<PAGE>
- --------------------------------------------------------------------------------
[LOGO OF MAINSTAY APPEARS HERE]
MAINSTAY (R)
INSTITUTIONAL
FUNDS INC.
1996 SEMIANNUAL REPORT
UNAUDITED JUNE 30, 1996
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Performance Highlights--Total Returns** ----------------------------------
SEC Average Annual
6 Months Ended June 30, 1996 Total Returns
as of June 30, 1996
- --------------------------------------------------------------------------------------------------------------------------------
Year to
Funds 1991 1992 1993 1994 1995 Date 1 Year 5 Year Since Inception
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Funds
- --------------------------------------------------------------------------------------------------------------------------------
EAFE Index (Instl. Class)+ 10.10% -12.22% 28.97% 6.83% 9.03% 5.01% 12.53% 8.41% 7.97%
- --------------------------------------------------------------------------------------------------------------------------------
EAFE Index (Serv. Class)* 10.10 -12.22 28.97 6.83 8.63 4.96 12.07 8.32 7.89
- --------------------------------------------------------------------------------------------------------------------------------
Growth Equity (Instl. Class)+ 67.00 5.63 9.59 -2.23 37.88 11.04 27.33 19.05 21.31
- --------------------------------------------------------------------------------------------------------------------------------
Growth Equity (Serv. Class)* 67.00 5.63 9.59 -2.23 37.50 10.85 26.91 18.95 21.21
- --------------------------------------------------------------------------------------------------------------------------------
Indexed Equity (Instl. Class)+ 29.80 7.19 9.41 0.90 36.88 9.93 25.45 15.20 16.45
- --------------------------------------------------------------------------------------------------------------------------------
Indexed Equity (Serv. Class)* 29.80 7.19 9.41 0.90 36.70 9.77 25.17 15.14 16.39
- --------------------------------------------------------------------------------------------------------------------------------
International Equity (Instl. Class)(S) N/A N/A N/A N/A 7.17 8.50 22.53 N/A 10.57
- --------------------------------------------------------------------------------------------------------------------------------
International Equity (Serv. Class)(S) N/A N/A N/A N/A 6.86 8.23 21.99 N/A 10.17
- --------------------------------------------------------------------------------------------------------------------------------
Multi-Asset (Instl. Class)+ 17.90 7.09 8.79 -0.86 26.81 8.14 21.43 11.89 12.02
- --------------------------------------------------------------------------------------------------------------------------------
Multi-Asset (Serv. Class)* 17.90 7.09 8.79 -0.86 26.70 7.97 21.13 11.83 11.97
- --------------------------------------------------------------------------------------------------------------------------------
Value Equity (Instl. Class)+ 36.60 20.71 14.90 1.22 29.42 7.69 20.45 17.71 19.57
- --------------------------------------------------------------------------------------------------------------------------------
Value Equity (Serv. Class)* 36.60 20.71 14.90 1.22 29.32 7.55 20.10 17.66 19.52
- --------------------------------------------------------------------------------------------------------------------------------
Income Funds
- --------------------------------------------------------------------------------------------------------------------------------
Bond (Instl. Class)+ 14.00% 6.39% 9.74% -3.31% 17.88% -1.83% 4.38% 7.55% 7.51%
- --------------------------------------------------------------------------------------------------------------------------------
Bond (Serv. Class)* 14.00 6.39 9.74 -3.31 17.55 -1.93 4.09 7.47 7.43
- --------------------------------------------------------------------------------------------------------------------------------
Indexed Bond (Instl. Class)+ 14.70 7.09 9.64 -3.44 18.07 -1.82 4.31 7.75 7.75
- --------------------------------------------------------------------------------------------------------------------------------
Indexed Bond (Serv. Class)* 14.70 7.09 9.64 -3.44 17.97 -1.91 3.94 7.71 7.71
- --------------------------------------------------------------------------------------------------------------------------------
International Bond (Instl. Class)(S) N/A N/A N/A N/A 18.46 5.02 11.77 N/A 15.66
- --------------------------------------------------------------------------------------------------------------------------------
International Bond (Serv. Class)(S) N/A N/A N/A N/A 18.26 4.85 11.40 N/A 15.40
- --------------------------------------------------------------------------------------------------------------------------------
Money Market++ (Instl. Class)+ 5.95 3.66 2.89 3.88 5.63 2.49 5.28 4.27 4.45
- --------------------------------------------------------------------------------------------------------------------------------
Money Market++ (Serv. Class)* 5.95 3.66 2.89 3.88 5.46 2.37 5.02 4.21 4.40
- --------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond (Instl. Class)+ 11.30 5.94 5.67 0.11 10.27 1.34 5.14 5.99 6.22
- --------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond (Serv. Class)* 11.30 5.94 5.67 0.11 10.07 1.14 4.83 5.91 6.15
- --------------------------------------------------------------------------------------------------------------------------------
</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 inception date of these Institutional Class shares and the date such
shares were first offered to the public is 1/2/91.
(S) 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.
** 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 an effective 7-day yield of
5.07% with an average 7-day yield of 4.95%, both as of 6/26/96. The Money
Market Fund-Service Class had an effective 7-day yield of 4.81% with an
average 7-day yield of 4.70%, both as of 6/26/96. 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 4.89% and 4.78%, respectively,
for the Institutional Class and 4.63% and 4.53%, 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 26
International Equity Fund 40
Multi-Asset Fund 54
Value Equity Fund 69
INCOME FUNDS
Bond Fund 77
Indexed Bond Fund 85
International Bond Fund 93
Money Market Fund 101
Short-Term Bond Fund 108
Note 1 Organization and Business 115
Note 2 Significant Accounting Policies 116
Note 3 Fees and Related Party Policies 119
Note 4 Federal Income Tax 121
Note 5 Financial Investments 121
Note 6 Purchase and Sales of Securities 122
Note 7 Capital Share Transactions 122
<PAGE>
CHAIRPERSON'S LETTER
================================================================================
REPORT TO SHAREHOLDERS FOR THE SIX MONTHS ENDED JUNE 30, 1996
Strategic security selection amid powerful economic forces and shifting market
perceptions--this was the strategy that guided the management of MainStay's
actively managed Institutional Funds for the six months ended June 30, 1996. Our
international portfolios added careful country selection and selective currency
hedging in an effort to enhance returns, and our income Funds pursued investment
opportunities with a focus on quality, duration, and shifting relative values.
During this period, our index-based funds continued to pursue their objectives
of closely tracking their respective indices.
Outstanding Performance
Based on these strategies, what were our results? Of the
eight MainStay Institutional Funds that qualify for
Morningstar* ratings, six received four or five stars
overall, placing them in the top 33% or top 10% of their
respective categories. As of June 30, 1996, the Value Equity
[PHOTO OF Fund earned five stars, Morningstar's highest overall rating,
ALICE T. KANE, and the Indexed Equity Fund received four stars. Both ratings
CHAIRPERSON were based on a Morningstar universe of 1,583 equity funds
APPEARS HERE] for the 3-year period and 997 equity funds for the 5-year
period ended 6/30/96. Four-star overall ratings were also
awarded to the Bond, Indexed Bond, and Short-Term Bond Funds,
each based on a universe of 889 fixed-income funds for the
3-year period and 464 fixed-income funds for the 5-year
period ended 6/30/96. The Multi-Asset Fund also earned a
four-star overall rating, based on a universe of 2,848 hybrid
funds for the 3-year period and 1,696 hybrid funds for the
5-year period ended 6/30/96.
A Stronger Economy--Good for Stocks, Challenging for Bonds
After a spectacular 1995, the stock market continued to climb for most of the
first half of 1996--but not without setbacks along the way. The economy was
stronger than expected, which led to inflation concerns, rising interest rates,
and price volatility. With the S&P 500 Stock Index+ advancing 10.09% in the
reporting period, the stock market delivered a six-month return close to its
historical average for an entire year.(S) Small capitalization stocks did even
better, but faced a sharp correction in mid-June. Investors were very active,
pouring more money into stock funds in the first six months than they had in any
full year in history.++ Whether the returns and investment activity we've seen
in the first half of the year can be sustained through what may be a volatile
second half remains an open question.
Bonds had a difficult time during this period. The improving economy generally
hurt fixed-income investors, but boosted prices among lower-rated bonds. In
March, unexpected payroll gains, which indicated higher employment, caused bond
prices to plummet. In a single day, 30-year Treasury bond prices fell 3.3% and
most domestic bond categories, except high current yield, closed the first
quarter with negative returns. As employment rose in the second quarter, so did
long-term rates, with the 30-year Treasury bond yielding 6.90% at the end of
June (up from 5.95% at year-end 1995).
Rising interest rates affected more than just bonds. They also led to price
corrections in financial and consumer nondurable stocks. Economically sensitive
sectors such as chemicals and consumer cyclicals showed sparks of progress
during the first quarter, which failed to ignite in the second. Retail stocks,
on the other hand, did well, based on strong consumer spending while health care
and technology stocks provided mixed results.
Positive Results in International Markets
Foreign equity markets lagged the U.S. during the first quarter of 1996, but
provided more competitive returns in the second. Latin America posted strong
gains and Japan showed signs of economic recovery, which boosted its equity
2
<PAGE>
================================================================================
REPORT TO SHAREHOLDERS FOR THE SIX MONTHS ENDED JUNE 30, 1996
returns to 43.5% for the 12 months ended June 30, 1996. During the reporting
period, small company funds did well in European markets, as they did in the
U.S. In all but a handful of markets, foreign currencies declined against the
U.S. dollar, led by weaknesses in the Japanese yen and core European currencies.
Foreign bond markets generally outperformed U.S. bond markets during the
reporting period, increasing the potential value of international
diversification.
Investment Outlook
Specific strategies and performance results for each Fund, in accordance with
each Fund's objectives and investment disciplines, are discussed in greater
detail in the Fund managers' comments on the following pages.
While the results of the last six months can't tell us what will happen next,
they may help us form realistic expectations based on historical trends. Viewed
in this light, a more moderate second half in the equity markets, and continued
fluctuations in interest rates and bond values would not come as a surprise.
Regardless of what the future holds, investors may benefit by maintaining a
long-range perspective and adding to their accounts over time. With the
recognition that ups and downs are a natural part of long-term investing, our
shareholders can make adjustments when warranted and stay focused on the
future--even during volatile periods.
Five Years of Shareholder Service
MainStay Institutional Funds Inc. celebrated its 5th anniversary as a Fund group
in January, passing a major milestone for nine of our Funds. It has been our
pleasure to serve you during the last six months, and we look forward to
continuing to do so for many years to come.
Sincerely,
/s/ Alice T. Kane
Alice T. Kane July 1996
- --------------------------------------------------------------------------------
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-, 5- & 10-year average annual returns with fee
adjustments, and a risk factor that reflects fund performance relative to 3-
month Treasury bill monthly returns. A one-year rating is calculated using
the same methodology, but is not a component of the overall rating. As of
6/30/96, the individual 1, 3 and 5 year ratings for these periods for the
following MainStay Institutional Funds were as follows: Bond Fund, 3, 3 and
4 stars; Indexed Bond Fund, 3, 3 and 4 stars; Short-Term Bond Fund, 4, 4 and
4 stars; Multi-Asset Fund, 4, 4 and 4 stars; Indexed Equity Fund, 5, 4 and 4
stars; Value Equity Fund, 3, 4 and 5 stars, respectively. For the one-year
period, the Indexed Equity and Value Equity Funds were rated among 2,882
funds in the equity category, the Bond, Indexed Bond and Short-Term Bond
Funds were rated among 1487 funds in the fixed-income category, and the
Multi-Asset Fund was rated among 5,076 funds in the hybrid 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,
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.
+ 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.
++ Source: Investment Company Institute
3
<PAGE>
PORTFOLIO MANAGER'S COMMENTS
EAFE INDEX FUND
================================================================================
Fund Highlights for the six months ended June 30, 1996
. One-year total returns of 12.53% and 12.07% for Institutional Class and
Service Class shares, respectively, as of 6/30/96
. For the six months ended 6/30/96, strong gains in local terms for the Morgan
Stanley Capital International (MSCI) EAFE Index* were eroded by currency
shifts relative to the U.S. dollar
. Strong performance from Ireland, Italy, and Spain during the reporting
period
For the six months ended June 30, 1996, the MainStay Institutional EAFE Index
Fund returned 5.01% and 4.96% for Institutional Class and Service Class shares,
respectively. During the reporting period, the Fund underperformed the average
Lipper(S) international equity fund, which gained 8.02%.
Many markets around the globe posted strong gains for the first half of 1996.
Over half the countries in the Morgan Stanley Capital International EAFE Index
even topped the 10.09% return on the S&P 500 Index.+ The persistent strength of
the U.S. dollar, however, substantially reduced this return to U.S. investors.
While the EAFE Index rose almost 9% in local terms during the first half, the
Index gained only 4.52% after adjusting for currency fluctuations versus the
U.S. dollar.
The yen-dollar exchange rate had the most profound effect on Fund performance
during the first half of 1996. The Japanese market accounts for almost 40% of
the EAFE Index. In local terms, this portion of the Index gained 7.5%. The
strong dollar--and corresponding weakness of the Japanese yen--reduced the
return to only 1.13% in dollar terms.
Ireland was the best performing market in the EAFE Index, providing an 18.5%
return (in local terms) over the reporting period. However, since this market
makes up only 0.3% of the Index, Irish gains had little impact on overall Fund
performance. Other strong performers were Spain and Italy, which climbed 13.9%
and 12.6%, respectively (also in local terms). In April, the victory of Italy's
center-left coalition propelled the Italian stock market higher as the prospect
of political stability and budget cuts encouraged investors. In Spain, the
market surged as the government took steps toward economic reform. The worst
performing market in the EAFE Index was Singapore, which returned -3.22%. Of the
20 countries represented in the EAFE Index, Singapore was the only one to post a
loss in the first half of the year.
In managing the Fund, we monitor the composition and seek to provide the
investment results of the EAFE Index as closely as possible, regardless of the
movements of the individual markets that make it up. Since the Fund does not
hedge currency exposure, the high weighting in, and relatively poor return on,
Japanese equities caused the Fund to substantially underperform the Lipper
international equity fund average.
James A. Mehling, CFA
Portfolio Manager
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.
* The MSCI EAFE Index is an unmanaged index generally considered
representative of the international 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 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.
Local terms Performance reports in local terms reflect results within a specific
country, with returns denominated in its local currency. It does not consider
the impact of currency fluctuations or exchange rates when translated into other
currencies.
Exchange rate The amount of one currency that may be exchanged for a single unit
of another at any given time. Exchange rates may vary, causing gains or losses
in the value of international investments when local returns are translated into
U.S. dollars.
Economic reform Steps taken by a government to enhance or control the growth of
the national economy. Such reforms might include steps to increase employment,
control wages, enhance productivity, manipulate the cost of loans, or otherwise
influence the availability of capital.
Currency management/hedging The process of managing or "hedging" the risks
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.
4
<PAGE>
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
EAFE INDEX FUND VS MSCI EAFE INDEX
INSTITUTIONAL CLASS SHARES
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
EAFE Index Fund MSCI EAFE Index
--------------- ---------------
1/2/91 $10,000 $10,000
1Q 1991 $10,630 $10,743
2Q 1991 $10,180 $10,157
3Q 1991 $10,930 $11,028
4Q 1991 $11,010 $11,213
1Q 1992 $9,665 $9,882
2Q 1992 $9,866 $10,091
3Q 1992 $10,027 $10,243
4Q 1992 $9,665 $9,848
1Q 1993 $10,681 $11,028
2Q 1993 $11,635 $12,137
3Q 1993 $12,427 $12,942
4Q 1993 $12,464 $13,054
1Q 1994 $12,858 $13,511
2Q 1994 $13,542 $14,201
3Q 1994 $13,521 $14,215
4Q 1994 $13,315 $14,070
1Q 1995 $13,526 $14,332
2Q 1995 $13,547 $14,436
3Q 1995 $14,043 $15,038
4Q 1995 $14,518 $15,647
1Q 1996 $14,989 $16,099
6/30/96 $15,246 $16,353
- --------------------------------------------------------------------------------
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
EAFE INDEX FUND VS MSCI EAFE INDEX
SERVICE CLASS SHARES
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
EAFE Index Fund MSCI EAFE Index
--------------- ---------------
1/2/91 $10,000 $10,000
1Q 1991 $10,630 $10,743
2Q 1991 $10,180 $10,157
3Q 1991 $10,930 $11,028
4Q 1991 $11,010 $11,213
1Q 1992 $9,665 $9,882
2Q 1992 $9,866 $10,091
3Q 1992 $10,027 $10,243
4Q 1992 $9,665 $9,848
1Q 1993 $10,681 $11,028
2Q 1993 $11,635 $12,137
3Q 1993 $12,427 $12,942
4Q 1993 $12,464 $13,054
1Q 1994 $12,858 $13,511
2Q 1994 $13,541 $14,201
3Q 1994 $13,521 $14,215
4Q 1994 $13,315 $14,070
1Q 1995 $13,537 $14,332
2Q 1995 $13,547 $14,436
3Q 1995 $14,011 $15,038
4Q 1995 $14,465 $15,647
1Q 1996 $14,947 $16,099
6/30/96 $15,182 $16,353
- --------------------------------------------------------------------------------
[_] EAFE Index Fund [_] MSCI EAFE Index
Source: (C) 1996 Ibbotson Associates EnCorr Software
These graphs assume a $10,000 investment made on 1/2/91.
<TABLE>
<CAPTION>
Total Return* SEC Average Annual Total Returns*
PERFORMANCE as of June 30, 1996 as of June 30, 1996
---------------------------------------------------------------------------------------------------------------------
Year to Date One Year Five Year Since Inception
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EAFE Index Fund Institutional Class 5.01% 12.53% 8.41% 7.97%
EAFE Index Fund Service Class** 4.96% 12.07% 8.32% 7.89%
Average Lipper International Fund 8.02% 15.46% 11.02% 10.68%
MSCI EAFE Index 4.67% 13.62% 10.33% 9.69%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
Institutional Class Shares
[BAR GRAPH APPEARS HERE]
Total Return *
1991 10.10%
1992 (12.22%)
1993 28.97%
1994 6.83%
1995 9.03%
1996 5.01% as of 6/30/96
================================================================================
PORTFOLIO COMPOSITION
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Common Stocks 97.23%
Cash Equivalents 2.17%
Other 0.60%
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
1. Toyota Motor Corp. 1.73%
2. Royal Dutch Petroleum Co. 1.38%
3. Fuji Bank, Ltd. 1.13%
4. Sumitomo Bank 1.06%
5. Roche Holding AG Bearer 1.05%
6. Industrial Bank of Japan, Ltd. 1.01%
7. British Petroleum Co. Plc 0.99%
8. Sandoz AG Registered 0.92%
9. Nestle SA Registered 0.89%
10. Bayer AG 0.80%
- --------------------------------------------------------------------------------
TOP 5 COUNTRIES
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
1. Japan 38.35%
2. United Kingdom 15.44%
3. Germany 6.70%
4. Switzerland 6.14%
5. France 5.96%
================================================================================
** 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 Fund's 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.
5
<PAGE>
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
COMMON STOCKS (97.2%)+
<TABLE>
<CAPTION>
SHARES VALUE
-------------------
<S> <C> <C>
AUSTRALIA (2.6%)
Boral, Ltd. (building materials & components).............. 12,500 $ 32,465
Broken Hill Proprietary Co., Ltd.
(energy sources).......................................... 17,270 238,818
Coles Myer, Ltd. (merchandising)........................... 40,137 145,942
CRA, Ltd. (metals-nonferrous).............................. 16,447 253,204
National Australia Bank, Ltd.
(banking)................................................. 42,900 396,730
News Corp., Ltd.
(broadcasting & publishing)............................... 33,000 187,262
Pacific Dunlop, Ltd.
(multi-industry).......................................... 25,200 56,723
Pioneer International, Ltd. (building
materials & components)................................... 42,400 123,469
Smith (Howard), Ltd.
(multi-industry).......................................... 20,900 129,950
Westpac Banking Corp., Ltd.
(banking)................................................. 70,800 313,722
WMC, Ltd. (metals-nonferrous).............................. 44,600 319,430
-----------
2,197,715
-----------
AUSTRIA (0.6%)
Bank Austria AG (banking).................................. 1,750 140,492
Creditanstalt-Bankverein Stamm
(banking)................................................. 700 46,330
EA-Generali AG (insurance)................................. 500 148,194
Flughafen Wien AG
(transportation-airlines)................................. 2,700 185,380
-----------
520,396
-----------
BELGIUM (1.3%)
Electrabel, SA
(utilities-electrical & gas).............................. 1,800 384,372
Fortis AG (insurance)...................................... 3,200 419,803
PetroFina, SA (energy sources)............................. 820 257,027
-----------
1,061,202
-----------
DENMARK (0.8%)
Dampskibsselskabet AF 1912 Class B
(transportation-shipping)................................. 7 158,730
Dampskibsselskabet Svendborg AS Class B (transportation-
shipping)................................................. 4 130,599
Den Danske Bank (banking).................................. 1,800 120,608
FLS Industries AS Class B
(machinery & engineering)................................. 700 70,414
Novo Nordisk AS Class B
(health & personal care).................................. 1,400 198,114
-----------
678,465
-----------
FINLAND (0.7%)
Kesko
(food & household products)............................... 3,400 50,130
</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 $ 211,434
Metra Oy Class B
(machinery & engineering)................................. 2,300 102,972
Nokia AB Class A (electronic
components & instruments)................................. 4,500 165,630
Pohjola Insurance Group Class B
(insurance)............................................... 4,600 77,724
-----------
607,890
-----------
FRANCE (6.0%)
Alcatel Alsthom
(electrical & electronics)................................ 2,500 218,042
AXA (insurance)............................................ 6,000 328,199
Compagnie de Saint Gobain
(misc.-materials & components)............................ 1,670 223,506
Compagnie Financiere de Paribas, SA Class A (banking)...... 3,400 200,773
Compagnie Generale de
Geophysique SA
(energy equipment & service) (a).......................... 300 17,832
Compagnie Generale des Eaux
(business & public services).............................. 2,572 287,272
Credit National (banking).................................. 2,744 188,687
Dollfus-Mieg & Cie
(textiles & apparel)...................................... 2,450 108,982
Elf Aquitaine, SA (energy sources)......................... 4,800 353,001
Etablissements Economiques du Casino Guichard-Perrachon
(merchandising)........................................... 6,100 251,792
Groupe Danone
(food & household products)............................... 1,675 253,458
Lafarge, SA (building materials &
components)............................................... 1,936 117,143
L'Air Liquide (chemicals).................................. 2,631 464,592
L'Oreal (health & personal care)........................... 1,300 431,558
LVMH-Moet Hennessy Louis Vuitton
(beverages & tobacco)..................................... 2,310 547,875
Michelin (CGDE) Class B
(industrial components)................................... 3,200 156,392
PSA Peugeot, SA (automobiles).............................. 1,150 153,911
Sanofi SA (health & personal care)......................... 5,440 407,675
Societe Generale (banking)................................. 1,600 175,910
Union des Assurances de Paris (UAP)
(insurance)............................................... 5,000 101,494
-----------
4,988,094
-----------
GERMANY (6.7%)
AGIV AG fuer Industrie und Verkehrswesen (multi-industry).. 3,000 56,565
Allianz AG Holding (insurance)............................. 272 472,829
BASF AG (chemicals)........................................ 1,950 555,353
Bayer AG (chemicals)....................................... 19,000 668,433
Bayerische Hypotheken-und Wechsel-Bank AG (banking)........ 12,450 302,469
</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)
Bayerische Vereinsbank AG (banking)......................... 6,630 $ 185,553
Beiersdorf AG
(health & personal care)................................... 200 196,828
Daimler-Benz AG (automobiles) (a)........................... 920 493,503
Daimler-Benz AG Rights
(expire 7/1/96) (automobiles) (a).......................... 920 127
Deutsche Bank AG (banking).................................. 4,100 194,207
Dresdner Bank AG (banking).................................. 600 15,058
Heidelberger Zement AG
(building materials
& components).............................................. 110 75,446
Hochtief AG
(construction & housing)................................... 350 156,359
Mannesmann AG
(machinery & engineering).................................. 860 296,057
Muenchener Rueckversicherungs-Gesellschaft (insurance)...... 150 306,477
RWE AG (utilities-electrical & gas)......................... 8,400 326,698
Siemens AG
(electrical & electronics)................................. 11,500 616,349
STRABAG AG
(construction & housing)................................... 500 43,031
VEBA AG (utilities-electrical & gas)........................ 6,900 366,727
Viag AG (multi-industry).................................... 700 278,687
-----------
5,606,756
-----------
HONG KONG (3.2%)
Cathay Pacific Airways
(transportation-airlines).................................. 90,000 165,105
Cheung Kong (Holdings) Ltd.
(construction & housing)................................... 40,000 288,092
China Light & Power Co., Ltd.
(utilities-electrical & gas)............................... 31,200 141,476
Chinese Estates Holdings
(multi-industry)........................................... 60,000 53,484
Hang Lung Development Co.
(multi-industry)........................................... 38,000 71,429
Hang Seng Bank Ltd. (banking)............................... 32,000 322,458
Hong Kong & China Gas Co., Ltd.
(utilities-electrical & gas)............................... 73,613 117,449
Hong Kong Telecommunications Ltd.
(telecommunications)....................................... 150,000 269,355
Hopewell Holdings Ltd.
(construction & housing)................................... 100,000 54,260
Hutchison Whampoa Ltd.
(multi-industry)........................................... 69,000 434,113
Miramar Hotel & Investment Ltd.
(leisure & tourism)........................................ 50,000 110,455
New World Development Co., Ltd.
(multi-industry)........................................... 34,000 157,688
Shangri-La Asia Ltd.
(multi-industry)........................................... 38,000 53,265
Sun Hung Kai Properties Ltd.
(construction & housing)................................... 33,000 333,600
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------
<S> <C> <C>
HONG KONG (Continued)
Swire Pacific Ltd. Class A
(multi-industry).......................................... 9,500 $ 81,309
Winsor Industrial Corp., Ltd.
(textiles & apparel)...................................... 30,000 25,578
-----------
2,679,116
-----------
IRELAND (0.4%)
Allied Irish Banks Plc (banking)........................... 12,000 62,305
Independent Newspapers Plc
(broadcasting & publishing)............................... 50,000 231,515
Irish Life Plc (insurance)................................. 15,000 59,190
-----------
353,010
-----------
ITALY (2.5%)
Alleanza Assicurazioni (insurance)......................... 57 372
Assicurazioni Generali (insurance)......................... 12,100 279,027
Banca Commerciale Italiana
(banking)................................................. 48,500 97,441
Cementir SPA
(building materials
& components)............................................. 62,000 51,361
Credito Italiano (banking)................................. 66,000 77,319
Edison SPA (energy sources)................................ 18,200 109,821
Ente Nazionale Idrocarburi SPA
(ENI) (energy sources) (a)................................ 76,000 379,020
Fiat SPA (automobiles)..................................... 36,000 120,589
Finanziaria Autogrill SPA
(food & household products)............................... 45,000 51,575
Istituto Mobiliare Italiano SPA
(banking)................................................. 9,600 80,159
Istituto Nazionale delle Assicurazioni
(INA) (insurance)......................................... 65,700 97,926
Magneti Marelli (automobiles).............................. 53,000 75,541
Mediobanca SPA (financial services)........................ 9,850 62,551
Montedison SPA
(multi-industry) (a)...................................... 70,000 40,684
Pirelli SPA (industrial components)........................ 72,000 120,470
Snia BPD SPA (multi-industry).............................. 50,400 56,448
Telecom Italia SPA
(telecommunications)...................................... 90,000 193,446
Telecom Italia Mobile SPA
(telecommunications)...................................... 90,000 201,078
-----------
2,094,828
-----------
JAPAN (38.4%)
Acom Co., Ltd. (financial services)........................ 3,000 117,340
Ajinomoto Co., Inc.
(food & household products)............................... 5,000 59,718
Arabian Oil Co., Ltd.
(energy sources).......................................... 2,000 93,543
Asahi Bank, Ltd. (banking)................................. 38,000 439,998
Asahi Breweries, Ltd.
(beverages & tobacco)..................................... 14,000 163,381
Asahi Chemical Industry Co., Ltd.
(chemicals)............................................... 46,000 327,966
</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)
June 30, 1996 (Unaudited)
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-------------------
<S> <C> <C>
JAPAN (Continued)
Asahi Glass Co., Ltd.
(misc.-materials & components)............................ 12,000 $ 143,323
Ashikaga Bank Ltd. (banking)............................... 19,000 120,046
Bank of Tokyo-Mitsubishi Ltd.
(banking)................................................. 24,800 574,316
Bank of Yokohama, Ltd. (banking)........................... 11,000 99,789
Bridgestone Corp.
(industrial components)................................... 10,000 190,551
Brother Industries, Ltd. (appliances &
household durables)....................................... 12,000 73,412
Canon, Inc. (recreation & other
consumer goods)........................................... 18,000 374,173
Chiba Bank, Ltd. (banking)................................. 25,000 220,182
Chichibu Onoda Cement Corp. (building materials &
components)............................................... 22,000 126,163
Chiyoda Corp.
(machinery & engineering)................................. 5,000 59,262
Chugai Pharmaceutical Co., Ltd.
(health & personal care).................................. 10,000 97,555
Citizen Watch Co., Ltd. (recreation & other consumer
goods).................................................... 19,000 158,158
Dai Nippon Printing Co., Ltd. (business & public services). 7,000 135,300
Daiei, Inc. (merchandising)................................ 17,000 204,592
Daikin Industries Ltd.
(machinery & engineering)................................. 6,000 65,644
Dainippon Ink & Chemical Inc. (chemicals).................. 33,000 169,089
Daiwa House Industry Co., Ltd.
(construction & housing).................................. 8,000 123,995
Daiwa Securities Co., Ltd.
(financial services)...................................... 23,000 295,674
East Japan Railway Co.
(transportation-road & rail).............................. 65 340,759
Ebara Corp.
(machinery & engineering)................................. 6,000 95,731
Eisai Co., Ltd.
(health & personal care).................................. 6,000 113,237
Fanuc Co., Ltd. (electronic
components & instruments)................................. 5,000 198,757
Fuji Bank, Ltd. (banking).................................. 44,000 946,739
Fuji Photo Film Co., Ltd. (recreation
& other consumer goods)................................... 13,000 410,095
Fujitsu, Ltd.
(data processing & reproduction).......................... 31,000 282,636
Furukawa Electric Co., Ltd.
(industrial components)................................... 15,000 89,577
Gakken
(broadcasting & publishing)............................... 13,000 96,242
Gunma Bank (banking)....................................... 14,000 155,723
Hitachi, Ltd.
(electrical & electronics)................................ 57,000 530,077
Hitachi Zosen Corp. (metals-steel)......................... 20,000 113,236
Hokuriku Bank (banking).................................... 27,000 162,224
Honda Motor Co., Ltd.
(automobiles)............................................. 19,000 491,969
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------
<S> <C> <C>
JAPAN (Continued)
Honshu Paper Co., Ltd.
(forest products & paper)................................. 14,000 $ 99,177
Industrial Bank of Japan, Ltd.
(banking)................................................. 34,000 843,166
Ito-Yokado Co., Ltd.
(merchandising)........................................... 7,000 421,858
Japan Air Lines
(transportation-airlines) (a)............................. 36,000 291,132
Japan Energy Corp.
(energy sources).......................................... 34,000 126,164
Japan Steel Works (metals-steel) (a)....................... 58,000 190,368
Joyo Bank (banking)........................................ 18,000 136,375
Kajima Corp.
(construction & housing).................................. 20,000 206,050
Kamigumi Co., Ltd.
(business & public services).............................. 22,000 200,581
Kansai Electric Power Co., Inc. (utilities-electrical &
gas)...................................................... 8,800 201,383
Kao Corp.
(food & household products)............................... 4,000 53,974
Kawasaki Heavy Industries (construction & housing)......... 22,000 111,322
Kawasaki Steel Corp. (metals-steel)........................ 66,000 237,686
Keihin Electric Express Railway
(transportation-road & rail).............................. 16,000 94,674
Kinki Nippon Railway Co., Ltd.
(transportation-road & rail).............................. 55,000 395,642
Kirin Brewery Co., Ltd.
(beverages & tobacco)..................................... 7,000 85,520
Komatsu, Ltd.
(machinery & engineering)................................. 15,000 147,699
Kubota Corp.
(machinery & engineering)................................. 39,000 257,080
Kumagai Gumi Co., Ltd.
(construction & housing).................................. 33,000 132,383
Kurabo Industries
(textiles & apparel)...................................... 15,000 59,900
Kyocera Corp. (electronic components & instruments)........ 3,000 211,977
Kyowa Hakko Kogyo
(health & personal care).................................. 8,000 76,585
Makita Corp.
(electrical & electronics)................................ 4,000 64,915
Marubeni Corp.
(wholesale & international trade)......................... 16,000 87,525
Marui Co., Ltd. (merchandising)............................ 8,000 177,240
Matsushita Electric Industrial Co., Ltd. (appliances &
household durables)....................................... 32,000 595,178
Mitsubishi Chemical Corp.
(chemicals)............................................... 15,000 69,200
Mitsubishi Corp. (multi-industry).......................... 28,000 367,609
Mitsubishi Estate Co., Ltd.
(construction & housing).................................. 19,000 261,575
Mitsubishi Heavy Industries, Ltd.
