacco 4.48%
5. Multiple Industry 3.65%
- --------------------------------------------------------------------------------
** Performance figures for the Service Class, first offered to the public on
1/1/95, include the historical performance of the Institutional Class from
the Funds' inception (1/2/91) up to December 31, 1994. Performance figures
for these two Classes after this date will vary based on differences in their
expense structures.
* The total return reflects the annual return on an investment including
appreciation and dividends or interest. Total returns shown herein include
the change in share price and reinvestment of capital gains distributions and
dividends, and, for the Service Class shares, include the service fee of
.25%.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that upon redemption, shares may be worth
more or less than their original cost.
The Institutional Class shares are sold with no sales charge. The Service
Class shares, first offered 1/1/95, are sold with no initial or contingent
deferred sales charge, but are subject to an annual shareholder service fee
of .25%.
52
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
MULTI-ASSET FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
LONG-TERM INVESTMENTS (22.4%)+
ASSET-BACKED SECURITIES (0.7%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------------------------
<S> <C> <C>
CREDIT CARD RECEIVABLES (0.7%)
Chase Manhattan Credit Card Master Trust Series 1992-
1A
7.40%, due 5/15/00.................................. $ 1,000,000 $ 1,029,948
MBNA Master Credit Card Trust Series 1992-1A
7.25%, due 6/15/99.................................. 1,000,000 1,025,348
------------
Total Asset-Backed Securities
(Cost $1,996,720)................................... 2,055,296
------------
CORPORATE BONDS (5.3%)
BANKS (0.8%)
Chemical Banking Corp.
8.50%, due 2/15/02.................................. 500,000 563,125
Fleet Financial Group, Inc.
7.625%, due 12/1/99................................. 500,000 526,250
Morgan (J.P.) & Co. Inc.
8.50%, due 8/15/03.................................. 500,000 571,250
NationsBank Corp.
6.50%, due 8/15/03.................................. 500,000 505,625
------------
2,166,250
------------
BROKERAGE (0.3%)
Dean Witter Discover & Company
6.50%, due 11/1/05.................................. 500,000 508,125
PaineWebber Group, Inc.
7.75%, due 9/1/02................................... 400,000 421,000
------------
929,125
------------
CHEMICALS (0.1%)
Rhone-Poulenc S.A.
7.75%, due 1/15/02.................................. 350,000 375,375
------------
COMPUTERS & OFFICE EQUIPMENT (0.3%)
Xerox Corp.
9.75%, due 3/15/00.................................. 600,000 684,000
------------
CONGLOMERATES (0.2%)
Tenneco Corp.
10.00%, due 3/15/08................................. 500,000 643,125
------------
CONSUMER FINANCIAL SERVICES (0.8%)
Bear Stearns Cos., Inc. (The)
6.625%, due 1/15/04................................. 500,000 505,625
CIT Group Holdings, Inc.
8.875%, due 6/15/96................................. 500,000 506,885
Transamerica Finance Corp.
8.375%, due 2/15/98................................. 500,000 526,250
U.S. Leasing International
8.75%, due 5/1/96................................... 625,000 631,081
------------
2,169,841
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
ELECTRONIC COMPONENTS (0.2%)
Texas Instruments, Inc.
9.25%, due 6/15/03................................... $ 500,000 $ 588,750
------------
FOOD, BEVERAGES & TOBACCO (0.8%)
Coca-Cola Enterprises
8.50%, due 2/1/22.................................... 500,000 612,500
Philip Morris Companies, Inc.
7.125%, due 12/1/99.................................. 500,000 520,625
9.00%, due 1/1/01.................................... 500,000 560,000
RJR Nabisco Corp.
8.75%, due 4/15/04................................... 500,000 521,250
------------
2,214,375
------------
MACHINERY (0.2%)
Caterpillar Inc.
9.00%, due 4/15/06................................... 500,000 602,500
------------
OIL & GAS (0.6%)
BP America Inc.
7.875%, due 5/15/02.................................. 450,000 493,875
Occidental Petroleum Corp.
10.125%, due 11/15/01................................ 500,000 599,375
Phillips Petroleum Co.
9.50%, due 11/15/97.................................. 500,000 533,750
------------
1,627,000
------------
UTILITIES--ELECTRIC (0.6%)
Florida Power & Light Co.
6.875, due 4/1/04.................................... 500,000 530,625
Houston Lighting & Power
7.75%, due 3/15/23................................... 500,000 554,375
Ohio Edison Company
8.625%, due 9/15/03.................................. 500,000 560,625
------------
1,645,625
------------
UTILITIES--TELEPHONE (0.4%)
Pacific Bell
7.125%, due 3/15/26.................................. 500,000 528,125
United Telephone (Ohio)
6.625%, due 10/1/02.................................. 600,000 616,500
------------
1,144,625
------------
Total Corporate Bonds
(Cost $13,897,922)................................... 14,790,591
------------
FOREIGN GOVERNMENT (0.4%)
CANADA (0.4%)
Manitoba (Province of)
9.625%, due 3/15/99.................................. 500,000 558,750
Quebec (Province of)
9.375%, due 4/1/99................................... 500,000 550,625
------------
Total Foreign Government
(Cost $1,060,440).................................... 1,109,375
------------
</TABLE>
- --------
+Percentages indicated are based on Fund net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
53
<PAGE>
MULTI-ASSET FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
INTERNATIONAL CORPORATE BONDS (0.8%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------------------------
<S> <C> <C>
BANK (0.8%)
International Bank for Reconstruction & Development
7.625%, due 1/19/23............................... $ 1,000,000 $ 1,157,500
8.125%, due 3/1/01................................ 900,000 999,000
------------
2,156,500
------------
Total International Corporate Bonds
(Cost $2,028,844)................................. 2,156,500
------------
U.S. GOVERNMENT &
FEDERAL AGENCIES (15.2%)
FEDERAL HOME LOAN MORTGAGE CORPORATION GOLD (MORTGAGE PASS-THROUGH
SECURITIES) (0.7%)
7.00%, due 1/1/23 TBA (b)......................... 1,000,000 1,005,938
7.75%, due 10/1/07................................ 907,098 930,343
------------
1,936,281
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (MORTGAGE PASS-THROUGH SECURITIES)
(4.1%)
6.50%, due 3/1/23 TBA (b)......................... 1,000,000 1,011,250
7.00%, due 9/1/22-1/1/23
TBA (b).......................................... 2,000,000 2,027,813
7.50%, due 1/1/08
TBA (b).......................................... 2,000,000 2,058,438
8.00%, due 1/1/07-1/1/08
TBA (b).......................................... 3,000,000 3,108,750
8.50%, due 1/1/23
TBA (b).......................................... 1,000,000 1,044,063
9.00%, due 1/1/23 TBA (b)......................... 2,000,000 2,107,500
------------
11,357,814
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (MORTGAGE PASS-THROUGH SECURITIES)
(1.9%)
7.00%, due 5/1/09 TBA (b)......................... 1,000,000 1,023,750
7.50%, due 1/1/25 TBA (b)......................... 1,000,000 1,028,750
8.00%, due 1/1/25 TBA(b).......................... 1,000,000 1,041,875
8.50%, due 1/1/25 TBA (b)......................... 1,000,000 1,050,000
9.00%, due 1/1/25 TBA (b)......................... 1,000,000 1,059,688
------------
5,204,063
------------
RESOLUTION FUNDING CORP. (0.1%)
(zero coupon), due 10/15/10....................... 500,000 205,050
------------
STUDENT LOAN MARKETING ASSOCIATION (0.1%)
(zero coupon), due 10/3/22........................ 2,000,000 359,860
------------
UNITED STATES TREASURY BONDS (3.4%)
6.25%, due 8/15/23................................ 1,000,000 1,028,690
8.125%, due 5/15/21............................... 1,000,000 1,263,530
8.75%, due 5/15/17................................ 1,000,000 1,322,120
9.125%, due 5/15/18............................... 1,000,000 1,373,520
9.25%, due 2/15/16................................ 1,000,000 1,374,570
9.875%, due 11/15/15.............................. 1,000,000 1,445,540
10.625%, due 8/15/15.............................. 1,000,000 1,531,510
------------
9,339,480
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
UNITED STATES TREASURY NOTES (4.9%)
4.75%, due 2/15/97................................... $ 1,000,000 $ 994,890
4.75%, due 8/31/98................................... 1,000,000 987,890
5.00%, due 1/31/99................................... 1,000,000 992,370
5.125%, due 3/31/98.................................. 1,000,000 998,550
5.875%, due 2/15/04.................................. 1,000,000 1,020,970
6.25%, due 1/31/97................................... 1,000,000 1,011,050
6.375%, due 1/15/99.................................. 1,000,000 1,030,880
7.50%, due 11/15/01.................................. 1,000,000 1,102,130
7.50%, due 5/15/02................................... 1,000,000 1,108,920
7.875%, due 4/15/98.................................. 1,000,000 1,056,390
7.875%, due 11/15/99................................. 1,000,000 1,087,100
8.25%, due 7/15/98................................... 1,000,000 1,070,820
8.875%, due 11/15/98................................. 1,000,000 1,095,010
------------
13,556,970
------------
Total U.S. Government & Federal Agencies
(Cost $40,139,756)................................... 41,959,518
------------
Total Long-Term Investments
(Cost $59,123,682)................................... 62,071,280
------------
COMMON STOCKS (56.3%)
<CAPTION>
SHARES
--------------
<S> <C> <C>
AIR TRANSPORTATION (0.2%)
AMR Corp. (a)......................................... 2,551 189,412
Delta Air Lines, Inc.................................. 1,735 128,173
Pittston Services Group............................... 1,393 43,705
Southwest Airlines Co................................. 4,742 110,251
USAir Group, Inc. (a)................................. 1,994 26,421
------------
497,962
------------
AIRCRAFT (0.8%)
Boeing Company (The).................................. 11,578 907,426
Lockheed Martin Corp.................................. 6,823 539,017
McDonnell Douglas Corp................................ 3,853 354,476
Northrop Grumman Corp................................. 1,728 110,592
United Technologies Corp.............................. 4,161 394,775
------------
2,306,286
------------
ALUMINUM (0.3%)
Alcan Aluminum Limited................................ 7,642 237,857
Aluminum Co. of America............................... 6,127 323,965
Reynolds Metals Company............................... 2,089 118,290
------------
680,112
------------
APPAREL (0.3%)
Brown Group, Inc...................................... 684 9,747
Fruit of the Loom Inc.
Class A (a).......................................... 2,500 60,937
Liz Claiborne, Inc.................................... 2,663 73,898
Nike, Inc............................................. 4,966 345,758
Reebok International Ltd.............................. 2,679 75,682
Russell Corp.......................................... 1,381 38,323
Stride Rite Corp...................................... 1,730 12,975
VF Corp............................................... 2,100 110,775
------------
728,095
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
54
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
BANKS (3.6%)
Banc One Corp......................................... 13,345 $ 503,774
Bank of Boston Corp................................... 3,796 175,565
Bank of New York Company, Inc. (The).................. 6,523 317,996
BankAmerica Corp...................................... 12,714 823,231
Bankers Trust New York Corp........................... 2,662 177,023
Barnett Banks, Inc.................................... 3,348 197,532
Boatmen's Bancshares, Inc............................. 4,329 176,948
Chase Manhattan Corp. (The)........................... 5,903 357,869
Chemical Banking Corp................................. 8,512 500,080
Citicorp.............................................. 13,820 929,395
Comerica Inc.......................................... 3,800 152,475
CoreStates Financial Corp............................. 4,847 183,580
First Bank System, Inc................................ 4,600 228,275
First Chicago Corp.................................... 10,678 421,781
First Fidelity Bancorp................................ 2,677 201,779
First Interstate Bancorp.............................. 2,552 348,348
First Union Corp...................................... 5,816 323,515
Fleet Financial Group, Inc............................ 8,707 354,810
KeyCorp............................................... 7,705 279,306
MBNA Corp............................................. 4,987 183,896
Mellon Bank Corp...................................... 4,922 264,558
Morgan (J.P.) & Company, Inc.......................... 6,365 510,791
NationsBank Corp...................................... 9,281 646,190
Norwest Corp.......................................... 11,485 379,005
PNC Bank Corp......................................... 7,886 254,324
Republic New York Corp................................ 1,900 118,037
Suntrust Banks, Inc................................... 3,841 263,109
U.S. Bancorp (Portland, OR)........................... 3,453 116,107
Wachovia Corp......................................... 5,844 267,363
Wells Fargo & Company................................. 1,730 373,680
------------
10,030,342
------------
BEVERAGES (2.1%)
Anheuser-Busch Companies, Inc......................... 8,597 574,924
Brown-Forman Corp..................................... 2,433 88,804
Coca-Cola Company (The)............................... 42,555 3,159,709
Coors (Adolph) Co..................................... 1,277 28,254
PepsiCo, Inc.......................................... 26,759 1,495,159
Seagram Company Ltd................................... 12,726 440,638
------------
5,787,488
------------
BROADCASTING (0.8%)
Capital Cities/ABC, Inc............................... 5,123 632,050
Comcast Corp. Class A................................. 8,166 148,519
Tele-Communications TCI Group, Class A (a)............ 22,108 439,397
Tellabs, Inc. (a)..................................... 3,000 111,000
U.S. West Media Group (a)............................. 15,885 301,815
Viacom Inc. Class B (a)............................... 12,194 577,691
------------
2,210,472
------------
BUSINESS EQUIPMENT & SERVICES (0.9%)
Block (H & R), Inc.................................... 3,684 149,202
Browning-Ferris Industries, Inc. ..................... 7,202 212,459
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
BUSINESS EQUIPMENT & SERVICES (Continued)
Ceridian Corp. (a).................................... 2,208 $ 91,080
Deluxe Corp........................................... 2,783 80,707
Donnelley (R.R.) & Sons Company....................... 5,293 208,412
Dun & Bradstreet Corp. (The).......................... 5,794 375,161
Federal Express Corp. (a)............................. 1,859 137,334
Harland (John H.) Co. (The)........................... 1,044 21,794
Interpublic Group of Cos., Inc........................ 2,660 115,377
Moore Corp. Ltd....................................... 3,361 62,599
National Service Industries, Inc...................... 1,726 55,879
Ogden Corp............................................ 1,735 37,086
Pitney Bowes Inc...................................... 5,117 240,499
Ryder System, Inc..................................... 2,566 63,508
Safety-Kleen Corp..................................... 1,967 30,734
Service Corp. International........................... 3,350 147,400
WMX Technologies, Inc................................. 16,448 491,384
------------
2,520,615
------------
CAPITAL EQUIPMENT (0.5%)
Caterpillar Inc....................................... 6,821 400,734
Cincinnati Milacron Inc............................... 1,056 27,720
Cummins Engine Company, Inc........................... 1,287 47,619
Fluor Corp............................................ 2,784 183,744
Foster Wheeler Corp................................... 1,367 58,097
General Signal Corp................................... 1,615 52,286
Giddings & Lewis Inc.................................. 1,059 17,473
Harnischfeger Industries, Inc......................... 1,652 54,929
Illinois Tool Works Inc............................... 4,028 237,652
Ingersoll-Rand Company................................ 3,689 129,576
Paccar Inc............................................ 1,305 54,973
Parker Hannifin Corp.................................. 2,592 88,776
Snap-On, Inc.......................................... 1,400 63,350
Timken Company (The).................................. 1,044 39,933
Trinova Corp.......................................... 934 26,736
------------
1,483,598
------------
CHEMICALS--PETROLEUM (1.2%)
Dow Chemical Company (The)............................ 9,185 646,394
DuPont (E.I.) De Nemours & Company.................... 18,844 1,316,724
Goodrich (B.F.) Company............................... 920 62,675
Grace (W.R.) & Co..................................... 3,232 191,092
Hercules Inc.......................................... 3,842 216,593
Monsanto Company...................................... 3,836 469,910
Rohm & Haas Company................................... 2,314 148,964
Union Carbide Corp.................................... 4,585 171,938
------------
3,224,290
------------
CHEMICALS--SPECIALTY (0.5%)
Air Products & Chemicals, Inc......................... 3,812 201,083
Avery Dennison Corp................................... 1,945 97,493
Eastman Chemical Co................................... 2,708 169,588
Ecolab, Inc........................................... 2,022 60,660
Engelhard Corp........................................ 4,913 106,858
Great Lakes Chemical Corp............................. 2,111 151,992
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
55
<PAGE>
MULTI-ASSET FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
CHEMICALS--SPECIALTY (Continued)
Morton International, Inc............................. 4,988 $ 178,945
Nalco Chemical Company................................ 2,316 69,770
Pall Corp............................................. 3,839 103,173
Praxair, Inc.......................................... 4,738 159,315
Sigma-Aldrich Corp.................................... 1,724 85,338
------------
1,384,215
------------
COMMUNICATIONS EQUIPMENT (0.3%)
Andrew Corp. (a)...................................... 1,278 48,883
DSC Communications
Corp. (a)............................................ 3,920 144,550
General Dynamics Corp................................. 2,090 123,571
Harris Corp........................................... 1,380 75,383
Northern Telecom Limited.............................. 8,572 368,596
Scientific-Atlanta, Inc............................... 2,556 38,340
------------
799,323
------------
COMPUTERS--MAIN & MINI (1.8%)
Amdahl Corp. (a)...................................... 3,940 33,490
Cisco Systems, Inc. (a)............................... 9,249 690,207
Cray Research, Inc. (a)............................... 918 22,721
Data General Corp. (a)................................ 1,271 17,476
Digital Equipment Corp. (a)........................... 4,891 313,636
Hewlett-Packard Company............................... 17,371 1,454,821
Honeywell Inc......................................... 4,301 209,136
International Business Machines Corp.................. 19,223 1,763,710
Tandem Computers Inc. (a)............................. 3,938 41,841
Unisys Corp. (a)...................................... 5,792 32,580
Xerox Corp............................................ 3,592 492,104
------------
5,071,722
------------
COMPUTERS--MICRO (0.3%)
Apple Computer Inc.................................... 4,067 129,636
Compaq Computer Corp. (a)............................. 9,019 432,912
Sun Microsystems Inc. (a)............................. 6,506 296,836
------------
859,384
------------
COMPUTERS--PERIPHERALS (1.5%)
Autodesk, Inc......................................... 1,618 55,416
Cabletron Systems, Inc. (a)........................... 2,500 202,500
Computer Associates International Inc................. 8,204 466,602
First Data Corp....................................... 7,279 486,783
Intergraph Corp. (a).................................. 1,607 25,310
Microsoft Corp. (a)................................... 19,810 1,738,328
Novell Inc. (a)....................................... 12,437 177,227
Oracle Corp. (a)...................................... 14,625 619,734
Silicon Graphics, Inc. (a)............................ 5,333 146,658
3Com Corp. (a)........................................ 5,300 247,113
------------
4,165,671
------------
CONSTRUCTION MATERIALS (0.2%)
Black & Decker Corp................................... 2,895 102,049
Crane Co.............................................. 1,041 38,387
PPG Industries Inc.................................... 6,944 317,688
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
CONSTRUCTION MATERIALS (Continued)
Sherwin-Williams Company.............................. 2,890 $ 117,767
Stanley Works (The)................................... 1,508 77,662
------------
653,553
------------
CONSUMER ELECTRONICS (0.0%) (c)
Zenith Electronics Corp. (a).......................... 424 2,915
------------
CONSUMER SERVICES (0.1%)
CUC International Inc. (a)............................ 5,913 201,781
------------
CONTAINERS (0.1%)
Ball Corp............................................. 1,038 28,545
Bemis Company, Inc.................................... 1,739 44,562
Crown Cork & Seal
Company, Inc. (a).................................... 3,114 130,009
------------
203,116
------------
COSMETICS & TOILETRIES (0.4%)
Alberto-Culver Company................................ 931 32,003
Avon Products, Inc.................................... 2,318 174,719
Gillette Company...................................... 15,154 789,903
International Flavors & Fragrances, Inc............... 3,818 183,264
------------
1,179,889
------------
DEFENSE (0.4%)
EG & G, Inc........................................... 1,955 47,409
Loral Corp............................................ 5,788 204,750
Raytheon Company...................................... 8,300 392,175
Rockwell International Corp........................... 7,399 391,222
------------
1,035,556
------------
ELECTRICAL COMPONENTS (0.1%)
LSI Logic Corp. (a)................................... 4,400 144,100
------------
ELECTRICAL EQUIPMENT (2.1%)
Cooper Industries, Inc................................ 3,641 133,807
Dover Corp............................................ 3,930 144,919
Emerson Electric Co................................... 7,633 623,998
General Electric Company.............................. 57,219 4,119,768
Grainger (W.W.), Inc.................................. 1,737 115,076
Johnson Controls, Inc................................. 1,390 95,562
Tyco International Ltd................................ 5,188 184,823
Westinghouse Electric Corp............................ 13,349 220,258
------------
5,638,211
------------
ELECTRONIC COMPONENTS (1.5%)
Advanced Micro Devices,
Inc. (a)............................................. 3,625 59,812
AMP Inc............................................... 7,472 286,738
Applied Materials, Inc. (a)........................... 5,994 236,014
Intel Corp............................................ 27,732 1,573,791
Micron Technology Inc................................. 6,934 274,760
Motorola, Inc......................................... 20,059 1,143,363
National Semiconductor
Corp. (a)............................................ 4,272 95,052
Raychem Corp.......................................... 1,503 85,483
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
56
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
ELECTRONIC COMPONENTS (Continued)
Teledyne, Inc......................................... 1,857 $ 47,586
Texas Instruments, Inc................................ 6,448 333,684
Thomas & Betts Corp................................... 592 43,660
------------
4,179,943
------------
ELECTRONIC INSTRUMENTS (0.0%) (c)
Perkin-Elmer Corp. (The).............................. 1,389 52,435
Tektronix, Inc........................................ 1,144 56,199
------------
108,634
------------
ENVIRONMENTAL CONTROL (0.0%)(c)
Laidlaw, Inc. Class B................................. 10,002 102,521
------------
FARM MACHINERY (0.1%)
Deere & Company....................................... 8,779 309,460
Navistar International
Corp. (a)............................................ 2,556 26,838
Varity Corp. (a)...................................... 1,389 51,566
------------
387,864
------------
FINANCE COMPANIES (0.4%)
Beneficial Corp....................................... 1,843 85,930
Household International Inc........................... 3,347 197,891
National City Corp.................................... 4,959 164,267
Travelers Group Inc................................... 10,814 679,930
------------
1,128,018
------------
FOOD & RELATED (1.6%)
Archer Daniels Midland Company........................ 18,307 329,526
Campbell Soup Company................................. 8,452 507,120
ConAgra, Inc.......................................... 8,552 352,770
CPC International, Inc................................ 4,975 341,409
Fleming Companies, Inc................................ 1,273 26,256
General Mills, Inc.................................... 5,434 313,813
Heinz (H.J.) Company.................................. 12,322 408,166
Hershey Foods Corp.................................... 2,602 169,130
Kellogg Company....................................... 7,435 574,354
Quaker Oats Company................................... 4,530 156,285
Ralston Purina Group.................................. 3,469 216,379
Sara Lee Corp......................................... 16,324 520,327
SuperValu Inc......................................... 2,527 79,601
Sysco Corp............................................ 6,245 202,963
Wrigley (Wm.) Jr. Company............................. 3,940 206,850
------------
4,404,949
------------
FOOD PROCESSING (0.1%)
Pioneer Hi-Bred International, Inc.................... 2,807 156,139
------------
FOREST & PAPER PRODUCTS (0.9%)
Boise Cascade Corp.................................... 1,634 56,577
Champion International Corp........................... 3,333 139,986
Crown Vantage, Inc. (a)............................... 247 3,520
Federal Paper Board Company, Inc...................... 1,496 77,605
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
FOREST & PAPER PRODUCTS (Continued)
Georgia-Pacific Corp.................................. 3,118 $ 213,973
International Paper Company........................... 8,560 324,210
James River Corp. of Virginia......................... 2,779 67,043
Kimberly-Clark Corp................................... 8,808 728,862
Louisiana-Pacific Corp................................ 3,623 87,858
Mead Corp............................................. 1,763 92,117
Potlatch Corp......................................... 1,035 41,400
Stone Container Corp.................................. 3,235 46,503
Temple-Inland Inc..................................... 1,859 82,028
Union Camp Corp....................................... 2,325 110,728
Westvaco Corp......................................... 3,416 94,794
Weyerhaeuser Company.................................. 6,855 296,479
Williamette Industries, Inc........................... 1,800 101,250
------------
2,564,933
------------
FURNITURE & FURNISHINGS (0.2%)
Armstrong World Industries, Inc....................... 1,275 79,050
Masco Corp............................................ 5,343 167,636
Newell Co............................................. 5,530 143,089
Owens-Corning Fiberglas
Corp. (a)............................................ 1,706 76,557
------------
466,332
------------
GOLD & PRECIOUS METALS (0.1%)
Echo Bay Mines Ltd.................................... 3,822 39,653
Homestake Mining Company.............................. 4,639 72,484
Placer Dome Inc....................................... 8,205 197,946
------------
310,083
------------
HEALTH CARE--DRUGS (2.9%)
Abbott Laboratories................................... 26,795 1,118,691
Allergan Inc.......................................... 2,096 68,120
Alza Corp. (a)........................................ 2,774 68,656
Amgen Inc. (a)........................................ 8,938 530,694
Baxter International Inc.............................. 9,318 390,191
Lilly (Eli) & Company................................. 18,506 1,040,963
Merck & Co., Inc...................................... 41,745 2,744,734
Millipore Corp........................................ 1,494 61,441
Pfizer Inc............................................ 21,396 1,347,948
Schering-Plough Corp.................................. 12,602 689,959
------------
8,061,397
------------
HEALTH CARE--GENERAL (2.2%)
American Home Products Corp........................... 10,507 1,019,179
Bausch & Lomb Inc..................................... 1,874 74,257
Becton, Dickinson & Company........................... 2,304 172,800
Biomet Inc. (a)....................................... 3,839 68,622
Bristol-Myers Squibb Company.......................... 17,171 1,474,560
Johnson & Johnson..................................... 21,888 1,874,160
Mallinckrodt Group, Inc............................... 2,653 96,503
Pharmacia & Upjohn, Inc............................... 16,670 645,962
St. Jude Medical, Inc. (a)............................ 2,425 104,275
Warner-Lambert Company................................ 4,527 439,685
------------
5,970,003
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
57
<PAGE>
MULTI-ASSET FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
HOMEBUILDERS, MOBILE HOMES (0.0%) (c)
Centex Corp........................................... 1,026 $ 35,653
Fleetwood Enterprises, Inc............................ 1,614 41,561
Kaufman & Broad Home Corp............................. 1,051 15,634
Pulte Corp............................................ 928 31,204
------------
124,052
------------
HOSPITAL SUPPLY & MANAGEMENT (0.6%)
Bard (C.R.), Inc...................................... 1,841 59,372
Beverly Enterprises, Inc. (a)......................... 3,294 34,999
Columbia/HCA Healthcare Corp.......................... 15,128 767,746
Community Psychiatric
Centers (a).......................................... 1,501 18,387
Humana, Inc. (a)...................................... 5,000 136,875
Manor Care, Inc....................................... 2,084 72,940
Medtronic, Inc........................................ 7,880 440,295
Shared Medical Systems Corp........................... 806 43,826
Tenet Healthcare Corp. (a)............................ 6,787 140,830
United States Surgical Corp........................... 1,863 39,822
------------
1,755,092
------------
HOTELS & GAMING (0.1%)
Bally Entertainment Corp. (a)......................... 1,617 22,638
Harrah's Entertainment,
Inc. (a)............................................. 3,400 82,450
Hilton Hotels Corp.................................... 1,722 105,903
Marriott International, Inc........................... 4,246 162,410
------------
373,401
------------
HOUSEHOLD--GENERAL PRODUCTS (1.4%)
American Greetings Corp............................... 2,644 73,040
Clorox Company (The).................................. 1,844 132,077
Colgate-Palmolive Company............................. 4,878 342,679
Corning Inc........................................... 7,782 249,024
Jostens, Inc.......................................... 1,511 36,642
Premark International, Inc............................ 2,087 105,654
Procter & Gamble
Company (The)........................................ 23,283 1,932,489
Rubbermaid, Inc....................................... 5,545 141,398
Unilever, N.V......................................... 5,441 765,821
------------
3,778,824
------------
HOUSEHOLD--MAJOR APPLIANCES (0.1%)
Briggs & Stratton Corp................................ 1,100 47,713
Maytag Corp........................................... 3,599 72,880
Whirlpool Corp........................................ 2,649 141,059
------------
261,652
------------
INSURANCE--LIFE (0.6%)
American General Corp................................. 7,021 244,857
Jefferson-Pilot Corp.................................. 2,434 113,204
Loews Corp............................................ 4,000 313,500
Providian Corp........................................ 3,242 132,112
Torchmark Corp........................................ 2,529 114,437
United Healthcare Corp................................ 5,870 384,485
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
INSURANCE--LIFE (Continued)
U.S. Healthcare, Inc.................................. 5,199 $ 241,754
UNUM Corp............................................. 2,564 141,020
USLIFE Corp........................................... 1,157 34,565
------------
1,719,934
------------
INSURANCE--PROPERTY & CASUALTY (1.5%)
Aetna Life & Casualty Company......................... 3,821 264,604
Allstate Corp. (The).................................. 15,253 627,280
American International Group, Inc..................... 15,943 1,474,728
Chubb Corp. (The)..................................... 2,903 280,865
CIGNA Corp............................................ 2,535 261,739