(machinery & engineering)................................. 72,000 625,586
Mitsubishi Oil Co. (energy sources)........................ 8,000 68,197
</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)
Mitsubishi Trust & Banking (financial services)............ 23,000 $ 387,941
Mitsui & Co.
(wholesale & international trade)......................... 23,000 208,228
Mitsui Fudosan Co., Ltd. (construction & housing).......... 15,000 202,404
Mitsui Marine & Fire Insurance
(insurance)............................................... 3,000 23,823
Mitsui O.S.K. Lines, Ltd.
(transportation-shipping) (a)............................. 49,000 168,869
Mitsui Trust & Banking
(financial services)...................................... 19,000 221,732
Mitsukoshi, Ltd. (merchandising)........................... 24,000 256,013
NEC Corp.
(electrical & electronics)................................ 27,000 292,937
New Oji Paper Co., Ltd.
(forest products & paper)................................. 16,000 137,998
NGK Insulators
(industrial components)................................... 11,000 123,356
Niigata Engineering Co., Ltd.
(machinery & engineering) (a)............................. 11,000 41,821
Nikon Corp. (multi-industry)............................... 9,000 103,390
Nippon Express Co., Ltd.
(transportation-road & rail).............................. 32,000 312,176
Nippon Fire & Marine Insurance
(insurance)............................................... 3,000 19,556
Nippon Light Metal Co.
(metals-nonferrous)....................................... 22,000 124,760
Nippon Meat Packers, Inc.
(food & household products)............................... 12,000 170,676
Nippon Oil Co., Ltd.
(energy sources).......................................... 17,000 115,160
Nippon Steel Corp. (metals-steel).......................... 83,000 284,532
Nippondenso Co., Ltd.
(industrial components)................................... 23,000 499,079
Nissan Motor Co., Ltd.
(automobiles)............................................. 32,000 283,875
Nisshinbo Industries
(textiles & apparel)...................................... 17,000 167,392
Nissin Food Products
(food & household products)............................... 9,000 230,576
NKK Corp. (metals-steel) (a)............................... 66,000 199,775
Nomura Securities Co., Ltd.
(financial services)...................................... 30,000 585,330
Obayashi Corp.
(construction & housing).................................. 28,000 252,986
Olympus Optical Co., Ltd. (recreation & other
consumer goods)........................................... 20,000 200,580
Orient Corp. (financial services).......................... 30,000 196,932
Osaka Gas Co.
(utilities-electrical & gas).............................. 15,000 54,840
Penta-Ocean Construction
(construction & housing).................................. 10,000 67,376
Pioneer Electronic Corp. (appliances
& household durables)..................................... 5,000 118,981
Sakura Bank, Ltd. (banking)................................ 48,000 533,909
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------
<S> <C> <C>
JAPAN (Continued)
Sankyo Co., Ltd.
(health & personal care).................................. 11,000 $ 284,824
Sanrio Co., Ltd.
(business & public services) (a).......................... 5,000 57,895
Sanyo Electric Co., Ltd. (appliances
& household durables)..................................... 32,000 195,181
Sapporo Breweries
(beverages & tobacco)..................................... 28,000 262,942
Sharp Corp. (appliances &
household durables)....................................... 18,000 315,094
Shimizu Corp.
(construction & housing).................................. 18,000 198,574
Shin-Etsu Chemical Co. (chemicals)......................... 11,550 221,140
Shionogi & Co.
(health & personal care).................................. 9,000 77,297
Shiseido Co., Ltd.
(health & personal care).................................. 13,000 165,935
Shizuoka Bank, Ltd. (banking).............................. 16,000 205,686
Sony Corp. (appliances & household durables)............... 4,400 289,237
Sumitomo Bank (banking).................................... 46,000 889,116
Sumitomo Chemical Co.
(chemicals)............................................... 30,000 143,049
Sumitomo Corp.
(wholesale & international trade)......................... 34,000 301,927
Sumitomo Electric Industries
(industrial components)................................... 21,000 300,596
Sumitomo Marine & Fire
(insurance)............................................... 9,000 78,363
Sumitomo Metal Industries, Ltd
(metals-steel)............................................ 38,000 116,409
Sumitomo Metal Mining Co.
(metals-nonferrous)....................................... 14,000 121,132
Taisei Corp.
(construction & housing).................................. 7,000 49,652
Taisho Pharmaceutical Co., Ltd.
(health & personal care).................................. 10,000 216,080
Taiyo Yuden Co., Ltd. (electronic components &
instruments).............................................. 11,000 138,400
Takashimaya Co. (merchandising)............................ 13,000 201,492
Takeda Chemical Industries
(health & personal care).................................. 13,000 229,938
Teikoku Oil (energy sources)............................... 20,000 137,124
Tobu Railway Co., Ltd.
(transportation-road & rail).............................. 16,000 104,885
Tohoku Electric Power Co., Inc.
(utilities-electrical & gas).............................. 6,000 134,024
Tokai Bank (banking)....................................... 29,000 375,449
Tokio Marine & Fire Insurance Co.
(insurance)............................................... 34,000 452,581
Tokyo Dome Corp.
(leisure & tourism)....................................... 6,000 120,895
Tokyo Electric Power
(utilities-electrical & gas).............................. 13,100 332,034
Tokyo Electron, Ltd. (electronic components & instruments). 5,000 145,421
</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)
June 30, 1996 (Unaudited)
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-------------------
<S> <C> <C>
JAPAN (Continued)
Tokyo Gas Co., Ltd.
(utilities-electrical & gas).............................. 68,000 $ 247,989
Tokyo Steel Manufacturing
(machinery & engineering)................................. 4,000 78,409
Tokyu Corp.
(transportation-road & rail).............................. 18,000 137,032
Toppan Printing Co., Ltd.
(business & public services).............................. 22,000 320,927
Tostem Corp. (building materials & components)............. 5,000 147,245
Toto, Ltd. (building materials & components)............... 3,000 45,131
Toyo Seikan Kaisha
(misc.-materials & components)............................ 6,000 208,969
Toyoda Automatic Loom Works
(machinery & engineering)................................. 4,000 79,868
Toyota Motor Corp. (automobiles)........................... 58,000 1,448,921
Ube Industries, Ltd.
(misc.-materials & components)............................ 44,000 167,284
Yamaha Corp. (recreation & other consumer goods)........... 11,000 181,525
Yamaichi Securities
(financial services)...................................... 10,000 68,562
Yamanouchi Pharmaceutical
(health & personal care).................................. 2,000 43,398
Yasuda Trust & Banking
(financial services)...................................... 15,000 94,773
-----------
32,077,301
-----------
MALAYSIA (2.4%)
Golden Hope Plantations Berhad
(food & household products)............................... 40,000 62,196
Hong Leong Properties Berhad
(construction & housing).................................. 60,000 69,732
Kuala Lumpur Kepong Berhad
(forest products & paper)................................. 70,500 177,998
Leader Universal Holdings Berhad
(electrical & electronics)................................ 30,000 84,759
Malayan Banking Berhad (banking)........................... 22,000 211,603
Malaysia International Shipping Berhad (transportation-
shipping)................................................. 37,333 115,954
Malaysian Airline System Berhad
(transportation-airlines)................................. 50,000 159,300
Malaysian Helicopter Services Berhad
(transportation-airlines)................................. 11,600 17,014
Malaysian Resources Corp. Berhad
(construction & housing).................................. 19,000 46,447
Metroplex Berhad
(construction & housing).................................. 80,000 85,920
Multi-Purpose Holdings Berhad
(multi-industry).......................................... 27,000 43,497
Perlis Plantations Berhad
(multi-industry).......................................... 25,000 96,183
Resorts World Berhad
(leisure & tourism)....................................... 18,000 103,156
Sime Darby Berhad (multi-industry)......................... 80,000 221,216
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------
<S> <C> <C>
MALAYSIA (Continued)
Technology Resources Industries Berhad (multi-industry)
(a)....................................................... 29,000 $ 101,111
Telekom Malaysia Berhad
(telecommunications)...................................... 30,000 266,907
Tenaga Nasional Berhad
(utilities-electrical & gas).............................. 29,000 122,032
-----------
1,985,025
-----------
NETHERLANDS (4.1%)
ABN Amro Holding NV (banking).............................. 4,400 236,113
Elsevier NV
(broadcasting & publishing)............................... 29,670 450,183
Hollandsche Benton Groep NV
(construction & housing).................................. 1,000 191,567
ING Groep NV (insurance)................................... 15,482 461,670
Koninklijke Hoogovens NV
(metals-steel)............................................ 1,000 37,025
Koninklijke KNP BT NV
(forest products & paper)................................. 3,200 76,673
Koninklijke Nedlloyd Groep NV
(transportation-shipping)................................. 2,000 46,046
Koninklijke Pakhoed NV
(transportation-shipping)................................. 1,000 26,070
Philips Electronics NV (appliances & household durables)... 6,500 211,338
Royal Dutch Petroleum Co.
(energy sources).......................................... 7,455 1,151,238
Stork NV (multi-industry).................................. 2,700 77,505
Unilever NV
(food & household products)............................... 3,083 446,111
-----------
3,411,539
-----------
NEW ZEALAND (0.3%)
Carter Holt Harvey Ltd.
(forest products & paper)................................. 23,100 52,696
Fletcher Challenge Building (building materials &
components)............................................... 8,775 17,132
Fletcher Challenge Energy
(oil/gas-exploration)..................................... 8,775 19,357
Fletcher Challenge Forest
(forest products & paper)................................. 30,174 37,413
Fletcher Challenge Paper
(forest products & paper)................................. 17,550 33,903
Telecom Corp. of New Zealand Ltd.
(telecommunications)...................................... 24,000 100,622
-----------
261,123
-----------
NORWAY (0.5%)
Elkem ASA Class A
(metals-nonferrous)....................................... 5,600 77,151
Norsk Hydro ASA (energy sources)........................... 6,800 332,865
-----------
410,016
-----------
</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>
SINGAPORE (1.2%)
City Developments, Ltd.
(real estate)............................................. 29,000 $ 226,009
Development Bank of Singapore, Ltd.
(banking)................................................. 8,750 109,108
First Capital Corp., Ltd.
(multi-industry).......................................... 24,000 59,513
Singapore Airlines, Ltd.
(transportation-airlines)................................. 15,000 158,347
Singapore Telecommunications, Ltd.
(telecommunications)...................................... 92,000 245,079
United Overseas Bank, Ltd.
(banking)................................................. 20,250 193,683
-----------
991,739
-----------
SPAIN (2.0%)
Banco Bilbao Vizcaya, SA, Registered Shares (banking)...... 6,367 257,737
Banco Espanol de Credito, SA
(Banesto) (banking) (a)................................... 1,033 6,679
Banco Santander, SA (banking).............................. 3,100 144,590
Compania Sevillana de Electricidad
(utilities-electrical & gas).............................. 6,049 55,672
Empresa Nacional de Cellulosas, SA
(forest products & paper)................................. 1,000 14,195
Empresa Nacional de Electricidad, SA
(utilities-electrical & gas).............................. 4,300 267,972
Gas Natural SDG
(utilities-electrical & gas).............................. 1,200 251,773
Iberdrola, SA
(utilities-electrical & gas).............................. 18,500 189,745
Repsol, SA (energy sources)................................ 4,200 145,939
Telefonica de Espana
(telecommunications)...................................... 19,056 350,766
-----------
1,685,068
-----------
SWEDEN (2.0%)
ABB AB Class B
(utilities-electrical & gas).............................. 2,500 264,110
Astra AB Class A
(health & personal care).................................. 8,205 362,303
Stadshypotek AB (banking).................................. 3,000 66,913
Svenska Cellulosa AB Class B
(forest products & paper)................................. 10,000 205,712
Swedish Match AB
(beverages & tobacco)..................................... 13,030 40,452
Telefonaktiebolaget LM Ericsson Class B
(telecommunications)...................................... 19,672 423,947
Volvo AB Class B (automobiles)............................. 13,030 296,516
-----------
1,659,953
-----------
SWITZERLAND (6.1%)
Ciba-Geigy AG Bearer (chemicals)........................... 315 382,034
Ciba-Geigy AG Registered
(chemicals)............................................... 285 347,244
CS Holding AG Registered
(financial services)...................................... 3,750 356,532
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------
<S> <C> <C>
SWITZERLAND (Continued)
Grands Magasins Jelmoli SA Bearer
(merchandising) (a)....................................... 300 $ 170,177
Holderbank Financiere Glaris AG Bearer (building materials
& components)............................................. 134 107,059
Holderbank Financiere Glaris AG Registered (building
materials & components)................................... 1,200 191,748
Nestle SA Registered
(food & household products)............................... 650 742,106
Roche Holding AG Bearer
(health & personal care).................................. 115 876,989
Sandoz AG Bearer
(health & personal care).................................. 75 85,268
Sandoz AG Registered
(health & personal care).................................. 670 766,010
Schindler Holding AG Participating Certificate
(misc.-materials & components)............................ 125 132,826
Schindler Holding AG Registered
(misc.-materials & components)............................ 75 79,096
Schweizerischer Bankverein Registered (banking)............ 1,070 211,155
SGS Societe Generale de Surveillance Holding SA Bearer
(business & public services).............................. 110 263,214
SGS Societe Generale de Surveillance Holding SA Registered
(business & public services).............................. 250 109,856
Sika Finanz AG Registered (building materials &
components)............................................... 2,400 96,833
Societe Suisse pour la Microelectronique et l'Horogerie AG
Registered (recreation & other consumer goods)............ 500 78,097
Sulzer AG Participating Certificate
(industrial components)................................... 100 59,921
Sulzer AG Registered
(industrial components)................................... 125 80,295
-----------
5,136,460
-----------
UNITED KINGDOM (15.4%)
Abbey National Plc (banking)............................... 39,100 328,675
Associated British Foods Plc
(food & household products)............................... 29,400 176,788
Barclays Plc (banking)..................................... 25,211 302,804
Bass Plc (beverages & tobacco)............................. 14,600 183,525
B.A.T Industries Plc
(beverages & tobacco)..................................... 44,666 347,702
Boots Co. Plc (merchandising).............................. 19,101 171,842
British Gas Plc (energy sources)........................... 82,100 229,617
British Petroleum Co. Plc
(energy sources).......................................... 94,427 828,238
British Sky Broadcasting Group Plc
(broadcasting & publishing)............................... 40,000 273,468
British Steel Plc (metals-steel)........................... 54,500 139,302
</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)
June 30, 1996 (Unaudited)
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-------------------
<S> <C> <C>
UNITED KINGDOM (Continued)
British Telecommunications Plc
(telecommunications)...................................... 99,095 $ 532,745
BTR Plc (multi-industry)................................... 63,913 251,741
Cable & Wireless Plc
(telecommunications)...................................... 40,976 271,224
Chubb Security Plc
(business & public services).............................. 20,520 102,984
Coats Viyella Plc
(textiles & apparel)...................................... 23,900 63,873
Costain Group Plc
(construction & housing) (a).............................. 13,050 7,907
Courtaulds Plc (chemicals)................................. 5,663 37,396
De La Rue Plc
(forest products & paper)................................. 7,300 67,489
General Accident Plc (insurance)........................... 16,500 167,414
General Electric Co. Plc
(electrical & electronics)................................ 56,040 302,145
Glaxo Wellcome Plc
(health & personal care).................................. 48,208 649,053
Granada Group Plc
(leisure & tourism)....................................... 11,410 152,824
Grand Metropolitan Plc
(multi-industry).......................................... 48,764 323,535
Guardian Royal Exchange Plc
(insurance)............................................... 31,700 122,153
Guinness Plc (beverages & tobacco)......................... 25,386 184,599
Hanson Plc (multi-industry)................................ 37,470 105,088
Harrisons & Crosfield Plc
(misc.-materials & components)............................ 29,200 61,703
HSBC Holdings Plc (HKD par)
(financial services)...................................... 28,300 433,567
Imperial Chemical Industries Plc
(chemicals)............................................... 20,553 251,649
Kingfisher Plc (merchandising)............................. 16,000 160,848
Ladbroke Group Plc
(leisure & tourism)....................................... 65,000 181,792
LASMO Plc (energy sources)................................. 29,400 80,397
Lloyds TSB Group Plc (banking)............................. 53,328 261,010
Marks & Spencer Plc
(merchandising)........................................... 67,789 495,578
National Grid Group Plc
(utilities-electrical & gas).............................. 4,447 11,781
National Power Plc
(utilities-electrical & gas).............................. 25,000 201,992
Next Plc (merchandising)................................... 15,000 131,217
Northern Electric Plc
(utilities-electrical & gas).............................. 4,158 36,823
Prudential Corp. Plc (insurance)........................... 38,200 240,981
Racal Electronic Plc
(multi-industry).......................................... 25,020 118,570
Rank Organisation Plc
(leisure & tourism)....................................... 40,500 313,385
Reuters Holdings Plc
(broadcasting & publishing)............................... 37,000 447,852
Rolls-Royce Plc (aerospace & military technology).......... 61,985 215,739
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------
<S> <C> <C>
UNITED KINGDOM (Continued)
Royal Bank of Scotland Group Plc
(banking)............................................... 25,900 $ 198,399
Royal Insurance Holdings Plc
(insurance)............................................. 24,800 153,366
RTZ Corp. Plc (metals-nonferrous)........................ 21,400 316,885
Sainsbury Plc (merchandising)............................ 30,082 177,150
SmithKline Beecham Plc
(health & personal care)................................ 43,176 461,895
Tarmac Plc (building materials & components)............. 29,168 50,306
Tesco Plc (merchandising)................................ 50,058 228,670
Thames Water Plc
(utilities-electrical & gas)............................ 14,000 123,340
Trafalgar House Plc
(multi-industry) (a).................................... 49,147 38,187
Unilever Plc
(food & household products)............................. 10,089 200,656
United Biscuits (Holdings) Plc
(food & household products)............................. 10,091 33,554
Vodafone Group Plc
(multi-industry)........................................ 95,135 354,026
Williams Holdings Plc (building materials &
components)............................................. 37,000 194,890
Wilson Connolly Holdings Plc
(construction & housing)................................ 46,300 117,982
Zeneca Group Plc (chemicals)............................. 13,553 299,664
----------
12,917,985
----------
Total Common Stocks
(Cost $62,250,291)...................................... 81,323,681(e)
----------
PREFERRED STOCKS (0.5%)
AUSTRALIA (0.1%)
News Corp. Ltd. Preference Shares
(broadcasting & publishing)............................. 16,500 80,515
---------
GERMANY (0.3%)
RWE AG Preference Shares
(utilities-electrical & gas)............................ 8,000 245,706
---------
ITALY (0.1%)
Fiat SPA Preference Shares
(automobiles)........................................... 35,000 61,415
---------
Total Preferred Stocks
(Cost $314,219)......................................... 387,636
---------
WARRANTS (0.0%) (b)
HONG KONG (0.0%) (b)
Hong Kong & China Gas Co., Ltd.
(Call Warrants-expire 9/30/97-strike price HK11.50)
(utilities-electrical & gas) (a)......................... 6,134 1,605
--------
</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 (0.0%) (b)
Schindler Holding AG (Call Warrants-expire
12/16/96-strike price SF1,385.00) (misc.-
materials & components) (a)...................... 200 $ 359
-----------
UNITED KINGDOM (0.0%) (b)
BTR Plc (Call Warrants-
expire 11/30/97-strike price (Pounds)2.58)
(multi-industry) (a)............................. 418 133
BTR Plc (Call Warrants-
expire 11/26/98-strike price (Pounds)4.05)
(multi-industry) (a)............................. 1,227 148
-----------
281
-----------
Total Warrants
(Cost $1,282).................................... 2,245
-----------
SHORT-TERM
INVESTMENTS (1.7%)
<CAPTION>
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
U.S. GOVERNMENT (1.7%)
United States Treasury Bills
5.09%, due 10/17/96.............................. $ 100,000 98,409
5.10%, due 10/17/96.............................. 150,000 147,614
5.125%, due 10/17/96 (c)......................... 1,200,000 1,180,908
-----------
Total Short-Term Investments
(Cost $1,427,728)................................ 1,426,931
-----------
Total Investments
(Cost $63,993,520) (f)........................... 99.4% 83,140,493 (g)
Cash and Other Assets,
Less Liabilities................................. 0.6 500,123
---------- -----------
Net Assets........................................ 100.0% $83,640,616
========== ===========
FUTURES
CONTRACTS (0.0%) (b)
<CAPTION>
UNREALIZED
CONTRACTS APPRECIATION/
LONG (DEPRECIATION)
----------------------------
<S> <C> <C>
JAPAN (0.0%) (b)
Japanese Yen, TOPIX Index, September 1996......... 6 $ 9,391 (d)
-----------
UNITED KINGDOM (0.0%) (b)
Pound Sterling, FTSE 100 Index, September 1996.... 5 (10,101)(d)
-----------
Total Futures Contracts
(Settlement Value $1,662,160).................... $ (710)
===========
</TABLE>
- --------
(a) Non-income producing securities.
(b) Less than one tenth of a percent.
(c) Partially segregated as collateral for futures contracts.
(d) Represents difference between the value of the contract at the time it was
opened and the value at June 30, 1996.
(e) The combined market value of common stocks and Index futures represents
99.2% of net assets.
(f) The cost for Federal income tax purposes is $64,304,582.
(g) At June 30, 1996 net unrealized appreciation for securities was
$18,835,911, 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 $21,060,637 and aggregate
gross unrealized depreciation for all investments on which there was an
excess of cost over market value of $2,224,726.
(h) Foreign cash held at June 30, 1996:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
-------------- ------- -------
<S> <C> <C>
(Yen)2,300,000 $21,842 $20,969
(Pounds)12,079 18,567 18,771
SF 5,800 4,941 4,634
------- -------
$45,350 $44,374
======= =======
</TABLE>
(i) The following abbreviations are used throughout the portfolio:
HK--Hong Kong Dollar
(Yen)--Japanese Yen
(Pounds)--Pound Sterling
SF--Swiss Franc
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)
June 30, 1996 (Unaudited)
The table below sets forth the diversification of EAFE Index Fund investments
by industry.
COMMON STOCKS,
PREFERRED STOCKS,
WARRANTS &
SHORT-TERM INVESTMENTS
<TABLE>
<CAPTION>
VALUE PERCENT +
---------------------
<S> <C> <C>
Aerospace & Military Technology........................... $ 215,739 0.3%
Appliances & Household Durables........................... 1,798,420 2.2
Automobiles............................................... 3,426,367 4.1
Banking................................................... 10,824,338 12.9
Beverages & Tobacco....................................... 1,936,467 2.3
Broadcasting & Publishing................................. 1,767,036 2.1
Building Materials & Components........................... 1,376,391 1.6
Business & Public Services................................ 1,420,133 1.7
Chemicals................................................. 3,936,809 4.7
Construction & Housing.................................... 3,001,215 3.6
Data Processing & Reproduction............................ 282,636 0.3
Electrical & Electronics.................................. 2,109,225 2.5
Electronic Components & Instruments....................... 860,185 1.0
Energy Equipment & Service................................ 17,832 0.0#
Energy Sources............................................ 4,646,169 5.6
Financial Services........................................ 3,480,674 4.2
Food & Household Products................................. 2,531,517 3.0
Forest Products & Paper................................... 711,062 0.9
Health & Personal Care.................................... 5,740,542 6.9
Industrial Components..................................... 1,499,767 1.8
Insurance................................................. 3,680,076 4.4
Leisure & Tourism......................................... 982,507 1.2
Machinery & Engineering................................... 1,920,544 2.3
Merchandising............................................. 3,194,410 3.8
</TABLE>
<TABLE>
<CAPTION>
VALUE PERCENT +
---------------------
<S> <C> <C>
Metals-Nonferrous......................................... $ 1,207,839 1.4%
Metals-Steel.............................................. 1,323,056 1.6
Miscellaneous-Materials & Components...................... 1,195,064 1.4
Multi-Industry............................................ 3,364,188 4.0
Oil/Gas-Exploration....................................... 19,357 0.0#
Real Estate............................................... 226,009 0.3
Recreation & Other Consumer Goods......................... 1,460,524 1.7
Telecommunications........................................ 2,855,169 3.4
Textiles & Apparel........................................ 425,725 0.5
Transportation-Airlines................................... 976,278 1.2
Transportation-Road & Rail................................ 1,385,168 1.7
Transportation-Shipping................................... 857,700 1.0
U.S. Government........................................... 1,426,931 1.7
Utilities-Electrical & Gas................................ 4,092,135 4.9
Wholesale & International Trade........................... 965,289 1.2
----------- -----
83,140,493 99.4
Cash and Other Assets,
Less Liabilities......................................... 500,123 0.6
----------- -----
Net Assets................................................ $83,640,616 100.0%
=========== =====
</TABLE>
- --------
+ Percentages indicated are based on Fund net assets.
# Less than one tenth of a percent.
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 STATEMENT OF OPERATIONS
As of June 30, 1996 (Unaudited) For the six months ended June 30,
1996 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$63,993,520).................................................... $83,140,493
Cash denominated in foreign currencies (identified cost
$45,350)........................................................ 44,374
Cash............................................................. 107,931
Receivables:
Dividends and interest........................................... 516,898
Investment securities sold....................................... 46,281
Fund shares sold................................................. 27,910
Other assets..................................................... 98
-----------
Total assets................................................... 83,883,985
-----------
LIABILITIES:
Payables:
Investment securities purchased.................................. 154,327
Administrator.................................................... 22,998
Adviser.......................................................... 10,211
Custodian........................................................ 9,290
Transfer agent................................................... 4,459
Directors........................................................ 1,492
Fund shares redeemed............................................. 1,410
Accrued expenses................................................. 38,472
Variation margin payable on futures contracts 710
-----------
Total liabilities.............................................. 243,369
-----------
Net assets....................................................... $83,640,616
===========
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class.............................................. $ 5,844
Institutional Service Class...................................... 29
Additional paid-in capital....................................... 62,630,784
Accumulated undistributed net investment income.................. 473,108
Accumulated undistributed net realized gain on investments....... 1,387,768
Accumulated net realized loss on foreign currency transactions... (973)
Net unrealized appreciation on investments....................... 19,146,263
Net unrealized depreciation on translation of assets and
liabilities in foreign currencies............................... (2,207)
-----------
Net assets....................................................... $83,640,616
===========
Institutional Class
Net assets applicable to outstanding shares...................... $83,228,936
===========
Shares of capital stock outstanding.............................. 5,844,361
===========
Net asset value per share outstanding............................ $ 14.24
===========
Institutional Service Class
Net assets applicable to outstanding shares...................... $ 411,680
===========
Shares of capital stock outstanding.............................. 29,038
===========
Net asset value per share outstanding............................ $ 14.18
===========
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)..................................................... $1,013,887
Interest.......................................................... 24,286
----------
Total income.................................................... 1,038,173
----------
Expenses: (Note 2)
Administration (Note 3)........................................... 325,573
Advisory (Note 3)................................................. 61,045
Custodian......................................................... 25,725
Transfer agent.................................................... 14,999
Registration...................................................... 14,961
Auditing.......................................................... 9,238
Legal............................................................. 5,254
Shareholder communication......................................... 4,925
Directors......................................................... 2,593
Service (Note 3).................................................. 429
Miscellaneous..................................................... 37,043
----------
Total expenses before
reimbursement.................................................. 501,785
Expense reimbursement from Administrator (Note 3)................. (118,808)
----------
Net expenses.................................................... 382,977
----------
Net investment income............................................. 655,196
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) from:
Security transactions............................................. 390,163
Futures transactions.............................................. 43,006
Foreign currency transactions..................................... (973)
----------
Net realized gain on investments and foreign currency
transactions..................................................... 432,196
----------
Net change in unrealized appreciation (depreciation) on
investments:
Security transactions............................................. 2,967,286
Futures transactions.............................................. (710)
Translation of assets and liabilities in foreign currencies....... (16,904)
----------
Net unrealized gain on investments and foreign currencies......... 2,949,672
----------
Net realized and unrealized gain on investments and foreign
currency transactions............................................ 3,381,868
----------
Net increase in net assets resulting from operations.............. $4,037,064
==========
</TABLE>
- --------
(a) Dividends recorded net of foreign withholding taxes of $155,430.
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 six months ended June 30, 1996 (Unaudited) and the year ended December
31, 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income................................ $ 655,196 $ 779,846
Net realized gain on investments..................... 433,169 1,764,177
Net realized loss on foreign currency transactions... (973) (631,201)
Net change in unrealized appreciation on
investments......................................... 2,966,576 4,874,109
Net change in unrealized appreciation (depreciation)
on translation of assets and liabilities in foreign
currencies.......................................... (16,904) 10,506
----------- -----------
Net increase in net assets resulting from
operations.......................................... 4,037,064 6,797,437
----------- -----------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class................................. -- (229,241)
Institutional Service Class......................... -- (736)
From net realized gain on investments and foreign
currency transactions:
Institutional Class................................. -- (812,185)
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)
----------- -----------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................. 11,652,697 24,179,826
Institutional Service Class......................... 192,739 248,855
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................. -- 1,222,774
Institutional Service Class......................... -- 3,923
----------- -----------
11,845,436 25,655,378
Cost of shares redeemed:
Institutional Class................................. (12,531,148) (23,146,316)
Institutional Service Class......................... (55,180) --
----------- -----------
Increase (decrease) in net assets derived from
capital share transactions......................... (740,892) 2,509,062
----------- -----------
Net increase in net assets.......................... 3,296,172 8,079,643
NET ASSETS:
Beginning of period.................................. 80,344,444 72,264,801
----------- -----------
End of period........................................ $83,640,616 $80,344,444
=========== ===========
Accumulated undistributed net investment
income/(excess distribution)........................ $ 473,108 $ (182,088)
=========== ===========
</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
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS INSTITUTIONAL CLASS
------------- ------------- ------------- ------------- ----------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31 JANUARY 2, 1991(A)
ENDED ----------------------------------------------------- THROUGH
JUNE 30, 1996* 1995 1994 1993 1992 DECEMBER 31, 1991
---------------------------- --------------------------- ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of
period............. $ 13.56 $13.51 $ 12.63 $12.63 $ 12.03 $ 9.60 $ 11.01 $ 10.00
------- ------- ------- ------- ------- ------- ------- -------
Net investment
income............. 0.09 0.08 0.13 0.14 0.10 0.06 0.08 0.08
Net realized and
unrealized gain
(loss) on
investments........ 0.59 0.59 1.11 1.05 0.70 2.71 (1.41) 0.93
Net realized and
unrealized gain
(loss) on foreign
currency
transactions....... (0.00)(b) (0.00)(b) (0.10) (0.10) 0.03 (0.01) (0.01) --
------- ------- ------- ------- ------- ------- ------- -------
Total from
investment
operations......... 0.68 0.67 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...... $ 14.24 $ 14.18 $ 13.56 $ 13.51 $ 12.63 $ 12.03 $ 9.60 $ 11.01
======= ======= ======= ======= ======= ======= ======= =======
Total investment
return (c)......... 5.01% 4.96% 9.03% 8.63% 6.83% 28.97% (12.22%) 10.10%
Ratios (to average
net assets)/
Supplemental Data:
Net investment
income............ 1.61%+ 1.36%+ 1.01% 0.76% 0.57% 0.53% 0.76% 0.71%
Net expenses....... 0.94%+ 1.19%+ 1.03% 1.28% 1.26% 1.27% 1.32% 1.40%
Expenses (before
reimbursement).... 1.23%+ 1.48%+ 1.24% 1.49% 1.26% 1.27% 1.32% 1.40%
Portfolio turnover
rate............... 2% 2% 6% 6% 7% 16% 1% 1%
Average commission
rate paid.......... $0.0147 $0.0147 (d) (d) (d) (d) (d) (d)
Net assets at end of
period (in 000's).. $83,229 $ 412 $80,087 $ 257 $72,265 $53,714 $40,531 $45,160
</TABLE>
- --------
* Unaudited.
+ Annualized.
(a) Commencement of operations.
(b) Less than one cent per share.
(c) Total return is not annualized.
(d) Disclosure of amount required for fiscal years beginning on or after
September 1, 1995.
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
================================================================================
Fund Highlights for the six months ended June 30, 1996
.Exceeded the S&P 500 Stock Index+ and the average Lipper(S) growth fund for the
six months ended 6/30/96
.Strong performance from HFS, our largest holding as of 6/30/96, and Nike, our
largest purchase in the first six months of 1996
For the six months ended June 30, 1996, the MainStay Institutional Growth Equity
Fund returned 11.04% and 10.85% for Institutional Class and Service Class
shares, respectively. During the reporting period, the Fund outpaced both the
average Lipper growth fund and the S&P 500 Stock Index, with the average Lipper
growth fund returning 10.08% and the S&P 500 returning 10.09%.
After a lackluster 1995, consumer cyclicals bounced back in March. Our bottom-up
stock selection benefited the portfolio, with securities such as Bed Bath &
Beyond, Lowe's, and Home Depot recording double-digit returns in March. We were
attracted to Nike for its accelerating sales, new product introductions, and
strong potential in an Olympic year, and made it our largest purchase in the
first half of 1996. With an outstanding return in the first half of 1996, Nike
shared the footlights with Nine West among the portfolio's top performers.
The Fund's top holding, HFS, was also its best performer. The company announced
the acquisition of Avis, adding a recognized car rental brand to its hotel and
real estate brand name businesses. Other strong consumer stocks in the Fund's
portfolio in the second quarter were Mirage Resorts and CUC International, a
membership-based consumer services company.