General Re Corp....................................... 2,777 430,435
ITT Hartford Group, Inc. (a).......................... 3,976 192,339
Lincoln National Corp................................. 3,438 184,792
SAFECO Corp........................................... 4,182 144,279
St. Paul Companies, Inc. (The)........................ 2,888 160,645
Transamerica Corp..................................... 2,333 170,017
USF&G Corp............................................ 3,757 63,399
------------
4,255,122
------------
LEISURE TIME INDUSTRY (0.5%)
Brunswick Corp........................................ 3,342 80,208
Handleman Co.......................................... 1,055 6,066
Hasbro Inc............................................ 3,056 94,736
Mattel, Inc........................................... 7,513 231,025
Outboard Marine Corp.................................. 691 14,079
Walt Disney Company (The)............................. 17,664 1,042,176
------------
1,468,290
------------
MEDICAL SUPPLIES (0.1%)
Boston Scientific Corp. (a)........................... 5,571 272,979
------------
METALS--DIVERSIFIED (0.1%)
Freeport-McMoRan Copper & Gold Inc.................... 7,000 196,875
------------
MINING (0.3%)
Asarco, Inc........................................... 1,396 44,672
Barrick Gold Corp..................................... 11,994 316,342
Cyprus Amax Minerals Co............................... 3,029 79,132
INCO Limited.......................................... 4,039 134,297
Nacco Industries, Inc................................. 258 14,319
Newmont Mining Corp................................... 2,892 130,863
Phelps Dodge Corp..................................... 2,328 144,918
Santa Fe Pacific Gold Corp............................ 4,431 53,726
------------
918,269
------------
MOTION PICTURES (0.0%) (c)
King World Productions,
Inc. (a)............................................. 1,268 49,294
------------
MOTOR VEHICLE PARTS (0.2%)
Dana Corp............................................. 3,351 98,017
Eaton Corp............................................ 2,659 142,589
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
58
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------------------------------------------
<S> <C> <C>
MOTOR VEHICLE PARTS (Continued)
Echlin Inc............................................ 2,076 $ 75,774
Genuine Parts Company................................. 4,264 174,824
------------
491,204
------------
MOTOR VEHICLES (1.1%)
Chrysler Corp......................................... 12,942 716,663
Ford Motor Company.................................... 36,570 1,060,530
General Motors Corp................................... 25,276 1,336,469
------------
3,113,662
------------
MULTIPLE INDUSTRY (1.0%)
Alco Standard Corp.................................... 3,796 173,192
AlliedSignal, Inc..................................... 9,610 456,475
Dial Corp. (The)...................................... 3,131 92,756
FMC Corp. (a)......................................... 1,169 79,054
Harcourt General, Inc................................. 2,472 103,515
ITT Corp. (New) (a)................................... 3,976 210,728
ITT Industries, Inc................................... 3,976 95,424
Minnesota Mining & Manufacturing Company.............. 14,356 951,085
Textron Inc........................................... 2,906 196,155
TRW Inc............................................... 2,300 178,250
Whitman Corp.......................................... 3,691 85,816
------------
2,622,450
------------
PETROLEUM--DOMESTIC (1.5%)
Amerada Hess Corp..................................... 3,231 171,243
Amoco Corp............................................ 16,802 1,207,644
Ashland Inc........................................... 2,082 73,130
Atlantic Richfield Company............................ 5,545 614,109
Burlington Resources, Inc............................. 4,369 171,483
Coastal Corp.......................................... 3,685 137,266
Kerr-McGee Corp....................................... 1,836 116,586
Louisiana Land & Exploration Company (The)............ 1,051 45,062
Noram Energy Corp..................................... 4,168 36,991
Occidental Petroleum Corp............................. 10,657 227,793
Oryx Energy Company (a)............................... 3,262 43,629
Pennzoil Company...................................... 1,610 68,023
Phillips Petroleum Company............................ 8,912 304,122
Santa Fe Energy Resources,
Inc. (a)............................................. 3,117 30,001
Sun Company, Inc...................................... 2,595 71,038
Tenneco, Inc.......................................... 6,111 303,258
Unocal Corp........................................... 8,331 242,641
USX-Marathon Group.................................... 10,032 195,624
------------
4,059,643
------------
PETROLEUM--INTERNATIONAL (3.4%)
Chevron Corp.......................................... 22,119 1,161,247
Exxon Corp............................................ 41,853 3,353,472
Mobil Corp............................................ 13,329 1,492,848
Royal Dutch Petroleum Company......................... 18,183 2,566,076
Texaco Inc............................................ 8,803 691,035
------------
9,264,678
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------------------------------------------
<S> <C> <C>
PETROLEUM--SERVICES (0.4%)
Baker Hughes Inc...................................... 4,853 $ 118,292
Dresser Industries, Inc............................... 6,224 151,710
Halliburton Company................................... 3,829 193,843
Helmerich & Payne, Inc................................ 915 27,221
McDermott International, Inc.......................... 1,850 40,700
Rowan Companies, Inc. (a)............................. 2,891 28,549
Schlumberger Limited.................................. 8,217 569,027
Western Atlas, Inc. (a)............................... 1,855 93,678
------------
1,223,020
------------
PHOTOGRAPHIC EQUIPMENT (0.3%)
Eastman Kodak Company................................. 11,688 783,096
Polaroid Corp......................................... 1,613 76,416
------------
859,512
------------
PUBLISHING (0.6%)
Dow Jones & Company, Inc.............................. 3,451 137,609
Gannett Company, Inc.................................. 4,830 296,441
Knight-Ridder Inc..................................... 1,846 115,375
McGraw-Hill Companies, Inc............................ 1,730 150,726
Meredith Corp......................................... 978 40,954
New York Times Company (The).......................... 3,324 98,473
Time Warner, Inc...................................... 13,174 498,965
Times Mirror Company.................................. 3,792 128,454
Tribune Company....................................... 2,207 134,903
------------
1,601,900
------------
RAILROAD (0.6%)
Burlington Northern Santa Fe Corp..................... 4,803 374,634
Conrail, Inc.......................................... 2,664 186,480
CSX Corp.............................................. 7,170 327,131
Norfolk Southern Corp................................. 4,419 350,758
Union Pacific Corp.................................... 6,956 459,096
------------
1,698,099
------------
RESTAURANTS (0.5%)
Darden Restaurants, Inc............................... 5,434 64,529
Luby's Cafeterias, Inc................................ 812 18,067
McDonald's Corp....................................... 23,535 1,062,017
Ryan's Family Steak Houses, Inc. (a).................. 1,847 12,929
Shoney's, Inc. (a).................................... 1,391 14,258
Wendy's International, Inc............................ 3,465 73,631
------------
1,245,431
------------
RETAIL--FOOD STORES (0.5%)
Albertson's, Inc...................................... 8,576 281,936
American Stores Co.................................... 4,997 133,670
Bruno's, Inc.......................................... 66 709
Giant Food, Inc....................................... 1,972 62,118
Great Atlantic & Pacific Tea Company, Inc............. 1,277 29,371
Kroger Company (The) (a).............................. 4,153 155,737
Longs Drug Stores Corp................................ 794 38,013
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
59
<PAGE>
MULTI-ASSET FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
RETAIL--FOOD STORES (Continued)
Rite Aid Corp....................................... 2,983 $ 102,168
Walgreen Company.................................... 8,340 249,158
Winn-Dixie Stores, Inc.............................. 5,296 195,290
------------
1,248,170
------------
RETAIL--GENERAL MERCHANDISE (1.4%)
Dayton Hudson Corp.................................. 2,532 189,900
Dillard Department Stores,
Inc................................................ 3,823 108,955
Federated Department Stores, Inc. (a)............... 6,700 184,250
Kmart Corp.......................................... 15,607 113,151
May Department Stores Company....................... 8,450 357,012
Mercantile Stores Company, Inc...................... 1,272 58,830
Nordstrom, Inc...................................... 2,780 112,590
Penney (J.C.) Company, Inc.......................... 7,769 369,999
Price/Costco, Inc. (a).............................. 6,717 102,434
Sears, Roebuck & Company............................ 13,160 513,240
TJX Companies, Inc. (The)........................... 2,634 49,717
Wal-Mart Stores, Inc................................ 77,949 1,744,109
Woolworth Corp...................................... 4,515 58,695
------------
3,962,882
------------
RETAIL--SPECIALTY STORES (0.7%)
Charming Shoppes, Inc............................... 3,476 9,993
Circuit City Stores, Inc............................ 3,347 92,461
Gap, Inc. (The)..................................... 4,871 204,582
Home Depot, Inc. (The).............................. 16,104 770,979
Limited Inc., (The)................................. 12,047 209,317
Lowe's Companies, Inc............................... 5,435 182,072
Melville Corp....................................... 3,689 113,437
Pep Boys-Manny, Moe & Jack.......................... 2,085 53,428
Tandy Corp.......................................... 2,258 93,707
Toys "R" Us (a)..................................... 9,264 201,492
------------
1,931,468
------------
SAVINGS & LOANS (0.7%)
Ahmanson (H.F.) & Company........................... 4,042 107,113
Federal Home Loan Mortgage Corp..................... 6,135 512,272
Federal National Mortgage Association............... 9,266 1,150,142
Golden West Financial Corp.......................... 1,974 109,064
Great Western Financial Corp........................ 4,621 117,836
------------
1,996,427
------------
SECURITY & COMMISSION BROKERS (0.7%)
Alexander & Alexander Services, Inc................. 1,501 28,519
American Express Company............................ 16,588 686,328
Dean Witter Discover & Company...................... 5,806 272,882
Marsh & McLennan Companies, Inc..................... 2,541 225,514
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
SECURITY & COMMISSION BROKERS (Continued)
Merrill Lynch & Co., Inc. ............................ 5,944 $ 303,144
Morgan Stanley Group Inc.............................. 2,600 209,625
Salomon Inc........................................... 3,682 130,711
------------
1,856,723
------------
STEEL (0.2%)
Armco Inc. (a)........................................ 3,587 21,074
Bethlehem Steel Corp. (a)............................. 3,702 51,828
Inland Steel Industries, Inc.......................... 1,707 42,888
Nucor Corp............................................ 3,004 171,604
USX-U.S. Steel Group Inc. ............................ 2,847 87,545
Worthington Industries, Inc........................... 3,119 64,914
------------
439,853
------------
TEXTILE (0.0%) (c)
Springs Industries, Inc............................... 681 28,176
------------
TIMESHARING & SOFTWARE (0.2%)
Automatic Data Processing, Inc........................ 4,865 361,226
Computer Sciences Corp. (a)........................... 1,862 130,806
------------
492,032
------------
TIRE & RUBBER PRODUCTS (0.1%)
Cooper Tire & Rubber Company.......................... 2,888 71,117
Goodyear Tire & Rubber Company........................ 5,196 235,769
------------
306,886
------------
TOBACCO (1.1%)
American Brands, Inc.................................. 6,464 288,456
Philip Morris Companies, Inc.......................... 28,414 2,571,467
Schweitzer-Mauduit International, Inc. (a)............ 335 7,747
UST Inc............................................... 6,829 227,918
------------
3,095,588
------------
TRUCKING & SHIPPING (0.0%) (c)
Consolidated Freightways, Inc......................... 1,414 37,471
Roadway Services, Inc................................. 1,384 67,643
Yellow Corp........................................... 930 11,509
------------
116,623
------------
UTILITIES--ELECTRIC (2.1%)
American Electric Power Company, Inc.................. 6,357 257,458
Baltimore Gas & Electric Company...................... 4,934 140,619
Carolina Power & Light Company........................ 5,317 183,436
Central & South West Corp............................. 6,481 180,658
CINergy Corp.......................................... 5,347 163,752
Consolidated Edison Company of New York............... 7,988 255,616
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
60
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
UTILITIES--ELECTRIC (Continued)
Detroit Edison Company................................ 4,967 $ 171,362
Dominion Resources Inc................................ 5,901 243,416
Duke Power Company.................................... 7,050 333,994
Entergy Corp.......................................... 7,700 225,225
FPL Group, Inc........................................ 6,353 294,620
General Public Utilities
Corp................................................. 3,949 134,266
Houston Industries Inc................................ 8,818 213,836
Niagara Mohawk Power Corp............................. 4,769 45,902
Northern States Power Company......................... 2,309 113,430
Ohio Edison Company................................... 5,207 122,365
Pacific Gas & Electric Company........................ 14,313 406,131
PacifiCorp............................................ 9,511 202,109
Peco Energy Company................................... 7,526 226,721
P P & L Resources, Inc................................ 5,300 132,500
Public Service Enterprise Group Inc................... 8,330 255,106
SCEcorp............................................... 15,175 269,356
Southern Company (The)................................ 22,623 557,091
Texas Utilities Company............................... 7,642 314,277
Unicom Corp........................................... 7,293 238,846
Union Electric Company................................ 3,473 144,998
------------
5,827,090
------------
UTILITIES--GAS & PIPELINE (0.4%)
Columbia Gas System,
Inc. (a)............................................. 1,734 76,079
Consolidated Natural Gas Company...................... 3,231 146,607
Eastern Enterprises................................... 796 28,059
Enron Corp............................................ 8,570 326,731
Enserch Corp.......................................... 2,210 35,912
Nicor Inc............................................. 1,842 50,655
Oneok, Inc............................................ 924 21,137
Pacific Enterprises................................... 2,776 78,422
Panhandle Eastern Corp................................ 5,043 140,574
Peoples Energy Corp................................... 1,162 36,894
Sonat Inc............................................. 2,903 103,419
Williams Companies, Inc. (The)........................ 3,463 151,939
------------
1,196,428
------------
UTILITIES--TELEPHONE (4.8%)
AT&T Corp............................................. 53,589 3,469,888
Airtouch Communications (a)........................... 16,718 472,283
Alltel Corp........................................... 6,424 189,508
Ameritech Corp........................................ 18,862 1,112,858
Bell Atlantic Corp.................................... 14,820 991,088
BellSouth Corp........................................ 33,696 1,465,776
GTE Corp.............................................. 32,753 1,441,132
MCI Communications Corp............................... 23,090 603,226
NYNEX Corp............................................ 14,368 775,872
Pacific Telesis Group................................. 14,459 486,184
SBC Communications, Inc............................... 20,677 1,188,928
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------------
<S> <C> <C>
UTILITIES--TELEPHONE (Continued)
Sprint Corp......................................... 11,821 $ 471,362
U S West, Inc....................................... 15,885 567,889
------------
13,235,994
------------
Total Common Stocks
(Cost $138,601,663)................................ 155,737,235(e)
------------
PREFERRED STOCK (0.0%) (c)
ELECTRONIC COMPONENTS (0.0%) (c)
Teledyne, Inc. $1.20, Series E...................... 41 589
------------
Total Preferred Stock
(Cost $603)........................................ 589
------------
SHORT-TERM
INVESTMENTS (27.4%)
<CAPTION>
PRINCIPAL
AMOUNT
---------------
<S> <C> <C>
COMMERCIAL PAPER (19.8%)
American Honda Motor Co. Inc.
5.73%, due 1/16/96 (f)............................. $ 500,000 498,567
Banca Crt Financial Corp.
5.80%, due 1/22/96 (f)............................. 4,000,000 3,986,467
Banco Itau S.A., Cayman Islands
5.72%, due 1/22/96 (f)............................. 6,350,000 6,328,812
5.95%, due 1/22/96 (f)............................. 1,050,000 1,046,355
DIC Americas, Inc.
5.72%, due 1/26/96 (f)............................. 860,000 856,584
6.00%, due 1/26/96 (f)............................. 5,060,000 5,038,917
Dynamic Funding Corp.,
Series A
5.71%, due 1/4/96 (f).............................. 110,000 109,948
5.75%, due 1/4/96 (f).............................. 1,130,000 1,129,458
6.00%, due 2/2/96 (f).............................. 140,000 139,253
6.05%, due 1/4/96 (f).............................. 560,000 559,717
Epson America Inc.
6.05%, due 1/4/96 (f).............................. 2,940,000 2,938,518
Hartz 667 Commercial Paper Corp.
5.98%, due 1/9/96 (f).............................. 8,200,000 8,189,103
Industrial Funding Corp.
5.78%, due 1/10/96 (f)............................. 300,000 299,566
5.83%, due 1/10/96 (f)............................. 9,200,000 9,186,591
Iris Partners, L.P.
6.03%, due 1/12/96 (f)............................. 300,000 299,447
Mitsui & Co. (U.S.A.) Inc.
5.74%, due 1/12/96 (f)............................. 1,900,000 1,896,668
5.82%, due 1/11/96 (f)............................. 5,600,000 5,590,947
Mitsubishi Motors Credit of America, Inc.
5.85%, due 1/18/96 (f)............................. 260,000 259,282
Questar Corp.
5.90%, due 1/19/96 (f)............................. 1,000,000 997,050
Shinhan Bank
5.87%, due 1/22/96 (f)............................. 2,000,000 1,993,152
5.95%, due 1/22/96 (f)............................. 2,330,000 2,321,913
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
61
<PAGE>
MULTI-ASSET FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
SHORT-TERM INVESTMENTS (Continued)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------
<S> <C> <C>
COMMERCIAL PAPER (Continued)
Strategic Asset Funding Corp.
5.72%, due 1/31/96 (f)........................... $ 365,000 $ 363,260
5.97%, due 1/5/96 (f)............................ 875,000 874,420
------------
Total Commercial Paper
(Cost $54,903,995)............................... 54,903,995
------------
U.S. GOVERNMENT &
FEDERAL AGENCY (7.6%)
Federal National Mortgage Association
5.41%, due 1/17/96 (f)........................... 14,410,000 14,376,583
United States Treasury Bills
5.41%, due 3/7/96 (f)............................ 6,630,000 6,571,484
------------
Total U.S. Government & Federal Agency
(Cost $20,948,068)............................... 20,948,067
------------
Total Short-Term Investments (Cost $75,852,063)... 75,852,062
------------
Total Investments
(Cost $273,578,011) (g).......................... 106.1% 293,661,166(h)
Liabilities in Excess of Cash and Other Assets.... (6.1) (16,773,803)
----------- ------------
Net Assets........................................ 100.0% $276,887,363
=========== ============
FUTURES
CONTRACTS (0.9%)
<CAPTION>
CONTRACTS UNREALIZED
LONG APPRECIATION
------------------------------
<S> <C> <C>
Standard & Poor's 500
March 1996....................................... 117 $ 1,508,047(i)
French Francs, Cac 40 Index
January 1996..................................... 113 258,945(i)
Japanese Yen, Topix Index
March 1996....................................... 127 833,219(i)
------------
Total Contracts Long (Settlement Value
$64,222,531)..................................... 2,600,211
------------
</TABLE>
<TABLE>
<CAPTION>
CONTRACTS UNREALIZED
SHORT (DEPRECIATION)
-------------------------------
<S> <C> <C>
United States Treasury Note
March 1996 (5 Year)............................. 169 $ (68,656)(i)
United States Treasury Note
March 1996 (10 Year)............................ 27 (11,814)(i)
United States Treasury Bond
March 1996 (30 Year)............................ 102 (121,125)(i)
------------
Total Contracts Short (Settlement Value
($34,142,500)).................................. (201,595)
------------
Total Futures Contracts (Settlement Value
$30,080,031).................................... $ 2,398,616
============
</TABLE>
- --------
(a) Non-income producing securities.
(b) TBA: Securities purchased on a forward commitment basis with an
approximate principal amount and no definite maturity date. The actual
principal amount and the maturity date will be determined upon settlement.
(c) Less than one tenth of a percent.
(d) The combined market value of U.S. Government and Federal Agencies
Investments and U.S. Treasury futures contracts represents 3.6% of net
assets.
(e) The combined market value of common stocks and Standard & Poor's 500 Index
futures contracts represents 69.3% of net assets.
(f) Segregated or partially segregated as collateral for futures contracts.
(g) The cost for Federal income tax purposes is $274,474,959.
(h) At December 31, 1995 net unrealized appreciation was $19,186,207, 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 $20,898,887, and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $1,712,680.
(i) Represents the difference between the value of the contracts at the time
they were opened and the value at December 31, 1995.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
62
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
MULTI-ASSET FUND
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$273,578,011).................................................. $293,661,166
Cash............................................................ 1,433
Receivables:
Dividends and interest.......................................... 1,049,968
Fund shares sold................................................ 250,297
------------
Total assets.................................................. 294,962,864
------------
LIABILITIES:
Payables:
Investment securities purchased................................. 17,718,712
Administrator................................................... 101,612
Adviser......................................................... 35,078
Custodian....................................................... 12,711
Fund shares redeemed............................................ 7,838
Transfer agent.................................................. 4,591
Directors....................................................... 1,342
Accrued expenses................................................ 56,965
Variation margin payable on futures contracts................... 136,652
------------
Total liabilities............................................. 18,075,501
------------
Net assets...................................................... $276,887,363
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized
Institutional Class............................................. $ 23,184
Institutional Service Class..................................... 300
Additional paid-in capital...................................... 256,077,474
Accumulated distributions in excess of net realized gain on
investments.................................................... (1,693,725)
Accumulated net realized loss on foreign currency transactions.. (1,641)
Net unrealized appreciation on investments...................... 22,481,771
------------
Net assets...................................................... $276,887,363
============
Institutional Class
Net assets applicable to outstanding shares..................... $273,351,317
============
Shares of capital stock outstanding............................. 23,184,113
============
Net asset value per share outstanding........................... $ 11.79
============
Institutional Service Class
Net assets applicable to outstanding shares..................... $ 3,536,046
============
Shares of capital stock outstanding............................. 300,012
============
Net asset value per share outstanding........................... $ 11.79
============
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a).................................................... $ 2,709,007
Interest......................................................... 9,014,086
-----------
Total income................................................... 11,723,093
-----------
Expenses: (Note 2)
Administration (Note 3).......................................... 1,240,213
Advisory (Note 3)................................................ 372,064
Legal............................................................ 64,294
Custodian........................................................ 62,011
Shareholder communication........................................ 32,755
Auditing......................................................... 30,979
Transfer agent................................................... 29,520
Registration..................................................... 27,893
Directors........................................................ 10,766
Amortization of organization expense............................. 6,965
Service (Note 3)................................................. 3,226
Miscellaneous.................................................... 26,672
-----------
Total expenses before
reimbursement................................................. 1,907,358
Expense reimbursement from Administrator (Note 3)................ (167,833)
-----------
Net expenses................................................... 1,739,525
-----------
Net investment income............................................ 9,983,568
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Security transactions............................................ 17,142,745
Futures transactions............................................. 7,503,201
Foreign currency transactions.................................... (267,722)
-----------
Net realized gain on investments and foreign currency............ 24,378,224
-----------
Net change in unrealized appreciation on investments:
Security transactions............................................ 22,048,798
Futures transactions............................................. 2,398,535
-----------
Net unrealized gain on investments............................... 24,447,333
-----------
Net realized and unrealized gain on investments and foreign
currency........................................................ 48,825,557
-----------
Net increase in net assets resulting from operations............. $58,809,125
===========
</TABLE>
- --------
(a) Dividends recorded net of foreign withholding taxes of $19,715.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
63
<PAGE>
MULTI-ASSET FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and December 31, 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income............................. $ 9,983,568 $ 9,062,469
Net realized gain on investments.................. 24,645,946 8,532,889
Net realized loss on foreign currency
transactions..................................... (267,722) --
Net change in unrealized appreciation
(depreciation) on investments.................... 24,447,333 (20,618,727)
------------ ------------
Net increase (decrease) in net assets resulting
from operations.................................. 58,809,125 (3,023,369)
------------ ------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class.............................. (9,683,938) (9,086,283)
Institutional Service Class...................... (122,295) --
From net realized gain on investments:
Institutional Class.............................. (23,783,105) (8,411,922)
Institutional Service Class...................... (308,316) --
In excess of net realized gain on investments:
Institutional Class.............................. (1,672,049) (523,396)
Institutional Service Class...................... (21,677) --
------------ ------------
Total dividends and distributions to
shareholders................................... (35,591,380) (18,021,601)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class.............................. 40,227,452 56,297,688
Institutional Service Class...................... 3,251,969 --
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions:
Institutional Class.............................. 35,139,085 17,861,871
Institutional Service Class...................... 452,281 --
------------ ------------
79,070,787 74,159,559
Cost of shares redeemed:
Institutional Class.............................. (54,473,647) (82,380,673)
Institutional Service Class...................... (6,140) --
------------ ------------
Increase (decrease) in net assets derived from
capital share transactions...................... 24,591,000 (8,221,114)
------------ ------------
Net increase (decrease) in net assets............ 47,808,745 (29,266,084)
NET ASSETS:
Beginning of year................................. 229,078,618 258,344,702
------------ ------------
End of year....................................... $276,887,363 $229,078,618
============ ============
Accumulated distribution in excess of net
investment income................................ $ -- $ (23,814)
============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
64
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
MULTI-ASSET FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL
INSTITUTIONAL SERVICE
CLASS CLASS INSTITUTIONAL CLASS
------------- ------------- -------------------------------------------------
YEAR ENDED DECEMBER 31 JANUARY 2, 1991(A)
--------------------------------------------------------- THROUGH
1995 1994 1993 1992 DECEMBER 31, 1991
--------------------------- -------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period.... $ 10.67 $10.67 $ 11.67 $ 12.02 $ 11.79 $ 10.00
-------- ------ -------- -------- -------- --------
Net investment income... 0.48 0.47 0.45 0.39 0.50 0.51
Net realized and
unrealized gain (loss)
on investments......... 2.39 2.39 (0.55) 0.59 0.29 1.28
Net realized and
unrealized loss on
foreign currency
transactions........... (0.01) (0.01) -- -- -- --
-------- ------ -------- -------- -------- --------
Total from investment
operations............. 2.86 2.85 (0.10) 0.98 0.79 1.79
-------- ------ -------- -------- -------- --------
Less dividends and
distributions:
From net investment
income................. (0.48) (0.47) (0.45) (0.88) (0.51) --
From net realized gain
on investments......... (1.18) (1.18) (0.42) (0.44) (0.05) --
In excess of net
realized gain on
investments............ (0.08) (0.08) (0.03) (0.01) -- --
-------- ------ -------- -------- -------- --------
Total dividends and
distributions.......... (1.74) (1.73) (0.90) (1.33) (0.56) --
-------- ------ -------- -------- -------- --------
Net asset value at end
of period.............. $ 11.79 $11.79 $ 10.67 $ 11.67 $ 12.02 $ 11.79
======== ====== ======== ======== ======== ========
Total investment
return................. 26.81% 26.70% (0.86%) 8.79% 7.09% 17.90%
Ratios (to average net
assets)/
Supplemental Data:
Net investment income.. 4.03% 3.78% 3.63% 3.55% 4.65% 5.87%
Net expenses........... 0.70% 0.95% 0.70% 0.60% 0.60% 0.60%
Expenses (before
reimbursement)........ 0.77% 1.02% 0.75% 0.75% 0.79% 0.88%
Portfolio turnover
rate................... 261% 261% 128% 101% 89% 22%
Net assets at end of
period (in 000's)...... $273,351 $3,536 $229,079 $258,345 $190,899 $139,449
</TABLE>
- --------
(a) Commencement of operations.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
65
<PAGE>
---------------------
Value Equity Fund
---------------------
For the year ended December 31, 1995, the MainStay Institutional Value Equity
Fund returned 29.42% and 29.32% for Institutional Class and Service Class
shares, respectively. These results represented the second highest annual
returns in the Fund's history and helped the Fund earn an overall five-star
rating in the equity category, the highest rating available, from Morningstar,
Inc.* as of 12/31/95. This rating is based on a Morningstar universe of 1,394
equity funds for the three-year period (12/31/92 to 12/31/95), and a universe of
950 equity funds for the five-year period (12/31/90 to 12/31/95). These
outstanding returns reflected unusually favorable market conditions which are
unlikely to be repeated in 1996.