The Fund's financial stocks had mixed performance in the first six months of
1996. After a surprisingly strong employment report in early March, any hopes of
the Fed lowering interest rates were dashed, the bond market dropped sharply,
and interest-sensitive bank and insurance stocks suffered. As rates began to
climb, we took some profits, which benefited the portfolio. Nevertheless, we
remained overweighted in financials relative to the S&P 500 Stock Index because
the fundamentals were, and continue to be, compelling for selected stocks in the
group. Therefore, we concluded the first quarter with an emphasis on consumer
finance companies.
In the second quarter, a volatile bond market and credit quality concerns led
financial stocks to underperform. The Bank of New York announced larger-than-
expected reserves for bad consumer loans, which led us to sell the stock before
the end of the quarter. Green Tree Financial and First USA, which we believe
continue to have strong potential, were notable underperformers for the
portfolio in this environment. Our decision to hold SunAmerica, First Data, and
Household International, however, benefited the Fund, as each recorded double-
digit gains for the first six months of the year.
Health care stocks were generally disappointing during the first half of the
year. Guidant and Medtronic performed exceptionally well during the first three
months of the year, as did the Fund's hospital consolidator holdings, OrNda
Healthcorp and Columbia/HCA. On the other hand, Genzyme was a disappointment,
suffering from FDA limitations on a new product introduction. Several HMOs,
including Humana, one of the Fund's holdings, preannounced disappointing second
quarter earnings, which they attributed to higher utilization trends and premium
pricing pressures. This led to underperformance of Humana, United Healthcare,
and PacifiCare Health Systems holdings in the second quarter. Profit taking
among pharmaceutical companies and signs of sector rotation also weakened
Consumer cyclicals Consumer products and services whose sales tend to rise and
fall with changes in the economic cycle.
Weighting The proportion of a portfolio allocated to a specific security or
sector, i.e., a fund is said to be overweighted in a sector when that portion of
the portfolio is greater than the sector's general relationship to the market as
a whole.
Sector rotation A general movement of investments out of one sector of the
market into another that has become more attractive to investors.
Excess capacity Refers to underutilized manufacturing resources which generally
occurs when inventory levels exceed the demand for goods and services.
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.
18
<PAGE>
================================================================================
health care stock performance. We continue to monitor the fundamental outlook
for the HMO securities in a rapidly changing environment.
Excess capacity, inventory adjustments, and weaker demand for personal computers
and cellular phones led to mixed performance among technology stocks during the
first half of 1996. In this environment, our bottom-up selection process worked
in the portfolio's favor with stocks such as Microsoft, Computer Associates, and
EMC, which outperformed the market in the first quarter--and Sun Microsystems,
Intel Corp., and Oracle, which provided double-digit advances in the second
quarter. Other technology holdings, however, such as Lam Research and Seagate,
suffered from preannounced earnings disappointments, which negatively impacted
the portfolio. While we sold Micron at a profit, unfortunately we did so long
after the stock's heyday had passed. Among technology stocks, we remain focused
primarily on software, networking, and database management companies as the
fundamentals for these specific sectors continue to be attractive.
Despite strong gains in April and May, the Fund lagged the S&P 500 by nearly 300
basis points (3%) in June. Two notable underperformers were copy machine
companies, Alco Standard and Danka Business Systems, which faced unrelated
setbacks. Since their problems appear temporary and demand for both companies'
products and services remains robust, we are continuing to hold both stocks.
Throughout the first half of the year, we concentrated on risk management by
focusing on highly liquid securities and following our strict diversification
guidelines. Despite the strong performance of HFS, the stock also represented
one of our largest sales as we trimmed back to stay within our portfolio
management disciplines on individual security positions.
Going forward, we believe a low inflation environment and slow but steady
economic growth should provide a positive backdrop for growth stocks. No matter
how the economy unfolds, however, we will continue to use careful security
selection to seek long-term growth of capital.
Ed 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.
19
<PAGE>
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
GROWTH EQUITY FUND VS S&P 500 INDEX
INSTITUTIONAL CLASS SHARES
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Growth Equity Fund S & P 500
1/2/91 $10,000 $10,000
1Q 1991 $12,560 $11,450
2Q 1991 $12,100 $11,423
3Q 1991 $14,680 $12,032
4Q 1991 $16,700 $13,040
1Q 1992 $16,369 $12,711
2Q 1992 $14,175 $12,952
3Q 1992 $14,738 $13,381
4Q 1992 $17,640 $14,032
1Q 1993 $17,434 $14,644
2Q 1993 $17,663 $14,715
3Q 1993 $19,168 $15,094
4Q 1993 $19,333 $15,443
1Q 1994 $19,064 $14,859
2Q 1994 $17,735 $14,921
3Q 1994 $19,453 $15,649
4Q 1994 $18,901 $15,646
1Q 1995 $20,629 $17,168
2Q 1995 $22,729 $18,804
3Q 1995 $25,437 $20,298
4Q 1995 $26,062 $21,520
1Q 1996 $28,040 $22,673
6/30/96 $28,939 $23,690
- --------------------------------------------------------------------------------
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
GROWTH EQUITY FUND VS S&P 500 INDEX
SERVICE CLASS SHARES
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Growth Equity Fund S & P 500
1/2/91 $10,000 $10,000
1Q 1991 $12,560 $11,450
2Q 1991 $12,100 $11,423
3Q 1991 $14,680 $12,032
4Q 1991 $16,700 $13,040
1Q 1992 $16,369 $12,711
2Q 1992 $14,175 $12,952
3Q 1992 $14,738 $13,381
4Q 1992 $17,640 $14,032
1Q 1993 $17,434 $14,644
2Q 1993 $17,663 $14,715
3Q 1993 $19,168 $15,094
4Q 1993 $19,333 $15,443
1Q 1994 $19,064 $14,859
2Q 1994 $17,735 $14,921
3Q 1994 $19,453 $15,649
4Q 1994 $18,901 $15,646
1Q 1995 $20,615 $17,168
2Q 1995 $22,701 $18,804
3Q 1995 $25,381 $20,298
4Q 1995 $25,990 $21,520
1Q 1996 $27,939 $22,673
6/30/96 $28,810 $23,690
- --------------------------------------------------------------------------------
.Growth Equity Fund. S&P 500
Source: (C) 1996 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 June 30, 1996 as of June 30, 1996
- -----------------------------------------------------------------------------------------------------
Year to Date One Year Five Year Since Inception
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Equity Fund Institutional Class 11.04% 27.33% 19.05% 21.31%
Growth Equity Fund Service Class** 10.85% 26.91% 18.95% 21.21%
Average Lipper Growth Fund 10.08% 22.20% 14.55% 16.34%
S&P 500 Stock Index 10.09% 25.98% 15.71% 16.98%
</TABLE>
YEAR BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
Institutional Class Shares
[BAR GRAPH APPEARS HERE]
Total Return *
1991 67.00%
1992 5.63%
1993 9.59%
1994 (2.23%)
1995 37.88%
1996 11.04% as of 6/30/96
================================================================================
PORTFOLIO COMPOSITION
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Common Stocks 96.66%
Cash & Equivalents 2.95%
Preferred Stock--Non-Convertible 0.39%
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
1. HFS Inc. 4.52%
2. Computer Associates International Inc. 3.04%
3. 3Com Corp. 2.90%
4. SunAmerica Inc. 2.53%
5. WorldCom, Inc. 2.25%
6. Medtronic, Inc. 2.22%
7. Amgen Inc. 2.21%
8. Oracle Corp. 2.16%
9. Schwab (Charles) Corp. 2.13%
10. Green Tree Financial Corp. 2.09%
- --------------------------------------------------------------------------------
TOP 5 INDUSTRY
HOLDINGS
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
1. Health Care 9.00%
2. Retail 8.79%
3. Drugs 8.79%
4. Finance 8.56%
5. Computers & Office Equipment 7.55%
================================================================================
** 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 Fund's 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% .
20
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
GROWTH EQUITY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
COMMON STOCKS (96.6%)+
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
AIRLINES (1.7%)
Atlantic Southeast Airlines, Inc...................... 102,200 $ 2,887,150
Southwest Airlines Co................................. 179,100 5,216,287
------------
8,103,437
------------
AUTO PARTS (1.0%)
Lear Seating Corp. (a)................................ 135,000 4,758,750
------------
BANKS (2.5%)
NationsBank Corp. .................................... 60,000 4,957,500
Wells Fargo & Co. .................................... 28,000 6,688,500
------------
11,646,000
------------
BROKERAGE (2.1%)
Schwab (Charles) Corp................................. 405,000 9,922,500
------------
BUILDINGS (1.7%)
Lennar Corp. ......................................... 107,000 2,675,000
Oakwood Homes Corp. .................................. 260,000 5,362,500
------------
8,037,500
------------
COMPUTERS & OFFICE EQUIPMENT (7.5%)
Alco Standard Corp.................................... 201,100 9,099,775
Danka Business Systems Plc ADR (b).................... 148,100 4,331,925
EMC Corp. (a)......................................... 156,500 2,914,813
Hewlett-Packard Co.................................... 68,000 6,774,500
Seagate Technology, Inc. (a).......................... 61,100 2,749,500
Sun Microsystems, Inc. (a)............................ 158,000 9,302,250
------------
35,172,763
------------
CONSUMER DURABLES (1.2%)
Black & Decker Corp. ................................. 151,100 5,836,238
------------
CONSUMER FINANCIAL SERVICES (1.3%)
First Data Corp....................................... 73,700 5,868,362
------------
CONSUMER SERVICES (2.4%)
CUC International Inc. (a)............................ 136,000 4,828,000
Service Corp. International........................... 112,000 6,440,000
------------
11,268,000
------------
DOMESTIC OILS (1.2%)
Triton Energy Ltd. (a)................................ 112,800 5,484,900
------------
DRUGS (8.8%)
Amgen Inc. (a)........................................ 190,400 10,281,600
Elan Corp. Plc ADR (a)(b)............................. 101,500 5,798,188
Genzyme Corp.-General Division (a).................... 86,200 4,331,550
Mylan Laboratories Inc................................ 152,050 2,622,862
Pharmacia & Upjohn, Inc............................... 153,400 6,807,125
Schering-Plough Corp.................................. 122,000 7,655,500
Teva Pharmaceutical Industries Ltd. ADR (b)........... 92,000 3,484,500
------------
40,981,325
------------
- -------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
ELECTRONICS (0.9%)
Vishay Intertechnology,
Inc. (a)............................................. 176,400 $ 4,167,450
------------
FINANCE (8.6%)
Federal National Mortgage Association................. 224,000 7,504,000
Green Tree Financial Corp............................. 311,000 9,718,750
Household International, Inc.......................... 109,800 8,344,800
MGIC Investment Corp.................................. 90,600 5,084,925
Travelers Group Inc................................... 202,849 9,254,986
------------
39,907,461
------------
FINANCIAL SERVICES (4.0%)
First USA, Inc........................................ 121,800 6,699,000
SunAmerica Inc........................................ 208,500 11,780,250
------------
18,479,250
------------
HEALTH CARE (9.0%)
Columbia/HCA Healthcare Corp.......................... 141,592 7,557,473
HealthCare COMPARE
Corp. (a)............................................ 88,100 4,294,875
HEALTHSOUTH Corp. (a)................................. 170,000 6,120,000
Humana Inc. (a)....................................... 168,000 3,003,000
Johnson & Johnson..................................... 135,504 6,707,448
OrNda HealthCorp. (a)................................. 168,500 4,044,000
PacifiCare Health Systems, Inc. Class B (a)........... 45,900 3,109,725
United Healthcare Corp................................ 140,500 7,095,250
------------
41,931,771
------------
INSURANCE (2.0%)
American International
Group, Inc........................................... 92,550 9,127,744
------------
INTERNATIONAL OILS (1.0%)
British Petroleum Co., Plc
ADR (b).............................................. 42,454 4,537,271
------------
MEDICAL EQUIPMENT (4.3%)
Guidant Corp. ........................................ 119,000 5,860,750
Medtronic, Inc. ...................................... 184,800 10,348,800
Waters Corp. (a)...................................... 115,000 3,795,000
------------
20,004,550
------------
PUBLISHING (1.1%)
News Corp. Ltd. ADR (b)............................... 212,600 4,996,100
------------
RESTAURANTS & LODGING (5.5%)
HFS Inc. (a).......................................... 301,000 21,070,000
Mirage Resorts, Inc. (a).............................. 86,200 4,654,800
------------
25,724,800
------------
</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.
21
<PAGE>
GROWTH EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996 (Unaudited)
COMMON STOCKS (Continued) PREFERRED STOCK (0.4%)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
RETAIL (8.8%)
AutoZone Inc. (a)..................................... 136,700 $ 4,750,325
Bed Bath & Beyond, Inc. (a)........................... 110,000 2,942,500
Home Depot, Inc. (The)................................ 105,500 5,697,000
Kohl's Corp. (a)...................................... 140,000 5,127,500
Kroger Co. (The) (a).................................. 139,000 5,490,500
Lowe's Cos., Inc...................................... 176,500 6,376,062
Office Depot, Inc. (a)................................ 190,000 3,871,250
Safeway Inc. (a)...................................... 203,900 6,728,700
------------
40,983,837
------------
SOFTWARE (7.3%)
Computer Associates International, Inc................ 199,000 14,178,750
Microsoft Corp. (a)................................... 29,000 3,483,625
Oracle Corp. (a)...................................... 255,750 10,086,141
Sterling Software, Inc. (a)........................... 82,000 6,314,000
------------
34,062,516
------------
TECHNOLOGY (6.4%)
Electronic Data Systems Corp.......................... 80,000 4,300,000
Intel Corp............................................ 73,900 5,427,031
Lam Research Corp. (a)................................ 100,500 2,613,000
Motorola, Inc......................................... 66,500 4,181,188
3Com Corp. (a)........................................ 295,000 13,496,250
------------
30,017,469
------------
TELECOMMUNICATION SERVICES (2.2%)
WorldCom, Inc. (a).................................... 189,544 10,495,999
------------
TEXTILE & APPAREL (4.1%)
Nike, Inc. Class B.................................... 81,700 8,394,675
Nine West Group Inc. (a).............................. 123,100 6,293,487
Warnaco Group, Inc. (The) Class A..................... 164,000 4,223,000
------------
18,911,162
------------
Total Common Stocks
(Cost $278,350,258).................................. 450,427,155
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
PUBLISHING (0.4%)
News Corp. Ltd. ADR--
Preference Shares (b)............................... 91,300 $ 1,837,413
------------
Total Preferred Stock
(Cost $1,378,044)................................... 1,837,413
------------
SHORT-TERM
INVESTMENT (2.4%)
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
COMMERCIAL PAPER (2.4%)
Prudential Funding Corp.
5.42%, due 7/1/96................................... $11,077,000 11,077,000
------------
Total Short-Term Investment (Cost $11,077,000)....... 11,077,000
------------
Total Investments
(Cost $290,805,302) (c)............................. 99.4% 463,341,568(d)
------------
Cash and Other Assets,
Less Liabilities.................................... 0.6 2,671,967
----------- ------------
Net Assets........................................... 100.0% $466,013,535
=========== ============
</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 June 30, 1996 net unrealized appreciation was $172,536,266, 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 $176,587,350 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $4,051,084.
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 ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
As of June 30, 1996 (Unaudited) For the six months ended June 30,
1996 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2)
(identified cost $290,805,302)................................. $463,341,568
Cash............................................................ 443
Receivables:
Investment securities sold...................................... 13,856,633
Dividends and interest.......................................... 232,507
Fund shares sold................................................ 94,084
Other assets.................................................... 1,026
------------
Total assets................................................... 477,526,261
------------
LIABILITIES:
Payables:
Investment securities purchased................................. 11,077,000
Administrator................................................... 232,004
Adviser......................................................... 96,668
Fund shares redeemed............................................ 15,809
Custodian....................................................... 8,243
Directors....................................................... 6,903
Transfer agent.................................................. 5,337
Accrued expenses................................................ 70,762
------------
Total liabilities.............................................. 11,512,726
------------
Net assets...................................................... $466,013,535
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized
Institutional Class............................................. $ 22,014
Institutional Service Class..................................... 263
Additional paid-in capital...................................... 272,832,156
Accumulated net investment loss................................. (521,935)
Accumulated undistributed net realized gain on investments...... 21,144,771
Unrealized appreciation on investments.......................... 172,536,266
------------
Net assets...................................................... $466,013,535
============
Institutional Class
Net assets applicable to outstanding shares..................... $460,525,124
============
Shares of capital stock outstanding............................. 22,014,101
============
Net asset value per share outstanding........................... $ 20.92
============
Institutional Service Class
Net assets applicable to outstanding shares..................... $ 5,488,411
============
Shares of capital stock outstanding............................. 263,307
============
Net asset value per share outstanding........................... $ 20.84
============
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)................................................... $ 1,302,817
Interest........................................................ 243,411
-----------
Total income................................................... 1,546,228
-----------
Expenses: (Note 2)
Administration (Note 3)......................................... 1,338,387
Advisory (Note 3)............................................... 557,661
Legal........................................................... 37,024
Auditing........................................................ 26,688
Shareholder communication....................................... 21,835
Custodian....................................................... 20,668
Registration.................................................... 17,354
Transfer agent.................................................. 16,986
Directors....................................................... 13,918
Service (Note 3)................................................ 5,315
Miscellaneous................................................... 9,785
-----------
Total expenses................................................. 2,065,621
-----------
Net investment loss............................................. (519,393)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments................................ 21,416,154
Net change in unrealized appreciation on investments............ 25,333,951
-----------
Net realized and unrealized gain on investments................. 46,750,105
-----------
Net increase in net assets resulting from operations............ $46,230,712
===========
</TABLE>
- --------
(a) Dividends recorded net of foreign withholding taxes of $6,966.
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
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996 (Unaudited) and the year ended December
31, 1995
<TABLE>
<CAPTION>
1996 1995
------------ -------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income (loss)..................... $ (519,393) $ 412,493
Net realized gain (loss) on investments.......... 21,416,154 (174,620)
Net change in unrealized appreciation on
investments..................................... 25,333,951 110,020,858
------------ -------------
Net increase in net assets resulting from
operations...................................... 46,230,712 110,258,731
------------ -------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class............................. -- (411,584)
Institutional Service Class..................... -- (960)
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)
Institutional Service Class..................... -- (527)
------------ -------------
Total dividends and distributions to
shareholders.................................. -- (497,183)
------------ -------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class............................. 93,774,341 156,413,353
Institutional Service Class..................... 2,509,146 2,609,492
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions:
Institutional Class............................. -- 571,650
Institutional Service Class..................... -- 1,493
------------ -------------
96,283,487 159,595,988
Cost of shares redeemed:
Institutional Class............................. (91,221,947) (138,869,720)
Institutional Service Class..................... (136,383) (17,893)
------------ -------------
Increase in net assets derived from capital
share transactions............................. 4,925,157 20,708,375
------------ -------------
Net increase in net assets...................... 51,155,869 130,469,923
NET ASSETS:
Beginning of period.............................. 414,857,666 284,387,743
------------ -------------
End of period.................................... $466,013,535 $ 414,857,666
============ =============
Accumulated net investment loss/(excess
distribution)................................... $ (521,935) $ (2,542)
============ =============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
24
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
GROWTH EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL
INSTITUTIONAL SERVICE
CLASS CLASS
------------- -------------
SIX MONTHS
ENDED
JUNE 30, 1996*
----------------------------
<S> <C> <C>
Net asset value
at beginning of
period.......... $ 18.84 $ 18.80
-------- --------
Net investment
income (loss)... (0.02) (0.04)
Net realized and
unrealized gain
(loss) on
investments..... 2.10 2.08
-------- --------
Total from
investment
operations...... 2.08 2.04
-------- --------
Less dividends
and
distributions:
From net
investment
income.......... -- --
From net realized
gain on
investments..... -- --
In excess of net
investment
income.......... -- --
In excess of net
realized
gain on
investments..... -- --
-------- --------
Total dividends
and
distributions... -- --
-------- --------
Net asset value
at end of
period.......... $ 20.92 $ 20.84
======== ========
Total investment
return (b)...... 11.04% 10.85%
Ratios (to
average net
assets)/
Supplemental
Data:
Net investment
income (loss).. (0.23%)+ (0.48%)+
Net expenses.... 0.92% + 1.17% +
Expenses (before
reimbursement).. 0.92% + 1.17% +
Portfolio
turnover rate... 13% 13%
Average
commission rate
paid............ $ 0.0608 $ 0.0608
Net assets at end
of period (in
000's).......... $460,525 $ 5,488
<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)(c) (0.00)(c) -- -- -- --
In excess of net
realized
gain on
investments..... (0.00)(c) (0.00)(c) (0.00)(c) (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 (b)...... 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%
Average
commission rate
paid............ (d) (d) (d) (d) (d) (d)
Net assets at end
of period (in
000's).......... $412,129 $ 2,729 $284,388 $258,751 $212,619 $191,495
</TABLE>
- --------
* Unaudited.
+ Annualized.
(a) Commencement of operations.
(b) Total return is not annualized.
(c) Less than one cent per share.
(d) Disclosure of amount required for fiscal years beginning on or after
September 1, 1995.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
25
<PAGE>
INDEXED EQUITY FUND
================================================================================
Fund Highlights for the six months ended June 30, 1996
. One-year total returns of 25.45% and 25.17% for Institutional Class and
Service Class shares, respectively, as of 6/30/96
. Institutional Class shares received a four-star overall rating from
Morningstar, Inc.* as of 6/30/96
. Fund returns closely tracked the S&P 500 Stock Index+
For the six-months ended June 30, 1996, the MainStay Institutional Indexed
Equity Fund returned 9.93% and 9.77% for Institutional Class and Service Class
shares, respectively. Over the same period, the S&P 500 returned 10.09% and the
average for funds in the Lipper(S) S&P 500 Index objective fund category
returned 9.83%. This performance helped the Fund's Institutional Class shares
earn a four-star overall rating from Morningstar, placing them among the top 33%
of their Morningstar universe, which consisted of 1,583 equity funds for the 3-
year period and 997 equity funds for the 5-year period ended 6/30/96.
After the stock market posted outstanding gains in 1995, many analysts expected
less-than-spectacular returns this year. At the end of the first half of the
year, however, the market already gained more than 10%. The driving force behind
last year's performance, strong corporate profits, showed little signs of
abating, despite scattered pockets of weakness. Although interest rates began to
edge higher, many investors appeared confident that the economy's "soft landing"
was a reality and that inflation would remain under control. Only at the very
end of June did we see any significant signs of impending inflation, as the
country approached full employment.
Small company stocks outperformed larger issues throughout the first half of the
year, leading the S&P 500 Stock Index to underperform the NASDAQ Composite Index
and mutual funds that were heavily invested in smaller issues. During the
reporting period, the NASDAQ Composite Index returned 12.63%.
The Indexed Equity Fund does not seek to benefit from shifting investor
preferences among small-, medium-, and large-capitalization issues. Instead, it
seeks to track the performance of the S&P 500 Stock Index, which consists
primarily of larger issues representing about two-thirds of the capitalization
of the stock market as a whole. Since the Fund incurs fees and expenses that the
Index does not, investors should anticipate trailing the Index by a small
margin.
The Fund seeks to remain as fully invested as possible at all times, to give
investors broad exposure to the companies that make up the S&P 500 Stock Index.
The Fund also seeks to invest in stocks in the same proportions as they are
invested in the Index. As a result, investors may experience greater gains or
losses from the price movements of sectors or securities with greater
representation in the Index.
"Soft landing" A curb on economic growth or other Federal Reserve action that is
sufficiently gradual to not create major disruptions or distortions in the
equity and fixed-income markets.
Inflation An increase in the supply of money relative to available goods and
services, resulting in higher prices or a rising "cost of living."
Full employment The level of employment that results from the efficient use of
the civilian labor force, after allowances are made for the normal rate of
unemployment due to dynamic changes and the structural conditions of the
economy. For the U.S., full employment is thought to exist when between 94%-95%
of the labor force is employed.
Capitalization The amount of outstanding equity a company has issued. Companies
may vary greatly in the amount of equity capital they have raised, and their
capitalization may change with new issues or stock repurchases.
Exposure The amount invested in a specific security, maturity, market, country,
or currency. Participation in positive as well as negative events affecting a
security or sector generally increases with the level of exposure.
26
<PAGE>
===============================================================================
During the reporting period, one of the best performing industries in the S&P
500 Stock Index was the shoe industry, which was propelled upward by Nike's 48%
return, to finish the first half of the year with a 41.75% gain. Since this
industry only represented 0.4% of the S&P 500, however, its impact on the Fund's
performance was very modest. The Coca-Cola Company and PepsiCo, with respective
returns of 32.4% and 27.4%, had a greater impact, as they pushed the soft drink
beverage industry sector of the S&P 500 up 30.8%. This sector accounts for 3.5%
of the Index. In the first half of the year, the worst performing sectors in the
Index were trucking company stocks (-16.3%), home-building stocks (-12.2%), and
HMOs (-12.1%), which represented 0.043%, 0.043%, and 0.372% of the Index,
respectively. These small weightings served to moderate the negative impact
these laggards had on the portfolio as a whole.
James A. Mehling, CFA
Portfolio Manager
================================================================================
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-, 5- & 10-year average annual returns with fee
adjustments, and a risk factor that reflects fund performance relative to 3-
month Treasury bill monthly returns. A one-year rating is calculated using
the same methodology, but is not a component of the overall rating. As of
6/30/96, the individual 1, 3 and 5 year ratings for the MainStay
Institutional Indexed Equity Fund was 5, 4 and 4 stars, respectively. For
the one-year period, the Fund was rated among 2,882 funds in the equity
category. Only 10% of the funds in an investment category may receive 5
stars, 22.5% may receive 4 stars and 35% may receive 3 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.
+ 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.
++ Source: Lipper Analytical Services, Inc.
27
<PAGE>
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
INDEXED EQUITY FUND VS S&P 500 INDEX
INSTITUTIONAL CLASS SHARES
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Indexed Equity S & P 500
Fund Index
1/2/91 $10,000 $10,000
1Q 1991 $11,440 $11,450
2Q 1991 $11,390 $11,423
3Q 1991 $11,990 $12,032
4Q 1991 $12,980 $13,040
1Q 1992 $12,646 $12,711
2Q 1992 $12,872 $12,952
3Q 1992 $13,264 $13,361
4Q 1992 $13,913 $14,032
1Q 1993 $14,495 $14,644
2Q 1993 $14,537 $14,715
3Q 1993 $14,888 $15,094
4Q 1993 $15,222 $15,443
1Q 1994 $14,618 $14,859
2Q 1994 $14,662 $14,921
3Q 1994 $15,365 $15,649
4Q 1994 $15,359 $15,646
1Q 1995 $16,846 $17,168
2Q 1995 $18,424 $18,804
3Q 1995 $19,854 $20,298
4Q 1995 $21,024 $21,520
1Q 1996 $22,145 $22,673
6/30/96 $23,112 $23,690
- --------------------------------------------------------------------------------
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
INDEXED EQUITY FUND VS S&P 500 INDEX
SERVICE CLASS SHARES
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Indexed Equity S & P 500
Fund Index
1/2/91 $10,000 $10,000
1Q 1991 $11,440 $11,450
2Q 1991 $11,390 $11,423
3Q 1991 $11,990 $12,032
4Q 1991 $12,980 $13,040
1Q 1992 $12,646 $12,711
2Q 1992 $12,872 $12,952
3Q 1992 $13,264 $13,361
4Q 1992 $13,913 $14,032
1Q 1993 $14,495 $14,644
2Q 1993 $14,537 $14,715
3Q 1993 $14,888 $15,094
4Q 1993 $15,222 $15,443
1Q 1994 $14,618 $14,859
2Q 1994 $14,662 $14,921
3Q 1994 $15,365 $15,649
4Q 1994 $15,359 $15,646
1Q 1995 $16,846 $17,168
2Q 1995 $18,413 $18,804
3Q 1995 $19,843 $20,298
4Q 1995 $20,995 $21,520
1Q 1996 $22,104 $22,673
6/30/96 $23,047 $23,690
- --------------------------------------------------------------------------------
. Indexed Equity Fund . S&P 500 Index
Source: (C) 1996 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 June 30, 1996 as of June 30, 1996
- -----------------------------------------------------------------------------------------------------
Year to Date One Year Five Year Since Inception
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Indexed Equity Fund Institutional Class 9.93% 25.45% 15.20% 16.45%
Indexed Equity Fund Service Class** 9.77% 25.17% 15.14% 16.39%
Average Lipper S&P 500 Index Fund 9.83% 25.42% 15.19% 16.44%
S&P 500 Stock Index 10.09% 25.98% 15.71% 16.98%
</TABLE>
YEAR-BY YEAR PERFORMANCE
- --------------------------------------------------------------------------------
[BAR GRAPH APPEARS HERE]
Institutional Class Shares
Total Return*
1991 29.80%
1992 7.19%
1993 9.41%
1994 0.90%
1995 36.88%
1996 9.93% as of 6/30/96
================================================================================
PORTFOLIO COMPOSITION
(% of net assets as of June 30,1996)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Common Stocks 97.57%
Cash & Equivalents 2.43%
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
1. General Electric Co. 2.88%
2. Coca-Cola Company (The) 2.46%
3. Exxon Corp. 2.01%
4. AT&T Corp. 1.99%
5. Philip Morris Companies Inc. 1.74%
6. Merck & Co. Inc. 1.59%
7. Royal Dutch Petroleum Company 1.54%
8. Microsoft Corp. 1.43%
9. Johnson & Johnson 1.29%
10. Procter & Gamble Company (The) 1.25%
- --------------------------------------------------------------------------------
TOP 5 INDUSTRY HOLDINGS
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
1. Oil - Integrated International 6.17%
2. Telephone 4.47%
3. Drugs 4.12%
4. Major Regional Banks 4.06%
5. Health Care - Diversified 4.04%
================================================================================
** 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 Fund's 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.
28
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
COMMON STOCKS (97.6%)+
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
AEROSPACE/DEFENSE (2.0%)
Boeing Company (The)................................... 33,825 $ 2,947,003
General Dynamics Corp.................................. 6,162 382,044
Lockheed Martin Corp................................... 19,620 1,648,080
Loral Space & Communications
Ltd. (a).............................................. 14,032 191,186
McDonnell Douglas Corp................................. 21,879 1,061,132
Northrop Grumman Corp.................................. 4,979 339,194
Raytheon Company....................................... 23,598 1,218,247
Rockwell International Corp............................ 21,238 1,215,875
United Technologies Corp............................... 11,858 1,363,670
------------
10,366,431
------------
AIRLINES (0.3%)
AMR Corp. (a).......................................... 7,760 706,160
Delta Air Lines, Inc................................... 5,266 437,078
Southwest Airlines Co.................................. 15,164 441,651
USAir Group, Inc. (a).................................. 6,532 117,576
------------
1,702,465
------------
ALUMINUM (0.4%)
Alcan Aluminum Limited................................. 22,143 675,362
Aluminum Co. of America................................ 17,299 992,530
Reynolds Metals Company................................ 6,162 321,194
------------
1,989,086
------------
AUTOMOBILES (1.8%)
Chrysler Corp.......................................... 37,145 2,302,990
Ford Motor Company..................................... 110,239 3,568,988
General Motors Corp.................................... 73,204 3,834,059
------------
9,706,037
------------
AUTOPARTS--AFTER MARKET (0.3%)
Cooper Tire & Rubber Company........................... 8,316 185,031
Echlin Inc............................................. 5,814 220,205
Genuine Parts Company.................................. 12,005 549,229
Goodyear Tire & Rubber Company......................... 15,012 724,329
------------
1,678,794
------------
BEVERAGES--ALCOHOLIC (0.6%)
Anheuser-Busch Companies, Inc.......................... 26,816 2,011,200
Brown-Forman Corp. .................................... 6,854 274,160
Coors (Adolph) Co...................................... 3,721 66,513
Seagram Company Ltd.................................... 36,512 1,227,716
------------
3,579,589
------------
BEVERAGES--SOFT DRINKS (3.6%)
Coca-Cola Company (The)................................ 265,476 12,975,139
PepsiCo, Inc........................................... 166,586 5,892,980
------------
18,868,119
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
BROADCAST/MEDIA (0.5%)
Comcast Corp. Class A.................................. 25,256 $ 467,236
Tele-Communications TCI Group, Class A (a)............. 63,810 1,156,556
U.S. West Media Group (a).............................. 49,688 906,806
------------
2,530,598
------------
BUILDING MATERIALS (0.2%)
Masco Corp. ........................................... 15,637 473,019
Owens-Corning Fiberglas
Corp. ................................................ 5,367 230,781
Sherwin-Williams Company............................... 8,369 389,159
------------
1,092,959
------------
CHEMICALS (2.2%)
Air Products & Chemicals, Inc.......................... 10,938 631,670
Dow Chemical Company (The)............................. 25,582 1,944,232
Du Pont (E.I.) De Nemours & Company.................... 54,710 4,328,929
Eastman Chemical Co.................................... 7,903 481,095
Goodrich (B.F.) Company................................ 5,137 191,995
Hercules Inc........................................... 11,589 640,292
Monsanto Company....................................... 61,739 2,006,518
Praxair, Inc........................................... 16,025 677,056
Rohm & Haas Company.................................... 6,642 416,785
Union Carbide Corp..................................... 13,380 531,855
------------
11,850,427
------------
CHEMICALS--DIVERSIFIED (0.4%)
Avery Dennison Corp.................................... 5,685 311,964
Engelhard Corp......................................... 15,211 349,853
FMC Corp. (a).......................................... 3,898 254,345
PPG Industries Inc. ................................... 18,958 924,202
------------
1,840,364
------------
CHEMICALS--SPECIALTY (0.4%)
Grace (W.R.) & Co...................................... 10,185 721,861
Great Lakes Chemical Corp.............................. 6,749 420,125
Morton International, Inc.............................. 14,498 540,051
Nalco Chemical Company................................. 7,079 222,989
Sigma-Aldrich Corp..................................... 5,287 282,855
------------
2,187,881
------------
COMMUNICATION--EQUIPMENT MANUFACTURERS (1.6%)
Andrew Corp. (a)....................................... 6,043 324,811
Bay Networks Inc. (a).................................. 19,585 504,314
Cabletron Systems, Inc. (a)............................ 7,509 515,305
Cisco Systems, Inc. (a)................................ 58,795 3,329,267
DSC Communications
Corp. (a)............................................. 12,240 368,730
General Instrument Corp. (a)........................... 13,037 376,443
Northern Telecom Limited............................... 25,037 1,361,387
Scientific-Atlanta, Inc. .............................. 7,540 116,870
Tellabs, Inc. (a)...................................... 9,265 619,597
3Com Corp. (a)......................................... 17,166 785,345
------------
8,302,069
------------
</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.