Although performance was strong in absolute terms, growth stocks outperformed
value equities during much of 1995. As a result, despite the Value Equity Fund
outperforming its Lipper(S) peer group in the first and fourth quarters of 1995,
it lagged the average Lipper growth and income fund (among 448 funds), and the
S&P 500+, which had returns of 30.82% and 37.53%, respectively, for the year
12/31/94 to 12/31/95.
A slowing economy, combined with low inflation and declining interest rates,
made 1995 a challenging year for value investors. This environment was favorable
for defense stocks, utilities, and technology issues that replaced labor with
knowledge-based systems. It also was favorable for financials, especially banks
and consumer nondurables, as well as niche sectors, such as fertilizers, oil
service and airlines, where supply and demand came into balance. The environment
was unfavorable for more economically sensitive sectors such as chemicals,
papers, retailers, autos, and auto parts.
As a result of our disciplined individual stock selection, on balance, the Fund
was overweighted during the year in economically sensitive sectors with very low
price/earnings ratios which limited the Fund's performance. We were also very
underweighted in technology, capital goods stocks and utilities, primarily
because these sectors did not meet our strict criteria for free cash flow and
value catalysts. This unfavorable sector mix was partially offset by our
decisions to hold or buy stocks in some niche segments which did very well, such
as fertilizer and farm related stocks (IMC Global, Potash Corp., Vigoro, and
Case), oil service (Coastal Corp.) and defense issues (McDonald Douglas,
Lockheed Martin, Loral, and Honeywell). Also benefiting the Fund were
investments in transportation (Union Pacific was one of our largest purchases)
and banking (First Fidelity was bought by First Union and First Interstate, with
bids from both Wells Fargo and First Bank Systems). Although the Fund was only
market-weighted in consumer nondurables, it benefited from extraordinary returns
in such names as Philip Morris, Kroger, and Merck.
The Fund's primary weaknesses relative to its peer group came in the second and
third quarters. We pared back on selected energy holdings in the third quarter
in response to their poor showing and saw disappointing results in consumer
cyclicals, particularly retail holdings in both the second and third quarters.
In the fourth quarter, our decision to hold HMOs such as U.S. Healthcare,
Humana, and FHP, helped contribute to the Fund's positive overall performance.
On balance, we believe it was a reasonably good year, given the defensive,
capital preservation bias in value investing and our rigorous methodology.
Although the economy may slow further before turning around, we believe an
eventual pick-up in the economy will cause a rotation back into cyclical stocks,
which should cause value investing to come back into favor. Our screening
process continues to point toward housing and auto related stocks, as well as
basic industry, where we already have a sizable weighting. At the same time,
technology stocks have undergone severe corrections and there may be some
selected stocks in this sector that now offer the appropriate value catalysts.
Finally, while the retail sector shows some favorable attributes, we have little
confidence in earnings estimates based on weak year-end sales. Over the long
term, we are confident that our adherence to strict value disciplines will
reward the patient investor who seeks to accumulate capital and manage downside
risk.
Denis Laplaige
Thomas Kolefas
Portfolio Managers
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
* Morningstar, Inc. is an independent fund performance monitor. Its ratings
reflect historic risk-adjusted performance, which does not include sales
charges, and may change monthly. Its ratings of 1 (low) and 5 (high) stars
are based on a fund's 3 and 5 year average annual returns with fee
adjustments, and a risk factor that reflects fund performance relative to 3-
month Treasury bill monthly returns. As of 12/31/95, the Value Equity Funds'
three- and five-year ratings for those periods were 4 and 5 stars out of
1,394 and 950 funds in the equity category. Only 10% of the funds in an
investment category may receive 5 stars, 22.5% may receive 4 stars, 35% may
receive 3 stars, and 22.5% may receive 2 stars. Ratings reflect
Institutional Class performance only. Service Class shares, introduced
January 1, 1995, will not be rated by Morningstar until they have a three
year operating history.
(S) Lipper Analytical Services Inc. is an independent monitor of mutual fund
performance. Results do not reflect any deduction of sales charges and are
based on total returns with capital gains and dividends reinvested.
VALUE STOCKS Stocks that are currently out of favor, but have features that the
adviser believes are likely to make them increase in value over time.
WEIGHTING The proportion of a portfolio allocated to a specific security or
sector. A Fund is said to be overweighted in a sector when that portion of the
portfolio is larger than the sector's general relationship to the market as a
whole.
BOTTOM-UP INVESTING Security selection based on the specific 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.
66
<PAGE>
$10,000 Invested in Mainstay Institutional
Value Equity Fund vs S&P 500 Index
Institutional Class Shares
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
VALUE EQUITY FUND S&P 500
<S> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $13,660 $13,055
4Q 1992 $16,489 $14,056
4Q 1993 $18,945 $15,460
4Q 1994 $19,177 $15,663
4Q 1995 $24,818 $21,525
</TABLE>
- --------------------------------------------------------------------------------
[ ] Value Equity Fund [ ] S&P 500 Index
Source: (C) Ibbotson Associates EnCorr Software
These graphs assume a $10,000 investment made on 1/2/91.
$10,000 Invested in Mainstay Institutional
Value Equity Fund vs S&P 500 Index
Service Class Shares
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
VALUE EQUITY FUND S&P 500
<C> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $13,660 $13,055
4Q 1992 $16,489 $14,056
4Q 1993 $18,945 $15,460
4Q 1994 $19,177 $15,663
4Q 1995 $24,799 $21,525
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Total Return* SEC Average Annual Total Return*
Performance as of December 31, 1995 as of December 31, 1995
- -----------------------------------------------------------------------------------------------------------------
1995 One Year Five Year Since Inception
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Value Equity Fund Institutional Class 29.42% 29.42% 19.94% 19.94%
Value Equity Fund Service Class** 29.32% 29.32% 19.92% 19.92%
Average Lipper Growth & Income Fund 30.82% 30.82% 15.31% 15.31%
S&P 500 Index 37.53% 37.53% 16.56% 16.56%
</TABLE>
Year-By-Year Performance
- --------------------------------------------------------------------------------
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Institutional Class Shares
Total Return %*
<S> <C>
1991 36.60
1992 20.71
1993 14.90
1994 1.22
1995 29.42
</TABLE>
Portfolio Composition (% of net assets as of December 31, 1995)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Common Stocks 93.86%
Cash & Equivalents 6.14%
</TABLE>
Top 10 Holdings
(% of net assets as of December 31, 1995)
1. Phillip Morris Cos. Inc. 2.22%
2. Aetna Life & Casualty Co. 2.00%
3. Humana, Inc. 1.83%
4. Allstate Corp. 1.81%
5. US Healthcare, Inc. 1.63%
6. Case Corp. 1.63%
7. Premark International Inc. 1.61%
8. IBM Corp. 1.59%
9. IMC Global, Inc. 1.59%
10. Kroger Co. 1.59%
Top 5 Industry Holdings
(% of net assets as of December 31, 1995)
1. Insurance 15.33%
2. Chemicals 10.35%
3. Retail 8.50%
4. Banks 6.17%
5. Energy 5.77%
- --------------------------------------------------------------------------------
** Performance figures for the Service Class, first offered to the public on
1/1/95, include the historical performance of the Institutional Class from
the Funds' inception (1/2/91) up to December 31, 1994. Performance figures
for these two Classes after this date will vary based on differences in their
expense structures.
* The total return reflects the annual return on an investment including
appreciation and dividends or interest. Total returns shown herein include
the change in share price and reinvestment of capital gains distributions and
dividends, and, for the Service Class shares, include the service fee of
.25%.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that upon redemption, shares may be worth
more or less than their original cost.
The Institutional Class shares are sold with no sales charge. The Service
Class shares, first offered 1/1/95, are sold with no initial or contingent
deferred sales charge, but are subject to an annual shareholder service fee
of .25%.
67
<PAGE>
VALUE EQUITY FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
COMMON STOCKS (93.9%)+
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
AEROSPACE (1.5%)
McDonnell Douglas Corp................................ 102,500 $ 9,430,000
------------
AUTO MANUFACTURING (0.5%)
General Motors Corp................................... 58,400 3,087,900
------------
BANKS (6.2%)
Bankers Trust New York Corp........................... 125,000 8,312,500
First Bank System, Inc................................ 53,800 2,669,825
First Interstate Bancorp.............................. 66,700 9,104,550
First Union Corp...................................... 112,000 6,230,000
National City Corp.................................... 166,400 5,512,000
PNC Bank Corp......................................... 173,800 5,605,050
------------
37,433,925
------------
BEVERAGES (0.9%)
Anheuser-Busch Cos., Inc.............................. 82,100 5,490,437
------------
BUILDING MATERIALS (0.6%)
Armstrong World Industries, Inc....................... 58,400 3,620,800
------------
CAPITAL GOODS (2.5%)
Case Corp............................................. 216,600 9,909,450
Honeywell Inc......................................... 110,900 5,392,512
------------
15,301,962
------------
CHEMICALS (10.3%)
Agrium, Inc........................................... 113,500 5,107,500
FMC Corp. (a)......................................... 101,100 6,836,887
Geon Co. (The)........................................ 12,500 304,687
Georgia Gulf Corp..................................... 225,500 6,934,125
IMC Global, Inc....................................... 236,000 9,646,500
International Specialty Products, Inc. (a)............ 618,000 6,720,750
Lyondell Petrochemical Co............................. 259,100 5,926,913
Potash Corp. of Saskatchewan Inc...................... 82,900 5,875,538
PPG Industries, Inc................................... 159,000 7,274,250
Vigoro Corp. (The).................................... 132,300 8,169,525
------------
62,796,675
------------
CONGLOMERATES (1.7%)
Hanson Plc ADR (b).................................... 220,200 3,358,050
Textron Inc........................................... 70,100 4,731,750
U.S. Industries, Inc. (a)............................. 13,150 241,631
Whitman Corp.......................................... 78,700 1,829,775
------------
10,161,206
------------
DEFENSE ELECTRONICS (4.0%)
Litton Industries, Inc. (a)........................... 182,400 8,116,800
Lockheed Martin Corp.................................. 118,775 9,383,225
Loral Corp............................................ 186,000 6,579,750
------------
24,079,775
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
DOMESTIC OILS (3.3%)
Noble Affiliates, Inc................................. 119,800 $ 3,579,025
Parker & Parsley Petroleum Co......................... 342,900 7,543,800
Unocal Corp........................................... 311,600 9,075,350
------------
20,198,175
------------
DRUGS (1.8%)
Merck & Co., Inc...................................... 92,400 6,075,300
Warner-Lambert Co..................................... 50,900 4,943,662
------------
11,018,962
------------
ENERGY (5.8%)
Coastal Corp.......................................... 217,900 8,116,775
Horsham Corp.......................................... 357,900 4,831,650
MAPCO, Inc............................................ 118,500 6,473,062
Panhandle Eastern Corp................................ 305,700 8,521,388
Tosco Corp............................................ 186,000 7,091,250
------------
35,034,125
------------
FINANCE (1.4%)
Travelers Group Inc................................... 133,784 8,411,669
------------
FOOD (1.4%)
Archer Daniels Midland Co............................. 366,450 6,596,100
IBP, Inc.............................................. 33,800 1,706,900
------------
8,303,000
------------
FOOD, BEVERAGES & TOBACCO (4.8%)
American Brands, Inc.................................. 154,000 6,872,250
Philip Morris Cos. Inc................................ 148,700 13,457,350
RJR Nabisco Holdings Corp............................. 285,000 8,799,375
------------
29,128,975
------------
HEALTH CARE (4.1%)
Baxter International Inc.............................. 42,500 1,779,687
FHP International Corp. (a)........................... 65,000 1,852,500
Humana, Inc. (a)...................................... 406,500 11,127,938
U.S. Healthcare, Inc.................................. 213,200 9,913,800
------------
24,673,925
------------
HOUSEHOLD PRODUCTS (1.6%)
Premark International, Inc............................ 192,600 9,750,375
------------
INSURANCE (10.6%)
Aetna Life and Casualty Co............................ 175,700 12,167,225
Allstate Corp. (The).................................. 267,471 10,999,745
American International Group, Inc..................... 83,675 7,739,937
Chubb Corp. (The)..................................... 96,800 9,365,400
Providian Corp........................................ 200,100 8,154,075
SAFECO Corp........................................... 214,000 7,383,000
St. Paul Cos., Inc. (The)............................. 48,000 2,670,000
Torchmark Corp........................................ 126,000 5,701,500
------------
64,180,882
------------
</TABLE>
- --------
+Percentages indicated are based on Fund net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
68
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
--------------------------
<S> <C> <C>
INTERNATIONAL OILS (3.1%)
British Petroleum Company, Plc ADR (b)................ 91,000 $ 9,293,375
Occidental Petroleum Corp............................. 309,800 6,621,975
Union Texas Petroleum Holdings, Inc................... 155,900 3,020,562
------------
18,935,912
------------
OIL SERVICES (0.6%)
Nabors Industries, Inc. (a)........................... 304,000 3,382,000
------------
PAPER & FOREST PRODUCTS (5.0%)
Champion International Corp........................... 171,700 7,211,400
Chesapeake Corp....................................... 222,200 6,582,675
Rayonier, Inc......................................... 203,750 6,800,156
Stone Container Corp.................................. 363,800 5,229,625
Temple-Inland Inc..................................... 102,700 4,531,638
------------
30,355,494
------------
PHOTOGRAPHY (1.5%)
Eastman Kodak Co...................................... 137,000 9,179,000
------------
PUBLISHING (0.0%) (c)
Harland (John H.) Co. (The)........................... 11,900 248,413
------------
RAILROADS (4.4%)
Conrail Inc........................................... 128,000 8,960,000
Illinios Central Corp................................. 236,200 9,064,175
Union Pacific Corp.................................... 128,100 8,454,600
------------
26,478,775
------------
REAL ESTATE (1.2%)
Meditrust............................................. 211,100 7,362,113
------------
RETAIL (8.5%)
American Stores Co.................................... 203,900 5,454,325
Dillard Department Stores, Inc........................ 198,500 5,657,250
Federated Department Stores, Inc. (a)................. 232,500 6,393,750
Kroger Co. (The) (a).................................. 256,700 9,626,250
Limited Inc. (The).................................... 365,200 6,345,350
Mac Frugals Bargains
Close-Outs, Inc. (a).................................. 58,600 820,400
Penney (J.C.) Co., Inc................................ 178,000 8,477,250
Sears, Roebuck and Co................................. 188,300 7,343,700
Stop & Shop Cos. Inc. (The) (a)....................... 64,900 1,500,812
------------
51,619,087
------------
TECHNOLOGY (1.7%)
Apple Computer, Inc................................... 21,800 694,875
International Business Machines Corp.................. 105,500 9,679,625
------------
10,374,500
------------
TEXTILE & APPAREL (1.0%)
Burlington Industries, Inc. (a)....................... 356,000 4,672,500
Jones Apparel Group, Inc. (a)......................... 35,000 1,378,125
------------
6,050,625
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------------
<S> <C> <C>
TIRE & RUBBER (1.4%)
Goodyear Tire & Rubber
Co. (The)............... 182,500 $ 8,280,938
------------
TRANSPORTATION (0.4%)
Arkansas Best Corp....... 305,500 2,405,813
------------
UTILITIES--ELECTRIC (2.1%)
Entergy Corp............. 134,700 3,939,975
Long Island Lighting Co.. 82,500 1,350,938
Unicom Corp.............. 233,400 7,643,850
------------
12,934,763
------------
Total Common Stocks
(Cost $463,880,785)..... 569,710,201
------------
SHORT-TERM
INVESTMENTS (6.1%)
<CAPTION>
PRINCIPAL
AMOUNT
---------------
<S> <C> <C>
COMMERCIAL PAPER (6.1%)
Beneficial Corp.
5.92%, due 1/2/96....... $19,112,000 19,112,000
Prudential Funding Corp.
5.65%, due 1/4/96....... 9,751,000 9,751,000
Texaco Inc.
5.95%, due 1/3/96....... 8,493,000 8,493,000
------------
Total Short-Term
Investments
(Cost $37,356,000)...... 37,356,000
------------
Total Investments
(Cost $501,236,785) (d). 100.0% 607,066,201(e)
Liabilities in Excess of
Cash and Other Assets... 0.0(c) (104,290)
----------- ------------
Net Assets............... 100.0% $606,961,911
=========== ============
</TABLE>
- --------
(a) Non-income producing securities.
(b) ADR--American Depository Receipt.
(c) Less than one tenth of a percent.
(d) The cost for Federal income tax purpose is $501,322,377.
(e) At December 31, 1995 net unrealized appreciation was $105,743,824, 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 $116,916,367 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $11,172,543.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
69
<PAGE>
VALUE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$501,236,785)................................................... $607,066,201
Cash............................................................. 136
Receivables:
Fund shares sold................................................. 2,745,042
Investment securities sold....................................... 2,398,383
Dividends and interest........................................... 1,428,267
------------
Total assets................................................... 613,638,029
------------
LIABILITIES:
Payables:
Investment securities purchased.................................. 5,930,617
Administrator.................................................... 305,197
Fund shares redeemed............................................. 153,948
Adviser.......................................................... 126,908
Custodian........................................................ 9,982
Transfer agent................................................... 4,898
Directors........................................................ 2,325
Accrued expenses................................................. 118,227
Dividend payable................................................. 24,016
------------
Total liabilities.............................................. 6,676,118
------------
Net assets....................................................... $606,961,911
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized......................................................
Institutional Class.............................................. $ 41,829
Institutional Service Class...................................... 223
Additional paid-in capital....................................... 495,095,749
Accumulated undistributed net realized gain on investments....... 5,994,694
Unrealized appreciation on investments........................... 105,829,416
------------
Net assets....................................................... $606,961,911
============
Institutional Class
Net assets applicable to outstanding shares...................... $603,749,226
============
Shares of capital stock outstanding.............................. 41,828,853
============
Net asset value per share outstanding............................ $ 14.43
============
Institutional Service Class
Net assets applicable to outstanding shares...................... $ 3,212,685
============
Shares of capital stock outstanding.............................. 222,600
============
Net asset value per share outstanding............................ $ 14.43
============
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a).................................................... $ 10,698,719
Interest......................................................... 2,406,282
------------
Total income................................................... 13,105,001
------------
Expenses: (Note 2)
Administration (Note 3).......................................... 3,060,145
Advisory (Note 3)................................................ 1,275,060
Legal............................................................ 116,199
Shareholder communication........................................ 63,108
Custodian........................................................ 54,238
Auditing......................................................... 46,998
Registration..................................................... 37,500
Transfer agent................................................... 34,827
Directors........................................................ 21,315
Amortization of organization expense............................. 6,520
Service (Note 3)................................................. 2,536
Miscellaneous.................................................... 8,996
------------
Total expenses................................................. 4,727,442
------------
Net investment income............................................ 8,377,559
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments................................. 20,263,540
Net change in unrealized appreciation on investments............. 101,419,028
------------
Net realized and unrealized gain on investments.................. 121,682,568
------------
Net increase in net assets resulting from operations............. $130,060,127
============
</TABLE>
- --------
(a) Dividends recorded net of foreign withholding taxes of $46,095.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
70
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
VALUE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and December 31, 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income............................. $ 8,377,559 $ 5,329,580
Net realized gain on investments.................. 20,263,540 24,798,536
Net change in unrealized appreciation on
investments...................................... 101,419,028 (27,279,016)
------------ ------------
Net increase in net assets resulting from
operations....................................... 130,060,127 2,849,100
------------ ------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class.............................. (8,337,828) (5,329,580)
Institutional Service Class...................... (41,210) --
From net realized gain on investments:
Institutional Class.............................. (14,061,287) (24,739,162)
Institutional Service Class...................... (73,769) --
In excess of net realized gain on investments:
Institutional Class.............................. -- (113,050)
------------ ------------
Total dividends and distributions to
shareholders................................... (22,514,094) (30,181,792)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class.............................. 141,414,162 151,252,407
Institutional Service Class...................... 3,038,197 --
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions:
Institutional Class.............................. 22,375,101 30,148,321
Institutional Service Class...................... 114,977 --
------------ ------------
166,942,437 181,400,728
Cost of shares redeemed:
Institutional Class.............................. (64,008,663) (62,590,154)
Institutional Service Class...................... (55,323) --
------------ ------------
Increase in net assets derived from capital
share transactions.............................. 102,878,451 118,810,574
------------ ------------
Net increase in net assets....................... 210,424,484 91,477,882
NET ASSETS:
Beginning of year................................. 396,537,427 305,059,545
------------ ------------
End of year....................................... $606,961,911 $396,537,427
============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
71
<PAGE>
VALUE EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
CLASS SERVICE CLASS INSTITUTIONAL CLASS
------------- ------------- ------------------------------------------------
YEAR ENDED DECEMBER 31 JANUARY 2, 1991(A)
-------------------------------------------------------- THROUGH
1995 1994 1993 1992 DECEMBER 31, 1991
--------------------------- -------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period.... $ 11.58 $11.58 $ 12.40 $ 14.16 $ 13.66 $ 10.00
-------- ------ -------- -------- -------- --------
Net investment income... 0.21 0.20 0.17 0.16 0.21 0.28
Net realized and
unrealized gain (loss)
on investments......... 3.20 3.20 (0.02) 1.63 2.22 3.38
-------- ------ -------- -------- -------- --------
Total from investment
operations............. 3.41 3.40 0.15 1.79 2.43 3.66
-------- ------ -------- -------- -------- --------
Less dividends and
distributions:
From net investment
income................. (0.21) (0.20) (0.17) (0.37) (0.28) --
From net realized gain
on investments......... (0.35) (0.35) (0.80) (3.18) (1.65) --
-------- ------ -------- -------- -------- --------
Total dividends and
distributions.......... (0.56) (0.55) (0.97) (3.55) (1.93) --
-------- ------ -------- -------- -------- --------
Net asset value at end
of period.............. $ 14.43 $14.43 $ 11.58 $ 12.40 $ 14.16 $ 13.66
======== ====== ======== ======== ======== ========
Total investment
return................. 29.42% 29.32% 1.22% 14.90% 20.71% 36.60%
Ratios (to average net
assets)/
Supplemental Data:
Net investment income.. 1.64% 1.39% 1.50% 1.38% 1.67% 2.33%
Net expenses........... 0.93% 1.18% 0.92% 0.90% 0.90% 0.90%
Expenses (before
reimbursement)........ 0.93% 1.18% 0.92% 0.93% 0.95% 0.99%
Portfolio turnover
rate................... 51% 51% 43% 83% 133% 142%
Net assets at end of
period (in 000's)...... $603,749 $3,213 $396,537 $305,060 $230,836 $182,627
</TABLE>
- --------
(a) Commencement of operations.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
72
<PAGE>
--------------------
Bond Fund
--------------------
For the year ended 12/31/95, the MainStay Institutional Bond Fund returned
17.88% and 17.55% for Institutional Class and Service Class shares,
respectively. These results compared favorably with the average Lipper(S)
intermediate U.S. government fund, which returned 15.69% (among 106 funds from
12/31/94 to 12/31/95). These performance numbers place the Fund's Institutional
Class shares in the top 18 percent (19th out of 106 funds) and Service Class
shares in the top 22 percent (23rd out of 106 funds) of their Lipper universe,
and helped the Fund receive an overall four-star rating in the fixed-income
category from Morningstar, Inc.(S)(S) as of 12/31/95. This rating is based on a
Morningstar universe of 765 fixed income funds for the three-year period
12/31/92 to 12/31/95; and a universe of 439 fixed income funds for the five-year
period 12/31/90 to 12/31/95.
Highlights of the year included the Federal Reserve raising short-term interest
rates during the first half, then easing rates in the third and fourth quarters.
These movements, combined with a low inflation environment and a slowly growing
economy contributed to the bond market's strong performance. Throughout the year
our duration position was closely in line with the market, allowing us to
participate in the bond rally. The Fund's corporate bonds and mortgage related
securities underperformed our Treasury holdings.
During the final quarter of 1995, the Fund's average maturity was equal to that
of the market and was positioned for a steepening yield curve. The Fund was
underweighted in Treasuries compared to the Lehman Brothers Government/Corporate
Bond Index,++ and security selection added value. Older and newer issues
vacillated during the quarter as to which group had better value. The Fund's
holdings of corporate bonds equaled that of the Index, but were overweighted in
asset-backed and mortgage-backed securities. The portfolio had an average-
weighted quality rating of AAA+, the highest rating by Standard & Poor's
Corporation.
Ravi Akhoury
Edward Munshower
Portfolio Managers
DURATION A measure of average maturity, adjusted for the level of interest
payments investors will receive. Duration is a better gauge of interest-rate
sensitivity than average maturity alone.
YIELD CURVE Fixed-income securities may carry a variety of maturities, from as
short as overnight to as long as 30 years. When the interest rates available
from this spectrum of short-, intermediate-, and long-term securities are
plotted on a graph, the resulting line is known as a "yield curve."
QUALITY RATING Generally, securities rated among the top four rating categories
by independent rating agencies such as Moody's and Standard & Poor's are
considered "investment grade." Investment grade securities generally represent
higher quality and may involve less risk than those designated as non-investment
grade.
$10,000 Invested in Mainstay Institutional Bond Fund vs. Lehman Brothers
Government/Corporate Bond Index
Institutional Class Shares
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
LB GVT/CORP
BOND FUND INDEX
<S> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $11,400 $11,613
4Q 1992 $12,128 $12,492
4Q 1993 $13,310 $13,874
4Q 1994 $12,870 $13,387
4Q 1995 $15,171 $15,962
- --------------------------------------------------------------------------------
</TABLE>
[ ] Bond Fund [ ] Lehman Brothers Gov't/Corp Bond Index
Source: (C) Ibbotson Associates EnCorr Software
These graphs assume a $10,000 investment made on 1/2/91.
Note: See following page for additional footnotes regarding these performance
figures.
$10,000 Invested in Mainstay Institutional Bond Fund vs. Lehman Brothers
Government/Corporate Bond Index
Service Class Shares
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
LB GVT/CORP
BOND FUND INDEX
<S> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $11,400 $11,613
4Q 1992 $12,128 $12,492
4Q 1993 $13,310 $13,874
4Q 1994 $12,870 $13,387
4Q 1995 $15,129 $15,962
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
+ The S&P 500 Stock Index is a registered trademark of Standard & Poor's
Corporation. S&P 500 Stock Index is an unmanaged index that is considered
representative of the U.S. stock market.
(S) Lipper Analytical Services Inc. is an independent monitor of mutual fund
performance. Results do not reflect any deduction of sales charges and
are based on total returns with capital gains and dividends reinvested.