29
<PAGE>
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996 (Unaudited)
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
COMPUTER--SOFTWARE & SERVICES (3.2%)
Autodesk, Inc.......................................... 4,914 $ 146,806
Automatic Data Processing, Inc......................... 30,745 1,187,526
Ceridian Corp. (a)..................................... 6,924 349,662
Computer Associates
International Inc. ................................... 25,424 1,811,460
Computer Sciences Corp. (a)............................ 5,893 440,502
First Data Corp. ...................................... 23,530 1,873,576
Microsoft Corp. (a).................................... 62,915 7,557,664
Novell Inc. (a)........................................ 38,995 541,056
Oracle Corp. (a)....................................... 68,097 2,685,575
Shared Medical Systems Corp............................ 2,503 160,818
------------
16,754,645
------------
COMPUTER SYSTEMS (3.0%)
Amdahl Corp. (a)....................................... 11,555 124,216
Apple Computer Inc. (a)................................ 11,949 250,929
Compaq Computer Corp. (a).............................. 27,991 1,378,557
Data General Corp. (a)................................. 3,615 46,995
Digital Equipment Corp. (a)............................ 15,102 679,590
EMC Corporation (a).................................... 24,044 447,819
Hewlett-Packard Company................................ 53,947 5,374,470
Intergraph Corp. (a)................................... 4,519 54,793
International Business Machines Corp................... 55,607 5,505,093
Silicon Graphics, Inc. (a)............................. 16,998 407,952
Sun Microsystems Inc. (a).............................. 19,398 1,142,057
Tandem Computers Inc. (a).............................. 11,421 141,335
Unisys Corp. (a)....................................... 16,784 119,586
------------
15,673,392
------------
CONGLOMERATES (0.3%)
Teledyne, Inc. ........................................ 5,510 199,049
Tenneco, Inc........................................... 17,402 889,677
Textron Inc............................................ 8,249 658,889
------------
1,747,615
------------
CONTAINERS--METAL & GLASS (0.1%)
Ball Corp.............................................. 3,045 87,544
Crown Cork & Seal Company, Inc. ....................... 12,331 554,895
------------
642,439
------------
CONTAINERS--PAPER (0.1%)
Bemis Company, Inc..................................... 5,634 197,190
Stone Container Corp................................... 9,347 128,521
Temple-Inland Inc...................................... 5,505 257,359
------------
583,070
------------
COSMETICS (0.8%)
Alberto-Culver Company................................. 2,809 130,267
Avon Products, Inc..................................... 14,379 648,853
Gillette Company....................................... 46,737 2,915,220
International Flavors & Fragrances, Inc................ 11,618 553,307
------------
4,247,647
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
DRUGS (4.1%)
Eli Lilly & Company.................................... 57,970 $ 3,768,050
Merck & Co., Inc. ..................................... 129,718 8,383,026
Pfizer Inc............................................. 67,439 4,813,459
Pharmacia & Upjohn, Inc. .............................. 53,110 2,356,756
Schering-Plough Corp................................... 38,532 2,417,883
------------
21,739,174
------------
ELECTRIC POWER COMPANIES (3.1%)
American Electric Power Company, Inc................... 18,242 777,565
Baltimore Gas & Electric Company....................... 14,485 411,012
Carolina Power & Light Company......................... 15,060 572,280
Central & South West Corp. ............................ 20,317 589,193
CINergy Corp........................................... 15,373 491,936
Consolidated Edison Company of New York................ 22,994 672,575
Dominion Resources Inc. ............................... 17,326 693,040
DTE Energy Company..................................... 14,161 437,221
Duke Power Company..................................... 20,045 1,027,306
Edison International................................... 43,482 766,370
Entergy Corp. ......................................... 22,243 631,145
FPL Group, Inc. ....................................... 18,097 832,462
General Public Utilities Corp.......................... 11,751 414,223
Houston Industries Inc................................. 25,694 632,715
Niagara Mohawk Power Corp.............................. 14,117 109,406
Northern States Power Company.......................... 6,660 328,837
Ohio Edison Company.................................... 15,108 330,487
Pacific Gas & Electric Company......................... 41,424 963,108
PacifiCorp............................................. 28,759 639,888
Peco Energy Company.................................... 21,618 562,068
PP&L Resources, Inc. .................................. 15,548 367,322
Public Service Enterprise Group Inc. .................. 23,893 654,071
Southern Company (The)................................. 65,153 1,604,393
Texas Utilities Company................................ 22,079 943,877
Unicom Corp............................................ 21,060 587,048
Union Electric Company................................. 9,920 399,280
------------
16,438,828
------------
ELECTRICAL EQUIPMENT (3.9%)
AMP Inc. .............................................. 22,978 921,992
Emerson Electric Co.................................... 23,669 2,139,086
General Electric Company............................... 175,493 15,180,145
General Signal Corp. .................................. 4,651 176,156
Grainger (W.W.), Inc................................... 5,412 419,430
Honeywell Inc. ........................................ 12,303 670,514
Raychem Corp........................................... 4,645 333,859
Thomas & Betts Corp.................................... 2,261 84,788
Westinghouse Electric Corp. ........................... 43,428 814,275
------------
20,740,245
------------
ELECTRONIC--DEFENSE (0.0%) (b)
EG&G, Inc.............................................. 4,688 100,206
------------
</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>
ELECTRONIC--INSTRUMENTATION (0.1%)
Perkin-Elmer Corp. (The)............................... 4,342 $ 209,501
Tektronix, Inc......................................... 3,492 156,267
------------
365,768
------------
ELECTRONIC--SEMICONDUCTORS (2.5%)
Advanced Micro Devices, Inc. (a) 12,848 175,054
Applied Materials, Inc. (a)............................ 18,657 569,039
Intel Corp............................................. 87,025 6,390,898
LSI Logic Corp. (a).................................... 13,474 350,324
Micron Technology Inc.................................. 21,692 561,281
Motorola, Inc.......................................... 62,094 3,904,160
National Semiconductor
Corp. (a)............................................. 13,199 204,585
Texas Instruments, Inc................................. 19,909 992,961
------------
13,148,302
------------
ENGINEERING & CONSTRUCTION (0.2%)
Fluor Corp. ........................................... 8,705 569,089
Foster Wheeler Corp.................................... 4,147 186,097
------------
755,186
------------
ENTERTAINMENT (1.5%)
King World Productions, Inc. (a) 3,611 131,350
Time Warner, Inc. ..................................... 40,767 1,600,105
Viacom Inc. Class B (a)................................ 36,321 1,411,979
Walt Disney Company (The).............................. 71,747 4,511,092
------------
7,654,526
------------
FINANCIAL--MISCELLANEOUS (1.8%)
American Express Company............................... 47,305 2,110,986
American General Corp. ................................ 20,150 732,956
Federal Home Loan Mortgage Corp........................ 17,784 1,520,532
Federal National Mortgage Association.................. 107,319 3,595,186
Green Tree Financial Corp. ............................ 14,602 456,313
MBNA Corp. ............................................ 23,672 674,652
Transamerica Corp. .................................... 6,728 550,014
------------
9,640,639
------------
FOOD DISTRIBUTORS (0.2%)
Fleming Companies, Inc................................. 3,609 51,879
SuperValu Inc.......................................... 6,694 210,861
Sysco Corp. ........................................... 19,174 656,710
------------
919,450
------------
FOODS (2.9%)
Archer Daniels Midland Company......................... 51,188 978,971
Campbell Soup Company.................................. 26,324 1,855,842
ConAgra, Inc. ......................................... 25,993 1,179,433
CPC International, Inc................................. 15,282 1,100,304
General Mills, Inc. ................................... 16,676 908,842
Heinz (H.J.) Company................................... 39,182 1,190,153
Hershey Foods Corp..................................... 7,651 561,392
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
FOODS (Continued)
Kellogg Company........................................ 22,748 $ 1,666,291
Quaker Oats Company.................................... 14,177 483,790
Ralston Purina Group................................... 11,182 717,046
Sara Lee Corp.......................................... 50,790 1,644,326
Unilever, N.V.......................................... 16,876 2,449,129
Wrigley (Wm.) Jr. Company.............................. 12,324 622,362
------------
15,357,881
------------
GOLD (0.5%)
Barrick Gold Corp...................................... 37,080 1,005,795
Echo Bay Mines Ltd. ................................... 12,409 133,397
Homestake Mining Company............................... 14,823 253,844
Newmont Mining Corp. .................................. 9,991 493,306
Placer Dome Inc. ...................................... 25,277 603,488
Santa Fe Pacific Gold Corp. ........................... 12,904 182,269
------------
2,672,099
------------
HARDWARE & TOOLS (0.1%)
Black & Decker Corp.................................... 8,375 323,484
Snap-On, Inc. ......................................... 3,903 184,905
Stanley Works (The).................................... 8,741 260,045
------------
768,434
------------
HEALTH CARE--DIVERSIFIED (4.0%)
Abbott Laboratories.................................... 83,542 3,634,077
Allergan Inc. ......................................... 6,807 267,175
American Home Products Corp............................ 65,737 3,952,437
Bristol-Myers Squibb Company........................... 53,269 4,794,210
Johnson & Johnson...................................... 137,127 6,787,786
Mallinckrodt Group, Inc. .............................. 7,329 284,915
Warner-Lambert Company................................. 28,680 1,577,400
------------
21,298,000
------------
HEALTH CARE--HMOs (0.4%)
Humana Inc. (a)........................................ 17,095 305,573
United Healthcare Corp................................. 18,414 929,907
U.S. Healthcare, Inc. ................................. 16,251 893,805
------------
2,129,285
------------
HEALTH CARE--MISCELLANEOUS (0.4%)
Alza Corp. (a)......................................... 8,787 240,544
Amgen Inc. (a)......................................... 27,999 1,511,946
Beverly Enterprises, Inc. (a).......................... 9,633 115,596
Manor Care, Inc........................................ 6,089 239,754
------------
2,107,840
------------
HEAVY TRUCKS & PARTS (0.3%)
Cummins Engine Company,
Inc. ................................................. 3,959 159,844
Dana Corp.............................................. 9,767 302,777
Eaton Corp............................................. 7,649 448,423
ITT Industries, Inc. .................................. 11,452 287,731
Navistar International Corp. (a)....................... 7,506 74,122
Paccar Inc............................................. 3,756 184,044
------------
1,456,941
------------
</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)
June 30, 1996 (Unaudited)
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
HOMEBUILDING (0.0%) (b)
Centex Corp............................................ 2,835 $ 88,240
Kaufman & Broad Home Corp.............................. 3,362 48,749
Pulte Corp............................................. 2,691 71,984
------------
208,973
------------
HOSPITAL MANAGEMENT (0.6%)
Columbia/HCA Healthcare Corp. ......................... 46,989 2,508,038
Community Psychiatric
Centers (a)........................................... 4,312 40,964
Tenet Healthcare Corp. (a)............................. 19,962 426,688
------------
2,975,690
------------
HOTEL--MOTEL (0.4%)
Harrah's Entertainment, Inc. (a)....................... 10,680 301,710
Hilton Hotels Corp. ................................... 4,755 534,938
ITT Corp. (New) (a).................................... 11,445 758,231
Marriott International, Inc............................ 13,162 707,457
------------
2,302,336
------------
HOUSEHOLD--FURNISHINGS & APPLIANCES (0.1%)
Armstrong World Industries, Inc. ...................... 3,599 207,392
Maytag Corp............................................ 10,495 219,083
Whirlpool Corp......................................... 7,191 356,854
------------
783,329
------------
HOUSEHOLD PRODUCTS (2.0%)
Clorox Company (The)................................... 5,542 491,160
Colgate-Palmolive Company.............................. 15,337 1,299,811
Kimberly-Clark Corp.................................... 29,618 2,287,990
Procter & Gamble Company (The)......................... 72,713 6,589,616
------------
10,668,577
------------
HOUSEWARES (0.2%)
Newell Co.............................................. 16,842 515,786
Rubbermaid, Inc. ...................................... 16,454 448,372
Tupperware Corp. (a)................................... 5,948 251,303
------------
1,215,461
------------
INSURANCE BROKERS (0.3%)
Alexander & Alexander Services, Inc. .................. 4,346 85,833
Aon Corporation........................................ 10,666 541,300
Marsh & McLennan Companies, Inc. ...................... 7,688 741,892
------------
1,369,025
------------
INVESTMENT BANK/BROKERAGE (1.0%)
Dean Witter Discover & Company......................... 16,489 943,995
Merrill Lynch & Co., Inc............................... 17,123 1,115,135
Morgan Stanley Group Inc............................... 15,150 744,244
Salomon Inc............................................ 10,412 458,128
Travelers Group Inc. .................................. 46,620 2,127,038
------------
5,388,540
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
LEISURE TIME (0.1%)
Bally Entertainment Corp. (a).......................... 4,670 $ 128,425
Brunswick Corp......................................... 9,412 188,240
Outboard Marine Corp................................... 2,037 36,921
------------
353,586
------------
LIFE INSURANCE (0.4%)
Jefferson-Pilot Corp................................... 6,925 357,503
Lincoln National Corp. ................................ 10,098 467,032
Providian Corp......................................... 9,258 396,937
Torchmark Corp. ....................................... 6,970 304,938
UNUM Corp.............................................. 7,105 442,286
USLIFE Corp. .......................................... 3,397 111,676
------------
2,080,372
------------
MACHINE TOOLS (0.0%) (b)
Cincinnati Milacron Inc................................ 3,718 89,232
Giddings & Lewis Inc................................... 3,442 55,933
------------
145,165
------------
MACHINERY--DIVERSIFIED (0.8%)
Briggs & Stratton Corp................................. 2,838 116,713
Case Corporation....................................... 7,012 336,576
Caterpillar Inc. ...................................... 19,173 1,298,971
Cooper Industries, Inc. ............................... 10,584 439,236
Deere & Company........................................ 25,669 1,026,760
Harnischfeger Industries, Inc.......................... 4,888 162,526
Ingersoll-Rand Company................................. 10,544 461,300
Nacco Industries, Inc. ................................ 891 49,339
Timken Company (The)................................... 3,076 119,195
Varity Corp. (a)....................................... 3,958 190,478
------------
4,201,094
------------
MAJOR REGIONAL BANKS (4.1%)
Banc One Corp.......................................... 44,321 1,506,914
Bank of Boston Corp.................................... 10,964 542,718
Bank of New York Company,
Inc. (The)............................................ 19,492 998,965
Barnett Banks, Inc..................................... 9,369 571,509
Boatmen's Bancshares, Inc.............................. 15,371 616,761
Comerica Inc. ......................................... 11,692 521,756
CoreStates Financial Corp.............................. 21,809 839,647
Fifth Third Bancorp.................................... 9,072 489,888
First Bank System, Inc. ............................... 15,368 891,344
First Union Corp....................................... 27,997 1,704,317
Fleet Financial Group, Inc............................. 25,873 1,125,475
KeyCorp................................................ 23,050 893,188
Mellon Bank Corp....................................... 13,197 752,229
National City Corp. ................................... 15,495 544,262
NationsBank Corp....................................... 29,151 2,408,601
Norwest Corp........................................... 37,313 1,301,291
PNC Bank Corp.......................................... 33,414 994,066
Republic New York Corp................................. 5,557 345,923
Suntrust Banks, Inc.................................... 22,257 823,509
U.S. Bancorp (Portland, OR)............................ 14,862 536,890
</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>
MAJOR REGIONAL BANKS (Continued)
Wachovia Corp. ........................................ 16,610 $ 726,688
Wells Fargo & Company.................................. 9,640 2,302,755
------------
21,438,696
------------
MANUFACTURED HOUSING (0.0%) (b)
Fleetwood Enterprises, Inc............................. 4,495 139,345
------------
MANUFACTURING--DIVERSIFIED (1.0%)
AlliedSignal, Inc...................................... 29,943 1,710,494
Crane Co............................................... 3,005 123,205
Dover Corp............................................. 12,078 557,098
Illinois Tool Works Inc. .............................. 12,442 841,390
Johnson Controls, Inc.................................. 3,984 276,888
Millipore Corp......................................... 4,637 194,174
Pall Corp.............................................. 12,134 292,733
Parker Hannifin Corp................................... 7,258 307,558
Trinova Corp. ......................................... 3,120 104,130
Tyco International Ltd. ............................... 14,940 608,805
------------
5,016,475
------------
MEDICAL PRODUCTS (1.0%)
Bard (C.R.), Inc....................................... 6,009 204,306
Bausch & Lomb Inc. .................................... 5,748 244,290
Baxter International Inc. ............................. 26,751 1,263,985
Becton, Dickinson & Company............................ 6,260 502,365
Biomet Inc. (a)........................................ 12,306 176,899
Boston Scientific Corp. (a)............................ 18,334 825,030
Medtronic, Inc......................................... 24,389 1,365,784
St. Jude Medical, Inc. (a)............................. 7,582 253,997
United States Surgical Corp............................ 5,703 176,793
------------
5,013,449
------------
METALS--MISCELLANEOUS (0.3%)
Asarco, Inc. .......................................... 4,014 110,887
Cyprus Amax Minerals Co................................ 9,164 207,335
Freeport-McMoRan Copper & Gold Inc. ................... 21,193 675,527
INCO Limited........................................... 11,613 374,519
Phelps Dodge Corp...................................... 6,773 422,466
------------
1,790,734
------------
MISCELLANEOUS (1.5%)
Airtouch Communications (a)............................ 52,046 1,470,300
American Greetings Corp................................ 7,409 202,821
Corning Inc. .......................................... 22,441 861,173
Dial Corp. (The)....................................... 9,850 281,956
Harcourt General, Inc.................................. 7,124 356,200
Harris Corp............................................ 3,843 234,423
Jostens, Inc........................................... 4,086 80,699
Minnesota Mining & Manufacturing Company............... 44,374 3,061,806
Pioneer Hi-Bred International, Inc. ................... 8,792 464,877
TRW Inc................................................ 6,406 575,739
Whitman Corp........................................... 11,196 270,104
------------
7,860,098
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
MONEY CENTER BANKS (2.5%)
BankAmerica Corp. ..................................... 36,304 $ 2,750,028
Bankers Trust New York Corp. .......................... 7,740 571,792
Chase Manhattan Corp. (The)............................ 42,580 3,007,212
Citicorp............................................... 47,848 3,953,441
First Chicago Corp. ................................... 31,197 1,220,583
Morgan (J.P.) & Company, Inc........................... 18,409 1,557,862
------------
13,060,918
------------
MULTI-LINE INSURANCE (1.4%)
Aetna Life & Casualty Company.......................... 11,275 806,162
American International Group, Inc. .................... 50,268 4,957,682
CIGNA Corp. ........................................... 7,435 876,401
ITT Hartford Group, Inc. .............................. 11,445 609,446
------------
7,249,691
------------
NATURAL GAS DISTRIBUTORS & PIPE LINES (0.9%)
Coastal Corp. ......................................... 10,235 427,311
Columbia Gas System, Inc............................... 5,068 264,170
Consolidated Natural Gas Company....................... 9,222 481,849
Eastern Enterprises.................................... 2,053 68,262
Enron Corp. ........................................... 26,589 1,086,825
Enserch Corp........................................... 6,672 145,116
Nicor Inc.............................................. 5,016 142,329
Noram Energy Corp. .................................... 12,243 133,143
Oneok, Inc. ........................................... 2,687 67,175
Pacific Enterprises.................................... 8,282 245,354
PanEnergy Corp......................................... 14,561 478,693
Peoples Energy Corp.................................... 3,455 115,743
Sonat Inc.............................................. 8,381 377,145
Williams Companies, Inc. (The)......................... 9,956 492,822
------------
4,525,937
------------
OFFICE EQUIPMENT & SUPPLIES (0.6%)
Alco Standard Corp..................................... 13,601 615,445
Moore Corp. Ltd. ...................................... 9,756 184,145
Pitney Bowes Inc....................................... 15,903 759,368
Xerox Corp............................................. 31,503 1,685,410
------------
3,244,368
------------
OIL & GAS DRILLING (0.0%) (b)
Helmerich & Payne, Inc................................. 2,539 92,991
Rowan Companies, Inc. (a).............................. 8,328 122,838
------------
215,829
------------
OIL--EXPLORATION & PRODUCTION (0.2%)
Burlington Resources, Inc. ............................ 12,356 531,308
Oryx Energy Company (a)................................ 10,917 177,401
Santa Fe Energy Resources,
Inc. (a).............................................. 8,895 105,628
------------
814,337
------------
</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)
June 30, 1996 (Unaudited)
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
OIL--INTEGRATED DOMESTIC (1.3%)
Amerada Hess Corp...................................... 9,114 $ 488,738
Ashland Inc............................................ 6,160 244,090
Atlantic Richfield Company............................. 15,788 1,870,878
Kerr-McGee Corp. ...................................... 5,087 309,671
Louisiana Land & Exploration Company (The)............. 3,314 190,969
Occidental Petroleum Corp.............................. 31,154 771,062
Pennzoil Company....................................... 4,481 207,246
Phillips Petroleum Company............................. 25,778 1,079,454
Sun Company, Inc....................................... 7,413 225,170
Unocal Corp............................................ 24,235 817,931
USX-Marathon Group..................................... 28,031 564,124
------------
6,769,333
------------
OIL--INTEGRATED INTERNATIONAL (6.2%)
Amoco Corp............................................. 48,882 3,537,835
Chevron Corp. ......................................... 64,200 3,787,800
Exxon Corp. ........................................... 122,165 10,613,084
Mobil Corp............................................. 38,687 4,337,780
Royal Dutch Petroleum Company.......................... 52,739 8,108,621
Texaco Inc. ........................................... 26,000 2,180,750
------------
32,565,870
------------
OIL--WELL EQUIPMENT & SERVICES (0.8%)
Baker Hughes Inc. ..................................... 13,876 456,173
Dresser Industries, Inc. .............................. 17,772 524,274
Halliburton Company.................................... 11,280 626,040
McDermott International, Inc. ......................... 5,372 112,141
Schlumberger Limited................................... 23,677 1,994,787
Western Atlas, Inc. (a)................................ 5,212 303,599
------------
4,017,014
------------
PAPER & FOREST PRODUCTS (0.9%)
Boise Cascade Corp..................................... 4,579 167,706
Champion International Corp............................ 9,456 394,788
Georgia-Pacific Corp................................... 8,967 636,657
International Paper Company............................ 29,141 1,074,574
James River Corp. of Virginia.......................... 8,224 216,908
Louisiana-Pacific Corp. ............................... 10,560 233,640
Mead Corp. ............................................ 5,283 274,055
Potlatch Corp.......................................... 2,829 110,685
Union Camp Corp........................................ 6,899 336,326
Westvaco Corp.......................................... 9,891 295,494
Weyerhaeuser Company................................... 19,806 841,755
Willamette Industries, Inc. ........................... 5,448 324,156
------------
4,906,744
------------
PERSONAL LOANS (0.2%)
Beneficial Corp........................................ 5,153 289,212
Household International Inc. .......................... 9,583 728,308
------------
1,017,520
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
PHOTOGRAPHY/IMAGING (0.6%)
Eastman Kodak Company.................................. 36,357 $ 2,826,757
Polaroid Corp.......................................... 4,462 203,579
------------
3,030,336
------------
POLLUTION CONTROL (0.5%)
Browning-Ferris Industries Inc......................... 20,906 606,274
Laidlaw, Inc. Class B.................................. 28,619 289,767
WMX Technologies, Inc.................................. 47,985 1,571,509
------------
2,467,550
------------
PROPERTY--CASUALTY INSURANCE (1.1%)
Allstate Corp. (The)................................... 43,867 2,001,432
Chubb Corp. (The)...................................... 17,006 848,174
General Re Corp. ...................................... 7,979 1,214,803
Loews Corp. ........................................... 11,510 907,851
SAFECO Corp. .......................................... 12,232 432,707
St. Paul Companies, Inc. (The)......................... 8,212 439,342
USF&G Corp............................................. 10,972 179,667
------------
6,023,976
------------
PUBLISHING (0.3%)
Dun & Bradstreet Corp. (The)........................... 17,899 1,118,687
McGraw-Hill Companies, Inc. ........................... 10,474 479,186
Meredith Corp.......................................... 2,922 121,993
------------
1,719,866
------------
PUBLISHING--NEWSPAPER (0.6%)
Dow Jones & Company, Inc. ............................. 9,436 393,953
Gannett Company, Inc................................... 14,791 1,046,463
Knight-Ridder Inc. .................................... 4,796 347,710
New York Times Company (The)........................... 9,469 308,926
Times Mirror Company................................... 10,630 462,405
Tribune Company........................................ 6,663 483,901
------------
3,043,358
------------
RAILROADS (1.0%)
Burlington Northern Santa Fe Corp...................... 15,161 1,226,146
Conrail Inc. .......................................... 7,709 511,685
CSX Corp. ............................................. 20,677 997,665
Norfolk Southern Corp.................................. 12,637 1,070,986
Union Pacific Corp. ................................... 20,056 1,401,413
------------
5,207,895
------------
RESTAURANTS (0.7%)
Darden Restaurants, Inc................................ 15,676 168,517
Luby's Cafeterias, Inc. ............................... 2,283 53,651
McDonald's Corp........................................ 73,707 3,445,802
Ryan's Family Steak Houses,
Inc. (a).............................................. 5,245 48,516
Shoney's, Inc. (a)..................................... 4,292 46,676
Wendy's International, Inc............................. 11,786 219,514
------------
3,982,676
------------
</TABLE>
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.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
RETAIL STORES--APPAREL (0.4%)
Charming Shoppes, Inc. (a)............................. 10,042 $ 70,922
Gap, Inc. (The)........................................ 30,363 975,411
Limited, Inc. (The).................................... 26,852 577,318
TJX Companies, Inc. (The).............................. 7,181 242,359
------------
1,866,010
------------
RETAIL STORES--DEPARTMENT (0.7%)
Dillard Department Stores, Inc......................... 11,056 403,544
Federated Department Stores,
Inc. (a).............................................. 19,887 678,644
May Department Stores Company.......................... 24,507 1,072,181
Mercantile Stores Company, Inc. 3,598 210,933
Nordstrom, Inc......................................... 7,969 354,620
Penney (J.C.) Company, Inc. ........................... 22,038 1,156,995
------------
3,876,917
------------
RETAIL STORES--DRUG (0.2%)
Longs Drug Stores Corp................................. 1,938 86,483
Rite Aid Corp.......................................... 8,237 245,051
Walgreen Company....................................... 25,935 868,822
------------
1,200,356
------------
RETAIL STORES--FOOD CHAIN (0.6%)
Albertson's, Inc. ..................................... 26,598 1,100,492
American Stores Co..................................... 14,412 594,495
Giant Food, Inc........................................ 5,893 211,411
Great Atlantic & Pacific Tea Company, Inc.............. 3,726 122,492
Kroger Company (The) (a)............................... 12,985 512,908
Winn-Dixie Stores, Inc................................. 15,903 562,569
------------
3,104,367
------------
RETAIL STORES--GENERAL MERCHANDISE (1.8%)
Dayton Hudson Corp. ................................... 7,064 728,475
Kmart Corp. ........................................... 45,289 560,451
Sears, Roebuck & Company............................... 38,139 1,854,509
Wal-Mart Stores, Inc................................... 242,938 6,164,552
------------
9,307,987
------------
RETAIL STORES--SPECIALTY (1.2%)
Circuit City Stores, Inc............................... 9,503 343,296
Home Depot, Inc. (The)................................. 50,509 2,727,486
Lowe's Companies, Inc.................................. 16,940 611,958
Melville Corp.......................................... 10,186 412,533
Pep Boys-Manny, Moe & Jack............................. 6,040 205,360
Price/Costco, Inc. (a)................................. 19,170 414,551
Tandy Corp. ........................................... 6,131 290,456
Toys "R" Us (a)........................................ 26,617 758,584
Woolworth Corp. (a).................................... 12,983 292,118
------------
6,056,342
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
SAVINGS & LOANS (0.2%)
Ahmanson (H.F.) & Company.............................. 11,616 $ 313,632
Golden West Financial Corp............................. 5,700 319,200
Great Western Financial Corp. ......................... 13,346 318,636
------------
951,468
------------
SHOES (0.3%)
Brown Group, Inc....................................... 1,690 29,364
Nike, Inc.............................................. 13,960 1,434,390
Reebok International Ltd............................... 7,373 247,917
Stride Rite Corp....................................... 4,883 40,285
------------
1,751,956
------------
SPECIALIZED SERVICES (0.5%)
Block (H & R), Inc..................................... 11,066 361,028
CUC International Inc. (a)............................. 19,076 677,198
Ecolab, Inc. .......................................... 6,786 223,938
Interpublic Group of Cos., Inc. ....................... 8,199 384,328
National Service Industries, Inc....................... 4,756 186,078
Ogden Corp. ........................................... 4,742 85,949
Safety-Kleen Corp. .................................... 5,654 98,945
Service Corp. International............................ 12,133 697,648
------------
2,715,112
------------
SPECIALTY PRINTING (0.2%)
Deluxe Corp............................................ 8,196 290,958
Donnelley (R.R.) & Sons Company........................ 15,064 525,357
Harland (John H.) Co. (The)............................ 3,078 75,796
------------
892,111
------------
STEEL (0.2%)
Armco Inc. (a)......................................... 11,200 56,000
Bethlehem Steel Corp. (a).............................. 10,722 127,323
Inland Steel Industries, Inc. ......................... 4,691 92,061
Nucor Corp. ........................................... 9,206 466,054
USX-U.S. Steel Group Inc. ............................. 8,062 228,759
Worthington Industries, Inc. .......................... 8,939 186,602
------------
1,156,799
------------
TELECOMMUNICATIONS--LONG DISTANCE (2.8%)
AT&T Corp. ............................................ 169,378 10,501,436
MCI Communications Corp. .............................. 67,180 1,721,487
Sprint Corp............................................ 35,374 1,485,708
WorldCom, Inc. (a)..................................... 21,480 1,189,455
------------
14,898,086
------------
TELEPHONE (4.5%)
Alltel Corp. .......................................... 18,610 572,257
Ameritech Corp......................................... 58,298 3,461,444
Bell Atlantic Corp. ................................... 46,284 2,950,605
BellSouth Corp......................................... 97,754 4,142,326
GTE Corp............................................... 102,675 4,594,706
NYNEX Corp............................................. 42,441 2,015,947
Pacific Telesis Group.................................. 41,802 1,410,818
</TABLE>
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
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996 (Unaudited)
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
TELEPHONE (Continued)
SBC Communications, Inc............................. 59,979 $ 2,953,966
US West, Inc........................................ 46,019 1,466,856
------------
23,568,925
------------
TEXTILES--APPAREL MANUFACTURERS (0.2%)
Fruit Of The Loom Inc.
Class A (a)........................................ 7,468 190,434
Liz Claiborne, Inc. ................................ 7,244 250,823
Russell Corp........................................ 3,851 106,384
Springs Industries, Inc. ........................... 2,025 102,263
VF Corp. ........................................... 6,182 368,602
------------
1,018,506
------------
TOBACCO (2.0%)
American Brands, Inc. .............................. 17,705 803,364
Philip Morris Companies, Inc........................ 88,373 9,190,792
UST Inc............................................. 20,420 699,385
------------
10,693,541
------------
TOYS (0.2%)
Hasbro Inc. ........................................ 8,590 307,093
Mattel, Inc......................................... 29,031 831,012
------------
1,138,105
------------
TRANSPORTATION--MISCELLANEOUS (0.1%)
Federal Express Corp. (a)........................... 5,522 452,804
Ryder System, Inc. ................................. 7,705 216,703
------------
669,507
------------
TRUCKERS (0.1%)
Caliber System, Inc................................. 3,847 130,798
Consolidated Freightways, Inc. ..................... 4,299 90,817
Yellow Corp. (a).................................... 2,909 38,544
------------
260,159
------------
Total Common Stocks
(Cost $368,711,589)................................ 514,576,848 (c)
------------
PREFERRED STOCK (0.0%) (b)
CONGLOMERATES (0.0%) (b)
Teledyne, Inc. $1.20, Series E...................... 41 630
------------
Total Preferred Stock
(Cost $615)........................................ 630
------------
</TABLE>
SHORT-TERM INVESTMENTS (2.2%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
COMMERCIAL PAPER (1.8%)
Jet Funding Corp.