++ The Lehman Brothers Government/Corporate Bond Index is an unmanaged index
generally considered representative of the U.S. intermediate-term bond
market.
(S)(S) Morningstar, Inc. is an independent fund performance monitor. Its ratings
reflect historic risk-adjusted performance, which does not include sales
charges, and may change monthly. Its ratings of 1 (low) and 5 (high)
stars are based on a fund's 3 & 5-year average annual returns with fee
adjustments, and a risk factor that reflects fund performance relative to
3-month Treasury bill monthly returns. As of 12/31/95, the Bond Fund's
three- and five-year ratings for those periods were 4 and 4 stars out of
765 and 439 funds in the fixed-income category, respectively. Only 10% of
the funds in an investment category may receive 5 stars, 22.5% may
receive 4 stars, 35% may receive 3 stars, and 22.5% may receive 2 stars.
Ratings reflect Institutional Class performance only. Service Class
shares, introduced January 1, 1995, will not be rated by Morningstar
until they have a three year operating history.
73
<PAGE>
<TABLE>
<CAPTION>
Total Return* SEC Average Annual Total Return*
Performance as of December 31, 1995 as of December 31, 1995
- -------------------------------------------------------------------------------------------------------------------------
1995 One Year Five Year Since Inception
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bond Fund Institutional Class 17.88% 17.88% 8.69% 8.69%
Bond Fund Service Class** 17.55% 17.55% 8.63% 8.63%
Average Lipper Intermediate U.S. Government Fund 15.69% 15.69% 8.13% 8.13%
Lehman Brothers Gov't/Corporate Bond Index 19.24% 19.24% 9.80% 9.80%
</TABLE>
Year-By-Year Performance
- --------------------------------------------------------------------------------
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Institutional Class Shares
Total Return %*
--------------------------
<S> <C>
1991 14.00
1992 6.39
1993 9.74
1994 -3.31
1995 17.88
</TABLE>
Portfolio Composition (% of net assets as of December 31, 1995)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Domestic Bonds 18.42%
U.S. Government &
Federal Agencies 75.15%
Other 9.41%
Cash & Equivalents - 2.98%#
</TABLE>
# Adjusted for liabilities
Top 10 Holdings
(% of net assets as of December 31, 1995)
1. US Treasury Note, 5.625%, 6/30/97 10.10%
2. US Treasury Note, 8.125%, 2/15/98 9.48%
3. US Treasury Bond, 7.625%, 2/15/25 6.41%
4. US Treasury Note, 5.625%, 11/30/00 6.32%
5. FNMA, 8.50%, 2/1/05 5.85%
6. US Treasury Bond, 6.875%, 8/15/25 5.65%
7. US Treasury Note, 4.625%, 2/15/96 5.52%
8. US Treasury Note, 7.875%, 11/15/04 5.48%
9. GNMA, 5.50%, (TBA), 2/22/26 4.75%
10. US Treasury Bond, 11.625%, 11/15/04 3.68%
Top 5 Industry Holdings
(% of net assets as of December 31, 1995)
1. US Government & Federal Agencies 75.15%
2. Yankee Bonds 13.08%
3. Credit Card Receivables 4.66%
4. Auto Loans 3.78%
5. Financial/Financial Services 2.63%
Dollar Weighted Average Maturity 9.6 years
(First Call/Effective Life)
- --------------------------------------------------------------------------------
** Performance figures for the Service Class, first offered to the public on
1/1/95, include the historical performance of the Institutional Class from
the Funds' inception (1/2/91) up to December 31, 1994. Performance figures
for these two Classes after this date will vary based on differences in their
expense structures.
* The total return reflects the annual return on an investment including
appreciation and dividends or interest. Total returns shown herein include
the change in share price and reinvestment of capital gains distributions and
dividends, and, for the Service Class shares, include the service fee of
.25%.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that upon redemption, shares may be worth
more or less than their original cost.
The Institutional Class shares are sold with no sales charge. The Service
Class shares, first offered 1/1/95, are sold with no initial or contingent
deferred sales charge, but are subject to an annual shareholder service fee
of .25%.
74
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
BOND FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
LONG-TERM INVESTMENTS (95.6%)+
ASSET-BACKED SECURITIES (9.4%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
AUTO LEASE (1.0%)
Ford Credit Auto Lease Trust
Series 1995-1 Class A2
6.35%, due 11/15/98.................................. $ 1,875,000 $ 1,890,244
------------
AUTO LOANS (3.8%)
Ford Credit Grantor Trust
Series 1995-B Class A
5.90%, due 10/15/00.................................. 2,966,725 2,979,778
NationsBank Auto Grantor Trust
Series 1995-A Class A
5.85%, due 6/15/02................................... 2,781,933 2,792,365
Union Acceptance Corp. Grantor Trust
Series 1995-B Class A
6.575%, due 7/10/02 (a).............................. 1,549,568 1,569,418
------------
7,341,561
------------
CREDIT CARD RECEIVABLES (4.6%)
American Express Master Trust
Series 1992-1 Class A
6.05%, due 6/15/98................................... 1,050,000 1,058,715
Chemical Master Credit
Card Trust I
Series 1995-3 Class A
6.23%, due 4/15/05................................... 2,775,000 2,835,051
Household Affinity Credit Card Master Trust I
Series 1994-2 Class A
7.00%, due 12/15/99.................................. 2,725,000 2,788,874
Standard Credit Card
Master Trust I
Series 1995-4 Class A
5.975%, due 2/15/00 (a).............................. 2,375,000 2,375,000
------------
9,057,640
------------
Total Asset-Backed Securities
(Cost $18,094,030)................................... 18,289,445
------------
CORPORATE BONDS (5.4%)
BANKS (2.1%)
First Union Corporation
7.50%, due 4/15/35................................... 1,750,000 1,939,402
SouthTrust Bank of Alabama (Birmingham)
7.69%, due 5/15/25................................... 1,875,000 2,106,075
------------
4,045,477
------------
BROKERAGE (0.6%)
Smith Barney Holdings Inc.
7.98%, due 3/1/00.................................... 1,135,000 1,216,958
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
FINANCE (2.7%)
Associates Corp. of North
America
7.75%, due 2/15/05............. $ 2,905,000 $ 3,235,473
General Motors Acceptance Corp.
9.625%, due 12/15/01........... 1,590,000 1,870,412
------------
5,105,885
------------
Total Corporate Bonds
(Cost $9,902,805).............. 10,368,320
------------
U.S. GOVERNMENT & FEDERAL AGENCIES (67.7%)
FEDERAL HOME LOAN MORTGAGE CORPORATION
(MORTGAGE PASS-THROUGH SECURITY) (1.0%)
8.19%, due 10/6/04............. 1,750,000 1,884,295
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (7.9%)
6.25%, due 8/12/03............. 1,790,000 1,780,996
7.85%, due 9/10/04............. 2,080,000 2,216,552
8.50%, due 2/1/05.............. 10,380,000 11,356,550
------------
15,354,098
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITY) (4.8%)
5.50%, due 2/22/26 TBA
ARM (b)(d)........................9,225,000....9,225,000
------------
TENNESSEE VALLEY AUTHORITY (0.9%)
Power Board 1992 Series D
8.25%, due 4/15/42............. 1,540,000 1,829,243
------------
UNITED STATES TREASURY BONDS (15.7%)
6.875%, due 8/15/25............ 9,740,000 10,984,869
7.625%, due 2/15/25............ 10,190,000 12,460,434
11.625%, due, 11/15/04......... 5,050,000 7,147,316
------------
30,592,619
------------
UNITED STATES TREASURY NOTES (37.4%)
5.625%, due 6/30/97 (c)........ 19,500,000 19,621,875
5.625%, due 11/30/00........... 12,160,000 12,270,170
6.375%, due 8/15/02............ 6,145,000 6,443,586
7.75%, due 12/31/99............ 4,840,000 5,252,174
7.875%, due 11/15/04........... 9,205,000 10,654,788
8.125%, due 2/15/98............ 17,420,000 18,421,650
------------
72,664,243
------------
Total U.S. Government & Federal
Agencies
(Cost $127,602,076)............ 131,549,498
------------
</TABLE>
- --------
+Percentages indicated are based on Fund net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
75
<PAGE>
BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
YANKEE BONDS (13.1%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
African Development Bank
6.875%, due 10/15/15.................................. $ 1,800,000 $ 1,850,976
BCH Cayman Islands
8.25%, due 6/15/04.................................... 3,550,000 3,901,663
Celulosa Arauco y Constitucion S.A.
6.75%, due 12/15/03................................... 2,100,000 2,109,744
China International Trust & Investment Corp.
9.00%, due 10/15/06................................... 2,025,000 2,294,264
Dresdner Bank A.G. (N.Y.)
7.25%, due 9/15/15.................................... 330,000 352,087
Grand Metropolitan Investment Corp.
7.45%, due 4/15/35.................................... 835,000 933,171
Nova Scotia (Province of) Canada
8.25%, due 11/15/19................................... 2,935,000 3,451,120
Ontario (Province of) Canada
7.75%, due 6/4/02..................................... 1,900,000 2,083,008
Republic of Italy
6.875%, due 9/27/23................................... 3,315,000 3,234,412
Santander Financial Issuances
7.25%, due 11/1/15.................................... 2,900,000 2,997,237
Wharf Capital International Ltd.
8.875%, due 11/1/04................................... 2,050,000 2,201,475
------------
Total Yankee Bonds
(Cost $24,432,483).................................... 25,409,157
------------
Total Long-Term Investments
(Cost $180,031,394)................................... 185,616,420
------------
</TABLE>
SHORT-TERM INVESTMENTS (7.4%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------
<S> <C> <C>
UNITED STATES TREASURY NOTES (7.4%)
4.625%, due 2/15/96 (c)........................... $10,725,000 $ 10,718,243
6.50%, due 9/30/96................................ 3,690,000 3,722,288
------------
Total Short-Term Investments
(Cost $14,381,089)................................ 14,440,531
------------
Total Investments
(Cost $194,412,483) (e)........................... 103.0% 200,056,951(f)
Liabilities in Excess of Cash and Other Assets..... (3.0) (5,789,583)
----------- ------------
Net Assets......................................... 100.0% $194,267,368
=========== ============
</TABLE>
- --------
(a) Floating rate. Rate shown is the rate in effect at December 31, 1995.
(b) TBA: Securities purchased on a forward commitment basis with an
approximate principal amount and maturity date. The actual principal
amount and the maturity date will be determined upon settlement.
(c) Segregated or partially segregated as collateral for TBAs.
(d) ARM--Adjustable Rate Mortgage. Resets annually.
(e) The cost for Federal income tax purposes is $194,627,617.
(f) At December 31, 1995 gross unrealized appreciation was $5,429,334, based
on cost for Federal income tax purposes. This consisted of aggregate gross
unrealized appreciation for all investments on which there was an excess
of market value over cost of $5,429,334.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
76
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$194,412,483).................................................. $200,056,951
Cash............................................................ 3,367
Receivables:
Interest........................................................ 3,512,692
Fund shares sold................................................ 109,657
Investment securities sold...................................... 6,016
------------
Total assets.................................................. 203,688,683
------------
LIABILITIES:
Payables:
Investment securities purchased................................. 9,144,281
Fund shares redeemed............................................ 104,212
Administrator................................................... 68,584
Adviser......................................................... 41,978
Transfer agent.................................................. 4,435
Custodian....................................................... 2,994
Directors....................................................... 1,359
Accrued expenses................................................ 53,340
Dividend payable................................................ 132
------------
Total liabilities............................................. 9,421,315
------------
Net assets...................................................... $194,267,368
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized
Institutional Class............................................. $ 19,648
Institutional Service Class..................................... 76
Additional paid-in capital...................................... 201,654,708
Accumulated undistributed net investment income................. 1,039
Accumulated net realized loss on investments.................... (13,052,571)
Net unrealized appreciation on investments...................... 5,644,468
------------
Net assets...................................................... $194,267,368
============
Institutional Class
Net assets applicable to outstanding shares..................... $193,518,262
============
Shares of capital stock outstanding............................. 19,647,695
============
Net asset value per share outstanding........................... $ 9.85
============
Institutional Service Class
Net assets applicable to outstanding shares..................... $ 749,106
============
Shares of capital stock outstanding............................. 76,181
============
Net asset value per share outstanding........................... $ 9.83
============
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest.......................................................... $13,970,001
-----------
Expenses: (Note 2)
Administration (Note 3)........................................... 1,041,729
Advisory (Note 3)................................................. 378,811
Legal............................................................. 53,140
Auditing.......................................................... 28,576
Transfer agent.................................................... 27,518
Shareholder communication......................................... 26,769
Registration...................................................... 19,102
Custodian......................................................... 13,496
Directors......................................................... 8,789
Amortization of organization expense.............................. 8,432
Service (Note 3).................................................. 626
Miscellaneous..................................................... 14,052
-----------
Total expenses before
reimbursement.................................................. 1,621,040
Expense reimbursement from Administrator (Note 3)................. (198,399)
-----------
Net expenses.................................................... 1,422,641
-----------
Net investment income............................................. 12,547,360
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.................................. 9,840,727
Net change in unrealized depreciation on investments.............. 8,872,585
-----------
Net realized and unrealized gain on investments................... 18,713,312
-----------
Net increase in net assets resulting from operations.............. $31,260,672
===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
77
<PAGE>
BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and December 31, 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
DECREASE IN NET ASSETS:
Operations:
Net investment income............................. $ 12,547,360 $ 15,219,917
Net realized gain (loss) on investments........... 9,840,727 (21,466,482)
Net change in unrealized depreciation on
investments...................................... 8,872,585 (1,326,394)
------------ ------------
Net increase (decrease) in net assets resulting
from operations.................................. 31,260,672 (7,572,959)
------------ ------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class.............................. (12,434,009) (15,115,386)
Institutional Service Class...................... (47,550) --
Return of capital:
Institutional Class.............................. -- (38,256)
------------ ------------
Total dividends and distributions to
shareholders................................... (12,481,559) (15,153,642)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class.............................. 13,089,512 26,808,898
Institutional Service Class...................... 776,469 --
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions:
Institutional Class.............................. 12,434,009 15,153,463
Institutional Service Class...................... 47,418 --
------------ ------------
26,347,408 41,962,361
Cost of shares redeemed:
Institutional Class.............................. (53,765,148) (36,099,142)
Institutional Service Class...................... (64,150) --
------------ ------------
Increase (decrease) in net assets derived from
capital share transactions...................... (27,481,890) 5,863,219
------------ ------------
Net decrease in net assets....................... (8,702,777) (16,863,382)
NET ASSETS:
Beginning of year................................. 202,970,145 219,833,527
------------ ------------
End of year....................................... $194,267,368 $202,970,145
============ ============
Accumulated undistributed net investment
income/(excess distribution)..................... $ 1,039 $ (208)
============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
78
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
CLASS SERVICE CLASS INSTITUTIONAL CLASS
------------- ------------- -------------------------------------------------
YEAR ENDED DECEMBER 31 JANUARY 2, 1991(A)
--------------------------------------------------------- THROUGH
1995 1994 1993 1992 DECEMBER 31, 1991
--------------------------- -------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period.... $ 8.93 $8.93 $ 9.98 $ 11.08 $ 11.40 $ 10.00
-------- ----- -------- -------- -------- --------
Net investment income... 0.68 0.67 0.72 0.74 0.61 0.70
Net realized and
unrealized gain (loss)
on investments......... 0.92 0.90 (1.05) 0.26 0.05 0.70
-------- ----- -------- -------- -------- --------
Total from investment
operations............. 1.60 1.57 (0.33) 1.00 0.66 1.40
-------- ----- -------- -------- -------- --------
Less dividends and
distributions:
From net investment
income................. (0.68) (0.67) (0.72) (1.35) (0.70) --
From net realized gain
on investments......... -- -- -- (0.65) (0.28) --
In excess of net
realized gain on
investments............ -- -- -- (0.10) -- --
-------- ----- -------- -------- -------- --------
Total dividends and
distributions.......... (0.68) (0.67) (0.72) (2.10) (0.98) --
-------- ----- -------- -------- -------- --------
Net asset value at end
of period.............. $ 9.85 $9.83 $ 8.93 $ 9.98 $ 11.08 $ 11.40
======== ===== ======== ======== ======== ========
Total investment
return................. 17.88% 17.55% (3.31%) 9.74% 6.39% 14.00%
Ratios (to average net
assets)/
Supplemental Data:
Net investment income.. 6.62% 6.37% 7.13% 6.86% 6.02% 7.05%
Net expenses........... 0.75% 1.00% 0.75% 0.70% 0.70% 0.70%
Expenses (before
reimbursement)........ 0.86% 1.11% 0.82% 0.84% 0.85% 0.90%
Portfolio turnover
rate................... 470% 470% 478% 567% 609% 301%
Net assets at end of
period (in 000's)...... $193,518 $ 749 $202,970 $219,834 $203,531 $186,253
</TABLE>
- --------
(a) Commencement of operations.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
79
<PAGE>
---------------------
Indexed Bond Fund
---------------------
For bonds, 1995 was an exceptional year. Early in the year, speculation over a
"soft landing" for the economy gave fixed-income investors a reason to be
optimistic in the face of a Federal Reserve rate hike. This optimism proved
justified, as slow growth and the absence of any significant signs of inflation
pushed interest rates down. Bond fund investors enjoyed spectacular returns in
the first half of the year, as the general bond market (as measured by the
Salomon Brother's Broad Investment Grade Index+) gained 12.54%. By year end, the
Fed tightening was a distant memory. In the fourth quarter, bond values were
further boosted by Fed easing. The Salomon BIG Index finished the year with an
impressive 18.55% return. While investors may note that this return falls short
of most general stock market measures, it is important to remember that
generally bonds have historically exhibited less price volatility (a measure of
risk) than stocks.
Within the bond market, the sectors that are most sensitive to interest rate
changes outperformed their counterparts. Longer-duration bonds that do not
mature for ten or more years returned 29.9%* in 1995. Corporate bonds, which
demand yield premiums (bond prices that exceed face value) over relatively safe
U.S. Treasury securities, returned 22.2%*. As a broadly diversified index fund,
the MainStay Institutional Indexed Bond Fund maintains exposure to all sectors
of the fixed-income market and seeks to be fully invested at all times. This
proved to be a successful strategy with the continuously rising bond market
throughout 1995. The Fund returned 18.07% and 17.97% for the year (Institutional
Class and Service Class shares, respectively), compared to a return of 15.62%
for the average Lipper fixed-income mutual fund (among 4,325 funds from 12/31/94
to 12/31/95).(S) This performance helped the Fund receive an overall four-star
rating in the fixed-income category from Morningstar, Inc.** as of 12/31/95.
This rating is based on a Morningstar universe of 765 fixed income funds for the
three-year period 12/31/92 to 12/31/95; and a universe of 439 fixed income funds
for the five year period 12/31/90 to 12/31/95.
As we move into 1996, we believe the potential upside for bonds is limited. The
benchmark 30-year Treasury bond was yielding only 5.94% at year-end. This
represents the very low end of the range for long-term interest rates during the
past 30 years. We believe it is unlikely that rates will fall enough to produce
the magnitude of returns we saw in 1995. In addition, the current low interest
rate environment may spur economic growth, and eventually lead to inflation and
poor performance for bond funds.
Holly V. Cox
James A. Mehling, CFA
Portfolio Managers
$10,000 Invested in Mainstay Institutional
Indexed Bond Fund vs Salomon Brothers Big Index
Institutional Class Shares
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Indexed SB BIG
Bond Fund Index
<S> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $11,470 $11,597
4Q 1992 $12,283 $12,477
4Q 1993 $13,467 $13,711
4Q 1994 $13,003 $13,320
4Q 1995 $15,355 $15,791
- --------------------------------------------------------------------------------
</TABLE>
[ ] Indexed Bond Fund [ ] Salomon Brothers BIG Index
Source: (C) Ibbotson Associates EnCorr Software
These graphs assume a $10,000 investment made on 1/2/91.
Note: See following page for additional footnotes regarding these performance
figures.
$10,000 Invested in Mainstay Institutional
Indexed Bond Fund vs Salomon Brothers Big Index
Service Class Shares
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Indexed SB BIG
Bond Fund Index
[C] [C] [C]
1/91 $10,000 $10,000
4Q 1991 $11,470 $11,597
4Q 1992 $12,283 $12,477
4Q 1993 $13,467 $13,711
4Q 1994 $13,003 $13,320
4Q 1995 $15,341 $15,791
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
+ The Salomon Brothers Broad Investment Grade Bond Index is an unmanaged index
generally considered representative of the U.S. bond market.
(S) Lipper Analytical Services Inc. is an independent monitor of mutual fund
performance. Results do not reflect any deduction of sales charges and are
based on total returns with capital gains and dividends reinvested.
** Morningstar, Inc. is an independent fund performance monitor. Its ratings
reflect historic risk-adjusted performance, which does not include sales
charges, and may change monthly. Its ratings of 1 (low) and 5 (high) stars
are based on a fund's 3 & 5-year average annual returns with fee
adjustments, and a risk factor that reflects fund performance relative to 3-
month Treasury bill monthly returns. As of 12/31/95, the Indexed Bond Fund's
three- and five-year ratings for those periods were 4 and 4 stars out of 765
and 439 funds in the fixed-income category, respectively. Only 10% of the
funds in an investment category may receive 5 stars, 22.5% may receive 4
stars, 35% may receive 3 stars, and 22.5% may receive 2 stars. Ratings
reflect Institutional Class performance only. Service Class shares,
introduced January 1, 1995, will not be rated by Morningstar until they have
a three year operating history.
* (C) Ibbotson Associates EnCorr Software
80
<PAGE>
<TABLE>
<CAPTION>
Total Return* SEC Average Annual Total Return*
Performance as of December 31, 1995 as of December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------
1995 One Year Five Year Since Inception
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Indexed Bond Fund Institutional Class 18.07% 18.07% 8.95% 8.95%
Indexed Bond Fund Service Class** 17.97% 17.97% 8.94% 8.94%
Average Lipper General U.S. Government Fund 17.37% 17.37% 8.33% 8.33%
Salomon Brothers BIG Bond Index 18.55% 18.55% 9.57% 9.57%
</TABLE>
Year-By-Year Performance
- --------------------------------------------------------------------------------
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Institutional Class Shares
Total Return %*
--------------------------
<S> <C>
1991 14.70
1992 7.09
1993 9.64
1994 -3.44
1995 18.07
</TABLE>
Portfolio Composition (% of net assets as of December 31, 1995)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Domestic Bonds--\Non-Convertible 18.73%
Foreign & Other Non-Convertible Bonds 1.30%
U.S. Government & Federal Agencies 85.24%
Other 1.36%
Cash & Equivalents - 6.63%#
</TABLE>
# Adjusted for liabilities
Top 10 Holdings
(% of net assets as of December 31, 1995)
1. FNMA Discount Note, 5.45%, 1/17/96 6.83%
2. FNMA Discount Note, 5.45%, 1/18/96 3.08%
3. US Treasury Bond, 7.50%, 11/15/16 3.00%
4. US Treasury, Note, 6.375%, 7/15/99 2.21%
5. US Treasury, Note, 6.00%, 10/15/99 2.13%
6. US Treasury Note, 8.875%, 2/15/19 2.06%
7. US Treasury Note, 9.125%, 5/15/99 2.05%
8. US Treasury Note, 6.25%, 2/15/03 1.91%
9. FNMA, 8.00% (TBA) 1.90%
10. US Treasury Note, 6.75%, 5/31/97 1.87%
Top 5 Industry Holdings
(% of net assets as of December 31, 1995)
1. US Government & Federal Agencies 85.24%
2. Banks 10.48%
3. Financial Services 4.26%
4. Utilities-Electric 3.56%
5. Consumer Financial Services 3.47%
Weighted Average Years to Maturity 9.99 years
- --------------------------------------------------------------------------------
** Performance figures for the Service Class, first offered to the public on
1/1/95, include the historical performance of the Institutional Class from
the Funds' inception (1/2/91) up to December 31, 1994. Performance figures
for these two Classes after this date will vary based on differences in their
expense structures.
* The total return reflects the annual return on an investment including
appreciation and dividends or interest. Total returns shown herein include
the change in share price and reinvestment of capital gains distributions and
dividends, and, for the Service Class shares, include the service fee of
.25%.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that upon redemption, shares may be worth
more or less than their original cost.
The Institutional Class shares are sold with no sales charge. The Service
Class shares, first offered 1/1/95, are sold with no initial or contingent
deferred sales charge, but are subject to an annual shareholder service fee
of .25%.
Unlike other funds which generally seek to "beat" the market, index funds
seek to "match" their respective indices.
81
<PAGE>
INDEXED BOND FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
LONG-TERM INVESTMENTS (95.7%)+
ASSET-BACKED SECURITIES (1.3%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
AUTO LOANS (0.1%)
Western Financial Grantor Trust
Series 1993-4 Class A1
4.60%, due 4/1/99..................................... $ 204,816 $ 202,272
------------
CREDIT CARD RECEIVABLES (1.2%)
Chase Manhattan Credit Card
Master Trust, Series 1992-1
Class A
7.40%, due 5/15/00.................................... 1,000,000 1,029,948
Standard Credit Card Master Trust, Series 1993-3
Class A
5.50%, due 2/7/00..................................... 1,000,000 997,100
------------
2,027,048
------------
Total Asset-Backed Securities (Cost $2,263,009)........ 2,229,320
------------
CORPORATE BONDS (18.1%)
AEROSPACE (0.6%)
Boeing Co.
6.35%, due 6/15/03.................................... 1,000,000 1,025,000
------------
AUTOMOTIVE (0.4%)
Ford Capital B.V.
9.125%, due 5/1/98.................................... 565,000 606,669
------------
AUTOMOTIVE RENTALS (0.4%)
Hertz Corp.
7.00%, due 7/15/03.................................... 700,000 732,375
------------
BANKS (1.6%)
BankAmerica Corp.
8.375%, due 3/15/02................................... 300,000 335,625
Bankers Trust NY Corp.
7.125%, due 7/31/02................................... 895,000 934,156
Barnett Banks, Inc.
8.50%, due 1/15/07.................................... 300,000 349,500
Chase Manhattan Corp.
10.00%, due 6/15/99................................... 38,000 42,892
Chemical Banking Corp.
8.625%, due 5/1/02.................................... 300,000 340,125
First Interstate Bancorp
9.90%, due 11/15/01................................... 400,000 477,500
11.00%, due 3/5/98.................................... 130,000 144,138
------------
2,623,936
------------
CHEMICALS (0.6%)
Arco Chemical Co.
9.90%, due 11/1/00.................................... 205,000 239,337
DuPont (E.I.) De
Nemours & Co.
7.50%, due 3/1/33..................................... 400,000 422,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
CHEMICALS (Continued)
Rhone-Poulenc S.A.
7.75%, due 1/15/02................................... $ 350,000 $ 375,375
------------
1,036,712
------------
COMPUTERS & OFFICE EQUIPMENT (0.4%)
Xerox Corp.
9.20%, due 7/15/99................................... 50,000 51,063
9.75%, due 3/15/00................................... 500,000 570,000
------------
621,063
------------
CONGLOMERATES (0.8%)
Tenneco Inc.
10.00%, due 3/15/08.................................. 1,000,000 1,286,250
------------
CONSUMER FINANCIAL SERVICES (3.5%)
American General Financial Corp.
8.125%, due 8/15/09.................................. 775,000 891,250
CIT Group Holdings, Inc.
8.875%, due 6/15/96.................................. 500,000 506,885
General Motors Acceptance Corp.
8.40%, due 10/15/99.................................. 500,000 541,875
Great Western Financial Corp.
8.60%, due 2/1/02.................................... 150,000 168,562
Japan Financial Corp.
8.70%, due 7/30/01................................... 1,000,000 1,136,250
John Deere Capital Corp.
8.625%, due 8/1/19................................... 300,000 341,250
KFW International Finance Inc.
9.125%, due 5/15/01.................................. 500,000 575,625
Norwest Financial, Inc.
6.00%, due 2/1/04.................................... 1,000,000 996,250
Transamerica Finance Corp.
8.375%, due 2/15/98.................................. 500,000 526,250
------------
5,684,197
------------
FOOD, BEVERAGES & TOBACCO (1.0%)
Anheuser Busch Companies, Inc.
10.00%, due 7/1/18................................... 13,000 13,845
Coca-Cola Enterprises
8.50%, due 2/1/22.................................... 500,000 612,500
Philip Morris Companies, Inc.
9.00%, due 1/1/01.................................... 500,000 560,000
RJR Nabisco, Inc.
8.75%, due 4/15/04................................... 500,000 521,250
------------
1,707,595
------------
MACHINERY (0.4%)
Caterpillar Inc.
9.00%, due 4/15/06................................... 500,000 602,500
9.75%, due 6/1/19.................................... 100,000 114,500
------------
717,000
------------
</TABLE>
- -------------
+ Percentages indicated are based on Fund net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
82
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
CORPORATE BONDS (Continued)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
OIL & GAS (1.8%)
Occidental Petroleum Corp.
9.25%, due 8/1/19.................................... $ 1,100,000 $ 1,406,625
Phillips Petroleum Co.
9.50%, due 11/15/97.................................. 500,000 533,750
Texaco Capital, Inc.
9.75%, due 3/15/20................................... 750,000 1,024,688
------------
2,965,063
------------
PAPER & FOREST PRODUCTS (0.8%)
Scott Paper Co.
7.00%, due 8/15/23................................... 1,250,000 1,282,812
------------
RAILROADS (0.5%)
CSX Corp.
8.625%, due 5/15/22.................................. 500,000 605,000
9.00%, due 8/15/06................................... 190,000 229,663
------------
834,663
------------
RETAIL-GENERAL MERCHANDISE (0.5%)
KMart Corp.
12.50%, due 3/1/05................................... 101,000 107,565
Limited, Inc.
7.50%, due 3/15/23................................... 500,000 498,125
May Department Stores Co.
9.875%, due 6/15/00.................................. 100,000 115,750
------------
721,440
------------
UTILITIES-ELECTRIC (3.6%)
Florida Power & Light Co.
7.875%, due 1/1/13................................... 1,000,000 1,067,500
Houston Lighting & Power Co.
7.75%, due 3/15/23................................... 1,500,000 1,663,125
Niagara Mohawk Power Co.
7.375%, due 8/1/03................................... 500,000 476,250
Pennsylvania Power & Light Co.
7.30%, due 3/1/24.................................... 1,000,000 1,027,500
Southern California Edison Capital Corp.
7.375%, due 12/15/03................................. 1,000,000 1,023,750
Texas Utility Electric Co.
8.25%, due 4/1/04.................................... 500,000 563,125
------------
5,821,250
------------
UTILITIES-TELEPHONE (1.2%)
British Telecommunications Finance, Inc.
9.375%, due 2/15/99.................................. 115,000 127,219
GTE Corp.
9.10%, due 6/1/03.................................... 100,000 115,750
Southwestern Bell Telephone Co.
7.625%, due 10/1/13.................................. 500,000 514,375
United Telecommunication, Inc.
9.50%, due 4/1/03.................................... 1,000,000 1,167,500
------------
1,924,844
------------
Total Corporate Bonds
(Cost $27,278,501)................................... 29,590,869
------------
</TABLE>
FOREIGN GOVERNMENT (1.3%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------------------------
<S> <C> <C>
CANADA (1.3%)
Manitoba (Province of)
9.625%, due 3/15/99................................... $ 500,000 $ 558,750
Nova Scotia (Province of)
7.25%, due 7/27/13.................................... 450,000 471,375
Ontario Hydro
7.45%, due 3/31/13.................................... 500,000 545,625
Quebec (Province of)
9.375%, due 4/1/99.................................... 500,000 550,625
-------------
Total Foreign Government
(Cost $1,977,049)..................................... 2,126,375
-------------
INTERNATIONAL
CORPORATE BOND (0.7%)
BANK (0.7%)
International Bank for Reconstruction & Development
9.875%, due 10/1/97................................... 1,000,000 1,075,000
-------------
Total International
Corporate Bond
(Cost $1,068,125)..................................... 1,075,000
-------------
U.S. GOVERNMENT &
FEDERAL AGENCIES (74.3%)
FEDERAL HOME LOAN MORTGAGE CORPORATION (MORTGAGE PASS-THROUGH SECURITIES) (9.0%)
6.50%, due 1/1/09 TBA (a)............................. 2,000,000 2,012,500
6.50%, due 9/1/25 TBA (a)............................. 1,000,000 1,009,688
6.50%, due 1/1/25 TBA (a)............................. 2,000,000 1,977,500
7.00%, due 1/1/09 TBA (a)............................. 1,000,000 1,019,375
7.00%, due 9/1/25 TBA (a)............................. 1,000,000 1,020,313
7.00%, due 1/1/25 TBA (a)............................. 2,000,000 2,011,876
7.50%, due 1/1/09 TBA (a)............................. 1,000,000 1,029,688
7.50%, due 1/1/25 TBA (a)............................. 2,000,000 2,051,876
8.00%, due 10/1/09.................................... 131,547 135,658
8.00%, due 1/1/25 TBA (a)............................. 2,000,000 2,062,500
8.50%, due 7/1/01-5/1/17.............................. 468,606 486,070
-------------
14,817,044
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION GOLD (MORTGAGE PASS-THROUGH SECURITIES)
(0.8%)
8.00%, due 1/1/21-4/1/21.............................. 241,933 250,854
9.50%, due 8/1/21-9/1/21.............................. 970,879 1,033,379
-------------
1,284,233
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (MORTGAGE PASS-THROUGH SECURITIES) (9.4%)
6.50%, due 1/1/09 TBA (a)............................. 2,000,000 2,011,250
6.50%, due 3/1/25 TBA (a)............................. 1,000,000 1,011,250
7.00%, due 1/1/09 TBA (a)............................. 2,000,000 2,037,500
7.00%, due 1/1/25 TBA (a)............................. 3,000,000 3,025,314
8.00%, due 1/1/09 TBA (a)............................. 1,000,000 1,036,250
8.00%, due 1/1/25 TBA (a)............................. 3,000,000 3,108,750
8.50%, due 7/1/19..................................... 450,065 469,896
8.75%, due 1/1/09..................................... 403,008 422,654
9.00%, due 6/1/16-4/1/22.............................. 2,194,201 2,312,141
-------------
15,435,005
-------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
83
<PAGE>
INDEXED BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
U.S. GOVERNMENT & FEDERAL AGENCIES (Continued)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (MORTGAGE PASS-THROUGH SECURITIES)
(8.9%)
7.00%, due 5/1/09 TBA (a)......................... $ 1,000,000 $ 1,023,750
7.00%, due 1/1/25 TBA (a)......................... 3,000,000 3,036,564
7.50%, due 5/1/09 TBA (a)......................... 1,000,000 1,035,000
7.50%, due 1/1/25 TBA (a)......................... 1,000,000 1,028,750
7.50%, due 1/1/25 TBA (a)......................... 1,000,000 1,028,750
8.00%, due 1/15/09................................ 297,354 309,806
8.00%, due 1/1/25 TBA (a)......................... 2,000,000 2,083,750
8.50%, due 5/15/17................................ 281,174 295,233
8.50%, due 1/1/25 TBA (a)......................... 1,000,000 1,050,000
8.50%, due 1/1/25 TBA (a)......................... 1,000,000 1,050,000
9.00%, due 10/15/16-8/15/17....................... 486,699 515,749
9.50%, due 9/15/17-8/15/21........................ 894,955 960,679
10.00%, due 1/15/19............................... 321,116 352,124
10.50%, due 2/15/12-9/15/21....................... 667,315 739,052
11.50%, due 4/15/13............................... 96,223 109,033
12.00%, due 4/15/15............................... 29,655 33,909
------------
14,652,149
------------
STUDENT LOAN MARKETING ASSOCIATION (0.2%)
(zero coupon), due 10/3/22........................ 1,300,000 233,909
------------
TENNESSEE VALLEY AUTHORITY (0.7%)
Power Board 1989 Series G
8.625%, due 11/15/29.............................. 1,000,000 1,135,000
------------
UNITED STATES TREASURY BONDS (14.6%)
7.25%, due 5/15/16................................ 1,000,000 1,141,270
7.50%, due 11/15/16............................... 3,500,000 4,103,680
8.00%, due 11/15/21............................... 600,000 750,636
8.125%, due 8/15/19-5/15/21....................... 3,300,000 4,159,599
8.25%, due 5/15/05................................ 1,000,000 1,101,940
8.50%, due 2/15/20................................ 1,000,000 1,306,490
8.75%, due 5/15/17................................ 500,000 661,060
8.875%, due 2/15/19............................... 2,500,000 3,371,225
9.375%, due 2/15/06............................... 1,230,000 1,581,878
9.875%, due 11/15/15.............................. 1,350,000 1,951,479
10.375%, due 11/15/12............................. 1,000,000 1,382,590
12.75%, due 11/15/10.............................. 1,000,000 1,524,790
13.375%, due 8/15/01.............................. 600,000 828,456
------------
23,865,093
------------
UNITED STATES TREASURY NOTES (30.7%)
4.25%, due 5/15/96................................ 1,500,000 1,494,720
4.375%, due 8/15/96-
11/15/96.......................................... 3,700,000 3,677,448
4.625%, due 2/15/96............................... 2,000,000 1,998,860
4.75%, due 2/15/97................................ 2,000,000 1,989,780
5.125%, due 2/28/98-
12/31/98.......................................... 3,000,000 2,993,530
5.25%, due 7/31/98................................ 1,000,000 1,000,430
5.375%, due 5/31/98............................... 1,000,000 1,003,190
5.50%, due 4/30/96-9/30/97........................ 1,750,000 1,754,557
5.75%, due 10/31/97............................... 500,000 504,700
5.875%, due 3/31/99............................... 1,000,000 1,017,740
6.00%, due 10/15/99............................... 3,400,000 3,480,342
6.25%, due 1/31/97-2/15/03........................ 4,500,000 4,647,315
6.375%, due 7/15/99-8/15/02....................... 5,200,000 5,402,850
6.75%, due 5/31/97................................ 3,000,000 3,061,590
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-------------------------------
<S> <C> <C>
UNITED STATES TREASURY NOTES (Continued)
7.00%, due 4/15/99............................... $ 1,000,000 $ 1,050,850
7.125%, due 10/15/98............................. 1,000,000 1,048,160
7.25%, due 11/15/96.............................. 150,000 152,504
7.375%, due 5/15/96.............................. 1,750,000 1,763,475
7.50%, due 11/15/01-5/15/02...................... 3,400,000 3,759,125
7.875%, due 11/15/99............................. 1,000,000 1,087,100
8.00%, due 1/15/97............................... 1,300,000 1,336,075
8.25%, due 7/15/98............................... 500,000 535,410
8.50%, due 5/15/97............................... 500,000 521,555
8.75%, due 10/15/97.............................. 1,500,000 1,589,505
9.125%, due 5/15/99.............................. 3,000,000 3,348,540
------------
50,219,351
------------
Total U.S. Government & Federal Agencies
(Cost $116,999,166).............................. 121,641,784 (c)
------------
Total Long-Term Investments
(Cost $149,585,850).............................. 156,663,348
------------
SHORT-TERM INVESTMENTS (25.9%)
COMMERCIAL PAPER (15.0%)
Banco Itau S.A., Cayman Islands
5.90%, due 1/22/96............................... 3,800,000 3,786,920
Dic Americas, Inc.
6.00%, due 1/26/96............................... 2,700,000 2,688,749
Dynamic Funding Corp., Series A
6.00%, due 1/12/96............................... 3,700,000 3,693,218
6.05%, due 1/4/96................................ 225,000 224,886
Mitsui & Co. (U.S.A.) Inc.
5.80%, due 1/11/96............................... 1,400,000 1,397,745
Shinhan Bank
5.87%, due 1/22/96............................... 5,400,000 5,381,510
5.92%, due 1/22/96............................... 3,460,000 3,448,053
5.95%, due 1/22/96............................... 840,000 837,084
Strategic Asset Funding Corp.
5.96%, due 1/22/96............................... 3,070,000 3,059,326
------------
Total Commercial Paper
(Cost $24,517,491)............................... 24,517,491
------------
U.S. GOVERNMENT & FEDERAL AGENCY (10.9%)
Federal National Mortgage Association
5.45%, due 1/17/96............................... 11,210,000 11,177,457
5.45%, due 1/18/96............................... 5,050,000 5,034,567
United States Treasury Bills
4.89%, due 3/7/96 (b)............................ 1,690,000 1,674,226
------------
Total U.S. Government & Federal Agency
(Cost $17,894,916)............................... 17,886,250
------------
Total Short-Term Investments
(Cost $42,412,407)............................... 42,403,741
------------
Total Investments
(Cost $191,998,257) (d).......................... 121.6% 199,067,089 (e)
Liabilities in Excess of Cash
and Other Assets................................. (21.6) (35,377,148)
----------- ------------
Net Assets........................................ 100.0% $163,689,941
=========== ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
84
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
FUTURES CONTRACTS (0.0%) (f)
<TABLE>
<CAPTION>
CONTRACTS UNREALIZED
LONG APPRECIATION
-----------------------------
<S> <C> <C>
United States Treasury Note March 1996 (5 Year)..... 20 $ 18,641(g)
United States Treasury Note March 1996 (10 Year).... 13 19,094(g)
United States Treasury Bond March 1996 (30 Year).... 8 19,562(g)
------------
Total Futures Contracts
(Settlement Value $4,669,594) $ 57,297
============
</TABLE>
- --------
(a) TBA: Securities purchased on a forward commitment basis with an approximate
principal amount and maturity date. The actual principal amount and the
maturity will be determined upon settlement.
(b) Segregated or partially segregated as collateral for futures contracts.
(c) The combined market value of U.S. Government and Federal Agencies
Investments and the value of securities purchased under U.S. Treasury
futures contracts represents 85.2% of net assets.
(d) The cost for Federal income tax purpose is $193,207,491.
(e) At December 31, 1995 net unrealized appreciation was $5,859,598, 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 $6,455,084 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $595,486.
(f) Less than one tenth of a percent.
(g) Represents the difference between the value of the contracts at the time
they were opened and the value at December 31, 1995.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
85
<PAGE>
INDEXED BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$191,998,257).................................................. $199,067,089
Cash............................................................ 1,408
Receivables:
Interest........................................................ 1,997,149
Fund shares sold................................................ 359,607
Variation margin receivable on futures contracts................ 19,875
------------
Total assets.................................................. 201,445,128
------------
LIABILITIES:
Payables:
Investment securities purchased................................. 37,540,000
Administrator................................................... 41,049
Fund shares redeemed............................................ 33,421
Adviser......................................................... 14,318
Custodian....................................................... 8,428
Transfer agent.................................................. 4,277
Directors....................................................... 1,006
Accrued expenses................................................ 41,501
Dividend payable................................................ 71,187
------------
Total liabilities............................................. 37,755,187
------------
Net assets...................................................... $163,689,941
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized
Institutional Class............................................. $ 14,857
Institutional Service Class..................................... 43
Additional paid-in capital...................................... 157,879,296
Accumulated distribution in excess of net investment income..... (63,855)
Accumulated net realized loss on investments.................... (1,266,529)
Unrealized appreciation on investments.......................... 7,126,129
------------
Net assets...................................................... $163,689,941
============
Institutional Class
Net assets applicable to outstanding shares..................... $163,218,984
============
Shares of capital stock outstanding............................. 14,856,900
============
Net asset value per share outstanding........................... $ 10.99
============
Institutional Service Class
Net assets applicable to outstanding shares..................... $ 470,957
============
Shares of capital stock outstanding............................. 42,839
============
Net asset value per share outstanding........................... $ 10.99
============
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest......................................................... $11,561,262
-----------
Expenses: (Note 2)
Administration (Note 3).......................................... 672,553
Advisory (Note 3)................................................ 168,137
Legal............................................................ 44,143
Custodian........................................................ 42,368
Auditing......................................................... 25,461
Transfer agent................................................... 24,876
Registration..................................................... 23,273
Shareholder communication........................................ 23,096
Directors........................................................ 7,495
Amortization of organization expense............................. 6,201
Service (Note 3)................................................. 360
Miscellaneous.................................................... 26,795
-----------
Total expenses before
reimbursement................................................. 1,064,758
Expense reimbursement from Administrator (Note 3)................ (225,553)
-----------
Net expenses................................................... 839,205
-----------
Net investment income............................................ 10,722,057
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from:
Security transactions............................................ 3,458,184
Futures transactions............................................. 672,545
-----------
Net realized gain on investments................................. 4,130,729
-----------
Net change in unrealized appreciation (depreciation) on
investments:
Security transactions............................................ 13,021,604
Futures transactions............................................. 36,407
-----------
Net unrealized gain on investments............................... 13,058,011
-----------
Net realized and unrealized gain on investments.................. 17,188,740
-----------
Net increase in net assets resulting from operations............. $27,910,797
===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
86
<PAGE>
MAINSTAY INSTITUTIONAL
FUNDS INC.
INDEXED BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and December 31, 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income............................. $ 10,722,057 $ 10,288,226
Net realized gain (loss) on investments........... 4,130,729 (3,928,816)
Net change in unrealized appreciation (deprecia-
tion) on investments............................. 13,058,011 (12,307,789)
------------ ------------
Net increase (decrease) in net assets resulting
from operations.................................. 27,910,797 (5,948,379)
------------ ------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class.............................. (11,220,560) (10,143,466)
Institutional Service Class...................... (28,621) --
From net realized gain on investments:
Institutional Class.............................. (973,373) --
Institutional Service Class...................... (2,514) --
------------ ------------
Total dividends and distributions to
shareholders................................... (12,225,068) (10,143,466)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class.............................. 20,545,438 93,722,989
Institutional Service Class...................... 451,329 --
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions:
Institutional Class.............................. 12,122,750 9,565,645
Institutional Service Class...................... 31,130 --
------------ ------------
33,150,647 103,288,634
Cost of shares redeemed:
Institutional Class.............................. (54,548,971) (77,583,926)
Institutional Service Class...................... (1,915) --
------------ ------------
Increase (decrease) in net assets derived from
capital share transactions...................... (21,400,239) 25,704,708
------------ ------------
Net increase (decrease) in net assets............ (5,714,510) 9,612,863
NET ASSETS:
Beginning of year................................. 169,404,451 159,791,588
------------ ------------
End of year....................................... $163,689,941 $169,404,451
============ ============
Accumulated undistributed net investment
income/(excess distribution)..................... $ (63,855) $ 3,783
============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
87
<PAGE>
INDEXED BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL
INSTITUTIONAL SERVICE
CLASS CLASS INSTITUTIONAL CLASS
------------- ------------- -------------------------------------------------
YEAR ENDED DECEMBER 31 JANUARY 2, 1991(A)
--------------------------------------------------------- THROUGH
1995 1994 1993 1992 DECEMBER 31, 1991
--------------------------- -------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period.... $ 10.06 $10.06 $ 11.08 $ 11.65 $ 11.47 $ 10.00
-------- ------ -------- -------- -------- --------
Net investment income... 0.82 0.81 0.65 0.67 0.79 0.56
Net realized and
unrealized gain (loss)
on investments......... 1.00 1.00 (1.03) 0.38 (0.02) 0.91
-------- ------ -------- -------- -------- --------
Total from investment
operations............. 1.82 1.81 (0.38) 1.05 0.77 1.47
-------- ------ -------- -------- -------- --------
Less dividends and
distributions:
From net investment
income................. (0.82) (0.81) (0.64) (1.46) (0.56) --
From net realized gain
on investments......... (0.07) (0.07) -- (0.15) (0.03) --
In excess of net
realized gain on
investments............ -- -- -- (0.01) -- --
-------- ------ -------- -------- -------- --------
Total dividends and
distributions.......... (0.89) (0.88) (0.64) (1.62) (0.59) --
-------- ------ -------- -------- -------- --------
Net asset value at end
of period.............. $ 10.99 $10.99 $ 10.06 $ 11.08 $ 11.65 $ 11.47
======== ====== ======== ======== ======== ========
Total investment
return................. 18.07% 17.97% (3.44%) 9.64% 7.09% 14.70%
Ratios (to average net
assets)/
Supplemental Data:
Net investment income.. 6.38% 6.13% 6.13% 6.19% 7.30% 7.80%
Net expenses........... 0.50% 0.75% 0.50% 0.45% 0.45% 0.45%
Expenses (before
reimbursement)........ 0.63% 0.88% 0.61% 0.61% 0.61% 0.73%
Portfolio turnover
rate................... 284% 284% 274% 213% 78% 34%
Net assets at end of
period (in 000's)...... $163,219 $ 471 $169,404 $159,792 $125,003 $109,744
</TABLE>
- --------
(a) Commencement of operations.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
88
<PAGE>
-------------------------
International Bond Fund
-------------------------
For the year ended December 31, 1995, the MainStay Institutional International
Bond Fund returned 18.46% and 18.26% for Institutional Class and Service Class
shares, respectively. These returns reflected unusually favorable market
conditions for bonds which are unlikely to be repeated in 1996. The Fund's
results compared favorably with the average Lipper general world income fund(S)
(134 funds), which returned 18.05% for the year 12/31/94 to 12/31/95.
During the same period, the Salomon Non-U.S. World Government Bond Index+
returned 19.55%. While the Fund lagged this unmanaged Index for the year, in the
fourth quarter (due to country allocations explained below), both share Classes
outpaced the Index by more than two-to-one.
The International Bond Fund's strong and consistent performance in 1995 was
attributable to solid country allocation and currency management decisions.
Starting the year with only modest currency hedging, the Fund captured gains
associated with the sharp appreciation of foreign currencies against the U.S.
dollar in the first four months of the year. Indeed, in March and April of 1995,
many foreign currencies appreciated to all-time highs against the U.S. dollar.
Beginning in the second quarter, we substantially raised our currency hedging
posture to lock in these extraordinary currency gains and help protect the
portfolio from declining foreign currencies. These decisions paid off handsomely
in the second half of 1995, when many currencies began to weaken. The Japanese
yen was particularly weak in the second half, as Japanese interest rates dropped
to nearly zero percent at the short end and 2.5% at the long end of the maturity
spectrum.
Country allocation also contributed substantially to our performance. During the
year we emphasized high-yielding bond markets in Europe and in the dollar block
(i.e. Canada and Australia), and generally avoided low-yielding Japanese bonds
and politically and inflation-sensitive U.K. bonds. Although our low exposure in
Japan was costly in the second quarter when the yen rallied, overall, these
strategies worked well. They were particularly effective in the second half of
the year, as Japanese capital flowed offshore in pursuit of higher yields. Our
portfolios were overweighted in the top five bond markets of 1995: Sweden,
Canada, Australia, Spain and Denmark. Each returned at least 19% in local terms,
and the three highest yielding bond markets in Europe returned 30% or more in
U.S. dollar terms -- led by Sweden, with an extraordinary 35% return. By year-
end, Japan proved to be the worst-performing market and the U.K. was a
conspicuous laggard, so our underweighting these countries also added to our
strong performance.
As we begin 1996, we remain upbeat about the return prospects in international
bond markets on a hedged basis. European bond markets entered the bull market
with a three- to six-month lag behind the U.S., and are thus not as extended as
the U.S. bond market. With surprisingly weak economic indicators forcing
European central banks to aggressively lower interest rates, we feel the
economic environment in Europe may be ideal for bond investors. Our portfolio is
thus heavily weighted in European bonds, with a particular emphasis on the
higher-yielding markets, including some star performers of 1995, as well as
Italy and Ireland. We also continue to favor the Canadian and Australian bond
markets, which may offer a substantial yield-pickup on U.S. bonds without any
incremental inflation risk. Finally, despite being the world's second largest
bond market, Japan's low yields are not attractive at this time.
The major threat we foresee for international bond investors in 1996 is currency
risk. Anticipating further declines in overvalued foreign currencies against the
U.S. dollar, we are seeking to help protect the portfolio with active currency
hedging, particularly in Europe.
Michael Perlstein
Portfolio Manager
Investments in foreign securities may be subject to greater risks than domestic
investments. These risks include currency fluctuations, changes in U.S. or
foreign tax or currency laws, and changes in monetary policies and economic and
political conditions in foreign countries.
- --------------------------------------------------------------------------------
Past Performance is no guarantee of future results.
(S) Lipper Analytical Services Inc. is an independent monitor of mutual fund
performance. Results do not reflect any deduction of sales charges and are
based on total returns with capital gains and dividends reinvested.
+ The Salomon Brothers Non-US Dollar World Government Bond Index is an
unmanaged index generally considered representative of the world bond
market.
YIELD The income per share (or current value of a security) paid to investors
over a specified period of time. Mutual fund yields are expressed as a percent
of the fund's current price per share.
WEIGHTING The portion of a portfolio allocated to a specific market sector or
country. A Fund is said to be overweighted in a country when that portion of the
portfolio is larger than the country's total bonds relative to the international
bond markets as a whole.
COUNTRY ALLOCATION The amount of assets a fund devotes to the various countries
in which its managers choose to invest.
CURRENCY MANAGEMENT/HEDGING A strategy used to offset investment risk associated
with owning securities denominated in different currencies, the relative values
of which may change at any time. There can be no assurance that currency hedging
will be beneficial to investors.
89
<PAGE>
$10,000 Invested in Mainstay Institutional
International Bond Fund vs Salomon Brothers Non-US
Dollar World Government Bond Index
Institutional Class Shares
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
INTERNATIONAL BOND SB NON-US GVT
FUND INDEX
<S> <C> <C>
1/95 $10,000 $10,000
1Q 1995 $10,790 $11,444
2Q 1995 $11,130 $12,003
3Q 1995 $11,271 $11,712
4Q 1995 $11,846 $11,955
- --------------------------------------------------------------------------------
</TABLE>
$10,000 Invested in Mainstay Institutional
International Bond Fund vs Salomon Brothers Non-US
Dollar World Government Bond Index
Service Class Shares
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
INTERNATIONAL BOND SB NON-US GVT
FUND INDEX
<S> <C> <C>
1/95 $10,000 $10,000
1Q 1995 $10,790 $11,444
2Q 1995 $11,130 $12,003
3Q 1995 $11,261 $11,712
4Q 1995 $11,826 $11,955
</TABLE>
- --------------------------------------------------------------------------------
[ ] International Bond Fund
[ ] Salomon Brothers Non-US Dollar World Gov't Bond Index
Source: (C) Ibbotson Associates EnCorr Software
The graphs assume a $10,000 investment made on 1/1/95.
<TABLE>
<CAPTION>
Total Return* SEC Average Annual Total Return*
Performance as of December 31, 1995 as of December 31, 1995
- -------------------------------------------------------------------------------------------------------------------------
1995 One Year Five Year Since Inception
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
International Bond Fund Institutional Class 18.46% 18.46% N/A 18.46%
International Bond Fund Service Class 18.26% 18.26% N/A 18.26%
Average Lipper General World Income Fund 18.05% 18.05% 8.09 18.05%
Salomon Brothers Non-US Dollar World Gov't Bond Index 19.55% 19.55% 12.18 19.55%
</TABLE>
Portfolio Composition (% of net assets as of December 31, 1995)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Cash & Fixed Income--\(maturities
less than or equal to 1 year) 9.29%
Foreign & Other\Non-Convertible Bonds 90.71%
</TABLE>
Top 10 Holdings
(% of net assets as of December 31, 1995)
1. Republic of Deutschland, 7.50%, 11/11/04, Germany 3.45%
2. Province of Ontario, 7.75%, 12/8/03, Canada 3.06%
3. Kingdom of Denmark, 9.00%, 11/15/98, Denmark 2.97%
4. Buoni Poliennali del Tesoro, 12.50%, 3/1/01, Italy 2.88%
5. Spanish Government, 12.25%, 3/25/00, Spain 2.84%
6. Autobahn Schnell, 6.00%, 3/11/00, Japan 2.80%
7. Buoni Poliennali del Tesoro, 8.50%, 1/1/04, Italy 2.75%
8. Australian Government, 10.00%, 2/15/06, Australia 2.73%
9. New South Wales Treasury, 7.50%, 2/1/98, Australia 2.68%
10. Bundesobligation, 8.50%, 9/20/96, Germany 2.52%
Top 5 Countries
(% of net assets as of December 31, 1995)
1. Germany 15.49%
2. Italy 12.93%
3. France 12.28%
4. Canada 9.54%
5. Denmark 7.60%
Dollar Weighted Average Coupon 6.59 years
- --------------------------------------------------------------------------------
* The total return reflects the annual return on an investment including
appreciation and dividends or interest. Total returns shown herein include the
change in share price and reinvestment of capital gains distributions and
dividends, and, for the Service Class shares, include the service fee of .25%.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that upon redemption, shares may be worth
more or less than their original cost.