5.40%, due 7/31/96 (d)............................. $2,550,000 $ 2,538,525
Minolta Corp.
5.40%, due 7/16/96 (d)............................. 1,380,000 1,376,895
Mitsubishi Motors Credit of America, Inc.
5.27%, due 7/1/96 (d).............................. 2,950,000 2,950,000
Wal-Mart Stores Inc.
5.52%, due 7/10/96 (d)............................. 460,000 459,365
Yamaha Motor Finance Corp.
5.45%, due 7/22/96 (d)............................. 2,000,000 1,993,642
------------
Total Commercial Paper
(Cost $9,318,427).................................. 9,318,427
------------
U.S. GOVERNMENT (0.4%)
United States Treasury Bill
5.13%, due 10/17/96 (d)............................ 2,450,000 2,411,021
------------
Total U.S. Government
(Cost $2,412,221).................................. 2,411,021
------------
Total Short-Term Investments
(Cost $11,730,648)................................. 11,729,448
------------
Total Investments
(Cost $380,442,852) (e)............................ 99.8% 526,306,926 (f)
Cash and Other Assets,
Less Liabilities................................... 0.2 1,092,180
---------- ------------
Net Assets.......................................... 100.0% $527,399,106
========== ============
FUTURES
CONTRACTS (0.0%) (b)
<CAPTION>
CONTRACTS UNREALIZED
LONG DEPRECIATION
------------------------
<S> <C> <C>
Standard & Poor's 500
September 1996..................................... 33 $ (85,507)(g)
------------
Total Futures Contracts
(Settlement Value $11,167,200) $ (85,507)
============
</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 99.7% of net assets.
(d) Segregated as collateral for futures contracts.
(e) The cost for Federal income tax purposes is $380,685,749.
(f) At June 30, 1996 net unrealized appreciation was $145,621,177, 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 $148,977,126 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $3,355,949.
(g) Represents the difference between the value of the contracts at the time
they were opened and the value at June 30, 1996.
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
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
As of June 30, 1996 (Unaudited) For the six months ended June 30,
1996 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$380,442,852)................................................... $526,306,926
Receivables:
Investment securities sold....................................... 64,981,560
Dividends and interest........................................... 780,062
Fund shares sold................................................. 690,078
Other assets..................................................... 952
Variation margin receivable on futures contracts................. 134,475
------------
Total assets................................................... 592,894,053
------------
LIABILITIES:
Payables:
Investment securities purchased.................................. 65,215,792
Administrator.................................................... 140,526
Adviser.......................................................... 42,005
Fund shares redeemed............................................. 14,042
Custodian........................................................ 13,005
Directors........................................................ 7,250
Transfer agent................................................... 5,396
Accrued expenses................................................. 56,931
------------
Total liabilities.............................................. 65,494,947
------------
Net assets....................................................... $527,399,106
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized
Institutional Class.............................................. $ 26,725
Institutional Service Class...................................... 201
Additional paid-in capital....................................... 371,809,877
Accumulated undistributed net investment income.................. 4,424,386
Accumulated undistributed net realized gain on investments....... 5,359,350
Net unrealized appreciation on investments....................... 145,778,567
------------
Net assets....................................................... $527,399,106
============
Institutional Class
Net assets applicable to outstanding shares...................... $523,474,648
============
Shares of capital stock outstanding.............................. 26,724,921
============
Net asset value per share outstanding............................ $ 19.59
============
Institutional Service Class
Net assets applicable to outstanding shares...................... $ 3,924,458
============
Shares of capital stock outstanding.............................. 200,780
============
Net asset value per share outstanding............................ $ 19.55
============
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a).................................................... $ 4,353,038
Interest......................................................... 1,153,656
------------
Total income................................................... 5,506,694
------------
Expenses: (Note 2)
Administration (Note 3).......................................... 862,920
Advisory (Note 3)................................................ 215,730
Custodian........................................................ 36,177
Legal............................................................ 25,910
Auditing......................................................... 25,720
Registration..................................................... 21,754
Shareholder communication........................................ 19,594
Transfer agent................................................... 16,153
Directors........................................................ 13,507
Service (Note 3)................................................. 3,657
Miscellaneous.................................................... 9,491
------------
Total expenses before
reimbursement................................................. 1,250,613
Expense reimbursement from Administrator (Note 3)................ (168,305)
------------
Net expenses................................................... 1,082,308
------------
Net investment income............................................ 4,424,386
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from:
Security transactions............................................ 1,879,672
Futures transactions............................................. 2,726,385
------------
Net realized gain on investments................................. 4,606,057
------------
Net change in unrealized appreciation on investments:
Security transactions............................................ 30,561,342
Futures transactions............................................. (104,289)
------------
Net unrealized gain on investments............................... 30,457,053
------------
Net realized and unrealized gain on investments.................. 35,063,110
------------
Net increase in net assets resulting from operations............. $ 39,487,496
============
</TABLE>
- --------
(a) Dividends recorded net of foreign withholding taxes of $50,137.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
37
<PAGE>
INDEXED EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996 (Unaudited) and the year ended December
31, 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income............................. $ 4,424,386 $ 6,542,760
Net realized gain on investments.................. 4,606,057 7,990,629
Net change in unrealized appreciation on invest-
ments............................................ 30,457,053 76,650,549
------------ ------------
Net increase in net assets resulting from opera-
tions............................................ 39,487,496 91,183,938
------------ ------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class.............................. -- (6,591,393)
Institutional Service Class...................... -- (16,388)
From net realized gain on investments:
Institutional Class.............................. -- (6,792,059)
Institutional Service Class...................... -- (17,654)
------------ ------------
Total dividends and distributions to sharehold-
ers............................................ -- (13,417,494)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class.............................. 164,356,134 78,587,684
Institutional Service Class...................... 2,817,545 897,435
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions:
Institutional Class.............................. -- 13,357,924
Institutional Service Class...................... -- 34,040
------------ ------------
167,173,679 92,877,083
Cost of shares redeemed:
Institutional Class.............................. (34,551,468) (59,931,221)
Institutional Service Class...................... (99,483) (8,197)
------------ ------------
Increase in net assets derived from capital
share transactions.............................. 132,522,728 32,937,665
------------ ------------
Net increase in net assets....................... 172,010,224 110,704,109
NET ASSETS:
Beginning of period............................... 355,388,882 244,684,773
------------ ------------
End of period..................................... $527,399,106 $355,388,882
============ ============
Accumulated undistributed net investment income... $ 4,424,386 $ --
============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
38
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS INSTITUTIONAL CLASS
------------- ------------- ------------- ------------- --------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31 JANUARY 2, 1991(a)
ENDED ---------------------------------------------------------- THROUGH
JUNE 30, 1996* 1995 1994 1993 1992 DECEMBER 31, 1991
--------------------------- --------------------------- -------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of
period........... $ 17.82 $ 17.81 $ 13.53 $ 13.53 $ 13.86 $ 13.50 $ 12.98 $ 10.00
-------- -------- -------- -------- -------- -------- -------- --------
Net investment
income........... 0.16 0.13 0.35 0.33 0.33 0.30 0.30 0.32
Net realized and
unrealized gain
(loss) on
investments...... 1.61 1.61 4.64 4.64 (0.20) 0.93 0.61 2.66
-------- -------- -------- -------- -------- -------- -------- --------
Total from
investment
operations....... 1.77 1.74 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(c) (0.01) -- --
-------- -------- -------- -------- -------- -------- -------- --------
Total dividends
and
distributions.... -- -- (0.70) (0.69) (0.46) (0.87) (0.39) --
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value at
end of period.... $ 19.59 $ 19.55 $ 17.82 $ 17.81 $ 13.53 $ 13.86 $ 13.50 $ 12.98
======== ======== ======== ======== ======== ======== ======== ========
Total investment
return (b)....... 9.93% 9.77% 36.88% 36.70% 0.90% 9.41% 7.19% 29.80%
Ratios (to average
net assets)/
Supplemental
Data:
Net investment
income.......... 2.05%+ 2.30%+ 2.21% 1.96% 2.43% 2.39% 2.52% 2.78%
Net expenses..... 0.50%+ 0.75%+ 0.50% 0.75% 0.50% 0.45% 0.45% 0.45%
Expenses (before
reimbursement).. 0.58%+ 0.83%+ 0.59% 0.84% 0.58% 0.60% 0.62% 0.68%
Portfolio turnover
rate............. 1% 1% 4% 4% 5% 5% 4% 4%
Average commission
rate paid........ $ 0.0498 $ 0.0498 (d) (d) (d) (d) (d) (d)
Net assets at end
of period (in
000's)........... $523,475 $ 3,924 $354,420 $ 969 $244,685 $219,351 $164,858 $144,055
</TABLE>
- --------
* Unaudited.
+ Annualized.
(a) Commencement of operations.
(b) Total return is not annualized.
(c) Less than one cent per share.
(d) Disclosure of amount required for fiscal years beginning on or after
September 1, 1995.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
39
<PAGE>
International Equity Fund
- --------------------------------------------------------------------------------
Fund Highlights for the six months ended June 30, 1996
. One-year total returns of 22.53% and 21.99% for Institutional Class and
Service Class shares, respectively, as of 6/30/96
. Outpaced the MSCI EAFE Index* and its average peer fund in the Lipper(S)
international fund category for the one-year and six-month periods ended
6/30/96
. Benefited from country allocation and selective currency management
strategies
For the six months ended June 30, 1996, the MainStay Institutional International
Equity Fund had total returns of 8.50% and 8.23% for Institutional Class and
Service Class shares, respectively. These results were ahead of the average
Lipper international fund, which returned 8.02% for the same period--and well
ahead of the Morgan Stanley Capital International (MSCI) EAFE Index, which
returned only 4.67%.
In the first quarter of 1996, the Fund benefited from international
diversification in two of the better performing international markets--Hong Kong
in Asia, and France in Europe. With its close ties to the growing U.S. economy,
Hong Kong's market was up 11.7%, and France continued its interest-rate
reductions, which resulted in a stock market gain of 11.6% (both in local
terms). In the second quarter, the Fund had over 11% of its investments in the
three top-performing equity markets--Spain, Italy, and Norway with market
increases of 10.9%, 10.8% and 8.8%, respectively. These markets rallied as a
result of declining trends in local interest-rates. Japan, the largest equity
market outside of the U.S., performed in line with the average of international
markets in the second quarter, but signs of economic recovery in Japan caused
Japanese equities to surge 43.5% over the 12 months ended June 30, 1996. The
weakest of the developed European markets was the U.K., which was up only 2.6%
over the reporting period. The Fund benefited from substantial investments in
Japan and modest positions in the U.K. Singapore was the weakest developed
market, overall, down 3.4% for the first six months of 1996, but its relatively
small weighting in the portfolio moderated its negative impact on returns.
Latin America and other emerging markets were strong performers in the second
quarter, causing the Fund to lag other funds that invested there. As of June 30,
1996, the Fund's portfolio did not include any investments in emerging markets.
Given the instability and volatility of emerging markets, we prefer to forego
profits on occasion rather than expose investors to undue risk. We also use
strict liquidity and diversification disciplines to help manage risks the
portfolio may encounter.
Throughout the first half of the year, the Fund also benefited from our currency
management strategies. Selective hedging helped protect the portfolio as
expensive foreign currencies declined relative to the U.S. dollar. During the
six-month reporting period, the Japanese yen and the German mark both declined
about 6.0%, and the Swiss franc dropped 8.0% relative to the U.S. dollar. On the
other hand, the Italian lira and U.K. pound increased relative to the U.S.
dollar. Our currency management strategies in these countries allowed us to
capture most of the gains. The Australian dollar gained 5.0% relative to the
U.S. dollar in the first quarter and remained flat in the second. Since we were
not hedged in Australian dollars, we captured the entire gain in that portion of
our portfolio.
International diversification Purchasing securities in several international
markets, which may react differently to economic, monetary, and market trends.
This diversification may provide opportunities for investors to pursue higher
returns while seeking to manage the risks of domestic investments.
Emerging markets Underdeveloped markets with less capital, or influence than the
leading markets in the world economy. While emerging markets may sometimes offer
greater growth potential than established markets, they generally carry greater
risks.
Liquidity The ability of a security to be readily traded or exchanged for cash.
Generally speaking, the larger an issuer's capitalization, the more liquid its
securities are likely to be.
Currency management/hedging The process of managing or "hedging" the risks
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.
40
<PAGE>
As we enter the second half of the year, the threat of Federal Reserve
tightening may increase the risk of foreign currencies declining against the
U.S. dollar. Should that occur, diversification into developed markets whose
central banks act independently of the Fed may again look attractive. With this
possibility in mind, we hold diversified positions in both Europe and Asia. We
find Austria, Italy, Spain, and France attractive because we anticipate
continued interest rate reductions in the face of mounting recessionary concern.
In Asia, we remain interested in Singapore, which we believe is now
significantly undervalued. In Japan, persistent government efforts to promote
economic growth continue to provide a positive outlook. We are emphasizing
energy and natural resources through investments in Norway (Norsk Hydro), the
Netherlands (Royal Dutch Petroleum), Australia (mining and metals), and New
Zealand (forest products) due to their attractive pricing.
The Fund is currently positioned across a broad array of developed equity
markets, with a tilt in favor of major Asian and peripheral European markets
over core European equity markets. The Fund continues to pursue long-term growth
of capital with an acceptable level of risk using a "country-first" approach. We
seek to identify the most promising markets outside the U.S. and equities in
each market with attractive growth potential. Current income is a secondary
objective of the Fund.
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.
* The MSCI EAFE Index is an unmanaged index generally considered
representative of the international 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.
41
<PAGE>
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
INTERNATIONAL EQUITY FUND vs MSCI EAFE INDEX
INSTITUTIONAL CLASS SHARES
- -------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
Intl. Equity Fund MSCI EAFE Index
1/1/95 $10,000 $10,000
IQ 1995 $9,830 $10,186
2Q 1995 $9,490 $10,260
3Q 1995 $10,150 $10,688
4Q 1995 $10,717 $11,121
1Q 1996 $11,245 $11,442
6/30/96 $11,629 $11,623
- -------------------------------------------------------------------------------
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
INTERNATIONAL EQUITY FUND vs MSCI EAFE INDEX
SERVICE CLASS SHARES
- -------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
Intl. Equity Fund MSCI EAFE Index
1/1/95 $10,000 $10,000
1Q 1995 $9,830 $10,186
2Q 1995 $9,480 $10,260
3Q 1995 $10,120 $10,688
4Q 1995 $10,686 $11,121
1Q 1996 $11,192 $11,442
6/30/96 $11,565 $11,623
- -------------------------------------------------------------------------------
[_] International Equity Fund [_] MSCI EAFE Index
Source: (C) 1996 Ibbotson Associates EnCorr Software
These graphs assume a $10,000 investment made on 1/1/95.
<TABLE>
<CAPTION>
Total Return* SEC Average Annual Total Return*
PERFORMANCE as of June 30, 1996 as of June 30, 1996
- ---------------------------------------------------------------------------------------------------------------------
Year to Date One Year Five Year Since Inception
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
International Equity Fund Institutional Class 8.50% 22.53% N/A 10.57%
International Equity Fund Service Class 8.23% 21.99% N/A 10.17%
Average Lipper International Fund 8.02% 15.46% 11.02% 11.73%
MSCI EAFE Index 4.67% 13.62% 10.33% 10.88%
</TABLE>
================================================================================
PORTFOLIO COMPOSITION
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Common Stocks 93.69%
Cash & Equivalents 6.21%
Other 0.10%
- -------------------------------------------------------------------------------
TOP 10 HOLDINGS
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
1. Bank of Tokyo - Mitsubishi Ltd. 2.12%
2. Toyota Motor Corp. 1.39%
3. Fuji Bank, Ltd. 1.12%
4. Sumitomo Bank 1.11%
5. Industrial Bank of Japan, Ltd. 1.09%
6. Matsushita Electric Industrial Co., Ltd. 1.02%
7. Norsk Hydro ASA 1.01%
8. Teijin, Ltd. 0.98%
9. Broken Hill Proprietary Co., Ltd. 0.95%
10. Singapore Airlines, Ltd. Foreign Registered 0.92%
- -------------------------------------------------------------------------------
TOP 5 COUNTRIES
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
1. Japan 39.28%
2. France 9.77%
3. United Kingdom 8.37%
4. Singapore 5.12%
5. Spain 4.85%
================================================================================
* 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.
42
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
COMMON STOCKS (93.7%)+
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
AUSTRALIA (4.4%)
Amcor, Ltd.
(forest products & paper)............................. 65,766 $ 447,736
Boral, Ltd.(building materials & components)........... 40,300 104,670
Brambles Industries, Ltd. (business & public services). 16,500 229,599
Broken Hill Proprietary Co., Ltd. (energy sources)..... 83,079 1,148,865
Coles Myer, Ltd. (merchandising)....................... 63,136 229,574
CRA, Ltd. (metals-nonferrous).......................... 29,842 459,410
CSR, Ltd. (multi-industry)............................. 58,400 206,378
Foster's Brewing Group, Ltd. (beverages & tobacco)..... 105,427 181,718
Mount Isa Mines Holdings, Ltd. (metals-nonferrous)..... 46,343 59,818
National Australia Bank, Ltd. (banking)................ 81,316 752,000
News Corp., Ltd.
(broadcasting & publishing)........................... 76,572 434,520
Pacific Dunlop, Ltd.
(multi-industry)...................................... 32,730 73,674
Santos, Ltd. (energy sources).......................... 40,400 139,907
Westpac Banking Corp., Ltd. (banking).................. 73,170 324,224
WMC, Ltd. (metals-nonferrous).......................... 72,425 518,721
------------
5,310,814
------------
AUSTRIA (2.5%)
Austrian Airlines Oesterreichische Luftverkehrs AG
(transportation-airlines) (a)......................... 650 100,057
Bank Austria AG (banking).............................. 8,550 686,403
Creditanstalt-Bankverein Stamm (banking)............... 4,300 284,596
EA-Generali AG (insurance)............................. 1,500 444,579
Oesterreichische Brau-Beteiligungs AG (beverages &
tobacco).............................................. 3,000 170,831
OMV AG (energy sources)................................ 4,300 435,524
Verbundgesellschaft-Oesterreichische
Elektrizitatswirtschafts AG Class A (utilities-
electrical & gas)..................................... 5,800 442,619
Wienerberger Baustoffindustrie AG
(building materials & components)..................... 2,050 413,928
------------
2,978,537
------------
FRANCE (9.8%)
Alcatel Alsthom
(electrical & electronics)............................ 5,352 466,785
AXA (insurance)........................................ 8,484 464,074
Carrefour, SA (merchandising).......................... 1,795 1,005,574
Compagnie de Saint Gobain (misc.-materials &
commodities).......................................... 5,354 716,559
</TABLE>
- --------
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
FRANCE (Continued)
Compagnie de Suez, SA (banking)........................ 7,662 $ 280,251
Compagnie Financiere de Paribas, SA Class A (banking).. 4,104 242,346
Compagnie Generale des Eaux (business & public
services)............................................. 4,997 558,125
Elf Aquitaine, SA
(energy sources)...................................... 9,235 679,159
Eridania Beghin-Say, SA
(food & household products)........................... 1,210 189,441
Groupe Danone
(food & household products)........................... 5,527 836,337
Havas, SA
(business & public services).......................... 3,138 256,619
Lafarge, SA (building materials & components).......... 5,190 314,036
L'Air Liquide (chemicals).............................. 5,837 1,030,642
L'Oreal (health & personal care)....................... 2,480 823,281
LVMH-Moet Hennessy Louis Vuitton (beverages & tobacco). 3,780 896,524
Lyonnaise des Eaux, SA
(multi-industry)...................................... 3,877 370,222
Michelin (CGDE) Class B
(tire & rubber)....................................... 3,800 185,716
Pernod-Ricard
(beverages & tobacco)................................. 2,680 171,792
Pinault-Printemps-Redoute, SA (building materials &
components)........................................... 790 276,373
PSA Peugeot, SA (automobiles).......................... 1,620 216,815
Rhone-Poulenc Class A (chemicals)...................... 11,040 290,149
Schneider, SA
(machinery & engineering)............................. 3,040 159,438
Societe Generale (banking)............................. 4,624 508,380
Thomson CSF, SA (aerospace & military technology)...... 8,895 250,016
Total, SA Class B
(energy sources)...................................... 7,865 583,296
------------
11,771,950
------------
GERMANY (3.8%)
Allianz AG Holding (insurance)......................... 400 692,446
BASF AG (chemicals).................................... 800 228,626
Bayer AG (chemicals)................................... 8,500 300,153
Daimler-Benz AG
(automobiles) (a)..................................... 1,000 535,102
Daimler-Benz AG Rights (automobiles) (a)............... 1,000 138
Deutsche Bank AG (banking)............................. 11,500 543,971
Dresdner Bank AG (banking)............................. 6,700 168,365
Karstadt AG (merchandising)............................ 150 60,655
Linde AG
(machinery & engineering)............................. 200 130,080
Mannesmann AG
(machinery & engineering)............................. 450 155,505
</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.
43
<PAGE>
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996 (Unaudited)
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
GERMANY (Continued)
Muenchener Rueckversicherungs-Gesellschaft AG
(insurance)........................................... 109 $ 224,855
Preussag AG (multi-industry)........................... 200 50,587
RWE AG
(utilities-electrical & gas).......................... 4,500 175,312
Siemens AG
(electrical & electronics)............................ 6,500 347,176
Thyssen AG (metals-steel).............................. 450 82,216
VEBA AG
(utilities-electrical & gas).......................... 12,100 642,863
Viag AG (multi-industry) .............................. 300 119,634
Volkswagen AG (automobiles)............................ 300 111,455
------------
4,569,139
------------
HONG KONG (3.2%)
Cheung Kong (Holdings) Ltd. (real estate).............. 89,000 641,013
China Light & Power Co. Ltd. (utilities-electrical &
gas).................................................. 72,000 326,491
Hang Seng Bank Ltd. (banking).......................... 53,500 539,114
Hong Kong Telecommunications Ltd. (telecommunications). 328,000 589,008
Hutchison Whampoa Ltd.
(multi-industry)...................................... 104,000 654,327
Sun Hung Kai Properties Ltd. (real estate)............. 69,000 697,535
Swire Pacific Ltd. Class A
(multi-industry)...................................... 46,500 397,989
------------
3,845,477
------------
ITALY (4.5%)
Assicurazioni Generali (insurance)..................... 43,650 1,006,054
Banca Commerciale Italiana (banking)................... 97,000 194,791
Benetton Group SPA
(textiles & apparel).................................. 11,000 142,006
Credito Italiano (banking)............................. 114,000 133,493
Edison SPA (energy sources)............................ 33,000 199,023
Fiat SPA (automobiles)................................. 165,000 552,423
Fiat SPA di Risp (automobiles)......................... 56,000 95,661
Istituto Bancario San Paolo di Torino SPA (banking).... 41,000 264,647
Italgas SPA
(utilities-electrical & gas).......................... 43,000 160,506
Mediobanca SPA
(financial services).................................. 43,900 278,643
Montedison SPA
(multi-industry) (a).................................. 285,000 165,566
Olivetti Group SPA (data processing & reproduction) (a) 237,500 128,061
Parmalat Finanziaria SPA
(food & household products)........................... 93,000 124,910
Pirelli SPA
(industrial components)............................... 78,000 130,446
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
ITALY (Continued)
Riunione Adriatica di Sicurta SPA (insurance).......... 19,600 $ 202,486
Sirti SPA (telecommunications)......................... 28,000 179,822
Telecom Italia SPA (telecommunications)................ 308,000 661,689
Telecom Italia SPA di Risp (telecommunications)........ 81,000 139,688
Telecom Italia Mobile SPA (telecommunications)......... 296,000 660,998
Telecom Italia Mobile SPA di Risp (telecommunications). 55,000 74,947
------------
5,495,860
------------
JAPAN (39.3%)
Ajinomoto Co., Inc.
(food & household products)........................... 26,000 310,525
Asahi Bank, Ltd. (banking)............................. 77,000 891,551
Asahi Chemical Industry Co., Ltd. (chemicals).......... 84,000 598,878
Asahi Glass Co., Ltd. (misc.-materials & components)... 50,000 597,164
Bank of Tokyo-Mitsubishi Ltd. (banking)................ 110,200 2,554,766
Bridgestone Corp.
(industrial components)............................... 30,000 571,636
Canon, Inc. (recreation & other consumer goods)........ 24,000 498,882
Chiba Bank, Ltd. (banking)............................. 34,000 299,439
Dai Nippon Printing Co., Ltd. (business & public
services)............................................. 34,000 657,153
Daiei, Inc. (merchandising)............................ 37,000 445,274
Daiwa House Industry Co., Ltd. (construction &
housing).............................................. 34,000 526,963
Fanuc Co., Ltd. (electronic components & instruments).. 9,000 357,751
Fuji Bank, Ltd. (banking).............................. 63,000 1,355,516
Fuji Photo Film Co., Ltd. (recreation & other consumer
goods)................................................ 14,000 441,628
Fujitsu, Ltd. (data processing & reproduction)......... 63,000 574,371
Furukawa Electric Co., Ltd. (industrial components).... 51,000 304,553
Hankyu Corp.
(transportation-road & rail).......................... 21,000 122,915
Hitachi, Ltd.
(electrical & electronics)............................ 84,000 781,145
Honda Motor Co., Ltd. (automobiles).................... 23,000 595,522
Industrial Bank of Japan, Ltd. (banking)............... 53,000 1,314,307
Ito-Yokado Co., Ltd. (merchandising)................... 12,000 723,160
Itochu Corp. (wholesale & international trade)......... 98,000 684,395
Japan Air Lines
(transportation-airlines) (a)......................... 47,000 380,079
</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>
JAPAN (Continued)
Japan Energy Corp.
(energy sources)...................................... 86,000 $ 319,113
Joyo Bank (banking).................................... 15,000 113,643
Kajima Corp.
(construction & housing).............................. 26,000 267,858
Kansai Electric Power Co., Inc. (utilities-electrical &
gas).................................................. 26,200 599,552
Kao Corp.
(food & household products)........................... 72,000 971,508
Kawasaki Steel Corp.
(metals-steel)........................................ 45,000 162,055
Kirin Brewery Co., Ltd.
(beverages & tobacco)................................. 37,000 452,021
Komatsu, Ltd.
(machinery & engineering)............................. 48,000 472,625
Kubota Corp.
(machinery & engineering)............................. 50,000 329,580
Marubeni Corp. (wholesale & international trade)....... 96,000 525,139
Marui Co., Ltd. (merchandising) 14,000 310,160
Matsushita Electric Industrial Co., Ltd. (appliances &
household durables)................................... 66,000 1,227,513
Mitsubishi Chemical Corp. (chemicals).................. 99,000 456,707
Mitsubishi Corp.
(multi-industry)...................................... 33,000 433,240
Mitsubishi Electric Corp. (electrical & electronics)... 104,000 724,400
Mitsubishi Estate Co., Ltd. (construction & housing)... 28,000 385,467
Mitsubishi Heavy Industries, Ltd. (machinery &
engineering).......................................... 105,000 912,293
Mitsubishi Trust & Banking (financial services)........ 44,000 742,124
Mitsui Engineering & Shipbuilding Co., Ltd.
(machinery & engineering) (a) 142,000 432,401
Mitsui Fudosan Co., Ltd. (construction & housing)...... 24,000 323,836
Mitsui Marine & Fire Insurance Co., Ltd. (insurance)... 42,000 333,518
Mitsui Trust & Banking Co., Ltd. (financial services).. 28,000 326,753
Mitsukoshi, Ltd. (merchandising)....................... 26,000 277,339
NEC Corp.
(electrical & electronics)............................ 40,000 433,969
New Oji Paper Co., Ltd.
(forest products & paper)............................. 23,000 198,368
Nippon Express Co., Ltd. (transportation-road & rail).. 33,000 321,921
Nippon Oil Co., Ltd.
(energy sources)...................................... 56,000 379,340
Nippon Paper Industries Co. (forest products & paper).. 26,000 162,374
Nippon Steel Corp. (metals-steel) 117,000 401,075
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
JAPAN (Continued)
Nippon Yusen Kabushiki Kaish (transportation-shipping). 38,000 $ 219,647
Nippondenso Co., Ltd.
(industrial components)............................... 25,000 542,462
Nissan Motor Co., Ltd. (automobiles)................... 60,000 532,250
NKK Corp. (metals-steel) (a)........................... 80,000 242,148
Nomura Securities Co., Ltd. (financial services)....... 40,000 780,415
Obayashi Corp.
(construction & housing).............................. 36,000 325,258
Osaka Gas Co., Ltd.
(utilities-electrical & gas).......................... 46,000 168,172
Sakura Bank, Ltd. (banking)............................ 84,000 934,310
Sankyo Co., Ltd.
(health & personal care).............................. 12,000 310,707
Sanyo Electric Co., Ltd. (appliances & household
durables)............................................. 55,000 335,460
Sekisui Chemical Co. (building materials & components). 13,000 158,818
Sekisui House, Ltd.
(construction & housing).............................. 17,000 193,736
Sharp Corp. (appliances & household durables).......... 23,000 402,607
Shimizu Corp.
(construction & housing).............................. 53,000 584,673
Shiseido Co., Ltd.
(health & personal care).............................. 17,000 216,985
Shizuoka Bank, Ltd. (banking).......................... 6,000 77,130
Sony Corp. (appliances & household durables)........... 6,200 407,548
Sumitomo Bank (banking)................................ 69,000 1,333,635
Sumitomo Chemical Co., Ltd. (chemicals)................ 38,000 181,191
Sumitomo Corp. (wholesale & international trade)....... 65,000 577,197
Sumitomo Electric Industries (industrial components)... 35,000 500,979
Sumitomo Marine & Fire (insurance)..................... 33,000 287,322
Sumitomo Metal Industries, Ltd. (metals-steel)......... 74,000 226,685
Sumitomo Metal Mining Co., Ltd. (metals-nonferrous).... 24,000 207,649
Taisho Pharmaceutical Co., Ltd. (health & personal
care)................................................. 14,000 302,502
Takeda Chemical Industries (health & personal care).... 30,000 530,609
Teijin, Ltd. (chemicals)............................... 217,000 1,177,141
Tobu Railway Co., Ltd. (transportation-road & rail).... 48,000 314,646
Tohoku Electric Power Co., Inc. (utilities-electrical &
gas).................................................. 9,090 203,040
Tokai Bank (banking)................................... 52,000 673,199
Tokio Marine & Fire Insurance Co. (insurance).......... 32,000 425,946
</TABLE>
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)
June 30, 1996 (Unaudited)
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
JAPAN (Continued)
Tokyo Dome Corp.
(leisure & tourism)................................... 9,000 $ 181,337
Tokyo Electric Power
(utilities-electrical & gas).......................... 26,300 666,580
Tokyo Gas Co., Ltd.
(utilities-electrical & gas).......................... 151,000 550,667
Tokyu Corp.
(transportation-road & rail).......................... 27,000 205,543
Toppan Printing Co., Ltd. (business & public services). 40,000 583,488
Tostem Corp. (building materials & components)......... 5,000 147,240
Toto, Ltd. (building materials & components)........... 6,000 90,258
Toyoda Automatic Loom Works (machinery & engineering).. 5,000 99,831
Toyota Motor Corp. (automobiles)....................... 67,000 1,673,699
Yamaichi Securities
(financial services).................................. 69,000 473,063
Yamanouchi Pharmaceutical (health & personal care)..... 15,000 325,477
Yamazaki Baking Co., Ltd.
(food & household products)........................... 6,000 111,045
Yasuda Trust & Banking (financial services)............ 44,000 277,996
------------
47,343,756
------------
MALAYSIA (2.5%)
AMMB Holdings Berhad
(financial services).................................. 8,000 112,214
DCB Holdings Berhad
(financial services).................................. 22,000 75,384
Edaran Otomobil Nasional Berhad (automobiles).......... 6,000 57,470
Golden Hope Plantations Berhad (misc.-materials &
commodities).......................................... 116,000 180,376
Hume Industries Berhad (building materials &
components)........................................... 19,000 92,897
Malayan Banking Berhad (banking)....................... 36,000 346,260
Malaysia International Shipping Berhad
(transportation-shipping)............................. 38,000 118,025
Malaysian Resources Corp. Berhad (real estate)......... 31,000 75,784
Resorts World Berhad
(leisure & tourism)................................... 62,000 355,317
Rothmans of Pall Mall Berhad (beverages & tobacco)..... 15,000 157,801
Sime Darby Berhad
(multi-industry)...................................... 107,000 295,884
Technology Resources Industries Berhad (multi-industry)
(a)................................................... 29,000 101,113
Telekom Malaysia Berhad (telecommunications)........... 44,000 391,466
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
MALAYSIA (Continued)
Tenaga Nasional Berhad
(utilities-electrical & gas).......................... 67,000 $ 281,938
United Engineers Ltd.
(machinery & engineering)............................. 39,000 270,395
YTL Corp. Berhad
(multi-industry)...................................... 12,000 62,519
------------
2,974,843
------------
NETHERLANDS (1.9%)
Elsevier NV
(broadcasting & publishing)........................... 10,900 165,386
ING Groep NV (insurance)............................... 8,905 265,537
Koninklijke PTT Nederland NV (forest products & paper). 7,100 268,697
Philips Electronics NV (appliances & household
durables)............................................. 4,400 143,060
Royal Dutch Petroleum Co. (energy sources)............. 6,400 988,320
Unilever NV
(food & household products)........................... 2,200 318,341
Wolters Kluwer CVA NV (broadcasting & publishing)...... 900 102,233
------------
2,251,574
------------
NEW ZEALAND (1.6%)
Brierley Investments Ltd.