The Institutional Class shares are sold with no sales charge. The Service
Class shares are sold with no initial or contingent deferred sales charge, but
are subject to an annual shareholder service fee of .25%.
The inception date of the International Bond Fund and the date such shares
were first offered to the public was 1/1/95.
90
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
LONG-TERM GOVERNMENT BONDS (89.7%)+
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------------------------
<S> <C> <C>
AUSTRALIA (6.4%)
Australian Government
Series 808
8.75%, due 8/15/08.................................. A$ 200,000 $ 153,585
Series 206
10.00%, due 2/15/06................................. 1,455,000 1,213,647
Series 1101
12.00%, due 11/15/01................................ 335,000 296,717
New South Wales Treasury Corp. Series Euro
7.50%, due 2/1/98................................... 1,600,000 1,191,725
-----------
2,855,674
-----------
AUSTRIA (3.8%)
Republic of Austria
Series 3
5.75%, due 3/22/99.................................. AS 5,500,000 564,731
Series 93-1
7.00%, due 1/20/03.................................. 3,600,000 375,540
Series 95-1
7.50%, due 1/24/05.................................. 7,120,000 758,997
-----------
1,699,268
-----------
BELGIUM (3.4%)
Kingdom of Belgium
Series 15
6.75%, due 5/25/97.................................. BF 5,000,000 176,458
Series 14
7.25%, due 4/29/04.................................. 10,000,000 355,295
Series 12
8.00%, due 12/24/12................................. 5,000,000 178,106
Series 3
10.00%, due 8/2/00.................................. 20,000,000 803,423
-----------
1,513,282
-----------
CANADA (9.6%)
Canadian Government
7.75%, due 9/15/96.................................. C$ 345,000 256,377
Series A76
9.00%, due 6/1/25................................... 280,000 239,186
Series H80
9.75%, due 6/1/01................................... 1,035,000 864,325
Series A33
11.50%, due 9/1/00.................................. 530,000 464,686
Province of British Columbia
8.00%, due 8/23/05.................................. 1,225,000 945,416
Province of Ontario
7.75%, due 12/8/03.................................. 1,800,000 1,360,095
Series GH
10.875%, due 1/10/01................................ 120,000 102,948
-----------
4,233,033
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------------------------
<S> <C> <C>
DENMARK (7.6%)
Kingdom of Denmark
7.00%, due 12/15/04................................. DK 6,150,000 $ 1,105,310
7.00%, due 11/10/24................................. 1,850,000 297,773
9.00%, due 11/15/96................................. 3,500,000 653,859
9.00%, due 11/15/98................................. 6,710,000 1,318,924
-----------
3,375,866
-----------
FRANCE (12.3%)
France Bons du Tresor Negociables
5.75%, due 11/12/98................................. FF 1,500,000 310,436
8.50%, due 11/12/97................................. 4,700,000 1,017,773
France Obligations Assimilables du Tresor
6.00%, due 10/25/25................................. 900,000 152,749
7.50%, due 4/25/05.................................. 3,960,000 858,095
8.25%, due 2/27/04.................................. 2,480,000 562,495
8.50%, due 3/28/00.................................. 3,000,000 674,855
8.50%, due 11/25/02................................. 4,200,000 961,631
8.50%, due 10/25/08................................. 2,100,000 491,207
8.50%, due 12/26/12................................. 1,800,000 420,593
-----------
5,449,834
-----------
GERMANY (15.5%)
Bundesobligation
Series 97
8.50%, due 9/20/96.................................. DM 1,550,000 1,118,903
Series 95
8.625%, due 2/20/96................................. 755,000 530,666
Bundesschatzanweisungen
8.125%, due 1/22/96................................. 505,000 353,608
German Unity Fund
8.50%, due 2/20/01.................................. 1,050,000 841,232
International Bank of Reconstruction & Development
7.125%, due 4/12/05................................. 400,000 296,938
Republic of Deutschland
6.25%, due 1/4/24................................... 1,000,000 650,818
7.375%, due 1/3/05.................................. 255,000 194,696
7.50%, due 11/11/04................................. 1,990,000 1,531,350
Treuhandanstalt
7.50%, due 9/9/04................................... 875,000 671,560
Treuhand-Obligationen
6.125%, due 6/25/98................................. 940,000 687,952
-----------
6,877,723
-----------
IRELAND (3.5%)
Irish Government
6.25%, due 4/1/99................................... IP 179,000 284,457
8.25%, due 8/18/15.................................. 111,000 189,026
8.75%, due 7/27/97.................................. 179,000 298,802
8.75%, due 9/30/12.................................. 179,000 318,310
9.25%, due 7/11/03.................................. 258,000 460,861
-----------
1,551,456
-----------
</TABLE>
- --------
+Percentages indicated are based on Fund net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
91
<PAGE>
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1995
LONG-TERM GOVERNMENT BONDS (Continued) SHORT-TERM INVESTMENTS (1.2%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------------
<S> <C> <C>
ITALY (11.9%)
Buoni Poliennali del Tesoro
8.50%, due 8/1/97................................ IL 1,510,000,000 $ 930,371
8.50%, due 4/1/99................................ 1,605,000,000 968,184
8.50%, due 1/1/04................................ 2,170,000,000 1,220,538
9.00%, due 11/1/23............................... 550,000,000 287,837
12.50%, due 3/1/01............................... 1,885,000,000 1,279,236
Certificati di Credito con Opzione
12.00%, due 1/20/98.............................. 955,000,000 620,846
-----------
5,307,012
-----------
JAPAN (2.8%)
Autobahn Schnell
6.00%, due 3/11/00............................... (Yen)110,000,000 1,241,753
-----------
SPAIN (6.1%)
Spanish Government
9.00%, due 2/28/97............................... SP 43,720,000 359,411
10.25%, due 11/30/98............................. 31,540,000 266,562
10.50%, due 10/30/03............................. 60,700,000 522,015
11.30%, due 1/15/02.............................. 33,570,000 297,942
12.25%, due 3/25/00.............................. 140,000,000 1,261,586
-----------
2,707,516
-----------
SWEDEN (6.8%)
Banque Nationale de Paris
Series EMTN
11.00%, due 11/4/99.............................. SK 6,050,000 981,801
Swedish Government
Series 1034
9.00%, due 4/20/09............................... 4,900,000 763,464
Series 1033
10.25%, due 5/5/03............................... 1,600,000 266,335
Series 1020
10.75%, due 1/23/97.............................. 4,200,000 649,404
Series 1030
13.00%, due 6/15/01.............................. 2,000,000 363,233
-----------
3,024,237
-----------
Total Long-Term Government Bonds
(Cost $36,556,290)............................... 39,836,654
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-------------------------------
<S> <C> <C>
COMMERCIAL PAPER (0.2%)
UNITED STATES (0.2%)
Hasbro Corp.
5.70%, due 1/2/96................................ $ 100,000 $ 99,984
-----------
Total Commercial Paper
(Cost $99,984)................................... 99,984
-----------
GOVERNMENT OBLIGATIONS (1.0%)
ITALY (1.0%)
Buoni Poliennali del Tesoro
12.00%, due 1/1/96............................... IL690,000,000 432,437
-----------
Total Government Obligations
(Cost $427,675).................................. 432,437
-----------
Total Short-Term Investments
(Cost $527,659).................................. 532,421
-----------
Total Investments
(Cost $37,083,949) (a)........................... 90.9% 40,369,075(b)
Cash and Other Assets,
Less Liabilities................................. 9.1 4,025,261
------------- -----------
Net Assets........................................ 100.0% $44,394,336
============= ===========
</TABLE>
- --------
(a) The cost for Federal income tax purposes is $37,114,781.
(b) At December 31, 1995 net unrealized appreciation for securities was
$3,254,294, 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 $3,420,683 and aggregate
gross unrealized depreciation for all investments on which there was an
excess of cost over market value of $166,389.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
92
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
(c) Forward Foreign Currency Contracts Open at December 31, 1995:
<TABLE>
<CAPTION>
GROSS
CONTRACT IN DELIVERY UNREALIZED
TO DELIVER EXCHANGE FOR DATE APPRECIATION
- ----------------- ----------------- -------- ------------
<S> <C> <C> <C>
BF 37,400,000 DM 1,817,652 1/30/96 $ 1,081
DM 13,116,666 $ 9,385,863 1/5/96 214,520
DM 1,305,676 IL 1,480,000,000 1/23/96 14,652
DM 579,676 FF 2,015,000 2/2/96 5,977
DM 3,347,470 $ 2,405,000 2/5/96 58,551
DM 1,027,485 DK 4,000,000 2/9/96 2,338
DM 1,032,224 $ 751,200 3/25/96 26,878
DM 5,545,000 $ 3,932,624 4/18/96 37,023
DM 3,170,000 $ 2,260,330 5/3/96 31,624
DM 991,410 $ 700,000 6/10/96 1,667
DM 1,734,335 $ 1,225,000 6/20/96 3,372
(Yen) 206,157,600 $ 2,055,000 7/2/96 4,557
(Pounds)1,240,500 DM 2,762,110 1/3/96 5,106
$ 3,050,000 DM 4,435,005 1/5/96 51,013
$ 640,000 A$ 869,565 2/26/96 5,006
$ 640,000 A$ 864,961 4/2/96 607
--------
463,972
--------
<CAPTION>
GROSS
CONTRACT IN DELIVERY UNREALIZED
TO DELIVER EXCHANGE FOR DATE DEPRECIATION
- ----------------- ----------------- -------- ------------
<S> <C> <C> <C>
A$ 3,620,000 $ 2,678,800 2/26/96 6,360
C$ 1,215,000 $ 880,435 3/14/96 10,262
DK 18,200,000 DM 4,677,461 2/9/96 8,952
DM 2,784,923 (Pounds)1,240,500 1/3/96 21,053
DM 12,821,789 $ 8,790,000 1/5/96 175,162
DM 3,480,681 $ 2,375,000 2/21/96 64,432
DM 190,744 SK 875,400 3/5/96 2,340
DM 4,448,141 $ 3,075,000 3/25/96 46,305
DM 2,746,600 (Pounds)1,240,000 4/2/96 7,202
FF 5,865,000 DM 1,679,385 2/2/96 22,907
IP 950,000 (Pounds) 973,418 1/3/96 11,538
IP 944,767 (Pounds) 975,000 4/2/96 4,293
IL 2,061,000,000 DM 1,796,313 1/23/96 35,768
(Pounds) 973,418 IP 942,139 1/3/96 1,063
SP 131,400,000 DM 1,496,924 1/22/96 31,577
$ 235,000 DM 334,640 1/5/96 1,015
$ 2,349,926 (Yen) 238,400,000 2/5/96 25,765
--------
475,994
--------
Net Depreciation........................................ $(12,022)
========
</TABLE>
(d) Foreign cash held at December 31, 1995:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
- --------------- ---------- ----------
<S> <C> <C>
A$ 41,499 $ 30,713 $ 30,871
AS 2,867,949 292,622 284,784
BF 2,011,544 69,316 68,350
C$ 1,105,635 810,643 810,643
DK 2,166,344 395,541 390,895
DM 403,413 282,348 281,851
FF 709,777 143,825 145,134
IP 8,881 14,328 14,234
IL 965,009,856 599,440 607,956
(Yen)11,249,254 120,272 109,050
SP 10,449,294 85,210 86,134
SK 8,191,035 1,230,176 1,235,937
---------- ----------
$4,074,434 $4,065,839
========== ==========
</TABLE>
(e) The following abbreviations are used in the portfolio and footnotes:
A$--Australian Dollar
AS--Austrian Schilling
BF--Belgian Franc
C$--Canadian Dollar
DK--Danish Krone
DM--Deutsche Mark
FF--French Franc
IP--Irish Punt
IL--Italian Lira
(Yen)--Japanese Yen
(Pounds)--Pound Sterling
SP--Spanish Peseta
SK--Swedish Krona
$--U.S. Dollar
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
93
<PAGE>
INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$37,083,949).................................................... $40,369,075
Cash denominated in foreign currencies (identified cost
$4,074,434)..................................................... 4,065,839
Cash............................................................. 43,747
Receivables:
Interest......................................................... 1,411,750
Unrealized appreciation on foreign currency contracts............ 463,972
Unamortized organization expense (Note 2)........................ 48,802
-----------
Total assets................................................... 46,403,185
-----------
LIABILITIES:
Payables:
Investment securities purchased.................................. 1,428,035
Organization..................................................... 41,402
Administrator.................................................... 28,867
Adviser.......................................................... 11,213
Transfer agent................................................... 2,050
Custodian........................................................ 1,454
Directors........................................................ 548
Accrued expenses................................................. 19,286
Unrealized depreciation on foreign currency contracts............ 475,994
-----------
Total liabilities.............................................. 2,008,849
-----------
Net assets....................................................... $44,394,336
===========
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized Institutional Class.................................. $ 3,978
Institutional Service Class...................................... 1
Additional paid-in capital....................................... 40,140,817
Accumulated undistributed net investment income.................. 626,008
Accumulated undistributed net realized gain on investments....... 287,048
Accumulated undistributed net realized gain on foreign currency
transactions.................................................... 70,073
Net unrealized appreciation on investments....................... 3,285,126
Net unrealized depreciation on translation of assets and
liabilities in foreign currencies............................... (18,715)
-----------
Net assets....................................................... $44,394,336
===========
Institutional Class
Net assets applicable to outstanding shares...................... $44,388,273
===========
Shares of capital stock outstanding.............................. 3,978,202
===========
Net asset value per share outstanding............................ $ 11.16
===========
Institutional Service Class
Net assets applicable to outstanding shares...................... $ 6,063
===========
Shares of capital stock outstanding.............................. 544
===========
Net asset value per share outstanding............................ $ 11.14
===========
</TABLE>
STATEMENT OF OPERATIONS
For the period January 1, 1995
(Commencement of operations) through
December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest (a)..................................................... $3,069,488
----------
Expenses: (Note 2)
Administration (Note 3).......................................... 203,021
Advisory (Note 3)................................................ 121,813
Registration..................................................... 21,274
Custodian........................................................ 13,505
Auditing......................................................... 13,264
Transfer agent................................................... 12,706
Amortization of organization expense............................. 12,198
Legal............................................................ 7,547
Shareholder communication........................................ 3,967
Directors........................................................ 1,807
Service (Note 3)................................................. 2
Miscellaneous.................................................... 6,813
----------
Total expenses before
reimbursement................................................. 417,917
Expense reimbursement from Administrator (Note 3)................ (31,528)
----------
Net expenses................................................... 386,389
----------
Net investment income............................................ 2,683,099
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain from:
Security transactions............................................ 781,828
Foreign currency transactions.................................... 89,561
----------
Net realized gain on investments and foreign currency
transactions.................................................... 871,389
----------
Net unrealized appreciation (depreciation) on investments:
Security transactions............................................ 3,285,126
Translation of assets and liabilities in foreign currencies...... (18,715)
----------
Net unrealized gain on investments and
foreign currencies.............................................. 3,266,411
----------
Net realized and unrealized gain on investments and foreign
currency transactions........................................... 4,137,800
----------
Net increase in net assets resulting from operations............. $6,820,899
==========
</TABLE>
- --------
(a) Interest recorded net of foreign withholding taxes of $79,308.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
94
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period January 1, 1995 (Commencement of operations) through
December 31, 1995
<TABLE>
<CAPTION>
1995
-----------
<S> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income............................................ $ 2,683,099
Net realized gain on investments................................. 781,828
Net realized gain on foreign currency transactions............... 89,561
Net unrealized appreciation on investments....................... 3,285,126
Net unrealized depreciation on translation of assets and liabil-
ities in foreign currencies..................................... (18,715)
-----------
Net increase in net assets resulting from operations............. 6,820,899
-----------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class............................................. (2,076,295)
Institutional Service Class..................................... (284)
From net realized gain on investments and foreign currency
transactions:
Institutional Class............................................. (494,713)
Institutional Service Class..................................... (67)
-----------
Total dividends and distributions to shareholders............. (2,571,359)
-----------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class............................................. 895,688
Institutional Service Class..................................... 5,756
Net asset value of shares issued to shareholders in reinvestment
of dividends and distributions:
Institutional Class............................................. 2,571,004
Institutional Service Class..................................... 349
-----------
3,472,797
Cost of shares redeemed:
Institutional Service Class..................................... (38)
-----------
Increase in net assets derived from capital share transac-
tions.......................................................... 3,472,759
-----------
Net increase in net assets...................................... 7,722,299
NET ASSETS:
Beginning of period.............................................. 36,672,037
-----------
End of period.................................................... $44,394,336
===========
Accumulated undistributed net investment income.................. $ 626,008
===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
95
<PAGE>
INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL
INSTITUTIONAL SERVICE
CLASS CLASS
------------- -------------
JANUARY 1, 1995(A)
THROUGH
DECEMBER 31, 1995
---------------------------
<S> <C> <C>
Net asset value at beginning of period............ $ 10.00 $10.00
------- ------
Net investment income............................. 0.70 0.70
Net realized and unrealized gain on investments... 1.12 1.10
Net realized and unrealized gain on foreign
currency transactions............................ 0.02 0.02
------- ------
Total from investment operations.................. 1.84 1.82
------- ------
Less dividends and distributions:
From net investment income........................ (0.55) (0.55)
From net realized gain on investments and foreign
currency transactions............................ (0.13) (0.13)
------- ------
Total dividends and distributions................. (0.68) (0.68)
------- ------
Net asset value at end of period.................. $ 11.16 $11.14
======= ======
Total investment return........................... 18.46% 18.26%
Ratios (to average net assets)/Supplemental Data:
Net investment income............................ 6.61% 6.36%
Net expenses..................................... 0.95% 1.20%
Expenses (before reimbursement).................. 1.03% 1.28%
Portfolio turnover rate........................... 92% 92%
Net assets at end of period (in 000's)............ $44,388 $ 6
</TABLE>
- --------
(a) Commencement of operations.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
96
<PAGE>
---------------------
Money Market Fund
---------------------
The MainStay Institutional Money Market Fund provided a total return of 5.63%
(Institutional Class shares) and 5.46% (Service Class shares), for the twelve
months ended December 31, 1995, compared to a total return of 5.75% for the
average Lipper institutional money market fund(S) (134 funds) over the same
period (12/31/94 to 12/31/95).
While short-term interest rates climbed steadily in 1994, during much of 1995,
uncertainty reigned. Unlike 1994, when the Federal Reserve Board entered the
market on six occasions, and each time raised its targeted overnight lending
rate, the Fed entered the market only three times in 1995, raising rates once
and lowering them twice.
The most dramatic effect of the Fed's change in direction was the influence on
the shape of the money market yield curve (defined as the yield differential
between the 12 month Treasury bill and the 3 month Treasury bill). At the
beginning of the year, the curve sloped upwards by 147 basis points; by year end
it had flattened so that its slope stood only at 6 basis points. This extreme
flattening, which had been largely completed by mid-year, made timing the
critical factor in performance during 1995. Typically, when rates are expected
to fall, the portfolio's duration would be extended in order to make the
portfolio more immune to interest rate changes. However, a flat yield curve
increases the opportunity cost of extending since longer-term maturities are
more risky, yet the yield is the same as those on shorter maturity investments.
We sought to combat this volatile environment by varying our strategies
throughout the year. We began by lengthening the average maturity of the Fund by
15 days, to 40 days by midyear. This strategy helped the performance of the Fund
when the Fed lowered short term rates in July. By year end we had again extended
our duration by 15 days, up to 55 days. This action again helped the Fund during
the fourth quarter when the Fed entered the market and lowered rates, and hurt
the Fund from August to November when the Fed was absent. In addition to varying
our duration, we also modified our maturity structure and purchased less liquid
securities at a yield premium. During the fourth quarter, the spread between
LIBOR and Treasuries increased, making products priced off of LIBOR cheaper
versus products priced off of Treasuries. If this spread continues to widen,
these securities may underperform; if the spread becomes tighter, they may
outperform securities priced versus Treasuries.
For 1996, we believe that the Federal Reserve may lower short term rates
modestly a couple more times during the first half of 1996. By historical
standards, short-term real interest rates remain high (real interest rates are
the "inflation adjusted" rates). In addition, recent numbers suggest that the
economy may be slowing, and with inflation seemingly in tow, the Fed may have
the room to slacken its monetary belt. We will continue to adjust our duration,
maturity structure, and sector allocations according to our interest rate view
and market conditions.
Dave Clement, CFA
Portfolio Manager
YIELD CURVE When the 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."
FLATTENED YIELD CURVE Generally, short-term rates are lower than intermediate-
or long-term rates, resulting in a positive yield curve. If there is little
difference between short-term and long-term rates, it is called a flat yield
curve.
LIBOR The London Interbank Offered Rate: the rate that the most creditworthy
international banks dealing in eurodollars charge each other for large loans.
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
(S) Lipper Analytical Services Inc. is an independent monitor of mutual fund
performance. Results do not reflect any deduction of sales charges and are
based on total returns with capital gains and dividends reinvested.
97
<PAGE>
$10,000 Invested in Mainstay Institutional
Money Market Fund vs
Lipper Institutional Money Market Average
Institutional Class Shares
- ---------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET LIPPER INSTITUTIONAL
FUND MONEY MARKET AVERAGE
<S> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $10,595 $10,601
4Q 1992 $10,983 $10,986
4Q 1993 $11,300 $11,307
4Q 1994 $11,738 $11,759
4Q 1995 $12,398 $12,435
- ---------------------------------------------------------------------
</TABLE>
$10,000 Invested in Mainstay Institutional
Money Market Fund vs
Lipper Institutional Money Market Average
Service Class Shares
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET LIPPER INSTITUTIONAL
FUND MONEY MARKET AVERAGE
<S> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $10,595 $10,601
4Q 1992 $10,983 $10,986
4Q 1993 $11,300 $11,307
4Q 1994 $11,738 $11,759
4Q 1995 $12,380 $12,435
- --------------------------------------------------------------------------------
</TABLE>
[ ] Money Market Fund [ ] Lipper Institutional Money Market Average
Source: (C) Ibbotson Associates EnCorr Software
These graphs assume a $10,000 investment made on 1/2/91.
<TABLE>
<CAPTION>
Total Return* SEC Average Annual Total Return*
Performance as of December 31, 1995 as of December 31, 1995
- -------------------------------------------------------------------------------------------------------------------------
1995 One Year Five Year Since Inception
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market Fund Institutional Class 5.63% 5.63% 4.39% 4.39%
Money Market Fund Service Class** 5.46% 5.46% 4.36% 4.36%
Average Lipper Institutional Money Market Fund 5.75% 5.75% 4.45% 4.45%
</TABLE>
Year-By-Year Performance
- --------------------------------------------------------------------------------
Institutional Class Shares
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
Total Return % *
1991 5.95
1992 3.66
1993 2.89
1994 3.88
1995 5.63
</TABLE>
Portfolio Composition (% of net assets as of December 31, 1995)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Commercial Paper 77.45%
MM Bankers Acceptances 8.64%
Medium Term Notes 6.15%
Cash 0.45%
Other 7.31%
</TABLE>
- --------------------------------------------------------------------------------
** Performance figures for the Service Class, first offered to the public on
1/1/95, include the historical performance of the Institutional Class from
the Funds' inception (1/2/91) up to December 31, 1994. Performance figures
for these two Classes after this date will vary based on differences in their
expense structures.
* The total return reflects the annual return on an investment including
appreciation and dividends or interest. Total returns shown herein include
the change in share price and reinvestment of capital gains distributions and
dividends, and, for the Service Class shares, include the service fee of
.25%.
The Money Market Fund-Institutional Class had a 7-day effective yield of
5.48% with a 7-day average yield of 5.34%, both as of 12/27/95. The Money
Market Fund-Service Class had a 7-day effective yield of 5.21% with a 7-day
average yield of 5.08%, both as of 12/27/95. The Administrator has agreed to
assume a portion of the expenses for these Funds. Had certain expenses not
been assumed by the Administrator, the 7-day effective yield and the 7-day
average yield would have been 5.34% and 5.21%, respectively, for the
Institutional Class and 5.08% and 4.95%, respectively, for the Service Class.
Investments in the Money Market Fund are neither insured nor guaranteed by
the U.S. Government, and there is no assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that upon redemption, shares may be worth
more or less than their original cost.
The Institutional Class shares are sold with no sales charge. The Service
Class shares, first offered 1/1/95, are sold with no initial or contingent
deferred sales charge, but are subject to an annual shareholder service fee
of .25%.
98
<PAGE>
Top 10 Holdings
(% of net assets as of December 31, 1995)
1. Weyerhauser Real Estate, 2/13/96, 5.63% 4.84%
2. John Deere Capital Corp., 1/26/96, 5.75% 4.23%
3. Sanwa Business Credit Corp., 2/23/96, 5.87% 4.21%
4. Morgan Stanley Group, Inc. 4/1/96, 5.50% 4.19%
5. AT&T Capital Corp., 1/29/96, 5.80% 3.98%
6. Lubrizol Corp., 1/23/96, 5.72% 3.53%
7. Bell South Capital Funding Corp. 1/5/96, 5.73% 3.03%
8. GTE South Inc., 2/7/96, 5.60% 3.03%
9. Brown-Forman Corp. 3/13/96, 5.50% 2.97%
10. Boatmens National Bank of St. Louis, 6/12/96, 5.91% 2.83%
Top 5 Industry Holdings
(% of net assets as of December 31, 1995)
1. Banks 19.20%
2. Utilities 11.12%
3. Consumer Financial Services 10.34%
4. Utilities-Telephone 9.81%
5. Capital Goods 6.99%
Average Maturity 55 Days
99
<PAGE>
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
SHORT-TERM
INVESTMENTS (99.6%)+
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
------------------------
<S> <C> <C>
BANK NOTE (2.8%)
Boatmens National Bank of
St. Louis
5.91%, due 6/12/96 (b)(c).............................. $2,000,000 $ 2,000,000
-----------
BANKERS' ACCEPTANCES (8.6%)
Huntington National Bank, Columbus
5.64%, due 1/16/96..................................... 1,000,000 997,650
Mellon Bank, N.A. Pittsburgh
5.55%, due 4/26/96..................................... 1,000,000 982,117
Morgan Guaranty & Trust Co.
5.53%, due 3/26/96..................................... 1,857,143 1,832,894
National City Bank, Cleveland
5.75%, due 1/18/96..................................... 1,000,000 997,285
Wachovia Bank of Georgia,
N.A., Atlanta
5.63%, due 1/16/96..................................... 1,300,000 1,296,950
-----------
6,106,896
-----------
CORPORATE BONDS (4.5%)
PepsiCo Inc.
7.87%, due 8/15/96 (c)................................. 1,650,000 1,668,170
Transamerica Finance Corp.
5.85%, due 7/15/96 (c)................................. 1,500,000 1,498,598
-----------
3,166,768
-----------
MEDIUM-TERM NOTES (6.2%)
Beneficial Corp.
5.86%, due 12/2/96 (b)(c).............................. 2,000,000 1,998,972
Ford Motor Corp.
5.40%, due 2/5/96 (c).................................. 1,000,000 998,743
PacifiCorp
8.49%, due 8/15/96 (c)................................. 1,325,000 1,344,263
-----------
4,341,978
-----------
COMMERCIAL PAPER (77.5%)
AT&T Capital Corp.
5.80%, due 1/29/96..................................... 2,825,000 2,812,256
BellSouth Capital Funding Corp.
5.73%, due 1/5/96...................................... 2,140,000 2,138,638
Beneficial Corp.
5.92%, due 1/2/96...................................... 1,812,000 1,811,702
BHP Finance (USA) Inc.
5.64%, due 3/5/96...................................... 2,000,000 1,979,947
Brown-Forman Corp.
5.50%, due 3/13/96..................................... 2,123,000 2,099,647
Campbell Soup Co.
5.58%, due 2/1/96...................................... 885,000 880,748
Cargill Inc.
5.52%, due 3/5/96...................................... 818,000 809,973
5.70%, due 1/12/96..................................... 2,000,000 1,996,517
Cooperative Association of Tractor Dealers Inc.
5.50%, due 3/22/96..................................... 1,500,000 1,481,438
5.75%, due 1/3/96...................................... 1,650,000 1,649,473
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
-------------------------
<S> <C> <C>
COMMERCIAL PAPER (Continued)
Dealers Capital Access Trust Inc.
5.80%, due 1/4/96..................................... $1,950,000 $ 1,949,057
Ford Motor Credit Co.
5.76%, due 1/4/96..................................... 2,000,000 1,999,040
Frontier Corp.
5.67%, due 3/14/96 (a)................................ 1,500,000 1,482,754
5.73%, due 2/22/96 (a)................................ 2,000,000 1,983,447
GTE South Inc.
5.60%, due 2/7/96..................................... 2,150,000 2,137,626
Heinz (H.J.) Co.
5.60%, due 2/2/96..................................... 1,150,000 1,144,276
J.C. Penney Funding Corp.
5.65%, due 2/14/96.................................... 2,000,000 1,986,189
John Deere Capital Corp.
5.75%, due 1/26/96.................................... 3,000,000 2,988,021
Lubrizol Corp.
5.72%, due 1/23/96.................................... 2,500,000 2,491,261
McGraw-Hill Companies Inc. (The)
5.38%, due 8/16/96.................................... 2,000,000 1,931,853
Morgan Stanley Group Inc.
5.50%, due 4/1/96..................................... 3,000,000 2,958,292
National City Credit Corp.
5.68%, due 1/12/96.................................... 1,000,000 998,264
National Rural Utilities Cooperative Finance Corp.
5.50%, due 3/12/96.................................... 2,000,000 1,978,306
Province of Alberta
5.58%, due 1/12/96.................................... 900,000 898,465
Sanwa Business Credit Corp.
5.87%, due 2/23/96.................................... 3,000,000 2,974,074
Southern Co.
5.72%, due 1/17/96 (a)................................ 1,750,000 1,745,551
Tampa Electric Co.
5.70%, due 1/10/96.................................... 2,000,000 1,997,150
Weyerhauser Real Estate Co.
5.63%, due 2/13/96.................................... 3,440,000 3,416,916
-----------
54,720,881
-----------
Total Short-Term Investments (Amortized Cost
$70,336,523) (d)...................................... 99.6% 70,336,523
Cash and Other Assets,
Less Liabilities...................................... 0.4 316,196
---------- -----------
Net Assets............................................. 100.0% $70,652,719
========== ===========
</TABLE>
- --------
(a) May be sold to institutional investors only.
(b) Floating rate. Rate shown is the rate in effect at December 31, 1995.
(c) Coupon interest bearing security.
(d) The cost stated also represents the aggregate cost for Federal income tax
purposes.
- --------
+Percentages indicated are based on Fund net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
100
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
The table below sets forth the diversification of Money
Market Fund investments by industry.
SHORT-TERM INVESTMENTS
<TABLE>
<CAPTION>
AMORTIZED
COST PERCENT +
-----------------------
<S> <C> <C>
Auto Manufacturing........................................ $ 998,743 1.4%
Banks..................................................... 13,561,989 19.2
Beverages................................................. 2,099,647 3.0
Brokerage................................................. 2,958,292 4.2
Capital Goods............................................. 4,937,079 7.0
Conglomerates............................................. 1,668,170 2.4
Consumer Financial Services............................... 7,308,312 10.4
Energy.................................................... 1,979,947 2.8
Food...................................................... 4,831,513 6.8
Foreign Government........................................ 898,465 1.3
Machinery................................................. 3,130,911 4.4
Oil Services.............................................. 2,491,261 3.5
Paper & Forest Products................................... 3,416,916 4.9
Publishing................................................ 1,931,853 2.7
Retail.................................................... 1,986,189 2.8
Utilities................................................. 7,858,632 11.1
Utilities-Electric........................................ 1,344,263 1.9
Utilities-Telephone....................................... 6,934,341 9.8
----------- -----
70,336,523 99.6
Cash and Other Assets,
Less Liabilities......................................... 316,196 0.4
----------- -----
Net Assets................................................ $70,652,719 100.0%
=========== =====
</TABLE>
- --------
+Percentages indicated are based on Fund net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
101
<PAGE>
MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (amortized cost
$70,336,523)..................................................... $70,336,523
Cash.............................................................. 299,848
Receivables:
Fund shares sold.................................................. 200,000
Interest.......................................................... 168,804
-----------
Total assets.................................................... 71,005,175
-----------
LIABILITIES:
Payables:
Administrator..................................................... 6,621
Adviser........................................................... 5,820
Transfer agent.................................................... 4,732
Custodian......................................................... 2,897
Directors......................................................... 429
Accrued expenses.................................................. 21,968
Dividend payable.................................................. 309,989
-----------
Total liabilities............................................... 352,456
-----------
Net assets........................................................ $70,652,719
===========
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 12 billion shares
authorized
Institutional Class............................................... $ 67,868
Institutional Service Class....................................... 2,784
Additional paid-in capital........................................ 70,581,938
Accumulated undistributed net realized gain on investments........ 129
-----------
Net assets........................................................ $70,652,719
===========
Institutional Class
Net assets applicable to outstanding shares....................... $67,868,617
===========
Shares of capital stock outstanding............................... 67,868,488
===========
Net asset value per share outstanding............................. $ 1.00
===========
Institutional Service Class
Net assets applicable to outstanding shares....................... $ 2,784,102
===========
Shares of capital stock outstanding............................... 2,784,102
===========
Net asset value per share outstanding............................. $ 1.00
===========
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest........................................................... $3,585,195
----------
Expenses: (Note 2)
Administration (Note 3)............................................ 239,673
Advisory (Note 3).................................................. 59,918
Registration....................................................... 31,217
Transfer agent..................................................... 29,439
Legal.............................................................. 17,236
Custodian.......................................................... 15,895
Auditing........................................................... 15,616
Shareholder communication.......................................... 10,844
Amortization of organization expense............................... 9,388
Directors.......................................................... 2,819
Service (Note 3)................................................... 2,449
Miscellaneous...................................................... 3,760
----------
Total expenses before
reimbursement................................................... 438,254
Expense reimbursement from Administrator (Note 3).................. (136,576)
----------
Net expenses..................................................... 301,678
----------
Net investment income.............................................. 3,283,517
----------
REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments................................... 129
----------
Net increase in net assets resulting from operations............... $3,283,646
==========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
102
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and December 31, 1994
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income........................... $ 3,283,517 $ 2,473,884
Net realized gain on investments................ 129 1,926
------------- -------------
Net increase in net assets resulting from
operations..................................... 3,283,646 2,475,810
------------- -------------
Dividends to shareholders:
From net investment income:
Institutional Class............................ (3,234,067) (2,473,884)
Institutional Service Class.................... (51,376) --
------------- -------------
Total dividends to shareholders............... (3,285,443) (2,473,884)
------------- -------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class............................ 193,425,248 303,367,894
Institutional Service Class.................... 4,420,373 --
Net asset value of shares issued to
shareholders in reinvestment of dividends:
Institutional Class............................ 3,150,373 2,147,791
Institutional Service Class.................... 40,688 --
------------- -------------
201,036,682 305,515,685
Cost of shares redeemed:
Institutional Class............................ (193,810,740) (316,244,412)
Institutional Service Class.................... (1,677,059) --
------------- -------------
Increase (decrease) in net assets derived from
capital share transactions.................... 5,548,883 (10,728,727)
------------- -------------
Net increase (decrease) in net assets.......... 5,547,086 (10,726,801)
NET ASSETS:
Beginning of year............................... 65,105,633 75,832,434
------------- -------------
End of year..................................... $ 70,652,719 $ 65,105,633
============= =============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
103
<PAGE>
MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL
INSTITUTIONAL SERVICE
CLASS CLASS INSTITUTIONAL CLASS
------------- ------------- ---------------------------------------------
YEAR ENDED DECEMBER 31 JANUARY 2, 1991(A)
----------------------------------------------------- THROUGH
1995 1994 1993 1992 DECEMBER 31, 1991
--------------------------- ------- ------- ------- ------------------
<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... 0.05 0.05 0.04 0.03 0.03 0.06
------- ------ ------- ------- ------- --------
Less dividends from net
investment income...... (0.05) (0.05) (0.04) (0.03) (0.03) (0.06)
------- ------ ------- ------- ------- --------
Net asset value at end
of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ====== ======= ======= ======= ========
Total investment
return................. 5.63% 5.46% 3.88% 2.89% 3.66% 5.95%
Ratios (to average net
assets)/ Supplemental
Data:
Net investment income.. 5.48% 5.23% 3.89% 2.85% 3.64% 5.84%
Net expenses........... 0.50% 0.75% 0.50% 0.45% 0.45% 0.45%
Expenses (before
reimbursement)........ 0.73% 0.98% 0.68% 0.67% 0.65% 0.65%
Net assets at end of
period (in 000's)...... $67,869 $2,784 $65,106 $75,832 $71,573 $126,690
</TABLE>
- --------
(a) Commencement of operations.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
104
<PAGE>
----------------------
Short-Term Bond Fund
----------------------
For 1995, the Institutional Short-Term Bond Fund returned 10.27% and 10.07% for
Institutional Class and Service Class shares, respectively. These results were
slightly behind the average Lipper short investment grade debt fund(S) return of
10.84% (among 86 funds in the Lipper category from 12/31/94 to 12/31/95) and the
Salomon 1-3 Year Treasury Index+ return of 10.73% for 1995.
The Institutional Short-Term Bond Fund returned 2.30% and 2.31% for the fourth
quarter of 1995 for Institutional Class and Service Class shares, respectively,
versus the average Lipper short investment grade debt fund's return of 2.51% and
the Salomon 1-3 Year Treasury Index return of 2.47% for the fourth quarter.
1995's economic environment of low inflation, moderate economic growth and
fiscal restraint helped drive interest rates down and bond prices up. During
1995, the Short-Term Bond Fund's holdings in corporates and asset-backed
securities were positive factors in the Fund's double digit returns. Compared to
the other Funds in the Lipper category, the Fund did not hold short-term higher
yield securities of foreign bonds which hurt the Fund's overall performance for
the year. The average maturity of holdings in the Fund is less than three years.
Looking at 1996, the Fund is positioned with exposure to corporate bonds, an
increased position in asset-backed securities, and no exposure to mortgage-
backed securities. The Fund's duration matches the Index.
Ravi Akhoury
Edward Munshower
Portfolio Managers
$10,000 Invested in Mainstay Institutional
Short-Term Bond Fund vs
Salomon 1-3 Year Treasury Index
Institutional Class Shares
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Short-Term SB 1-3
Bond Fund Yr Treasury Index
- ------- ---------- -----------------
<S> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $11,130 $11,164
4Q 1992 $11,791 $11,867
4Q 1993 $12,459 $12,507
4Q 1994 $12,473 $12,574
4Q 1995 $13,754 $13,923
</TABLE>
- --------------------------------------------------------------------------------
[ ] Short-Term Bond Fund [ ] Salomon 1-3 Year Treasury Index
Source: (C) Ibbotson Associates EnCorr Software
The graphs assume a $10,000 investment made on 1/2/91.
$10,000 Invested in Mainstay Institutional
Short-Term Bond Fund vs
Salomon 1-3 Year Treasury Index
Service Class Shares
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Short-Term SB 1-3
Bond Fund Yr Treasury Index
- ------- ---------- -----------------
<C> <C> <C>
1/91 $10,000 $10,000
4Q 1991 $11,130 $11,164
4Q 1992 $11,791 $11,867
4Q 1993 $12,459 $12,507
4Q 1994 $12,473 $12,574
4Q 1995 $13,727 $13,923
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
(S) Lipper Analytical Services Inc. is an independent monitor of mutual fund
performance. Results do not reflect any deduction of sales charges and are
based on total returns with capital gains and dividends reinvested.
+ The Salomon 1-3 Year Treasury Index is an unmanaged index generally
considered representative of the U.S. short-term bond market.
105
<PAGE>
<TABLE>
<CAPTION>
Total Return* SEC Average Annual Total Return*
Performance as of December 31, 1995 as of December 31, 1995
- -------------------------------------------------------------------------------------------------------------------------
1995 One Year Five Year Since Inception
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Short-Term Bond Fund Institutional Class 10.27% 10.27% 6.58% 6.58%
Short-Term Bond Fund Service Class** 10.07% 10.07% 6.54% 6.54%
Average Lipper Short-Term Investment Grade Fund 10.84% 10.84% 7.14% 7.14%
Salomon 1-3 Year Treasury Index 10.73% 10.73% 6.84% 6.84%
</TABLE>
Year-By-Year Performance
- --------------------------------------------------------------------------------
[BAR CHART APPEARS HERE]
<TABLE>
<CAPTION>
Institutional Class Shares
Total Return %*
--------------
<S> <C>
1991 11.30
1992 5.94
1993 5.67
1994 0.11
1995 10.27
</TABLE>
Portfolio Composition (% of net assets as of December 31, 1995)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Domestic Bonds - Non-Convertible 12.71%
U.S. Government 56.25%
Cash & Equivalents 0.49%
Other 30.55%
</TABLE>
Top 10 Holdings
(% of net assets as of December 31, 1995)
1. US Treasury Note, 6.125%, due 5/15/98 15.88%
2. US Treasury Note, 4.75%, due 8/31/98 10.68%
3. US Treasury Note, 7.375%, due 11/15/97 8.70%
4. US Treasury Note, 7.25%, due 2/15/98 7.99%
5. US Treasury Note, 4.75%, due 10/31/98 6.83%
6. Standard Credit Card Trust, 9.375%, due 9/10/98 4.56%
7. US Treasury Note, 8.125%, due 2/15/98 4.52%
8. Old Kent Bank & Trust Corp., 7.86%, due 12/16/96 3.93%
9. BankAmerica, 7.25%, due 2/3/97 3.91%
10. First Fidelity Bancorp, 8.50%, due 4/1/98 3.28%
Top 5 Industry Holdings
(% of net assets as of December 31, 1995)
1. US Government 56.25%
2. Banks 15.55%
3. Auto Loans 11.31%
4. Credit Card Receivables 10.33%
5. First Mortgage Loans 3.27%
Dollar Weighted Average Maturity 1.9 Years
- --------------------------------------------------------------------------------
** Performance figures for the Service Class, first offered to the public on
1/1/95, include the historical performance of the Institutional Class from
the Funds' inception (1/2/91) up to December 31, 1994. Performance figures
for these two Classes after this date will vary based on differences in their
expense structures.
* The total return reflects the annual return on an investment including
appreciation and dividends or interest. Total returns shown herein include
the change in share price and reinvestment of capital gains distributions and
dividends, and, for the Service Class shares, include the service fee of
.25%.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that upon redemption, shares may be worth
more or less than their original cost.
The Institutional Class shares are sold with no sales charge. The Service
Class shares, first offered 1/1/95, are sold with no initial or contingent
deferred sales charge, but are subject to an annual shareholder service fee
of .25%.
106
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
LONG-TERM INVESTMENTS (98.5%)+
ASSET-BACKED SECURITIES (30.5%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-------------------------
<S> <C> <C>
AUTO LEASE (3.0%)
Ford Credit Auto Lease Trust
Series 1995-1 Class A2
6.35%, due 11/15/98................................... $ 1,550,000 $ 1,562,601
-----------
AUTO LOANS (11.3%)
Case Equipment Loan Trust
Series 1994-A Class A2
4.65%, due 8/15/99.................................... 594,223 589,766
Ford Credit Grantor Trust
Series 1995-B Class A
5.90%, due 10/15/00................................... 1,021,332 1,025,825
NationsBank Auto Grantor Trust
Series 1995-A Class A
5.85%, due 6/15/02.................................... 1,470,519 1,476,034
Old Kent Auto Receivables
Series 1995-A Class A
6.20%, due 8/15/01.................................... 1,542,353 1,551,515
Union Acceptance Corp.
Series 1995-B Class A
6.575%, due 7/10/02................................... 1,225,423 1,241,121
-----------
5,884,261
-----------
BOAT LOANS (1.1%)
Chrysler Financial Corp.
Grantor Trust
Series 11-A Class A
8.90%, due 8/15/97.................................... 561,838 575,715
-----------
CREDIT CARD RECEIVABLES (10.3%)
American Express Master Trust
Series 1992-1 Class A
6.05%, due 6/15/98.................................... 1,550,000 1,562,865
People's Bank Credit Card
Master Trust
Series 1994-1 Class A
5.10%, due 8/15/01.................................... 1,450,000 1,443,200
Standard Credit Card Trust
Series 1990-6 Class A
9.375%, due 9/10/98................................... 2,250,000 2,370,240
-----------
5,376,305
-----------
FIRST MORTGAGE LOANS (3.3%)
Resolution Trust Corp.
Series 1992-C4 Class A1
8.15%, due 6/25/24.................................... 1,676,545 1,701,693
-----------
HOME EQUITY LOANS (1.5%)
Green Tree Home Improvement Loan Trust
Series 1995-C Class A1
6.20%, due 7/15/20.................................... 789,243 791,713
-----------
Total Asset-Backed Securities
(Cost $15,813,634).................................... 15,892,288
-----------
</TABLE>
CORPORATE BONDS (12.7%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------------
<S> <C> <C>
BANKS (12.7%)
BankAmerica Corp.
7.25%, due 2/3/97.................................. $ 2,000,000 $ 2,036,820
Citicorp
8.42%, due 2/12/97................................. 800,000 825,144
First Fidelity Bancorp
8.50%, due 4/1/98.................................. 1,610,000 1,706,278
Old Kent Bank & Trust Co., CD
7.86%, due 12/16/96................................ 2,000,000 2,044,460
-----------
Total Corporate Bonds
(Cost $6,486,452).................................. 6,612,702
-----------
U.S. GOVERNMENT (55.3%)
UNITED STATES TREASURY
NOTES (55.3%)
4.75%, due 8/31/98................................. 5,625,000 5,559,075
4.75%, due 10/31/98................................ 3,600,000 3,553,308
6.125%, due 5/15/98................................ 8,100,000 8,262,000
6.50%, due 8/15/97................................. 350,000 357,000
7.25%, due 2/15/98................................. 4,000,000 4,159,360
7.375%, due 11/15/97............................... 4,360,000 4,524,852
8.125%, due 2/15/98................................ 2,225,000 2,352,938
-----------
28,768,533
-----------
Total U.S. Government
(Cost $28,309,216)................................. 28,768,533
-----------
Total Long-Term Investments
(Cost $50,609,302)................................. 51,273,523
-----------
SHORT-TERM
INVESTMENT (1.0%)
U.S. GOVERNMENT (1.0%)
United States Treasury Note
9.25%, due 1/15/96................................. 500,000 500,705
-----------
Total Short-Term Investment
(Cost $501,293).................................... 500,705
-----------
Total Investments
(Cost $51,110,595) (a)............................. 99.5% 51,774,228(b)
Cash and Other Assets,
Less Liabilities................................... 0.5 256,076
----------- -----------
Net Assets.......................................... 100.0% $52,030,304
=========== ===========
</TABLE>
- --------
(a) The cost stated also represents the aggregate cost for Federal income tax
purposes.
(b) At December 31, 1995 net unrealized appreciation was $663,633, 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 $674,811 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $11,178.
- --------
+Percentages indicated are based on Fund net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
107
<PAGE>
SHORT-TERM BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$51,110,595).................................................... $51,774,228
Cash............................................................. 13,197
Receivables:
Interest......................................................... 725,998
Fund shares sold................................................. 69,455
-----------
Total assets................................................... 52,582,878
-----------
LIABILITIES:
Payables:
Fund shares redeemed............................................. 481,152
Administrator.................................................... 11,629
Adviser.......................................................... 6,687
Transfer agent................................................... 4,435
Custodian........................................................ 1,576
Directors........................................................ 394
Accrued expenses................................................. 20,456
Dividend payable................................................. 26,245
-----------
Total liabilities.............................................. 552,574
-----------
Net assets....................................................... $52,030,304
===========
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized
Institutional Class.............................................. $ 5,256
Institutional Service Class...................................... 117
Additional paid-in capital....................................... 57,748,909
Accumulated undistributed net investment income.................. 26,086
Accumulated net realized loss on investments..................... (6,413,697)
Net unrealized appreciation on investments....................... 663,633
-----------
Net assets....................................................... $52,030,304
===========
Institutional Class
Net assets applicable to outstanding shares...................... $50,902,017
===========
Shares of capital stock outstanding.............................. 5,255,934
===========
Net asset value per share outstanding............................ $ 9.68
===========
Institutional Service Class
Net assets applicable to outstanding shares...................... $ 1,128,287
===========
Shares of capital stock outstanding.............................. 116,664
===========
Net asset value per share outstanding............................ $ 9.67
===========
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest........................................................... $3,682,732
----------
Expenses: (Note 2)
Administration (Note 3)............................................ 237,578
Advisory (Note 3).................................................. 79,193
Transfer agent..................................................... 26,514
Registration....................................................... 21,993
Legal.............................................................. 18,681
Auditing........................................................... 15,199
Custodian.......................................................... 9,696
Shareholder communication.......................................... 7,182
Amortization of organization expense............................... 6,368
Directors.......................................................... 2,485
Service (Note 3)................................................... 1,043
Miscellaneous...................................................... 6,315
----------
Total expenses before
reimbursement................................................... 432,247
Expense reimbursement from Administrator (Note 3).................. (114,433)
----------
Net expenses..................................................... 317,814
----------
Net investment income.............................................. 3,364,918
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments................................... (33,269)
Net change in unrealized depreciation on investments............... 1,869,072
----------
Net realized and unrealized gain on investments.................... 1,835,803
----------
Net increase in net assets resulting from operations............... $5,200,721
==========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
108
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
SHORT-TERM BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1995 and December 31, 1994
<TABLE>
<CAPTION>
1995 1994
------------ -------------
<S> <C> <C>
DECREASE IN NET ASSETS:
Operations:
Net investment income............................. $ 3,364,918 $ 6,170,021
Net realized loss on investments.................. (33,269) (5,730,361)
Net change in unrealized
appreciation(depreciation) on investments........ 1,869,072 (531,527)
------------ -------------
Net increase (decrease) in net assets resulting
from operations.................................. 5,200,721 (91,867)
------------ -------------
Dividends to shareholders:
From net investment income:
Institutional Class.............................. (3,241,928) (5,881,369)
Institutional Service Class...................... (70,366) --
------------ -------------
Total dividends to shareholders................. (3,312,294) (5,881,369)
------------ -------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class.............................. 25,700,541 48,548,493
Institutional Service Class...................... 1,404,973 --
Net asset value of shares issued to shareholders
in reinvestment of dividends:
Institutional Class.............................. 3,215,966 5,881,032
Institutional Service Class...................... 70,083 --
------------ -------------
30,391,563 54,429,525
Cost of shares redeemed:
Institutional Class.............................. (42,279,444) (134,962,634)
Institutional Service Class...................... (310,374) --
------------ -------------
Decrease in net assets derived from capital
share transactions.............................. (12,198,255) (80,533,109)
------------ -------------
Net decrease in net assets....................... (10,309,828) (86,506,345)
NET ASSETS:
Beginning of year................................. 62,340,132 148,846,477
------------ -------------
End of year....................................... $ 52,030,304 $ 62,340,132
============ =============
Accumulated undistributed net investment income... $ 26,086 $ 21,336
============ =============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
109
<PAGE>
SHORT-TERM BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL
INSTITUTIONAL SERVICE
CLASS CLASS INSTITUTIONAL CLASS
------------- ------------- -----------------------------------------------
YEAR ENDED DECEMBER 31 JANUARY 2, 1991(A)
------------------------------------------------------- THROUGH
1995 1994 1993 1992 DECEMBER 31, 1991
--------------------------- ------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period.... $ 9.37 $ 9.37 $ 10.33 $ 11.23 $ 11.13 $ 10.00
------- ------ ------- -------- -------- --------
Net investment income... 0.65 0.64 0.97 0.72 0.66 0.48
Net realized and
unrealized gain (loss)
on investments......... 0.31 0.30 (0.96) (0.12) (0.03) 0.65
------- ------ ------- -------- -------- --------
Total from investment
operations............. 0.96 0.94 0.01 0.60 0.63 1.13
------- ------ ------- -------- -------- --------
Less dividends and
distributions:
From net investment
income................. (0.65) (0.64) (0.97) (1.36) (0.48) --
From net realized gain
on investments......... -- -- -- (0.04) (0.05) --
In excess of net
investment income...... -- -- -- (0.02) -- --
In excess of net
realized gain on
investments............ -- -- -- (0.08) -- --
------- ------ ------- -------- -------- --------
Total dividends and
distributions.......... (0.65) (0.64) (0.97) (1.50) (0.53) --
------- ------ ------- -------- -------- --------
Net asset value at end
of period.............. $ 9.68 $ 9.67 $ 9.37 $ 10.33 $ 11.23 $ 11.13
======= ====== ======= ======== ======== ========
Total investment
return................. 10.27% 10.07% 0.11% 5.67% 5.94% 11.30%
Ratios (to average net
assets)/
Supplemental Data:
Net investment income.. 6.38% 6.13% 5.90% 6.32% 6.64% 7.33%
Net expenses........... 0.60% 0.85% 0.60% 0.55% 0.55% 0.55%
Expenses (before
reimbursement)........ 0.82% 1.07% 0.72% 0.68% 0.72% 0.81%
Portfolio turnover
rate................... 171% 171% 269% 232% 270% 151%
Net assets at end of
period (in 000's)...... $50,902 $1,128 $62,340 $148,846 $161,499 $130,141
</TABLE>
- --------
(a) Commencement of operations.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
110
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Organization and Business:
- -------------------------------------------------------------------------------
Mainstay Institutional Funds Inc. (the "Company") was incorporated in the state
of Maryland on September 21, 1990 and commenced operations on January 2, 1991.
The Company is registered as an open-end management investment company under
the Investment Company Act of 1940, as amended, ("Investment Company Act"). As
of December 31, 1995 the Company has eleven separate investment portfolios:
EAFE Index Fund, Growth Equity Fund, Indexed Equity Fund, International Equity
Fund, Multi-Asset Fund, Value Equity Fund, Bond Fund, Indexed Bond Fund,
International Bond Fund, Money Market Fund and Short-Term Bond Fund
(individually or collectively referred to as a "Fund" or the "Funds").
The International Bond Fund and the International Equity Fund commenced
operations on January 1, 1995.
Each Fund currently offers two classes of shares as follows: Institutional
Class shares and Institutional Service Class shares. The distribution of
Institutional Service Class shares commenced on January 3, 1995. The Company
has adopted a Shareholder Services Plan with respect to the Institutional
Service Class of each Fund. The Institutional Class shares and Institutional
Service Class shares are substantially the same, except that the Institutional
Service Class shares bear the fees payable under the Shareholder Services Plan
at an annual rate of 0.25% of the average daily net assets of the outstanding
Institutional Service Class shares ("Shareholder Service Fee").