(multi-industry)...................................... 271,100 256,296
Carter Holt Harvey Ltd.
(forest products & paper)............................. 199,600 455,342
Fletcher Challenge Building (building materials &
components) .......................................... 37,600 73,412
Fletcher Challenge Energy (energy sources) ............ 37,600 82,942
Fletcher Challenge Paper
(forest products & paper) ............................ 75,200 145,278
Lion Nathan Ltd.
(beverages & tobacco)................................. 70,200 183,229
Telecom Corp. of New Zealand Ltd. (telecommunications). 189,600 794,919
------------
1,991,418
------------
NORWAY (1.9%)
Bergesen d.y. ASA Class A (transportation-shipping).... 6,200 128,842
Bergesen d.y. ASA Class B (transportation-shipping).... 3,900 78,644
Dyno Industrier ASA (chemicals) 3,800 84,232
Hafslund ASA Class A
(energy sources)...................................... 6,600 47,750
Hafslund ASA Class B
(energy sources)...................................... 4,900 30,925
Kvaerner ASA Class B
(machinery & engineering)............................. 3,000 115,912
Norsk Hydro ASA
(energy sources)...................................... 24,900 1,218,872
</TABLE>
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.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
NORWAY (Continued)
Norske Skogindustrier ASA Class A (forest products &
paper)................................................ 5,400 $ 162,923
Nycomed ASA Class A
(health & personal care) (a).......................... 6,600 94,992
Nycomed ASA Class B
(health & personal care) (a).......................... 4,900 67,884
Orkla ASA Class A
(multi-industry)...................................... 4,700 247,432
------------
2,278,408
------------
SINGAPORE (5.1%)
City Developments, Ltd.
(real estate)......................................... 78,000 607,889
DBS Land, Ltd. (real estate)........................... 117,000 401,207
Development Bank of Singapore, Ltd. Foreign Registered
(banking)............................................. 59,000 735,701
Fraser & Neave, Ltd.
(beverages & tobacco)................................. 36,000 372,385
Keppel Corp., Ltd.
(machinery & engineering)............................. 60,000 501,614
Oversea-Chinese Banking Corp., Ltd. Foreign Registered
(banking)............................................. 76,000 888,453
Oversea-Chinese Banking Corp., Ltd. Foreign Registered
Rights (banking) (a).................................. 7,600 60,843
Singapore Airlines, Ltd. Foreign Registered
(transportation-airlines)............................. 105,000 1,108,441
Singapore Press Holdings, Ltd. Foreign Registered
(broadcasting & publishing)........................... 29,400 576,984
Straits Steamship Land, Ltd. (multi-industry).......... 57,000 190,613
United Overseas Bank, Ltd. Foreign Registered
(banking)............................................. 76,000 726,916
------------
6,171,046
------------
SPAIN (4.8%)
Acerinox, SA (metals-steel)............................ 924 96,216
Autopistas Concesionaria Espanola, SA
(business & public services).......................... 11,893 138,220
Banco Bilbao Vizcaya, SA (banking)..................... 12,370 500,762
Banco Central Hispanoamericano, SA (banking)........... 5,830 118,687
Banco Santander, SA (banking).......................... 8,120 378,749
Corporacion Bancaria de Espana, SA (banking)........... 7,510 327,451
Corporacion Mapfre, SA (insurance)..................... 1,890 96,413
Empresa Nacional de Electricidad, SA (utilities-
electrical & gas)..................................... 16,690 1,040,154
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
SPAIN (Continued)
Fomento de Construcciones y Contratas, SA
(construction & housing).............................. 2,000 $ 165,360
Gas Natural SDG
(utilities-electrical & gas).......................... 1,830 383,971
Iberdrola, SA
(utilities-electrical & gas).......................... 69,000 707,733
Repsol, SA (energy sources)............................ 23,520 817,297
Telefonica de Espana (telecommunications).............. 58,590 1,078,525
------------
5,849,538
------------
UNITED KINGDOM (8.4%)
Abbey National Plc (banking)........................... 35,838 301,256
Barclays Plc (banking)................................. 25,591 307,370
Bass Plc (beverages & tobacco)......................... 13,628 171,307
B.A.T Industries Plc
(beverages & tobacco)................................. 37,057 288,472
BOC Group Plc (chemicals).............................. 9,234 132,574
Boots Co. Plc (merchandising).......................... 16,826 151,375
British Airways Plc (transportation-airlines).......... 20,819 179,211
British Gas Plc (energy sources)....................... 52,514 146,873
British Petroleum Co. Plc
(energy sources)...................................... 98,941 867,832
British Telecommunications Plc (telecommunications).... 64,026 344,213
BTR Plc (multi-industry)............................... 89,104 350,970
Cable & Wireless Plc (telecommunications).............. 41,318 273,492
Commercial Union Plc (insurance)....................... 15,034 135,487
General Electric Co. Plc
(electrical & electronics)............................ 39,522 213,090
GKN Plc
(machinery & engineering)............................. 6,135 94,182
Glaxo Wellcome Plc
(health & personal care).............................. 53,832 724,777
Granada Group Plc
(leisure & tourism)................................... 8,096 108,436
Grand Metropolitan Plc
(multi-industry)...................................... 51,796 343,652
Great Universal Stores Plc (merchandising)............. 8,956 91,010
Guinness Plc
(beverages & tobacco)................................. 28,550 207,610
Hanson Plc (multi-industry)............................ 171,403 480,719
HSBC Holdings Plc (GBP par) (financial services)....... 15,202 238,099
HSBC Holdings Plc (HKD par) (financial services)....... 14,700 225,211
Imperial Chemical Industries Plc (chemicals)........... 6,680 81,790
Kingfisher Plc (merchandising)......................... 5,783 58,137
Lloyds TSB Group Plc (banking) 63,168 309,175
Marks & Spencer Plc (merchandising).................... 40,608 296,870
</TABLE>
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
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996 (Unaudited)
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------
<S> <C> <C>
UNITED KINGDOM (Continued)
MEPC Plc (real estate)............................ 6,204 $ 39,138
National Power Plc
(utilities-electrical & gas)..................... 9,720 78,535
Peninsular & Oriental Steam Navigation Co.
Deferred Stock (transportation-shipping)......... 22,626 170,860
Prudential Corp. Plc (insurance) 42,229 266,399
Rank Organisation Plc
(leisure & tourism).............................. 27,627 213,776
Redland Plc (building materials & components)..... 11,493 71,610
Reed International Plc (broadcasting &
publishing)...................................... 22,326 373,613
Reuters Holdings Plc (broadcasting & publishing).. 31,560 382,006
RMC Group Plc (building materials & components)... 4,593 72,294
RTZ Corp. Plc
(metals-nonferrous).............................. 19,008 281,465
Sainsbury Plc (merchandising)..................... 24,430 143,866
Scottish Power Plc
(utilities-electrical & gas)..................... 47,860 226,069
Thorn Emi Plc (appliances & household durables)... 7,618 212,353
Unilever Plc
(food & household products)...................... 14,361 285,621
Vodafone Group Plc
(multi-industry)................................. 40,727 151,560
------------
10,092,355
------------
Total Common Stocks
(Cost $107,503,817).............................. 112,924,715
------------
PREFERRED STOCK (0.1%)
AUSTRIA (0.1%)
Creditanstalt-Bankverein Vorzug (banking)......... 2,400 121,542
------------
Total Preferred Stock
(Cost $140,469).................................. 121,542
------------
SHORT-TERM
INVESTMENT (1.4%)
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
COMMERCIAL PAPER (1.4%)
UNITED STATES (1.4%)
A.I. Credit Corp.
5.47%, due 7/1/96................................ $1,675,000 1,675,000
------------
Total Short-Term Investment (Cost $1,675,000)..... 1,675,000
------------
Total Investments
(Cost $109,319,286) (b).......................... 95.2% 114,721,257 (c)
Cash and Other Assets,
Less Liabilities................................. 4.8 5,813,756
---------- ------------
Net Assets........................................ 100.0% $120,535,013
========== ============
</TABLE>
- --------
(a) Non-income producing securities.
(b) The cost for Federal income tax purposes is $109,571,311.
(c) At June 30, 1996 net unrealized appreciation for securities was
$5,149,946, 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 $8,740,576 and aggregate
gross unrealized depreciation for all investments on which there was an
excess of cost over market value of $3,590,630.
(d) Forward Foreign Currency Contracts Open at June 30, 1996:
<TABLE>
<CAPTION>
GROSS
CONTRACT IN DELIVERY UNREALIZED
TO DELIVER EXCHANGE FOR DATE APPRECIATION
- ------------------ ----------------- -------- ------------
<S> <C> <C> <C>
A$ 1,125,000 $ 886,275 8/28/96 $ 3,957
AS 13,529,000 (Pounds) 815,000 7/12/96 2,303
DM 3,085,852 (Pounds)1,375,000 7/2/96 108,710
DM 12,685,000 $ 8,901,754 7/5/96 564,969
DM 377,492 SP 32,000,000 7/22/96 905
DM 3,575,000 $ 2,424,880 8/5/96 70,924
DM 1,865,406 DK 7,200,000 8/9/96 1,192
DM 10,285,000 $ 7,107,809 8/20/96 329,141
DM 5,370,000 $ 3,678,964 9/23/96 132,444
DM 3,227,125 (Pounds)1,375,000 10/2/96 2,968
DM 11,275,000 $ 7,587,483 10/18/96 128,992
DM 2,065,000 $ 1,380,348 12/20/96 8,665
FF 10,290,000 DM 3,043,568 8/2/96 1,755
(Yen) 669,881,200 $ 6,610,150 7/2/96 499,494
(Yen)2,705,000,000 $ 25,855,477 8/5/96 1,058,742
(Yen) 388,354,425 $ 3,633,485 8/5/96 73,440
(Yen) 245,000,000 (Pounds)1,475,904 9/10/96 34,772
(Yen) 656,500,000 $ 6,259,728 10/28/96 168,721
N$ 3,050,000 $ 2,079,795 8/7/96 921
$ 1,963,440 A$ 2,525,000 7/2/96 23,528
$ 1,999,894 (Pounds)1,295,000 8/14/96 11,506
----------
3,228,049
----------
<CAPTION>
GROSS
CONTRACT IN DELIVERY UNREALIZED
TO DELIVER EXCHANGE FOR DATE DEPRECIATION
- ------------------ ----------------- -------- ------------
<S> <C> <C> <C>
A$ 460,000 $ 361,100 7/2/96 882
DK 7,200,000 DM 1,863,258 8/9/96 2,607
DM 1,200,000 $ 787,919 9/23/96 4,600
DM 2,190,000 $ 1,439,769 10/18/96 8,931
DM 558,659 FF 1,890,000 10/30/96 586
DM 13,905,000 $ 9,181,219 11/4/96 27,270
FF 4,135,000 DM 1,221,385 8/2/96 389
IL 2,860,000,000 DM 2,704,714 7/23/96 82,386
(Pounds) 1,375,000 DM 3,246,375 7/2/96 3,230
SP 323,600,000 DM 3,814,357 7/22/96 11,142
$ 7,290,000 DM 10,668,551 7/5/96 278,458
$ 6,960,000 DM 10,189,440 8/5/96 250,773
$ 1,616,822 (Yen) 173,000,000 8/5/96 30,931
$ 3,500,000 DM 5,279,750 10/18/96 7,408
----------
709,593
----------
Net Appreciation....................................... $2,518,456
==========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
48
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
(e) Foreign cash held at June 30, 1996:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
- ----------------- ---------- ----------
<S> <C> <C>
A$ 80,391 $ 63,615 $ 63,276
AS 387,756 36,088 36,196
BF 40,386 1,284 1,289
DK 9,068 1,536 1,546
DM 31,977 20,831 19,229
FF 3,069,321 607,580 602,881
HK 191,540 24,758 24,744
IL76,500,455 49,335 49,878
(Yen)2,857,493 26,364 26,052
MK 15,424 6,175 6,181
NG 49,104 28,496 28,766
N$ 23,375 15,750 16,014
NK 265,455 40,339 40,861
(Pounds)1,216,174 1,841,971 1,889,701
S$ 18,219 12,935 12,907
SP 4,111,896 31,833 32,069
---------- ----------
$2,808,890 $2,851,590
========== ==========
</TABLE>
(f) The following abbreviations are used in footnotes (d) and (e):
A$--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
MK--Malaysian Ringgit
NG--Netherland Guilder
N$--New Zealand Dollar
NK--Norwegian Krone
(Pounds)--Pound Sterling
S$--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.
49
<PAGE>
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996 (Unaudited)
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........................... $ 250,017 0.2%
Appliances & Household Durables........................... 2,728,541 2.3
Automobiles............................................... 4,370,536 3.6
Banking................................................... 19,593,243 16.3
Beverages & Tobacco....................................... 3,253,689 2.7
Broadcasting & Publishing................................. 2,034,742 1.7
Building Materials & Components........................... 1,815,536 1.5
Business & Public Services................................ 2,423,205 2.0
Chemicals................................................. 4,562,083 3.8
Construction & Housing.................................... 2,773,150 2.3
Data Processing & Reproduction............................ 702,432 0.6
Electrical & Electronics.................................. 2,966,565 2.5
Electronic Components & Instruments....................... 357,751 0.3
Energy Sources............................................ 8,085,040 6.7
Financial Services........................................ 3,529,901 2.9
Food & Household Products................................. 3,147,727 2.6
Forest Products & Paper................................... 1,840,717 1.5
Health & Personal Care.................................... 3,397,215 2.8
Industrial Components..................................... 2,050,076 1.7
Insurance................................................. 6,520,117 5.4
Leisure & Tourism......................................... 858,866 0.7
Machinery & Engineering................................... 3,673,856 3.0
Merchandising............................................. 3,792,995 3.2
</TABLE>
<TABLE>
<CAPTION>
VALUE PERCENT +
----------------------
<S> <C> <C>
Metals-Nonferrous........................................ $ 1,527,063 1.3%
Metals-Steel............................................. 1,210,395 1.0
Miscellaneous-Materials & Commodities.................... 896,935 0.7
Miscellaneous-Materials & Components..................... 597,163 0.5
Multi-Industry........................................... 4,952,374 4.1
Real Estate.............................................. 2,462,565 2.0
Recreation & Other Consumer Goods........................ 940,510 0.8
Telecommunications....................................... 5,188,766 4.3
Textiles & Apparel....................................... 142,006 0.1
Tire & Rubber............................................ 185,716 0.2
Transportation-Airlines.................................. 1,767,787 1.5
Transportation-Road & Rail............................... 965,025 0.8
Transportation-Shipping.................................. 716,018 0.6
Utilities-Electrical & Gas............................... 6,654,203 5.5
Wholesale & International Trade.......................... 1,786,731 1.5
------------ -----
114,721,257 95.2
Cash and Other Assets,
Less Liabilities........................................ 5,813,756 4.8
------------ -----
Net Assets............................................... $120,535,013 100.0%
============ =====
</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.
50
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
As of June 30, 1996 (Unaudited) For the six months ended June 30,
1996 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$109,319,286)................................................... $114,721,257
Cash denominated in foreign currencies (identified cost
$2,808,890)..................................................... 2,851,590
Cash............................................................. 2,032
Receivables:
Investment securities sold....................................... 2,465,000
Fund shares sold................................................. 621,596
Dividends and interest........................................... 530,598
Unrealized appreciation on foreign currency contracts............ 3,228,049
Unamortized organization expense
(Note 2)........................................................ 42,719
Other assets..................................................... 152
------------
Total assets.................................................... 124,462,993
------------
LIABILITIES:
Payables:
Investment securities purchased.................................. 3,057,486
Organization..................................................... 41,402
Administrator.................................................... 39,125
Adviser.......................................................... 34,044
Custodian........................................................ 12,404
Transfer agent................................................... 4,347
Directors........................................................ 1,849
Accrued expenses................................................. 27,730
Unrealized depreciation on foreign currency contracts............ 709,593
------------
Total liabilities............................................... 3,927,980
------------
Net assets....................................................... $120,535,013
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class.............................................. $ 10,676
Institutional Service Class...................................... 59
Additional paid-in capital....................................... 108,227,128
Accumulated undistributed net investment income.................. 651,733
Accumulated undistributed net realized gain on investments....... 480,007
Accumulated undistributed net realized gain on foreign currency
transactions.................................................... 3,219,179
Net unrealized appreciation on investments....................... 5,401,971
Net unrealized appreciation on translation of assets and
liabilities in foreign currencies............................... 2,544,260
------------
Net assets....................................................... $120,535,013
============
Institutional Class
Net assets applicable to outstanding shares...................... $119,872,984
============
Shares of capital stock outstanding.............................. 10,676,113
============
Net asset value per share outstanding............................ $ 11.23
============
Institutional Service Class
Net assets applicable to outstanding shares...................... $ 662,029
============
Shares of capital stock outstanding.............................. 59,219
============
Net asset value per share outstanding............................ $ 11.18
============
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a).................................................... $ 1,095,662
Interest......................................................... 102,639
----------
Total income................................................... 1,198,301
----------
Expenses: (Note 2)
Administration (Note 3).......................................... 263,862
Advisory (Note 3)................................................ 184,703
Custodian........................................................ 37,845
Registration..................................................... 20,769
Transfer agent................................................... 13,450
Auditing......................................................... 10,258
Legal............................................................ 6,537
Amortization of organization expense............................. 6,083
Shareholder communication........................................ 4,254
Directors........................................................ 2,886
Service (Note 3)................................................. 569
Miscellaneous.................................................... 11,692
----------
Total expenses before
reimbursement................................................. 562,908
Expense reimbursement from Administrator (Note 3)................ (34,616)
----------
Net expenses................................................... 528,292
----------
Net investment income............................................ 670,009
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain from:
Security transactions............................................ 1,076,874
Foreign currency transactions.................................... 2,325,426
----------
Net realized gain on investments and foreign currency
transactions.................................................... 3,402,300
----------
Net change in unrealized appreciation on investments:
Security transactions............................................ 1,948,384
Translation of assets and liabilities in foreign currencies...... 2,426,823
----------
Net unrealized gain on investments and foreign currencies........ 4,375,207
----------
Net realized and unrealized gain on investments and foreign
currency transactions........................................... 7,777,507
----------
Net increase in net assets resulting from operations............. $8,447,516
==========
</TABLE>
- --------
(a) Dividends recorded net of foreign withholding taxes of $163,901.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
51
<PAGE>
INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996 (Unaudited) and the period January 1,
1995 (Commencement of operations) through December 31, 1995
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income.............................. $ 670,009 $ 875,662
Net realized gain (loss) on investments............ 1,076,874 (391,405)
Net realized gain on foreign currency
transactions...................................... 2,325,426 3,113,934
Net change in unrealized appreciation on
investments....................................... 1,948,384 3,453,587
Net change in unrealized appreciation on
translation of assets and liabilities in foreign
currencies........................................ 2,426,823 117,437
------------ -----------
Net increase in net assets resulting from
operations........................................ 8,447,516 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............................... 15,140,498 23,192,754
Institutional Service Class....................... 422,366 198,438
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions:
Institutional Class............................... -- 3,312,479
Institutional Service Class....................... -- 7,098
------------ -----------
15,562,864 26,710,769
Cost of shares redeemed:
Institutional Class............................... (393,315) (197,898)
Institutional Service Class....................... (9,743) (1,689)
------------ -----------
Increase in net assets derived from capital share
transactions..................................... 15,159,806 26,511,182
------------ -----------
Net increase in net assets........................ 23,607,322 30,360,816
NET ASSETS:
Beginning of period................................ 96,927,691 66,566,875
------------ -----------
End of period...................................... $120,535,013 $96,927,691
============ ===========
Accumulated undistributed net investment
income/(excess distribution)...................... $ 651,733 $ (18,276)
============ ===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
52
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
SIX MONTHS JANUARY 1, 1995(a)
ENDED THROUGH
JUNE 30, 1996* DECEMBER 31, 1995
--------------------------- -----------------------------
<S> <C> <C> <C> <C>
Net asset value at
beginning of period.... $ 10.35 $ 10.33 $ 10.00 $ 10.00
-------- -------- -------- --------
Net investment income... 0.06 0.06 0.36 0.35
Net realized and
unrealized gain on
investments............ 0.32 0.31 0.17 0.16
Net realized and
unrealized gain on
foreign currency
transactions........... 0.50 0.48 0.18 0.17
-------- -------- -------- --------
Total from investment
operations............. 0.88 0.85 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.............. $ 11.23 $ 11.18 $ 10.35 $ 10.33
======== ======== ======== ========
Total investment return
(c) ................... 8.50% 8.23% 7.17% 6.86%
Ratios (to average net
assets)/Supplemental
Data:
Net investment income.. 1.27%+ 1.02%+ 1.05% 0.80%
Net expenses........... 1.00%+ 1.25%+ 1.00% 1.25%
Expenses (before
reimbursement)........ 1.07%+ 1.32%+ 1.07% 1.32%
Portfolio turnover
rate................... 14% 14% 26% 26%
Average commission rate
paid................... $ 0.0445 $ 0.0445 (d) (d)
Net assets at end of
period (in 000's)...... $119,873 $ 662 $ 96,714 $ 213
</TABLE>
- --------
* Unaudited.
+ Annualized.
(a) Commencement of operations.
(b) Less than one cent per share.
(c) Total return is not annualized.
(d) Disclosure of amount required for fiscal years beginning on or after
September 1, 1995.
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
- --------------------------------------------------------------------------------
Fund Highlights for the six months ended June 30, 1996
. One-year total returns of 21.43% and 21.13% for Institutional Class and
Service Class shares, respectively, as of 6/30/96
. Both share classes outperformed the Lipper+ flexible portfolio fund average
for the six-month and 1-year periods ended 6/30/96
. Institutional Class shares received a four-star overall rating from
Morningstar, Inc.* as of 6/30/96
For the six months ended June 30, 1996, the MainStay Institutional Multi-Asset
Fund returned 8.14% and 7.97% for Institutional Class and Service Class shares,
respectively. Both share classes outperformed the average Lipper flexible
portfolio fund, which returned only 5.52% for the same period.
The Fund's Institutional Class shares also received a four-star overall rating
from Morningstar, Inc., placing them among the top 33% of the Morningstar
universe, which consisted of 2,848 hybrid funds for the 3-year and 1,696 hybrid
funds for the 5-year period ended 6/30/96.
With a continuing bull market for stocks in the first half of 1996, bonds
suffered some serious setbacks. Rising interest rates pummeled bond prices,
while equity prices rose based on strong corporate profits. The Multi-Asset Fund
was well-positioned to take advantage of the discrepancy in returns between
stocks and bonds. The Fund remained at its maximum weight in stocks (80%) and
minimum weight in bonds (10%) throughout the first half of the year.
The yield-to-maturity on the Salomon Brothers Broad Investment Grade (BIG) Bond
Index++ has ranged between 6% and 7% throughout most of the first half of the
year. While bond yields edged higher during these six months, this level is
still relatively low when compared to yields over the last twenty-year period.
In managing the Fund, we use quantitative models to govern the allocation
between stocks, fixed-income securities and money market instruments. These
models have identified stocks as a more attractive investment on a risk-adjusted
basis during the first half of the year. This has proven to be very beneficial
to the Fund. The bond market, as represented by the Salomon BIG Index lost 1.26%
in the first half of the year, while the S&P 500(S) Stock Index surged 10.09%.
Some of the Fund's equity exposure was obtained abroad. 5% of the Fund's net
assets were allocated to German securities in the first four months of the year.
During that period, Germany's DAX Index was up 11.87% (in local terms). An
additional 5% was invested in the British FTSE-100 Stock Index+++ in April,
which rose 3.59% (in local terms) that month. Smaller investments in Australia
and France in the second quarter did not pay off, as U.S. stocks outperformed
these markets. The investment in foreign securities provided opportunity not
only for return enhancement, but also the opportunity to reduce price
volatility. This is because the returns of foreign stocks are not highly
correlated with those of domestic stocks and bonds. Allocations to such
diversifying assets may work to reduce the Fund's overall volatility, which is
one measure of portfolio risk.
James A. Mehling, CFA
Portfolio Manager
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.
* 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- & 10-year average annual returns with fee
adjustments, and a risk factor that reflects fund performance relative to 3-
month Treasury bill monthly returns. A one-year rating is calculated using
the same methodology, but is not a component of the overall rating. As of
6/30/96, the individual 1, 3 and 5 year ratings for the MainStay
Institutional Multi-Asset Fund was 4, 4 and 4 stars, respectively. For the
one-year period, the Fund was rated among 5,076 funds in the hybrid
category. Only 10% of the funds in an investment category may receive 5
stars and 22.5% may receive 4 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.
++ The Salomon Brothers Broad Investment Grade Bond Index is an unmanaged
index generally considered representative of the U.S. stock market.
+ 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.
+++ British FTSE-100 Stock Index is a capitalizaton-weighted index of the 100
most highly capitalized companies traded on the London Stock Exchange.
Weight The proportion of a portfolio allocated to a specific security, sector,
or asset class.
Yield-to-maturity The rate of return an investor will earn if a fixed-income
security is held to maturity, taking into account a variety of factors,
including the purchase price, redemption value, time to maturity, coupon yield,
and the time between interest payments.
Risk-adjusted returns When absolute returns in a security, portfolio, or asset
class are adjusted for the risk required to achieve them. Risk may be determined
by comparing performance over time with a benchmark (such as short-term Treasury
bills).
Exposure The amount invested in a specific security, maturity, market, country,
or currency. Participation in positive as well as negative events affecting a
security or sector generally increases with the level of exposure.
Volatility Fluctuations in the price of a security, sector, portfolio, currency,
or asset class over time, either on an absolute basis or in relation to other
assets, markets, or currencies. The degree and frequency of such variations
determines the relative volatility of the asset or currency under consideration.
54
<PAGE>
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
MULTI-ASSET FUND VS LIPPER FLEXIBLE PORTFOLIO AVERAGE
INSTITUTIONAL CLASS SHARES
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
Multi-Asset Fund Lipper Flexible Portfolio Average
1/2/91 $10,000 $10,000
1Q 1991 $10,580 $11,123
2Q 1991 $10,650 $11,150
3Q 1991 $11,130 $11,723
4Q 1991 $11,790 $12,551
1Q 1992 $11,607 $12,545
2Q 1992 $11,912 $12,611
3Q 1992 $12,332 $13,017
4Q 1992 $12,626 $13,560
1Q 1993 $13,098 $14,162
2Q 1993 $13,244 $14,388
3Q 1993 $13,548 $14,940
4Q 1993 $13,736 $15,223
1Q 1994 $13,313 $14,828
2Q 1994 $13,289 $14,700
3Q 1994 $13,583 $15,162
4Q 1994 $13,618 $14,981
1Q 1995 $14,460 $17,096
2Q 1995 $15,379 $18,132
3Q 1995 $16,362 $18,804
4Q 1995 $17,269 $19,473
1Q 1996 $18,031 $19,909
6/30/96 $18,676 $19,909
- --------------------------------------------------------------------------------
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
MULTI-ASSET FUND VS LIPPER FLEXIBLE PORTFOLIO AVERAGE
SERVICE CLASS SHARES
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
Multi-Asset Fund Lipper Flexible Portfoliio Average
1/2/91 $10,000 $10,000
1Q 1991 $10,580 $11,123
2Q 1991 $10,650 $11,150
3Q 1991 $11,130 $11,723
4Q 1991 $11,790 $12,551
1Q 1992 $11,607 $12,545
2Q 1992 $11,912 $12,611
3Q 1992 $12,332 $13,017
4Q 1992 $12,626 $13,560
1Q 1993 $13,098 $14,162
2Q 1993 $13,244 $14,388
3Q 1993 $13,548 $14,940
4Q 1993 $13,736 $15,223
1Q 1994 $13,313 $14,828
2Q 1994 $13,289 $14,700
3Q 1994 $13,583 $15,162
4Q 1994 $13,618 $14,981
1Q 1995 $14,473 $17,096
2Q 1995 $15,379 $18,132
3Q 1995 $16,349 $18,804
4Q 1995 $17,254 $19,473
1Q 1996 $18,000 $19,909
6/30/96 $18,629 $19,909
- --------------------------------------------------------------------------------
[_] Multi-Asset Fund [_] Lipper Flexible Portfolio Average
Source: (C) 1996 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 June 30, 1996 as of June 30, 1996
- --------------------------------------------------------------------------------------------------------------
Year to Date One Year Five Year Since Inception
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Multi-Asset Fund Institutional Class 8.14% 21.43% 11.89% 12.02%
Multi-Asset Fund Service Class** 7.97% 21.13% 11.83% 11.97%
Average Lipper Flexible Portfolio Fund 5.52% 16.01% 12.23% 13.19%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
Institutional Class Shares
[BAR CHART APPEARS HERE]
Total Return*
1991 17.90%
1992 7.09%
1993 8.79%
1994 (0.86%)
1995 26.81%
1996 8.14% as of 6/30/96
================================================================================
TOP 10 HOLDINGS
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
1. General Electric Company 1.88%
2. Coca-Cola Company (The) 1.61%
3. Exxon Corp. 1.41%
4. AT&T Corp. 1.30%
5. Philip Morris Cos. Inc. 1.14%
6. Royal Dutch Petroleum Company 1.08%
7. Merck & Co. Inc. 1.03%
8. Microsoft Corp. 0.93%
9. Johnson & Johnson 0.86%
10. Proctor & Gamble Company (The) 0.81%
- --------------------------------------------------------------------------------
TOP 5 INDUSTRY HOLDINGS
(EXCLUDING GOVERNMENT)
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
1. Financial 12.54%
2. Major Regional Banks 7.27%
3. Oil - Integrated International 4.33%
4. Telephone 3.37%
5. Drugs 2.67%
================================================================================
** 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 Fund's 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%.
55
<PAGE>
MULTI-ASSET FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
LONG-TERM INVESTMENTS (18.9%)+
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 $ 1,009,000
MBNA Master Credit Card Trust
Series 1992-1A
7.25%, due 6/15/99................................... 1,000,000 1,005,600
------------
Total Asset-Backed Securities
(Cost $2,002,028).................................... 2,014,600
------------
CORPORATE BONDS (4.4%)
BANKS (1.0%)
Chase Manhattan Corp.
8.50%, due 2/15/02................................... 500,000 534,375
First Union Corp.
8.77%, due 11/15/04.................................. 1,000,000 1,050,000
Fleet Financial Group, Inc.
7.625%, due 12/1/99.................................. 500,000 513,750
Morgan (J.P.) & Co. Inc.
8.50%, due 8/15/03................................... 500,000 538,125
NationsBank Corp.
6.50%, due 8/15/03................................... 500,000 478,125
------------
3,114,375
------------
BROKERAGE (0.3%)
Dean Witter Discover & Company
6.50%, due 11/1/05................................... 500,000 470,625
PaineWebber Group, Inc.
7.75%, due 9/1/02.................................... 400,000 404,500
------------
875,125
------------
CHEMICALS (0.1%)
Rhone-Poulenc S.A.
7.75%, due 1/15/02................................... 350,000 358,750
------------
COMPUTERS & OFFICE EQUIPMENT (0.2%)
Xerox Corp.
9.75%, due 3/15/00................................... 600,000 657,000
------------
CONGLOMERATES (0.2%)
Tenneco Corp.
10.00%, due 3/15/08.................................. 500,000 596,250
------------
CONSUMER FINANCIAL SERVICES (0.3%)
Bear Stearns Cos., Inc. (The)
6.625%, due 1/15/04.................................. 500,000 477,500
Transamerica Finance Corp.
8.375%, due 2/15/98.................................. 500,000 513,750
------------
991,250
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
ELECTRONIC COMPONENTS (0.2%)
Texas Instruments, Inc.
9.25%, due 6/15/03................................... $ 500,000 $ 558,125
------------
FOOD, BEVERAGES & TOBACCO (0.7%)
Coca-Cola Enterprises
8.50%, due 2/1/22.................................... 500,000 548,125
Philip Morris Companies, Inc.
7.125%, due 12/1/99.................................. 500,000 504,375
9.00%, due 1/1/01.................................... 500,000 538,750
RJR Nabisco Corp.
8.75%, due 4/15/04................................... 500,000 500,000
------------
2,091,250
------------
MACHINERY (0.2%)
Caterpillar Inc.
9.00%, due 4/15/06................................... 500,000 561,875
------------
OIL & GAS (0.4%)
Occidental Petroleum Corp.
10.125%, due 11/15/01................................ 500,000 568,125
Phillips Petroleum Co.
9.50%, due 11/15/97.................................. 500,000 520,000
------------
1,088,125
------------
UTILITIES--ELECTRIC (0.5%)
Florida Power & Light Co.
6.875, due 4/1/04.................................... 500,000 488,750
Houston Lighting & Power
7.75%, due 3/15/23................................... 500,000 490,625
Ohio Edison Company
8.625%, due 9/15/03.................................. 500,000 527,500
------------
1,506,875
------------
UTILITIES--TELEPHONE (0.3%)
Pacific Bell
7.125%, due 3/15/26.................................. 500,000 473,750
United Telephone (Ohio)
6.625%, due 10/1/02.................................. 600,000 585,750
------------
1,059,500
------------
Total Corporate Bonds
(Cost $13,342,867)................................... 13,458,500
------------
FOREIGN GOVERNMENT (0.3%)
CANADA (0.3%)
Manitoba (Province of)
9.625%, due 3/15/99.................................. 500,000 537,500
Quebec (Province of)
9.375%, due 4/1/99................................... 500,000 534,375
------------
Total Foreign Government
(Cost $1,060,440).................................... 1,071,875
------------
</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.