The investment objectives for each of the Portfolios of the Company are as
follows:
The EAFE Index Fund seeks to provide investment results that correspond to
the total return performance (reflecting reinvestment of dividends) of common
stocks in the aggregate, as represented by the Morgan Stanley Capital
International Europe, Australia, Far East (EAFE) Index.
The Growth Equity Fund seeks long-term growth of capital. Dividend income,
if any, is a consideration incidental to the Fund's objective of growth of
capital.
The Indexed Equity Fund seeks to provide investment results that correspond
to the total return performance (reflecting reinvestment of dividends) of
common stocks in the aggregate, as represented by the Standard's & Poor's 500
Composite Stock Price Index.
The International Equity Fund seeks to provide long-term growth of capital
by investing in a portfolio consisting primarily of non-U.S. equity
securities. Current income is a secondary objective.
The Multi-Asset Fund seeks to maximize total return, consistent with certain
percentage constraints on amounts allocated to each asset class, from a
combination of common stocks, fixed income securities, and money market
investments.
The Value Equity Fund seeks maximum long-term total return from a
combination of capital growth and income. The Fund is not designed or managed
primarily to produce current income.
The Bond Fund seeks to maximize total return, consistent with liquidity, low
risk to principal and investment in debt securities.
The Indexed Bond Fund seeks to provide investment results that correspond to
the total return performance of fixed income securities in the aggregate, as
represented by the Salomon Brothers Broad Investment Grade Bond Index.
The International Bond Fund seeks to provide total return by investing
primarily in a portfolio of non-U.S. (primarily government) debt securities.
The Money Market Fund seeks to provide a high level of current income while
preserving capital and maintaining liquidity.
The Short-Term Bond Fund seeks to maximize total return, consistent with
liquidity, preservation of capital and investment in short-term debt
securities.
111
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
- -------------------------------------------------------------------------------
NOTE 2--Significant Accounting Policies:
- -------------------------------------------------------------------------------
The following is a summary of significant accounting policies followed by the
Company:
(A)
VALUATION OF FUND SHARES. The net asset value per share of each Class of
shares of each Fund 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 of each Class of shares is determined
by taking the assets attributable to that Class, subtracting the liabilities
attributable to that Class, and dividing the result by the shares of that
Class that are outstanding.
The Money Market Fund seeks to maintain a net asset value of $1.00 per share,
although there is no assurance that it will be able to do so.
(B)
SECURITIES VALUATION. Portfolio securities of the Money Market Fund are valued
at their 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.
Portfolio securities of each of the other Funds are stated at value
determined (a) by appraising common and preferred stocks which are traded on
the New York Stock Exchange at the last sale price on that day or, if no sale
occurs, the mean between the closing bid price and asked price; (b) by
appraising common and preferred stocks traded on other United States national
securities exchanges or foreign securities exchanges as nearly as possible in
the manner described in (a) by reference to their principal exchange,
including the National Association of Securities Dealers National Market
System; (c) by appraising over-the-counter securities quoted on the National
Association of Securities Dealers NASDAQ system (but not listed on the
National Market System) at the bid price supplied through such system; (d) by
appraising over-the-counter securities not quoted on the NASDAQ system and
securities listed or traded on certain foreign exchanges whose operations are
similar to the U.S. over-the-counter market at prices supplied by a pricing
agent selected by a Fund's investment adviser if such prices are deemed to be
representative of market values at the regular close of business of the New
York Stock Exchange; (e) by appraising debt securities at prices supplied by a
pricing agent selected by a Fund's investment adviser, whose prices reflect
broker/dealer supplied valuations and electronic data processing techniques if
those prices are deemed by a Fund's investment adviser to be representative of
market values at the regular close of business of the New York Stock Exchange;
(f) by appraising options and futures contracts at the last sale price on the
market where any such option or futures are principally traded; and (g) by
appraising all other securities and other assets, including over-the-counter
common and preferred stocks not quoted on the NASDAQ system, securities not
listed or traded on foreign exchanges whose operations are similar to the U.S.
over-the-counter market and debt securities for which prices are supplied by a
pricing agent but are not deemed by a Fund's investment 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 Board of Directors. Money Market
instruments held by the Funds with a remaining maturity of sixty days or less
are valued by the amortized cost method which 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.
Events affecting the values of portfolio securities that occur between the
time their prices are determined and the close of the New York Stock Exchange
will not be reflected in the Funds' calculation of net asset values' unless a
Fund's investment adviser deems that the particular event would materially
affect net asset value, in which case an adjustment will be made.
(C)
FEDERAL INCOME TAXES. Each of the Funds is treated as a separate entity for
Federal income tax purposes. The Company's policy is to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of the taxable income to the shareholders of
each Fund within the allowable time limits. Therefore, no Federal income or
excise tax provision is required.
112
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
Investment income received by a Fund from foreign sources may be subject to
foreign income taxes withheld at the source.
(D)
STATEMENT OF POSITION 93-2: Permanent book-tax differences relating to
shareholder distributions have been reclassified. Net investment income
(loss), net realized gain (loss), and net assets are not affected. The
following table discloses the current year reclassifications between
accumulated undistributed net investment income (loss) and accumulated
undistributed net realized gain (loss) on investments.
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED
ACCUMULATED NET REALIZED
ACCUMULATED UNDISTRIBUTED GAIN (LOSS) ON
UNDISTRIBUTED NET REALIZED FOREIGN ADDITIONAL
NET INVESTMENT GAIN (LOSS) CURRENCY PAID-IN
INCOME (LOSS) ON INVESTMENTS TRANSACTIONS CAPITAL
-------------- -------------- -------------- ----------
<S> <C> <C> <C> <C>
EAFE Index Fund......... $ (600,909) $ 3,248 $ 631,201 $ (33,540)
Growth Equity Fund...... 418 80,225 0 (80,643)
Indexed Equity Fund..... 109,286 11,480 0 (120,766)
International Equity
Fund................... 2,220,471 (290) (2,220,181) 0
Multi-Asset Fund........ (153,521) (31,128) 266,081 (81,432)
Value Equity Fund....... 1,479 (20,740) 0 19,261
Bond Fund............... (64,554) 301,041 0 (236,487)
Indexed Bond Fund....... 459,486 (459,486) 0 0
International Bond Fund. 19,488 0 (19,488) 0
Short-Term Bond Fund.... (47,874) 324,505 0 (276,631)
</TABLE>
(E)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends are recorded on the ex-
dividend date. For the Money Market Fund, dividends are declared daily and
paid monthly. Each of the other Funds intends to declare and pay substantially
all of their net investment income and net realized gains no less frequently
than once a year. Income distributions and capital gain distributions are
determined in accordance with Federal income tax regulations which may differ
from generally accepted accounting principles.
(F)
SECURITY TRANSACTIONS AND INVESTMENT INCOME. The Company records security
transactions on the trade date. Realized gains and losses on security
transactions are determined using the identified cost method and include gains
and losses from repayments of principal on mortgage related and other asset-
backed securities. Dividend income is recognized on the ex-dividend date and
interest income is accrued daily. Discounts on securities, other than short-
term securities, purchased for all Funds are amortized on the constant yield
method over the life of the respective securities or, in the case of a
callable security, over the period to the first date of call.
(G)
ORGANIZATION COSTS. Costs incurred in connection with the Fund's initial
organization and registration aggregated $313,695. Organization costs for the
International Bond Fund and the International Equity Fund amounted to $61,000
for each Fund. Such costs are being amortized over 60 months beginning with
the commencement of operations of the respective Fund of the Company. In the
event that any of the initial shares purchased by affiliates of the
Administrator are redeemed, proceeds of such redemption will be reduced by the
proportionate amount of the unamortized deferred organizational expenses which
the number of shares redeemed bears to the total number of initial shares
purchased.
(H)
EXPENSES. Expenses with respect to any two or more Funds are allocated in
proportion to the net assets of the respective Funds when the expenses are
incurred except where allocations of direct expenses can otherwise fairly be
made.
113
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
The investment income and expenses (other than expenses incurred under the
Shareholder Services Plan), and realized and unrealized gains and losses on
investments of a Fund are allocated to separate classes of shares based upon
their relative net assets on the date the income is earned or expenses and
realized and unrealized gains and losses are incurred.
(I)
USE OF ESTIMATES. The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
(J)
FOREIGN CURRENCY TRANSACTIONS. The books and records of the Company are kept
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at
the mean between the buying and selling rates last quoted by any major U.S.
bank at the following dates:
(i)market value of investment securities, other assets and liabilities--
at the valuation date
(ii)income and expenses--at the date of such transactions.
The assets and liabilities are presented at the exchange rates and market
values at the close of the year. The changes in net assets arising from
changes in exchange rates and the changes in net assets resulting from changes
in market prices are not separately presented. However, gains and losses from
certain foreign currency transactions are treated as ordinary income for
Federal income tax purposes.
Net realized gain (loss) on foreign currency transactions represents net
gains and losses on forward currency transactions, net currency gains and
losses realized as a result of differences between the amounts of security
sale proceeds or purchase cost, dividends, interest and withholding taxes as
recorded on the Fund's books, and the U.S. dollar equivalent amount actually
received or paid. Net currency gains or losses from valuing such foreign
currency denominated assets and liabilities at year-end exchange rates are
reflected in unrealized foreign exchange gains or losses.
There are certain risks involved in investing in foreign securities that are
in addition to the usual risks inherent in domestic instruments. These risks
include those resulting from future adverse political and economic
developments and possible imposition of currency exchange blockages or other
foreign governmental laws or restrictions.
(K)
REPURCHASE AGREEMENTS. At the time the Funds enter into a repurchase
agreement, the value of the underlying security, including accrued interest,
will be equal to or exceed the value of the repurchase agreement and, in the
case of repurchase agreements exceeding one day, the value of the underlying
security, including accrued interest, is required during the term of the
agreement to be equal to or exceed the value of the repurchase agreement. The
underlying securities for all repurchase agreements are held in a segregated
account of the Funds' custodian. In the case of repurchase agreements
exceeding one day, the market value of the underlying securities is monitored
by pricing the underlying securities daily.
In the event of the bankruptcy of a counterparty, realization of the
collateral may be delayed or limited.
(L)
FORWARD CONTRACTS. A forward contract is an agreement to buy or sell
currencies of different countries on a specified future date at a specified
rate. During the period the forward contract is open, changes in the value of
the contract are recognized as unrealized gains or losses by "marking to
market" such contract on a daily basis to reflect the market value of the
contract at the end of each day's trading. When the forward contract is
closed, the Fund records a realized gain or loss equal to the difference
between the proceeds from (or cost of) the closing transaction and the Fund's
basis in the contract. Forward contracts may be used for hedging purposes.
(see Note 5).
114
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
(M)
FUTURES CONTRACTS. A futures contract is an agreement to purchase or sell a
specified quantity of an underlying instrument at a specified future date, or
to make or receive a cash payment based on the value of a securities index.
During the period the futures contract is open, changes in the value of the
contract are recognized as unrealized gains or losses by "marking to market"
such contract on a daily basis to reflect the market value of the contract at
the end of each day's trading. The Fund agrees to receive from or pay to the
broker an amount of cash equal to the daily fluctuation in the value of the
contract. Such receipts or payments are known as "variation margin". When the
futures contract is closed, the Fund records a realized gain or loss equal to
the difference between the proceeds from (or cost of) the closing transaction
and the Fund's basis in the contract. Futures contracts may be used for
hedging purposes. (see Note 5).
(N)
MORTGAGE DOLLAR ROLLS. A mortgage dollar roll is a transaction ("MDRs") in
which a Fund sells mortgage backed securities ("MBS") from its portfolio to a
counterparty from whom it simultaneously agrees to buy a similar security on a
delayed delivery basis. The MDR transactions of a Fund are classified as
purchase and sale transactions. The securities sold in connection with the MDR
are removed from the portfolio and a realized gain or loss is recognized.
These securities are included at market value in the portfolio of investments
and liability for such purchase commitments is included as payables for
investments purchased.
(O)
SECURITIES LENDING. The Fund may lend its securities to broker-dealers and
financial institutions. The loans are secured by collateral at least equal at
all times to the market value of the securities loaned. The Fund may bear the
risk of delay in recovery of, or even loss of rights in, the securities loaned
should the borrower of the securities fail financially. The Fund receives
compensation for lending its securities in the form of fees or it retains a
portion of interest on the investment of any cash received as collateral. The
Fund also continues to receive interest and dividends on the securities loaned
and any gain or loss in the market price of the securities loaned that may
occur during the term of the loan will be for the account of the Funds.
- -------------------------------------------------------------------------------
NOTE 3--Fees and Related Party Policies:
- -------------------------------------------------------------------------------
(A)
INVESTMENT ADVISORY AND ADMINISTRATION FEES. MacKay-Shields Financial
Corporation ("MacKay-Shields") serves as the investment adviser to the Growth
Equity Fund, International Equity Fund, Value Equity Fund, Bond Fund,
International Bond Fund and Short-Term Bond Fund under an Investment Advisory
Agreement. MacKay-Shields is a registered investment adviser and an indirect
wholly-owned subsidiary of New York Life Insurance Company ("New York Life").
New York Life serves as the investment adviser to the Money Market Fund under
an Investment Advisory Agreement. Monitor Capital Advisors Inc. ("Monitor"),
is a registered investment adviser, a wholly-owned subsidiary of NYLIFE Inc.,
an indirect wholly-owned subsidiary of New York Life and serves as investment
adviser to the EAFE Index Fund, Indexed Equity Fund, Multi-Asset Fund and the
Indexed Bond Fund under an Investment Advisory Agreement.
New York Life is the Administrator for the Funds.
The Company, on behalf of each Fund, pays the Advisers and Administrator a
monthly fee for the services performed and the facilities furnished at an
annual rate of the average daily net assets of that Fund as follows:
<TABLE>
<CAPTION>
ADVISER ADMINISTRATOR
------- -------------
<S> <C> <C>
EAFE Index Fund........................................ .15% .80%
Growth Equity Fund..................................... .25% .60%
Indexed Equity Fund.................................... .10% .40%
International Equity Fund.............................. .35% .50%
Multi-Asset Fund....................................... .15% .50%
Value Equity Fund...................................... .25% .60%
Bond Fund.............................................. .20% .55%
Indexed Bond Fund...................................... .10% .40%
International Bond Fund................................ .30% .50%
Money Market Fund...................................... .10% .40%
Short-Term Bond Fund................................... .15% .45%
</TABLE>
115
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
The Administrator has voluntarily agreed to assume the portion of the Funds'
operating expenses for the year ended December 31, 1995, for the following
Funds to the extent the expenses (excluding service fees) on an annualized
basis exceeded the indicated percentages:
<TABLE>
<S> <C>
EAFE Index Fund............ .94%
Indexed Equity Fund........ .50%
International Equity Fund.. 1.00%
Multi-Asset Fund........... .70%
Bond Fund.................. .75%
Indexed Bond Fund.......... .50%
International Bond Fund.... .95%
Money Market Fund.......... .50%
Short-Term Bond Fund....... .60%
</TABLE>
In connection with the voluntary expense limitations, the Administrator
assumed the following expenses for the year ended December 31, 1995:
<TABLE>
<S> <C>
*EAFE Index Fund........... $165,321
Indexed Equity Fund........ 272,396
International Equity
Fund...................... 60,652
Multi-Asset Fund........... 167,833
Bond Fund.................. $198,399
Indexed Bond Fund.......... 225,553
International Bond
Fund...................... 31,528
Money Market Fund.......... 136,576
Short-Term Bond Fund....... 114,433
</TABLE>
- --------
* The EAFE Index Fund's expense limitation became effective April 1, 1995.
The Growth Equity Fund and the Value Equity Fund do not have a voluntary
expense limitation.
The voluntary expense limitation will continue through December 31, 1996
(December 31, 1997 for the EAFE Index Fund), after which the voluntary expense
limitation may be terminated or revised at anytime at the discretion of the
Administrator.
(B)
SERVICE FEES. In accordance with the Shareholder Services Plan, New York Life
has agreed to provide, through its affiliates or independent third parties,
various shareholder and administrative support services to Institutional
Service Class shareholders. For its services, New York Life is entitled to a
Shareholder Service Fee accrued daily and paid monthly at an annual rate of
0.25% of the average daily net assets attributable to the Institutional Service
Class of each Fund.
(C)
DISTRIBUTOR. NYLIFE Distributors Inc., an indirect wholly-owned subsidiary of
New York Life serves as the Company's distributor and principal underwriter
(the "Distributor") pursuant to a Distribution Agreement. The Distributor is
not obligated to sell any specific amount of the Company's shares, and receives
no compensation from the Company pursuant to the Distribution Agreement.
(D)
DIRECTORS FEES. Directors, other than those affiliated with New York Life,
MacKay-Shields, Monitor Capital or NYLIFE Distributors, are paid an annual fee
of $24,000 and $1,000 for each Board and Audit Committee meeting attended plus
reimbursement for travel and out-of-pocket expenses.
116
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
(E)
CAPITAL. The Funds have been advised that at December 31, 1995 affiliates of
New York Life Insurance Company owned shares of the Funds with the following
market values:
<TABLE>
<S> <C>
EAFE Index Fund...... $ 70,591,262
Growth Equity Fund... 329,582,202
Indexed Equity Fund.. 270,514,522
International Equity
Fund................ 87,987,393
Multi-Asset Fund..... 136,252,097
Value Equity Fund.... 409,104,286
Bond Fund............ $121,361,013
Indexed Bond Fund.... 135,861,320
International Bond
Fund................ 43,441,463
Money Market Fund.... 16,822,616
Short-Term Bond
Fund................ 13,980,133
</TABLE>
(F)
OTHER. Fees for the cost of legal services provided to the Company by the
Office of General Counsel of New York Life are charged to the Funds. For the
year ended December 31, 1995 these fees were as follows:
<TABLE>
<S> <C>
EAFE Index Fund.......... $ 7,429
Growth Equity Fund....... 33,198
Indexed Equity Fund...... 27,925
International Equity
Fund.................... 7,851
Multi-Asset Fund......... 23,804
Value Equity Fund........ 47,601
Bond Fund................ $18,765
Indexed Bond Fund........ 16,421
International Bond Fund.. 3,921
Money Market Fund........ 6,045
Short-Term Bond Fund..... 5,364
</TABLE>
- --------------------------------------------------------------------------------
NOTE 4--Federal Income Tax:
- --------------------------------------------------------------------------------
At December 31, 1995, for Federal income tax purposes, capital loss
carryforwards, as shown in the table below, are available to the extent
provided by regulations to offset future realized gains of each respective Fund
through the years indicated. To the extent that these loss carryforwards are
used to offset future capital gains, it is probable that the capital gains so
offset will not be distributed to shareholders. Additionally, as shown in the
table below, certain Funds intend to elect, to the extent provided by
regulations, to treat certain qualifying capital losses that arose during the
year ended December 31, 1995 as if they arose on January 1, 1996.
<TABLE>
<CAPTION>
CAPITAL LOSS CAPITAL LOSS
AVAILABLE THROUGH AMOUNT (000'S) DEFERRED (000'S)
----------------- -------------- ----------------
<S> <C> <C> <C>
Growth Equity Fund........ 2003 $ 97 $175
======= ====
International Equity
Fund..................... $ 0 $366
======= ====
Bond Fund................. 2002 $12,623 $214
======= ====
Short-Term Bond Fund...... 2002 $ 4,642 $ 0
======= ====
</TABLE>
The Multi-Asset Fund intends to elect to treat for Federal income tax purposes
approximately $1,641 of qualifying foreign exchange losses that arose during
the year ended December 31, 1995 as if they arose January 1, 1996. The Bond
Fund, the Indexed Bond Fund and the Short-Term Bond Fund utilized $3,970,141,
$2,535,626 and $1,772,191, respectively of capital loss carryforwards during
the current year.
117
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
- -------------------------------------------------------------------------------
NOTE 5--Financial Investments:
- -------------------------------------------------------------------------------
The EAFE Index Fund's, the International Equity Fund's, the Multi-Asset Fund's
and the International Bond Fund's use of forward contracts, involves, to
varying degrees, elements of market risk in excess of the amount recognized in
the statement of assets and liabilities. The contract or notional amounts
reflect the extent of the Fund's involvement in these financial instruments.
Risks arise from the possible movements in the foreign exchange rates
underlying these instruments. The unrealized appreciation/depreciation on
forward contracts reflects the Fund's exposure at year end to credit loss in
the event of a counterparty's failure to perform its obligations.
The EAFE Index Fund's and the Multi-Asset Fund's forward foreign currency
exchange contracts are intended to minimize the risk of loss to the Fund from
adverse changes in the relationship between U.S. dollar and foreign
currencies. The International Equity Fund and the International Bond Fund
enter into forward currency exchange contracts in order to protect against
uncertainty in the level of future foreign currency exchange rates.
The EAFE Index Fund's, the Indexed Equity Fund's, the Multi-Asset Fund's
and the Indexed Bond Fund's use of futures contracts involves, to varying
degrees, elements of market risk in excess of the amount recognized in the
statement of assets and liabilities. The contract or notional amounts and
variation margin reflect the extent of the Fund's involvement in open futures
positions. Risks arise from possible imperfect correlation in movements in the
price of futures contracts, interest rates and the underlying hedged assets,
and the possible inability of counterparties to meet the terms of their
contracts. However, the Fund's activities in futures contracts are conducted
through regulated exchanges which minimize counterparty credit risks.
The EAFE Index Fund and the Indexed Equity Fund invests in stock index
futures contracts to maintain cash reserves while remaining fully invested, to
facilitate trading, or to reduce transaction costs. The Multi-Asset Fund has
entered into contracts for the future delivery of debt securities and invests
in stock index futures contracts to rebalance the Fund's portfolio composition
and risk profile to meet the asset class constraints. The Indexed Bond Fund
invests in contracts for the future delivery of debt securities in order to
attempt to maintain cash reserves while remaining fully invested, to
facilitate trading, or to reduce transaction costs.
118
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
119
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
NOTE 6--Purchases and Sales of Securities (in 000's):
- --------------------------------------------------------------------------------
During the year ended December 31, 1995, purchases and sales of securities,
other than securities subject to repurchase transactions and short-term
securities, were as follows:
<TABLE>
<CAPTION>
EAFE Index Growth Equity Indexed Equity International Equity
Fund Fund Fund Fund
PURCHASES SALES PURCHASES SALES PURCHASES SALES PURCHASES SALES
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government Securi-
ties $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
All others 6,020 4,647 146,638 107,455 37,140 10,060 106,748 17,547
-----------------------------------------------------------------------------
Total $6,020 $4,647 $146,638 $107,455 $37,140 $10,060 $ 106,748 $ 17,547
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTE 7--Capital Share Transactions (in 000's):
- --------------------------------------------------------------------------------
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
EAFE Index Growth Equity
Fund Fund
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Class Service Class Class
------------- ------------- ------------- ------------- ------------- -------------
Year Ended Year Ended Year Ended Year Ended
1995 1994 1995 1994
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,843 19 3,434 9,698 146 14,948
Shares issued in rein-
vestment of
dividends and distri-
butions 90 -- * 99 32 -- * 589
-------------------------------------------------------------------------------------
1,933 19 3,533 9,730 146 15,537
Shares redeemed 1,749 -- 2,275 8,640 1 12,715
-------------------------------------------------------------------------------------
Net increase (decrease) 184 19 1,258 1,090 145 2,822
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
<CAPTION>
Bond Indexed Bond
Fund Fund
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Class Service Class Class
------------- ------------- ------------- ------------- ------------- -------------
Year Ended Year Ended Year Ended Year Ended
1995 1994 1995 1994
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,326 78 2,737 1,876 40 8,513
Shares issued in
reinvestment of
dividends and
distributions 1,262 5 1,697 1,103 3 951
-------------------------------------------------------------------------------------
2,588 83 4,434 2,979 43 9,464
Shares redeemed 5,680 7 3,731 4,960 -- * 7,046
-------------------------------------------------------------------------------------
Net increase (decrease) (3,092) 76 703 (1,981) 43 2,418
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
</TABLE>
*Less than one thousand shares.
120
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Multi-Asset Value Equity Bond Indexed Bond International Bond Short-Term Bond
Fund Fund Fund Fund Fund Fund
PURCHASES SALES PURCHASES SALES PURCHASES SALES PURCHASES SALES PURCHASES SALES PURCHASES SALES
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$385,327 $416,911 $ -- $ -- $656,221 $668,833 $452,653 $470,052 $ -- $ -- $73,033 $83,218
106,900 66,083 321,361 239,806 196,797 212,378 -- 1,245 66,675 32,683 14,578 15,788
- -------------------------------------------------------------------------------------------------------------------
$492,227 $482,994 $321,361 $239,806 $853,018 $881,211 $452,653 $471,297 $ 66,675 $ 32,683 $87,611 $99,006
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Indexed Equity International Equity Multi-Asset
Fund Fund Fund
Institutional Institutional Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Class Service Class Class Service Class Class
- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Year Ended Year Ended Year Ended Year Ended Year Ended
1995 1994 1995 1995 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
4,814 53 8,766 2,383 20 3,333 262 4,864
750 2 588 320 1 2,980 38 1,670
- ----------------------------------------------------------------------------------------------------------------
5,564 55 9,354 2,703 21 6,313 300 6,534
3,763 1 7,094 19 -- * 4,595 -- * 7,206
- ----------------------------------------------------------------------------------------------------------------
1,801 54 2,260 2,684 21 1,718 300 (672)
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Value Equity
Fund
Institutional Institutional Institutional
Class Service Class Class
- ------------- ------------- -------------
Year Ended Year Ended
1995 1994
- -----------------------------------------
<C> <C> <C>
10,840 219 11,982
1,551 8 2,603
- -----------------------------------------
12,391 227 14,585
4,818 4 4,930
- -----------------------------------------
7,573 223 9,655
- -----------------------------------------
- -----------------------------------------
</TABLE>
<TABLE>
<CAPTION>
International Bond Money Market Short-Term Bond
Fund Fund Fund
Institutional Institutional Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Class Service Class Class
- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Year Ended Year Ended Year Ended Year Ended Year Ended
1995 1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
81 1 193,425 4,420 303,368 2,617 140 4,708
230 -- * 3,150 41 2,148 332 7 628
- ----------------------------------------------------------------------------------------------------------------
311 1 196,575 4,461 305,516 2,949 147 5,336
-- -- * 193,811 1,677 316,245 4,347 30 13,096
- ----------------------------------------------------------------------------------------------------------------
311 1 2,764 2,784 (10,729) (1,398) 117 (7,760)
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
121
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
MainStay Institutional Funds Inc.
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the EAFE Index
Fund, the Growth Equity Fund, the Indexed Equity Fund, the International
Equity Fund, the Multi-Asset Fund, the Value Equity Fund, the Bond Fund, the
Indexed Bond Fund, the International Bond Fund, the Money Market Fund and the
Short-Term Bond Fund (constituting MainStay Institutional Funds Inc.,
hereafter referred to as the "Funds") at December 31, 1995, the results of
each of their operations for the year then ended and the changes in each of
their net assets and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1995 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York
February 20, 1996
122
<PAGE>
MAINSTAY /(R)/
INSTITUTIONAL FUNDS INC. [ARTWORK APPEARS HERE]
Distributed by NYLIFE Distributors Inc., Member NASD
260 Cherry Hill Road
Parsippany, NJ 07054
NYLIFE Distributors Inc. is an
indirect wholly owned subsidiary of
New York Life Insurance Company.
[LOGO OF NEW YORK LIFE APPEARS HERE]
This is a copy of a report by MainStay Institutional Funds Inc. to the
shareholders. Distribution of this report to persons other than these
shareholders is authorized only when accompanied or preceded by a current
prospectus. This report does not offer for sale or solicit orders to buy any
securities.
Advisers:
New York Life Insurance Company
MacKay-Shields Financial Corporation
Monitor Capital Advisors, Inc.
02-006-0296