56
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL CORPORATE BONDS (0.6%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
BANK (0.6%)
International Bank for Reconstruction & Development
7.625%, due 1/19/23............................... $ 1,000,000 $ 1,031,250
8.125%, due 3/1/01................................ 900,000 952,875
------------
Total International Corporate Bonds
(Cost $2,028,844)................................. 1,984,125
------------
U.S. GOVERNMENT &
FEDERAL AGENCIES (12.9%)
FEDERAL HOME LOAN MORTGAGE CORPORATION GOLD (MORTGAGE PASS-THROUGH
SECURITIES) (0.6%)
7.00%, due 1/1/23 TBA (b)......................... 1,000,000 962,500
7.75%, due 10/1/07................................ 842,219 840,640
------------
1,803,140
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (MORTGAGE PASS-THROUGH SECURITIES)
(3.6%)
6.50%, due 3/1/23 TBA (b)......................... 1,000,000 980,938
7.00%, due 9/1/22-1/1/23
TBA (b).......................................... 2,000,000 1,958,750
7.50%, due 1/1/08 TBA (b)......................... 2,000,000 2,009,376
8.00%, due 1/1/07-1/1/08
TBA (b).......................................... 3,000,000 3,059,064
8.50%, due 1/1/23 TBA (b)......................... 1,000,000 1,026,250
9.00%, due 1/1/23 TBA (b)......................... 2,000,000 2,086,250
------------
11,120,628
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (1.6%)
7.00%, due 5/1/09 TBA (b)......................... 1,000,000 990,000
7.50%, due 1/1/25 TBA (b)......................... 1,000,000 985,625
8.00%, due 1/1/25 TBA (b)......................... 1,000,000 1,008,750
8.50%, due 1/1/25 TBA (b)......................... 1,000,000 1,028,438
9.00%, due 1/1/25 TBA (b)......................... 1,000,000 1,046,875
------------
5,059,688
------------
RESOLUTION FUNDING CORP. (0.1%)
(zero coupon), due 10/15/10....................... 500,000 181,975
------------
STUDENT LOAN MARKETING ASSOCIATION (0.1%)
(zero coupon), due 10/3/22........................ 2,000,000 295,800
------------
UNITED STATES TREASURY BONDS (2.7%)
6.25%, due 8/15/23................................ 1,000,000 906,470
8.125%, due 5/15/21............................... 1,000,000 1,125,780
8.75%, due 5/15/17................................ 1,000,000 1,186,040
9.125%, due 5/15/18............................... 1,000,000 1,231,470
9.25%, due 2/15/16................................ 1,000,000 1,237,330
9.875%, due 11/15/15.............................. 1,000,000 1,302,890
10.625%, due 8/15/15.............................. 1,000,000 1,380,780
------------
8,370,760
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------------------------
<S> <C> <C>
UNITED STATES TREASURY NOTES (4.2%)
4.75%, due 2/15/97................................ $ 1,000,000 $ 994,330
4.75%, due 8/31/98................................ 1,000,000 972,110
5.00%, due 1/31/99................................ 1,000,000 970,770
5.125%, due 3/31/98............................... 1,000,000 984,760
5.875%, due 2/15/04............................... 1,000,000 955,240
6.25%, due 1/31/97................................ 1,000,000 1,004,010
6.375%, due 1/15/99............................... 1,000,000 1,003,320
7.50%, due 11/15/01............................... 1,000,000 1,043,990
7.50%, due 5/15/02................................ 1,000,000 1,047,440
7.875%, due 4/15/98............................... 1,000,000 1,030,020
7.875%, due 11/15/99.............................. 1,000,000 1,044,600
8.25%, due 7/15/98................................ 1,000,000 1,040,010
8.875%, due 11/15/98.............................. 1,000,000 1,057,820
------------
13,148,420
------------
Total U.S. Government & Federal Agencies
(Cost $39,631,954)................................ 39,980,411 (d)
------------
Total Long-Term Investments
(Cost $58,066,133)................................ 58,509,511
------------
COMMON STOCKS (65.7%)
<CAPTION>
SHARES
-----------
<S> <C> <C>
AEROSPACE/DEFENSE (1.4%)
Boeing Company (The)............................... 13,763 1,199,101
General Dynamics Corp.............................. 2,471 153,202
Lockheed Martin Corp............................... 8,020 673,680
Loral Space & Communications Ltd. (a).............. 5,788 78,862
McDonnell Douglas Corp. ........................... 9,043 438,586
Northrop Grumman Corp.............................. 1,969 134,138
Raytheon Company................................... 9,642 497,768
Rockwell International Corp........................ 8,709 498,590
United Technologies Corp........................... 4,894 562,810
------------
4,236,737
------------
AIRLINES (0.2%)
AMR Corp. (a)...................................... 3,191 290,381
Delta Air Lines, Inc............................... 2,106 174,798
Southwest Airlines Co. ............................ 5,612 163,449
USAir Group, Inc. (a).............................. 2,376 42,768
------------
671,396
------------
ALUMINUM (0.3%)
Alcan Aluminum Limited............................. 9,003 274,591
Aluminum Co. of America............................ 7,086 406,559
Reynolds Metals Company............................ 2,573 134,118
------------
815,268
------------
AUTOMOBILES (1.3%)
Chrysler Corp. .................................... 15,195 942,090
Ford Motor Company................................. 45,453 1,471,541
General Motors Corp. .............................. 30,131 1,578,111
------------
3,991,742
------------
</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)
June 30, 1996 (Unaudited)
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
AUTOPARTS--AFTER MARKET (0.2%)
Cooper Tire & Rubber Company.......................... 3,392 $ 75,472
Echlin Inc............................................ 2,446 92,642
Genuine Parts Company................................. 4,998 228,658
Goodyear Tire & Rubber Company........................ 6,130 295,773
------------
692,545
------------
BEVERAGES--ALCOHOLIC (0.5%)
Anheuser-Busch Companies, Inc......................... 10,122 759,150
Brown-Forman Corp..................................... 2,849 113,960
Coors (Adolph) Co..................................... 1,506 26,920
Seagram Company Ltd................................... 14,978 503,635
------------
1,403,665
------------
BEVERAGES--SOFT DRINKS (2.3%)
Coca-Cola Company (The)............................... 101,748 4,972,934
PepsiCo, Inc.......................................... 63,961 2,262,620
------------
7,235,554
------------
BROADCAST/MEDIA (0.3%)
Comcast Corp. Class A................................. 9,609 177,766
Tele-Communications TCI Group, Class A (a)............ 26,041 471,993
U.S. West Media Group (a)............................. 18,731 341,841
------------
991,600
------------
BUILDING MATERIALS (0.1%)
Masco Corp. .......................................... 6,309 190,847
Owens-Corning Fiberglas
Corp. ............................................... 2,016 86,688
Sherwin-Williams Company.............................. 3,406 158,379
------------
435,914
------------
CHEMICALS (1.5%)
Air Products & Chemicals, Inc. 4,486 259,067
Dow Chemical Company (The) 10,491 797,316
Du Pont (E.I.) De Nemours & Company................... 22,521 1,781,974
Eastman Chemical Co. ................................. 3,186 193,948
Goodrich (B.F.) Company............................... 2,157 80,618
Hercules Inc.......................................... 4,396 242,879
Monsanto Company...................................... 23,729 771,193
Praxair, Inc.......................................... 6,070 256,457
Rohm & Haas Company................................... 2,712 170,178
Union Carbide Corp.................................... 5,387 214,133
------------
4,767,763
------------
CHEMICALS--DIVERSIFIED (0.2%)
Avery Dennison Corp................................... 2,165 118,805
Engelhard Corp........................................ 5,779 132,917
FMC Corp. (a)......................................... 1,493 97,418
PPG Industries Inc.................................... 7,783 379,421
------------
728,561
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
CHEMICALS--SPECIALTY (0.3%)
Grace (W.R.) & Co. ................................... 3,923 $ 278,043
Great Lakes Chemical Corp. ........................... 2,600 161,850
Morton International, Inc. ........................... 5,874 218,806
Nalco Chemical Company................................ 2,720 85,680
Sigma-Aldrich Corp. .................................. 2,025 108,338
------------
852,717
------------
COMMUNICATION--EQUIPMENT MANUFACTURERS (1.0%)
Andrew Corp. (a)...................................... 2,279 122,496
Bay Networks Inc. (a)................................. 7,432 191,374
Cabletron Systems, Inc. (a)........................... 2,835 194,552
Cisco Systems, Inc. (a)............................... 22,323 1,264,040
DSC Communications Corp. (a).......................... 4,618 139,117
General Instrument Corp. (a).......................... 4,659 134,529
Northern Telecom Limited.............................. 10,121 550,330
Scientific-Atlanta, Inc............................... 3,016 46,748
Tellabs, Inc. (a)..................................... 3,535 236,403
3Com Corp. (a)........................................ 6,507 297,695
------------
3,177,284
------------
COMPUTER--SOFTWARE & SERVICES (2.1%)
Autodesk, Inc......................................... 1,896 56,643
Automatic Data Processing, Inc........................ 11,476 443,260
Ceridian Corp. (a).................................... 2,617 132,158
Computer Associates International Inc. ............... 9,862 702,667
Computer Sciences Corp. (a)........................... 2,200 164,450
First Data Corp. ..................................... 8,924 710,574
Microsoft Corp. (a)................................... 24,089 2,893,691
Novell Inc. (a)....................................... 14,640 203,130
Oracle Corp. (a)...................................... 26,029 1,026,519
Shared Medical Systems Corp........................... 946 60,781
------------
6,393,873
------------
COMPUTER SYSTEMS (2.0%)
Amdahl Corp. (a)...................................... 4,659 50,084
Apple Computer Inc. (a)............................... 4,812 101,052
Compaq Computer Corp. (a)............................. 10,635 523,774
Data General Corp. (a)................................ 1,506 19,578
Digital Equipment Corp. (a)........................... 6,014 270,630
EMC Corportation (a).................................. 9,190 171,164
Hewlett-Packard Company............................... 20,543 2,046,596
Intergraph Corp. (a).................................. 1,889 22,904
International Business Machines Corp. ................ 22,899 2,267,001
Silicon Graphics, Inc. (a)............................ 6,313 151,512
Sun Microsystems Inc. (a)............................. 7,410 436,264
Tandem Computers Inc. (a)............................. 4,646 57,494
Unisys Corp. (a)...................................... 6,825 48,628
------------
6,166,681
------------
CONGLOMERATES (0.2%)
Teledyne, Inc......................................... 2,193 79,222
Tenneco, Inc.......................................... 7,058 360,840
Textron Inc........................................... 3,413 272,614
------------
712,676
------------
</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>
CONTAINERS--METAL & GLASS (0.1%)
Ball Corp............................................. 1,220 $ 35,075
Crown Cork & Seal
Company, Inc. ....................................... 5,086 228,870
------------
263,945
------------
CONTAINERS--PAPER (0.1%)
Bemis Company, Inc.................................... 2,056 71,960
Stone Container Corp.................................. 3,832 52,690
Temple-Inland Inc..................................... 2,194 102,569
------------
227,219
------------
COSMETICS (0.5%)
Alberto-Culver Company................................ 1,098 50,920
Avon Products, Inc.................................... 5,444 245,660
Gillette Company...................................... 17,735 1,106,221
International Flavors & Fragrances, Inc. ............. 4,386 208,883
------------
1,611,684
------------
DRUGS (2.7%)
Eli Lilly & Company................................... 22,024 1,431,560
Merck & Co., Inc. .................................... 49,341 3,188,662
Pfizer Inc............................................ 25,835 1,843,973
Pharmacia & Upjohn, Inc. ............................. 20,139 893,668
Schering-Plough Corp. ................................ 14,622 917,531
------------
8,275,394
------------
ELECTRIC POWER COMPANIES (2.1%)
American Electric Power Company, Inc. ................ 7,481 318,878
Baltimore Gas & Electric Company...................... 5,823 165,228
Carolina Power & Light Company........................ 6,233 236,854
Central & South West Corp. ........................... 8,342 241,918
CINergy Corp. ........................................ 6,297 201,504
Consolidated Edison Company of New York............... 9,404 275,067
Dominion Resources Inc. .............................. 6,969 278,760
DTE Energy Company.................................... 5,841 180,341
Duke Power Company.................................... 8,184 419,430
Edison International.................................. 17,858 314,747
Entergy Corp. ........................................ 9,074 257,475
FPL Group, Inc. ...................................... 7,460 343,160
General Public Utilities Corp. ....................... 4,675 164,794
Houston Industries Inc................................ 10,401 256,125
Niagara Mohawk Power Corp............................. 5,639 43,702
Northern States Power Company......................... 2,720 134,300
Ohio Edison Company................................... 6,126 134,006
Pacific Gas & Electric Company........................ 16,824 391,158
PacifiCorp............................................ 11,780 262,105
Peco Energy Company................................... 8,865 230,490
PP&L Resources, Inc. ................................. 6,260 147,892
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
ELECTRIC POWER COMPANIES (Continued)
Public Service Enterprise
Group Inc............................................ 9,804 $ 268,384
Southern Company (The)................................ 26,664 656,601
Texas Utilities Company............................... 9,003 384,878
Unicom Corp........................................... 8,587 239,363
Union Electric Company................................ 4,088 164,542
------------
6,711,702
------------
ELECTRICAL EQUIPMENT (2.6%)
AMP Inc. ............................................. 8,782 352,378
Emerson Electric Co................................... 8,983 811,839
General Electric Company.............................. 67,135 5,807,177
General Signal Corp. ................................. 1,914 72,493
Grainger (W.W.), Inc.................................. 2,044 158,410
Honeywell Inc. ....................................... 5,065 276,042
Raychem Corp.......................................... 1,771 127,291
Thomas & Betts Corp................................... 925 34,687
Westinghouse Electric Corp. .......................... 16,562 310,538
------------
7,950,855
------------
ELECTRONIC-DEFENSE (0.0%) (c)
EG&G, Inc............................................. 1,942 41,510
------------
ELECTRONIC--INSTRUMENTATION (0.1%)
Perkin-Elmer Corp. (The).............................. 1,648 79,516
Tektronix, Inc. ...................................... 1,341 60,010
------------
139,526
------------
ELECTRONIC--SEMICONDUCTORS (1.6%)
Advanced Micro Devices,
Inc. (a)............................................. 5,238 71,368
Applied Materials, Inc. (a)........................... 7,075 215,787
Intel Corp............................................ 33,280 2,444,000
LSI Logic Corp. (a)................................... 5,174 134,524
Micron Technology Inc. ............................... 8,186 211,813
Motorola, Inc......................................... 24,026 1,510,635
National Semiconductor
Corp. (a)............................................ 5,388 83,514
Texas Instruments, Inc................................ 7,590 378,551
------------
5,050,192
------------
ENGINEERING & CONSTRUCTION (0.1%)
Fluor Corp............................................ 3,287 214,887
Foster Wheeler Corp. ................................. 1,611 72,294
------------
287,181
------------
ENTERTAINMENT (1.0%)
King World Productions,
Inc. (a)............................................. 1,494 54,344
Time Warner, Inc. .................................... 15,539 609,906
Viacom Inc. Class B (a)............................... 14,823 576,244
Walt Disney Company (The)............................. 27,073 1,702,215
------------
2,942,709
------------
</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)
June 30, 1996 (Unaudited)
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
FINANCIAL--MISCELLANEOUS (1.3%)
American Express Company.............................. 19,499 $ 870,143
American General Corp................................. 8,272 300,894
Federal Home Loan Mortgage Corp. ..................... 7,212 616,626
Federal National Mortgage Association................. 44,243 1,482,141
Green Tree Financial Corp. ........................... 5,325 166,406
MBNA Corp............................................. 8,822 251,427
Transamerica Corp. ................................... 2,743 224,240
------------
3,911,877
------------
FOOD DISTRIBUTORS (0.1%)
Fleming Companies, Inc. .............................. 1,500 21,563
SuperValu Inc......................................... 2,733 86,089
Sysco Corp............................................ 7,340 251,395
------------
359,047
------------
FOODS (1.9%)
Archer Daniels Midland Company........................ 21,140 404,303
Campbell Soup Company................................. 9,955 701,828
ConAgra, Inc. ........................................ 9,916 449,938
CPC International, Inc................................ 5,852 421,344
General Mills, Inc. .................................. 6,294 343,023
Heinz (H.J.) Company.................................. 14,749 448,001
Hershey Foods Corp.................................... 3,068 225,114
Kellogg Company....................................... 8,816 645,772
Quaker Oats Company................................... 5,345 182,398
Ralston Purina Group.................................. 4,207 269,774
Sara Lee Corp......................................... 19,640 635,845
Unilever, N.V......................................... 6,405 929,526
Wrigley (Wm.) Jr. Company............................. 4,640 234,320
------------
5,891,186
------------
GOLD (0.3%)
Barrick Gold Corp..................................... 14,146 383,710
Echo Bay Mines Ltd. .................................. 5,108 54,911
Homestake Mining Company.............................. 5,522 94,564
Newmont Mining Corp. ................................. 3,790 187,131
Placer Dome Inc. ..................................... 9,645 230,275
Santa Fe Pacific Gold Corp. .......................... 5,223 73,775
------------
1,024,366
------------
HARDWARE & TOOLS (0.1%)
Black & Decker Corp................................... 3,422 132,175
Snap-On, Inc. ........................................ 1,645 77,932
Stanley Works (The)................................... 3,549 105,582
------------
315,689
------------
HEALTH CARE--DIVERSIFIED (2.7%)
Abbott Laboratories................................... 31,731 1,380,299
Allergan Inc. ........................................ 2,486 97,576
American Home Products Corp. 25,226 1,516,713
Bristol-Myers Squibb Company.......................... 20,301 1,827,090
Johnson & Johnson..................................... 53,604 2,653,398
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
HEALTH CARE--DIVERSIFIED (Continued)
Mallinckrodt Group, Inc. ............................. 3,100 $ 120,512
Warner-Lambert Company................................ 10,888 598,840
------------
8,194,428
------------
HEALTH CARE--HMOs (0.3%)
Humana Inc. (a)....................................... 6,478 115,794
United Healthcare Corp................................ 7,068 356,934
U.S. Healthcare, Inc. ................................ 6,126 336,930
------------
809,658
------------
HEALTH CARE--MISCELLANEOUS (0.3%)
Alza Corp. (a)........................................ 3,281 89,817
Amgen Inc. (a)........................................ 10,640 574,560
Beverly Enterprises, Inc. (a)......................... 3,897 46,764
Manor Care, Inc. ..................................... 2,461 96,902
------------
808,043
------------
HEAVY TRUCKS & PARTS (0.2%)
Cummins Engine Company, Inc........................... 1,529 61,733
Dana Corp. ........................................... 3,963 122,853
Eaton Corp............................................ 3,128 183,379
ITT Industries, Inc. ................................. 4,685 117,711
Navistar International Corp. (a)...................... 3,010 29,724
Paccar Inc............................................ 1,539 75,411
------------
590,811
------------
HOMEBUILDING (0.0%) (c)
Centex Corp........................................... 1,197 37,257
Kaufman & Broad Home Corp............................. 1,285 18,632
Pulte Corp. .......................................... 1,091 29,184
------------
85,073
------------
HOSPITAL MANAGEMENT (0.4%)
Columbia/HCA Healthcare Corp. ........................ 17,825 951,409
Community Psychiatric
Centers (a).......................................... 1,768 16,796
Tenet Healthcare Corp. (a)............................ 8,485 181,367
------------
1,149,572
------------
HOTEL--MOTEL (0.3%)
Harrah's Entertainment, Inc. (a)...................... 4,019 113,537
Hilton Hotels Corp.................................... 1,916 215,550
ITT Corp. (New) (a)................................... 4,682 310,182
Marriott International, Inc........................... 5,015 269,556
------------
908,825
------------
HOUSEHOLD--FURNISHINGS & APPLIANCES (0.1%)
Armstrong World Industries, Inc....................... 1,497 86,265
Maytag Corp........................................... 4,232 88,343
Whirlpool Corp........................................ 2,996 148,676
------------
323,284
------------
</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>
HOUSEHOLD PRODUCTS (1.3%)
Clorox Company (The).................................. 2,057 $ 182,302
Colgate-Palmolive Company............................. 5,860 496,635
Kimberly-Clark Corp. ................................. 11,302 873,079
Procter & Gamble Company (The)........................ 27,816 2,520,825
------------
4,072,841
------------
HOUSEWARES (0.2%)
Newell Co............................................. 6,486 198,634
Rubbermaid, Inc. ..................................... 6,258 170,531
Tupperware Corp. (a).................................. 2,458 103,850
------------
473,015
------------
INSURANCE BROKERS (0.2%)
Alexander & Alexander
Services, Inc........................................ 1,769 34,938
Aon Corportation...................................... 4,353 220,915
Marsh & McLennan Companies, Inc....................... 2,979 287,473
------------
543,326
------------
INVESTMENT BANK/BROKERAGE (0.7%)
Dean Witter Discover & Company........................ 6,711 384,205
Merrill Lynch & Co., Inc.............................. 6,977 454,377
Morgan Stanley Group Inc.............................. 6,221 305,607
Salomon Inc........................................... 4,316 189,904
Travelers Group Inc. ................................. 19,079 870,479
------------
2,204,572
------------
LEISURE TIME (0.1%)
Bally Entertainment Corp. (a)......................... 1,920 52,800
Brunswick Corp........................................ 3,934 78,680
Outboard Marine Corp.................................. 812 14,717
------------
146,197
------------
LIFE INSURANCE (0.3%)
Jefferson-Pilot Corp.................................. 2,863 147,802
Lincoln National Corp. ............................... 4,166 192,678
Providian Corp. ...................................... 3,807 163,225
Torchmark Corp. ...................................... 2,961 129,544
UNUM Corp. ........................................... 2,904 180,774
USLIFE Corp. ......................................... 1,364 44,841
------------
858,864
------------
MACHINE TOOLS (0.0%) (c)
Cincinnati Milacron Inc............................... 1,296 31,104
Giddings & Lewis Inc.................................. 1,267 20,589
------------
51,693
------------
MACHINERY--DIVERSIFIED (0.6%)
Briggs & Stratton Corp................................ 1,274 52,393
Case Corporation...................................... 2,936 140,928
Caterpillar Inc. ..................................... 7,889 534,480
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
MACHINERY--DIVERSIFIED (Continued)
Cooper Industries, Inc. .............................. 4,292 $ 178,118
Deere & Company....................................... 10,561 422,440
Harnischfeger Industries, Inc......................... 1,935 64,339
Ingersoll-Rand Company................................ 4,346 190,137
Nacco Industries, Inc. ............................... 312 17,277
Timken Company (The).................................. 1,233 47,779
Varity Corp. (a)...................................... 1,626 78,251
------------
1,726,142
------------
MAJOR REGIONAL BANKS (2.8%)
Banc One Corp......................................... 18,172 617,848
Bank of Boston Corp................................... 4,471 221,315
Bank of New York Company, Inc. (The).................. 7,997 409,846
Barnett Banks, Inc.................................... 3,815 232,715
Boatmen's Bancshares, Inc............................. 6,281 252,025
Comerica Inc. ........................................ 4,803 214,334
CoreStates Financial Corp............................. 8,882 341,957
Fifth Third Bancorp................................... 4,016 216,864
First Bank System, Inc. .............................. 5,750 333,500
First Union Corp...................................... 11,446 696,775
Fleet Financial Group, Inc............................ 10,590 460,665
KeyCorp............................................... 9,402 364,328
Mellon Bank Corp...................................... 5,349 304,893
National City Corp.................................... 6,290 220,936
NationsBank Corp...................................... 11,885 981,998
Norwest Corp.......................................... 14,190 494,876
PNC Bank Corp......................................... 13,640 405,790
Republic New York Corp................................ 2,236 139,191
Suntrust Banks, Inc................................... 9,048 334,776
U.S. Bancorp (Portland, OR)........................... 6,124 221,230
Wachovia Corp. ....................................... 6,862 300,212
Wells Fargo & Company................................. 3,919 936,151
------------
8,702,225
------------
MANUFACTURED HOUSING (0.0%) (c)
Fleetwood Enterprises, Inc............................ 1,889 58,559
------------
MANUFACTURING--DIVERSIFIED (0.6%)
AlliedSignal, Inc. ................................... 11,314 646,312
Crane Co. ............................................ 1,223 50,143
Dover Corp. .......................................... 4,616 212,913
Illinois Tool Works Inc. ............................. 4,745 320,881
Johnson Controls, Inc................................. 1,638 113,841
Millipore Corp........................................ 1,761 73,742
Pall Corp............................................. 4,532 109,334
Parker Hannifin Corp.................................. 3,039 128,778
Trinova Corp.......................................... 1,106 36,913
Tyco International Ltd. .............................. 6,107 248,860
------------
1,941,717
------------
MEDICAL PRODUCTS (0.6%)
Bard (C.R.), Inc...................................... 2,185 74,290
Bausch & Lomb Inc. ................................... 2,216 94,180
Baxter International Inc.............................. 10,956 517,671
Becton, Dickinson & Company........................... 2,590 207,848
</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)
June 30, 1996 (Unaudited)
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
MEDICAL PRODUCTS (Continued)
Biomet Inc. (a)....................................... 4,536 $ 65,205
Boston Scientific Corp. (a)........................... 6,943 312,435
Medtronic, Inc........................................ 9,291 520,296
St. Jude Medical, Inc. (a)............................ 2,907 97,384
United States Surgical Corp........................... 2,235 69,285
------------
1,958,594
------------
METALS--MISCELLANEOUS (0.2%)
Asarco, Inc........................................... 1,653 45,664
Cyprus Amax Minerals Co............................... 3,590 81,224
Freeport-McMoRan Copper & Gold Inc. .................. 8,174 260,546
INCO Limited.......................................... 4,746 153,059
Phelps Dodge Corp..................................... 2,728 170,159
------------
710,652
------------
MISCELLANEOUS (1.0%)
Airtouch Communications (a)........................... 19,722 557,147
American Greetings Corp............................... 3,094 84,698
Corning Inc........................................... 9,173 352,014
Dial Corp. (The)...................................... 3,700 105,912
Harcourt General, Inc................................. 2,900 145,000
Harris Corp........................................... 1,614 98,454
Jostens, Inc.......................................... 1,744 34,444
Minnesota Mining & Manufacturing Company.............. 16,976 1,171,344
Pioneer Hi-Bred International, Inc.................... 3,308 174,910
TRW Inc............................................... 2,593 233,046
Whitman Corp.......................................... 4,326 104,365
------------
3,061,334
------------
MONEY CENTER BANKS (1.7%)
BankAmerica Corp...................................... 14,719 1,114,964
Bankers Trust New York Corp........................... 3,141 232,041
Chase Manhattan Corp. (The)........................... 17,487 1,235,020
Citicorp.............................................. 19,549 1,615,236
First Chicago Corp.................................... 12,785 500,213
Morgan (J.P.) & Company, Inc.......................... 7,497 634,434
------------
5,331,908
------------
MULTI-LINE INSURANCE (0.9%)
Aetna Life & Casualty Company......................... 4,615 329,973
American International Group, Inc..................... 19,094 1,883,146
CIGNA Corp............................................ 3,096 364,941
ITT Hartford Group, Inc. ............................. 4,682 249,316
------------
2,827,376
------------
NATURAL GAS DISTRIBUTORS & PIPE LINES (0.6%)
Coastal Corp.......................................... 4,320 180,360
Columbia Gas System, Inc.............................. 2,065 107,638
Consolidated Natural Gas Company...................... 3,795 198,289
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
NATURAL GAS DISTRIBUTORS & PIPE LINES (Continued)
Eastern Enterprises................................ 918 $ 30,524
Enron Corp......................................... 10,084 412,184
Enserch Corp....................................... 2,623 57,050
Nicor Inc.......................................... 2,144 60,836
Noram Energy Corp.................................. 4,980 54,157
Oneok, Inc. ....................................... 1,088 27,200
Pacific Enterprises................................ 3,273 96,963
PanEnergy Corp..................................... 5,952 195,672
Peoples Energy Corp................................ 1,373 45,995
Sonat Inc.......................................... 3,422 153,990
Williams Companies, Inc. (The) 4,094 202,653
------------
1,823,511
------------
OFFICE EQUIPMENT & SUPPLIES (0.4%)
Alco Standard Corp................................. 5,166 233,762
Moore Corp. Ltd. .................................. 3,962 74,783
Pitney Bowes Inc................................... 6,019 287,407
Xerox Corp......................................... 13,025 696,837
------------
1,292,789
------------
OIL & GAS DRILLING (0.0%) (c)
Helmerich & Payne, Inc............................. 1,065 39,006
Rowan Companies, Inc. (a).......................... 3,403 50,194
------------
89,200
------------
OIL-EXPLORATION & PRODUCTION (0.1%)
Burlington Resources, Inc.......................... 5,132 220,676
Oryx Energy Company (a)............................ 3,892 63,245
Santa Fe Energy Resources,
Inc. (a).......................................... 3,663 43,498
------------
327,419
------------
OIL--INTEGRATED DOMESTIC (0.9%)
Amerada Hess Corp.................................. 3,691 197,930
Ashland Inc. ...................................... 2,466 97,715
Atlantic Richfield Company......................... 6,514 771,909
Kerr-McGee Corp. .................................. 2,038 124,063
Louisiana Land & Exploration Company (The)......... 1,256 72,377
Occidental Petroleum Corp.......................... 12,580 311,355
Pennzoil Company................................... 1,890 87,412
Phillips Petroleum Company......................... 10,491 439,311
Sun Company, Inc................................... 3,040 92,340
Unocal Corp........................................ 9,821 331,459
USX-Marathon Group................................. 11,464 230,713
------------
2,756,584
------------
OIL--INTEGRATED INTERNATIONAL (4.3%)
Amoco Corp......................................... 20,193 1,461,468
Chevron Corp....................................... 26,251 1,548,809
Exxon Corp. ....................................... 50,336 4,372,940
Mobil Corp......................................... 16,005 1,794,560
Royal Dutch Petroleum Company...................... 21,713 3,338,374
Texaco Inc. ....................................... 10,595 888,656
------------
13,404,807
------------
</TABLE>
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.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
OIL--WELL EQUIPMENT & SERVICES (0.5%)
Baker Hughes Inc...................................... 5,712 $ 187,782
Dresser Industries, Inc. ............................. 7,318 215,881
Halliburton Company................................... 4,621 256,466
McDermott International, Inc.......................... 2,178 45,466
Schlumberger Limited.................................. 9,682 815,708
Western Atlas, Inc. (a)............................... 2,076 120,927
------------
1,642,230
------------
PAPER & FOREST PRODUCTS (0.6%)
Boise Cascade Corp.................................... 1,925 70,503
Champion International Corp........................... 3,909 163,201
Georgia-Pacific Corp.................................. 3,668 260,428
International Paper Company........................... 11,857 437,227
James River Corp. of Virginia......................... 3,291 86,800
Louisiana-Pacific Corp................................ 4,276 94,607
Mead Corp. ........................................... 2,181 113,139
Potlatch Corp......................................... 1,209 47,302
Union Camp Corp....................................... 2,741 133,624
Westvaco Corp......................................... 4,028 120,337
Weyerhaeuser Company.................................. 8,051 342,167
Willamette Industries, Inc............................ 2,233 132,863
------------
2,002,198
------------
PERSONAL LOANS (0.1%)
Beneficial Corp....................................... 2,165 121,511
Household International Inc........................... 3,932 298,832
------------
420,343
------------
PHOTOGRAPHY/IMAGING (0.4%)
Eastman Kodak Company................................. 13,672 1,062,998
Polaroid Corp......................................... 1,888 86,140
------------
1,149,138
------------
POLLUTION CONTROL (0.3%)
Browning-Ferris Industries Inc........................ 8,483 246,007
Laidlaw, Inc. Class B................................. 11,774 119,212
WMX Technologies, Inc................................. 19,827 649,334
------------
1,014,553
------------
PROPERTY--CASUALTY INSURANCE (0.8%)
Allstate Corp. (The).................................. 17,934 818,239
Chubb Corp. (The)..................................... 7,064 352,317
General Re Corp. ..................................... 3,366 512,474
Loews Corp............................................ 4,710 371,501
SAFECO Corp. ......................................... 4,941 174,788
St. Paul Companies, Inc. (The)........................ 3,393 181,525
USF&G Corp............................................ 4,476 73,294
------------
2,484,138
------------
PUBLISHING (0.2%)
Dun & Bradstreet Corp. (The).......................... 6,818 426,125
McGraw-Hill Companies, Inc. .......................... 4,066 186,020
Meredith Corp......................................... 1,144 47,762
------------
659,907
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
PUBLISHING--NEWSPAPER (0.4%)
Dow Jones & Company, Inc.............................. 3,837 $ 160,195
Gannett Company, Inc.................................. 5,578 394,644
Knight-Ridder Inc..................................... 1,941 140,723
New York Times Company (The).......................... 3,912 127,629
Times Mirror Company.................................. 4,423 192,400
Tribune Company....................................... 2,578 187,227
------------
1,202,818
------------
RAILROADS (0.7%)
Burlington Northern Santa Fe Corp..................... 5,719 462,524
Conrail Inc........................................... 3,136 208,152
CSX Corp.............................................. 8,444 407,423
Norfolk Southern Corp................................. 5,187 439,598
Union Pacific Corp.................................... 8,195 572,626
------------
2,090,323
------------
RESTAURANTS (0.5%)
Darden Restaurants, Inc............................... 6,394 68,736
Luby's Cafeterias, Inc. .............................. 954 22,419
McDonald's Corp....................................... 28,055 1,311,571
Ryan's Family Steak Houses,
Inc. (a)............................................. 2,163 20,008
Shoney's, Inc. (a).................................... 1,642 17,856
Wendy's International, Inc............................ 4,829 89,940
------------
1,530,530
------------
RETAIL STORES--APPAREL (0.2%)
Charming Shoppes, Inc. (a)............................ 4,099 28,949
Gap, Inc. (The)....................................... 11,279 362,338
Limited, Inc. (The)................................... 11,078 238,177
TJX Companies, Inc. (The)............................. 3,071 103,646
------------
733,110
------------
RETAIL STORES--DEPARTMENT (0.5%)
Dillard Department Stores, Inc. 4,506 164,469
Federated Department Stores, Inc. (a)................. 8,150 278,119
May Department Stores Company......................... 9,955 435,531
Mercantile Stores Company, Inc........................ 1,494 87,586
Nordstrom, Inc........................................ 3,269 145,470
Penney (J.C.) Company, Inc............................ 9,122 478,905
------------
1,590,080
------------
RETAIL STORES--DRUG (0.2%)
Longs Drug Stores Corp................................ 913 40,743
Rite Aid Corp......................................... 3,488 103,768
Walgreen Company...................................... 9,823 329,070
------------
473,581
------------
</TABLE>
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
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996 (Unaudited)
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
RETAIL STORES--FOOD CHAIN (0.4%)
Albertson's, Inc...................................... 10,094 $ 417,639
American Stores Co.................................... 5,900 243,375
Giant Food, Inc....................................... 2,331 83,625
Great Atlantic & Pacific Tea Company, Inc............. 1,507 49,543
Kroger Company (The) (a).............................. 4,901 193,590
Winn-Dixie Stores, Inc................................ 6,012 212,674
------------
1,200,446
------------
RETAIL STORES--GENERAL MERCHANDISE (1.2%)
Dayton Hudson Corp.................................... 2,866 295,556
Kmart Corp............................................ 18,503 228,975
Sears, Roebuck & Company.............................. 15,723 764,531
Wal-Mart Stores, Inc.................................. 93,067 2,361,575
------------
3,650,637
------------
RETAIL STORES--SPECIALTY (0.8%)
Circuit City Stores, Inc.............................. 3,935 142,152
Home Depot, Inc. (The)................................ 19,184 1,035,936
Lowe's Companies, Inc................................. 6,406 231,417
Melville Corp......................................... 4,323 175,081
Pep Boys-Manny, Moe & Jack............................ 2,460 83,640
Price/Costco, Inc. (a)................................ 7,896 170,751
Tandy Corp............................................ 2,623 124,265
Toys "R" Us (a)....................................... 10,912 310,992
Woolworth Corp. (a)................................... 5,317 119,632
------------
2,393,866
------------
SAVINGS & LOANS (0.1%)
Ahmanson (H.F.) & Company............................. 4,739 127,953
Golden West Financial Corp............................ 2,329 130,424
Great Western Financial Corp.......................... 5,447 130,047
------------
388,424
------------
SHOES (0.2%)
Brown Group, Inc...................................... 792 13,761
Nike, Inc............................................. 5,730 588,758
Reebok International Ltd.............................. 3,119 104,876
Stride Rite Corp...................................... 2,029 16,739
------------
724,134
------------
SPECIALIZED SERVICES (0.4%)
Block (H & R), Inc.................................... 4,307 140,516
CUC International Inc. (a)............................ 7,360 261,280
Ecolab, Inc. ......................................... 2,609 86,097
Interpublic Group of Cos., Inc. ...................... 3,137 147,047
National Service Industries, Inc. 2,016 78,876
Ogden Corp. .......................................... 2,034 36,866
Safety-Kleen Corp..................................... 2,316 40,530
Service Corp. International........................... 4,757 273,528
------------
1,064,740
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
SPECIALTY PRINTING (0.1%)
Deluxe Corp........................................... 3,280 $ 116,440
Donnelley (R.R.) & Sons Company....................... 6,221 216,958
Harland (John H.) Co. (The)........................... 1,229 30,264
------------
363,662
------------
STEEL (0.2%)
Armco Inc. (a)........................................ 4,230 21,150
Bethlehem Steel Corp. (a)............................. 4,371 51,906
Inland Steel Industries, Inc. ........................ 2,001 39,270
Nucor Corp............................................ 3,532 178,807
USX--U.S. Steel Group Inc............................. 3,350 95,056
Worthington Industries, Inc. ......................... 3,666 76,528
------------
462,717
------------
TELECOMMUNICATIONS--LONG DISTANCE (1.9%)
AT&T Corp. ........................................... 64,870 4,021,940
MCI Communications Corp............................... 27,254 698,384
Sprint Corp........................................... 14,451 606,942
WorldCom, Inc. (a).................................... 7,869 435,746
------------
5,763,012
------------
TELEPHONE (3.1%)
Alltel Corp. ......................................... 7,565 232,624
Ameritech Corp........................................ 22,309 1,324,597
Bell Atlantic Corp. .................................. 17,758 1,132,072
BellSouth Corp........................................ 39,986 1,694,407
GTE Corp.............................................. 39,329 1,759,973
NYNEX Corp............................................ 17,299 821,702
Pacific Telesis Group................................. 17,040 575,100
SBC Communications, Inc............................... 24,547 1,208,940
US West, Inc.......................................... 19,142 610,151
------------
9,359,566
------------
TEXTILES--APPAREL MANUFACTURERS (0.1%)
Fruit Of The Loom Inc.
Class A (a).......................................... 2,958 75,429
Liz Claiborne, Inc.................................... 2,905 100,586
Russell Corp.......................................... 1,616 44,642
Springs Industries, Inc. ............................. 802 40,501
VF Corp............................................... 2,583 154,011
------------
415,169
------------
TOBACCO (1.3%)
American Brands, Inc.................................. 7,233 328,197
Philip Morris Companies, Inc.......................... 33,813 3,516,552
UST Inc............................................... 7,746 265,301
------------
4,110,050
------------
TOYS (0.1%)
Hasbro Inc. .......................................... 3,580 127,985
Mattel, Inc........................................... 11,060 316,593
------------
444,578
------------
</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.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
TRANSPORTATION--MISCELLANEOUS (0.1%)
Federal Express Corp. (a).......................... 2,301 $ 188,682
Ryder System, Inc. ................................ 3,044 85,612
------------
274,294
------------
TRUCKERS (0.0%) (c)
Caliber System, Inc................................ 1,620 55,080
Consolidated Freightways, Inc. .................... 1,678 35,448
Yellow Corp. (a)................................... 1,099 14,562
------------
105,090
------------
Total Common Stocks
(Cost $172,157,752)............................... 203,224,411 (e)
------------
PREFERRED STOCK (0.0%) (c)
CONGLOMERATES (0.0%) (c)
Teledyne, Inc. $1.20, Series E..................... 18 277
------------
Total Preferred Stock
(Cost $270)....................................... 277
------------
SHORT-TERM
INVESTMENTS (20.5%)
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
COMMERCIAL PAPER (15.0%)
American Honda Finance Corp.
5.32%, due 7/9/96 (f)............................. $ 1,400,000 1,398,345
DIC Americas, Inc.
5.36%, due 7/19/96 (f)............................ 1,540,000 1,535,873
Dynamic Funding Corp.
5.47%, due 7/23/96 (f)............................ 5,500,000 5,481,615
Minolta Corp.
5.40%, due 7/16/96 (f)............................ 2,850,000 2,843,587
Mitsubishi Motors Credit of America, Inc.
5.38%, due 7/1/96 (f)............................. 5,400,000 5,400,000
5.40%, due 7/18/96 (f)............................ 10,570,000 10,543,047
Oak Funding Corp.
5.38%, due 7/16/96 (f)............................ 5,000,000 4,988,792
Sanwa Business Credit Corp.
5.31%, due 7/15/96 (f)............................ 3,100,000 3,093,598
5.35%, due 7/15/96 (f)............................ 3,000,000 2,993,758
Shinhan Bank
5.55%, due 7/15/96 (f)............................ 8,270,000 8,252,151
------------
Total Commercial Paper
(Cost $46,530,766)................................ 46,530,766
------------
U.S. GOVERNMENT (5.5%)
United States Treasury Bill
4.85%, due 10/17/96 (f)........................... 17,200,000 16,926,348
------------
Total U.S. Government
(Cost $16,936,246)................................ 16,926,348
------------
Total Short-Term Investments
(Cost $63,467,012)................................ 63,457,114
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
-------------
<S> <C> <C>
Total Investments
(Cost $293,691,167) (g)........................... 105.1% $325,191,313 (h)
Liabilities in Excess of
Cash and Other Assets............................. (5.1) (15,660,641)
----------- ------------
Net Assets......................................... 100.0% $309,530,672
=========== ============
FUTURES
CONTRACTS (0.2%)
<CAPTION>
CONTRACTS UNREALIZED
LONG APPRECIATION
-------------------------
<S> <C> <C>
Standard & Poor's 500 September 1996............... 130 $ 1,038,416 (i)
------------
Total Contracts Long
(Settlement Value $43,992,000).................... 1,038,416
------------
<CAPTION>
CONTRACTS UNREALIZED
SHORT DEPRECIATION
-------------------------
<S> <C> <C>
United States Treasury Note September 1996 (5
Year)............................................. 138 (199,755)(i)
United States Treasury Note September 1996 (10
Year)............................................. 24 (44,490)(i)
United States Treasury Bond September 1996 (30
Year)............................................. 87 (221,089)(i)
------------
Total Contracts Short
(Settlement Value ($26,702,719)).................. (465,334)
------------
Total Futures Contracts
(Settlement Value $17,289,281).................... $ 573,082
============
</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 4.9% of net
assets.
(e) The combined market value of common stocks and Standard & Poor's 500 Index
futures contracts represents 79.9% of net assets.
(f) Segregated as collateral for futures contracts.
(g) The cost for Federal income tax purposes is $294,575,996.
(h) At June 30, 1996 net unrealized appreciation was $30,615,317, 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 $33,134,500 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $2,519,183.
(i) Represents the difference between the value of the contracts at the time
they were opened and the value at June 30, 1996.
(j) Foreign cash held at June 30, 1996:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
---------------------- -------- --------
<S> <C> <C>
Deutsche Marks 500,000 $347,947 $328,493
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
65
<PAGE>
MULTI-ASSET FUND
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
As of June 30, 1996 (Unaudited) For the six months ended June 30,
1996 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$293,691,167).................................................. $325,191,313
Cash denominated in foreign currencies (identified cost
$347,947)...................................................... 328,493
Receivables:
Investment securities sold...................................... 8,282,861
Dividends and interest.......................................... 1,090,859
Fund shares sold................................................ 37,959
Other assets.................................................... 741
Variation margin receivable on futures contracts................ 203,186
------------
Total assets.................................................. 335,135,412
------------
LIABILITIES:
Payables:
Investment securities purchased................................. 23,991,295
Custodian....................................................... 1,376,451
Administrator................................................... 128,821
Adviser......................................................... 37,835
Fund shares redeemed............................................ 9,155
Transfer agent.................................................. 5,837
Directors....................................................... 5,232
Accrued expenses................................................ 50,114
------------
Total liabilities............................................. 25,604,740
------------
Net assets...................................................... $309,530,672
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized
Institutional Class............................................. $ 23,846
Institutional Service Class..................................... 434
Additional paid-in capital...................................... 265,921,997
Accumulated undistributed net investment income................. 4,626,718
Accumulated undistributed net realized gain on investments...... 6,922,721
Accumulated net realized loss on foreign currency transactions.. (18,818)
Net unrealized appreciation on investments...................... 32,073,228
Net unrealized depreciation on foreign currency transactions.... (19,454)
------------
Net assets...................................................... $309,530,672
============
Institutional Class
Net assets applicable to outstanding shares..................... $304,005,834
============
Shares of capital stock outstanding............................. 23,846,066
============
Net asset value per share outstanding........................... $ 12.75
============
Institutional Service Class
Net assets applicable to outstanding shares..................... $ 5,524,838
============
Shares of capital stock outstanding............................. 434,059
============
Net asset value per share outstanding........................... $ 12.73
============
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)................................................... $ 1,843,767
Interest........................................................ 3,815,629
------------
Total income.................................................. 5,659,396
------------
Expenses: (Note 2)
Administration (Note 3)......................................... 733,329
Advisory (Note 3)............................................... 219,999
Custodian....................................................... 34,927
Auditing........................................................ 19,986
Legal........................................................... 18,587
Registration.................................................... 17,484
Transfer agent.................................................. 17,035
Shareholder communication....................................... 15,982
Directors....................................................... 9,559
Service (Note 3)................................................ 6,018
Miscellaneous................................................... 15,199
------------
Total expenses before
reimbursement................................................ 1,108,105
Expense reimbursement from Administrator (Note 3)............... (75,427)
------------
Net expenses.................................................. 1,032,678
------------
Net investment income........................................... 4,626,718
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) from:
Security transactions........................................... (776)
Futures transactions............................................ 8,617,222
Foreign currency transactions................................... (17,177)
------------
Net realized gain on investments and foreign currency
transactions................................................... 8,599,269
------------
Net change in unrealized appreciation on investments:
Security transactions........................................... 11,416,991
Futures transactions............................................ (1,825,534)
Foreign currency transactions................................... (19,454)
------------
Net unrealized gain on investments and foreign currency
transactions................................................... 9,572,003
------------
Net realized and unrealized gain on investments and foreign
currency transactions.......................................... 18,171,272
------------
Net increase in net assets resulting from operations............ $ 22,797,990
============
</TABLE>
- --------
(a) Dividends recorded net of foreign withholding taxes of $20,798.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
66
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
MULTI-ASSET FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996 (Unaudited) and the year ended December
31, 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income............................. $ 4,626,718 $ 9,983,568
Net realized gain on investments.................. 8,616,446 24,645,946
Net realized loss on foreign currency
transactions..................................... (17,177) (267,722)
Net change in unrealized appreciation on
investments...................................... 9,591,457 24,447,333
Net change in unrealized depreciation on foreign
currency......................................... (19,454) --
------------ ------------
Net increase in net assets resulting from
operations....................................... 22,797,990 58,809,125
------------ ------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class.............................. -- (9,683,938)
Institutional Service Class...................... -- (122,295)
From net realized gain on investments:
Institutional Class.............................. -- (23,783,105)
Institutional Service Class...................... -- (308,316)
In excess of net realized gain on investments:
Institutional Class.............................. -- (1,672,049)
Institutional Service Class...................... -- (21,677)
------------ ------------
Total dividends and distributions to
shareholders................................... -- (35,591,380)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class.............................. 19,904,830 40,227,452
Institutional Service Class...................... 1,889,466 3,251,969
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions:
Institutional Class.............................. -- 35,139,085
Institutional Service Class...................... -- 452,281
------------ ------------
21,794,296 79,070,787
Cost of shares redeemed:
Institutional Class.............................. (11,695,224) (54,473,647)
Institutional Service Class...................... (253,753) (6,140)
------------ ------------
Increase in net assets derived from capital
share transactions.............................. 9,845,319 24,591,000
------------ ------------
Net increase in net assets....................... 32,643,309 47,808,745
NET ASSETS:
Beginning of period............................... 276,887,363 229,078,618
------------ ------------
End of period..................................... $309,530,672 $276,887,363
============ ============
Accumulated undistributed net investment income... $ 4,626,718 $ --
============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
67
<PAGE>
MULTI-ASSET FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS INSTITUTIONAL CLASS
------------- ------------- ------------- ------------- -------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31 JANUARY 2, 1991(a)
ENDED --------------------------------------------------------- THROUGH
JUNE 30, 1996* 1995 1994 1993 1992 DECEMBER 31, 1991
----------------------------- --------------------------- -------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of
period........... $ 11.79 $ 11.79 $ 10.67 $ 10.67 $ 11.67 $ 12.02 $ 11.79 $ 10.00
-------- -------- -------- -------- -------- -------- -------- --------
Net investment
income........... 0.19 0.17 0.48 0.47 0.45 0.39 0.50 0.51
Net realized and
unrealized gain
(loss) on
investments...... 0.77 0.77 2.39 2.39 (0.55) 0.59 0.29 1.28
Net realized and
unrealized loss
on foreign
currency
transactions..... (0.00)(b) (0.00)(b) (0.01) (0.01) -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Total from
investment
operations....... 0.96 0.94 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.... $ 12.75 $ 12.73 $ 11.79 $ 11.79 $ 10.67 $ 11.67 $ 12.02 $ 11.79
======== ======== ======== ======== ======== ======== ======== ========
Total investment
return (c)....... 8.14% 7.97% 26.81% 26.70% (0.86%) 8.79% 7.09% 17.90%
Ratios (to average
net assets)/
Supplemental
Data:
Net investment
income.......... 3.16%+ 2.91%+ 4.03% 3.78% 3.63% 3.55% 4.65% 5.87%
Net expenses..... 0.70%+ 0.95%+ 0.70% 0.95% 0.70% 0.60% 0.60% 0.60%
Expenses (before
reimbursement).. 0.75%+ 1.00%+ 0.77% 1.02% 0.75% 0.75% 0.79% 0.88%
Portfolio turnover
rate............. 47% 47% 261% 261% 128% 101% 89% 22%
Average commission
rate paid........ $ 0.0500 $ 0.0500 (d) (d) (d) (d) (d) (d)
Net assets at end
of period (in
000's)........... $304,006 $ 5,525 $273,351 $ 3,536 $229,079 $258,345 $190,899 $139,449
</TABLE>
- --------
* Unaudited.
+ Annualized.
(a) Commencement of operations.
(b) Less than one cent per share.
(c) Total return is not annualized.
(d) Disclosure of amount required for fiscal years beginning on or after
September 1, 1995.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
68
<PAGE>
VALUE EQUITY FUND
- --------------------------------------------------------------------------------
Fund Highlights for the six months ended June 30, 1996
. One-year total returns of 20.45% and 20.10% for Institutional Class and
Service Class shares, respectively, as of 6/30/96
. Underperformed the S&P 500 Stock Index* and the average Lipper(S) growth and
income fund for the six-month and 1-year periods ended 6/30/96
. Institutional Class shares received a five-star overall rating from
Morningstar, Inc.+ as of 6/30/96
. Positive results in retailers, tobacco stocks, and consumer-related issues
For the six months ended June 30, 1996, the MainStay Institutional Value Equity
Fund returned 7.69% and 7.55% for Institutional Class and Service Class shares,
respectively. These results trailed the S&P 500 Stock Index, which returned
10.09%, and the average Lipper growth and income fund, which returned 9.24%,
over the same period. Nevertheless, the Fund earned Morningstar's highest
overall ranking of five stars, placing it among the top 10% of funds in its
Morningstar universe. The Value Equity Fund's individual Morningstar ratings for
the three- and five-year periods ending 6/30/96 were 4 stars and 5 stars,
respectively, out of a universe of 1,583 and 997 funds in the equity category
for their respective periods.
The Fund had a strong first quarter and a challenging second quarter. During the
first quarter, the long-awaited signs of an economic recovery began to emerge,
with improvements in auto sales, housing activity, and retail sales. These signs
led to rising interest rates, prompting first-quarter corrections in financials,
consumer nondurables, utilities, and healthcare. In the second quarter, 30-year
Treasury yields pierced the 7% level, spreading the earlier corrections into
economically sensitive issues. The stock market also underwent a rotational
correction when prospects for rising profits came into question as the economy
picked up.
Chemical issues such as Lyondell, Georgia Gulf, and Dow Chemical, which helped
overall performance in the first quarter, were particularly weak in the second.
Despite careful selection and screening of financial issues, regional banks such
as Wells Fargo and First Bank System underperformed as interest rates rose.
Aetna's buyout announcement of U.S. Healthcare confirmed the consolidation trend
in the HMO industry. We had previously purchased U.S. Healthcare based on
attractive earnings growth, management ownership, and strong asset value, and we
profited from the acquisition announcement. Nevertheless, our holdings in Humana
and FHP International suffered in the subsequent correction, as earnings
prospects for the industry came under pressure.
Economic recovery A general improvement in formerly weak fundamental factors
underlying a country's gross domestic product, which may include factory output,
sales, productivity, employment, and relative currency values.
Sector rotation A general movement of investments out of one sector of the
market into another that has become more attractive to investors.
Correction A shift in securities prices which brings them more in line with
historically appropriate levels.
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.
Consumer cyclicals Consumer products and services whose sales tend to rise and
fall with changes in the economic cycle
- --------------------------------------------------------------------------------
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.
+ 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- & 10-year average annual returns with fee
adjustments, and a risk factor that reflects fund performance relative to 3-
month Treasury bill monthly returns. A one-year rating is calculated using
the same methodology, but is not a component of the overall rating. As of
6/30/96, the individual 1, 3 and 5 year ratings for the MainStay
Institutional Value Equity Fund was 3, 4 and 5 stars, respectively. For the
one-year period, the Fund was rated among 2,882 funds in the equity
category. Only 10% of the funds in an investment category may receive 5
stars, 22.5% may receive 4 stars and 35% may receive 3 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.
+ The Salomon Brothers Broad Investment Grade Bond Index is an unmanaged index
+ generally considered representative of the U.S. stock market.
69
<PAGE>
- --------------------------------------------------------------------------------
Shifting earnings and sector rotation produced mixed results among the
Fund's capital goods/technology stocks. In the first quarter, IBM was
strong while Xerox, Lockheed Martin, McDonnell Douglas, and Intel were
weak. In the second quarter, we sold Intel at a gain, felt the impact of
weakness at IBM, and benefited from strengths at Xerox, Lockheed Martin,
and McDonnell Douglas.
Stop & Shop, which we purchased based on its restructuring, insider
ownership, and attractive value, benefited the Fund handsomely when the
same fundamentals led to a takeover announcement in the first quarter.
During the second quarter, our careful "bottom-up" security selection and
review process paid off in a number of areas. With an improved outlook in a
class action suit, tobacco stocks, including Philip Morris and RJR Nabisco,
exhibited strong performance. Retail stocks such as Dillard, J.C. Penney,
and Federated Department Stores strengthened the Fund's performance.
Several other consumer-related stocks, including Premark, Kroger, and
American Stores, made positive contributions to the portfolio during the
first six months of 1996. Premark's contribution was decisively positive
when it spun off its Tupperware business in the second quarter to realize
greater value for its shareholders.
Despite short-term challenges, our outlook remains unchanged. We continue
to believe that metals, papers, and consumer cyclicals, such as auto parts
and building materials, offer attractive valuations if the economy
improves. With the recent rise in interest rates, we also anticipate
opportunities to add to our financial positions at attractive valuations.
Overall, we believe these areas of corporate America are best positioned
for earnings improvements over the next 12 months. If the economy improves
as we expect, we believe the Fund may benefit as undervalued issues move
toward their full market potential.
Denis Laplaige
Jeffrey Simon
Portfolio Managers
70
<PAGE>
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
VALUE EQUITY FUND vs S&P 500 INDEX
INSTITUTIONAL CLASS SHARES
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
Value Equity Fund S&P 500 Index
1/2/91 $10,000 $10,000
1Q 1991 $11,550 $11,450
2Q 1991 $11,830 $11,423
3Q 1991 $12,870 $12,032
4Q 1991 $13,660 $13,040
1Q 1992 $14,695 $12,711
2Q 1992 $14,637 $12,952
3Q 1992 $14,847 $13,361
4Q 1992 $16,489 $14,032
1Q 1993 $17,465 $14,644
2Q 1993 $17,670 $14,715
3Q 1993 $18,680 $15,094
4Q 1993 $18,945 $15,443
1Q 1994 $18,976 $14,859
2Q 1994 $19,068 $14,921
3Q 1994 $20,015 $15,649
4Q 1994 $19,177 $15,646
1Q 1995 $20,866 $17,168
2Q 1995 $22,191 $18,804
3Q 1995 $23,632 $20,298
4Q 1995 $24,819 $21,520
1Q 1996 $26,401 $22,673
6/30/96 $26,728 $23,690
- --------------------------------------------------------------------------------
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
VALUE EQUITY FUND vs S&P 500 INDEX
SERVICE CLASS SHARES
[GRAPH APPEARS HERE]
Value Equity Fund S&P 500 Index
1/2/91 $10,000 $10,000
1Q 1991 $11,550 $11,450
2Q 1991 $11,830 $11,423
3Q 1991 $12,870 $12,032
4Q 1991 $13,660 $13,040
1Q 1992 $14,695 $12,711
2Q 1992 $14,637 $12,952
3Q 1992 $14,847 $13,361
4Q 1992 $16,489 $14,032
1Q 1993 $17,465 $14,644
2Q 1993 $17,670 $14,715
3Q 1993 $18,680 $15,094
4Q 1993 $18,945 $15,443
1Q 1994 $18,976 $14,859
2Q 1994 $19,068 $14,921
3Q 1994 $20,015 $15,649
4Q 1994 $19,177 $15,646
1Q 1995 $20,833 $17,168
2Q 1995 $22,208 $18,804
3Q 1995 $23,632 $20,298
4Q 1995 $24,799 $21,520
1Q 1996 $26,363 $22,673
6/30/96 $26,672 $23,690
- --------------------------------------------------------------------------------
[_] Value Equity Fund [_] S&P 500 Index
Source: (C) 1996 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 June 30, 1996 as of June 30, 1996
- -----------------------------------------------------------------------------------------------------------------
Year to Date One Year Five Year Since Inception
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Value Equity Fund Institutional Class 7.69% 20.45% 17.71% 19.57%
Value Equity Fund Service Class** 7.55% 20.10% 17.66% 19.52%
Average Lipper Growth & Income Fund 9.24% 22.13% 14.25% 15.63%
S&P 500 Stock Index 10.09% 25.98% 15.71% 16.98%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
[BAR CHART APPEARS HERE]
Institutional Class Shares
1991 36.60%
1992 20.71%
1993 14.90%
1994 1.22%
1995 29.42%
1996 7.69% (as of 6/30/96)
================================================================================
PORTFOLIO COMPOSITION
(% of net assets as of June 30,1996)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Common Stocks 91.66%
Cash & Equivalents 8.34%
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS
(% of net assets as of June 30, 1996)
- ------------------------------------------------------
1. IMC Global, Inc. 2.38%
2. Philip Morris Cos. Inc. 2.28%
3. Aetna Life & Casualty Co. 2.24%
4. Allstate Corp. (The) 2.22%
5. International Business Machines Corp. 2.03%
6. AT&T Corp. 2.00%
7. Goodyear Tire & Rubber Co. (The) 1.99%
8. Conrail Inc. 1.88%
9. American International Group, Inc. 1.84%
10. Wells Fargo & Co. 1.64%
- --------------------------------------------------------------------------------
TOP 5 INDUSTRY HOLDINGS
(% of net assets as of June 30, 1996)
- -------------------------------------------------------
1. Insurance 11.05%
2. Chemicals 9.54%
3. Banks 7.14%
4. Retail 6.17%
5. Energy 5.87%
- -------------------------------------------------------
** 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 Fund's 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%.
71
<PAGE>
VALUE EQUITY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
COMMON STOCKS (91.7%)+
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
AEROSPACE (1.4%)
McDonnell Douglas Corp................................ 199,000 $ 9,651,500
------------
AUTO MANUFACTURING (1.4%)
General Motors Corp. ................................. 186,500 9,767,937
------------
AUTO PARTS (0.7%)
Varity Corp. (a)...................................... 106,200 5,110,875
------------
BANKS (7.1%)
Bankers Trust New York Corp. ......................... 128,000 9,456,000
Boatman's Bancshares, Inc............................. 185,000 7,423,125
First Bank System, Inc. .............................. 150,000 8,700,000
National City Corp.................................... 166,400 5,844,800
PNC Bank Corp......................................... 240,000 7,140,000
Wells Fargo & Co...................................... 48,000 11,466,000
------------
50,029,925
------------
BUILDING MATERIALS (2.8%)
Armstrong World Industries, Inc....................... 159,500 9,191,187
Masco Corp. .......................................... 334,400 10,115,600
------------
19,306,787
------------
CAPITAL GOODS (3.5%)
Case Corp............................................. 198,600 9,532,800
Coltec Industries Inc. (a)............................ 409,900 5,841,075
Xerox Corp............................................ 165,300 8,843,550
------------
24,217,425
------------
CHEMICALS (9.5%)
Agrium, Inc. ......................................... 463,500 6,076,195
Dow Chemical Co. (The)................................ 86,900 6,604,400
FMC Corp. (a)......................................... 133,200 8,691,300
Geon Co. (The)........................................ 12,500 281,250
Georgia Gulf Corp..................................... 252,000 7,371,000
IMC Global, Inc....................................... 443,860 16,700,233
International Specialty Products, Inc. (a)............ 593,600 6,529,600
Lyondell Petrochemical Co. ........................... 285,800 6,894,925
PPG Industries, Inc................................... 159,000 7,751,250
------------
66,900,153
------------
COMPUTERS & OFFICE EQUIPMENT (0.6%)
Gateway 2000, Inc. (a)................................ 132,400 4,501,600
------------
CONGLOMERATES (2.3%)
Hanson Plc ADR (b).................................... 720,300 10,264,275
Textron Inc........................................... 70,100 5,599,237
------------
15,863,512
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
DEFENSE ELECTRONICS (2.2%)
Litton Industries, Inc. (a)........................... 128,600 $ 5,594,100
Lockheed Martin Corp.................................. 117,175 9,842,700
------------
15,436,800
------------
DOMESTIC OILS (2.3%)
Parker & Parsley Petroleum Co. 210,600 5,844,150
Unocal Corp........................................... 311,600 10,516,500
------------
16,360,650
------------
DRUGS (0.1%)
Warner-Lambert Co. ................................... 15,000 825,000
------------
ENERGY (5.9%)
Coastal Corp. ........................................ 217,900 9,097,325
Horsham Corp.......................................... 357,900 4,965,862
MAPCO, Inc............................................ 175,900 9,916,363
PanEnergy Corp. ...................................... 305,700 10,049,888
Tosco Corp............................................ 141,800 7,125,450
------------
41,154,888
------------
FINANCE (1.5%)
Travelers Group Inc. ................................. 229,026 10,449,311
------------
FOOD (2.4%)
Archer Daniels Midland Co............................. 366,450 7,008,356
IBP, Inc.............................................. 362,900 10,025,113
------------
17,033,469
------------
FOOD, BEVERAGES & TOBACCO (4.6%)
American Brands, Inc.................................. 158,000 7,169,250
Philip Morris Cos. Inc. .............................. 153,700 15,984,800
RJR Nabisco Holdings Corp. ........................... 285,000 8,835,000
------------
31,989,050
------------
HEALTH CARE (1.1%)
FHP International Corp. (a)........................... 65,000 1,779,375
Humana, Inc. (a)...................................... 347,900 6,218,712
------------
7,998,087
------------
HOUSEHOLD PRODUCTS (1.8%)
Premark International, Inc............................ 208,800 3,862,800
Tupperware Corp. (a).................................. 208,800 8,821,800
------------
12,684,600
------------
INSURANCE (11.1%)
Aetna Life and Casualty Co............................ 219,700 15,708,550
Allstate Corp. (The).................................. 340,871 15,552,239
American International Group, Inc..................... 131,075 12,927,272
Chubb Corp. (The)..................................... 220,100 10,977,488
SAFECO Corp. ......................................... 214,000 7,570,250
St. Paul Cos., Inc. (The)............................. 152,400 8,153,400
Torchmark Corp. ...................................... 150,000 6,562,500
------------
77,451,699
------------
</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.
72
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
COMMON STOCKS (Continued)
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
INTERNATIONAL OILS (2.7%)
British Petroleum Co., Plc
ADR (b).............................................. 68,210 $ 7,289,944
Occidental Petroleum Corp............................. 463,000 11,459,250
------------
18,749,194
------------
PAPER & FOREST PRODUCTS (4.6%)
Bowater Inc. ......................................... 221,600 8,337,700
Chesapeake Corp. ..................................... 222,200 5,832,750
Rayonier, Inc. ....................................... 193,250 7,343,500
Stone Container Corp.................................. 443,200 6,094,000
Temple-Inland Inc..................................... 102,700 4,801,225
------------
32,409,175
------------
RAILROADS (4.9%)
Conrail Inc........................................... 198,200 13,155,525
Illinios Central Corp................................. 377,100 10,700,213
Union Pacific Corp.................................... 146,300 10,222,712
------------
34,078,450
------------
REAL ESTATE (1.0%)
Meditrust............................................. 211,100 7,045,462
------------
RETAIL (6.2%)
American Stores Co.................................... 166,100 6,851,625
Dillard Department Stores, Inc. 198,500 7,245,250
Federated Department Stores, Inc. (a)................. 210,100 7,169,663
Kroger Co. (The) (a).................................. 269,700 10,653,150
Mac Frugals Bargains Close-Outs, Inc. (a)............. 58,600 1,040,150
Penney (J.C.) Co., Inc. .............................. 178,000 9,345,000
Sears, Roebuck and Co................................. 20,100 977,362
------------
43,282,200
------------
TECHNOLOGY (2.0%)
International Business Machines Corp. ................ 143,700 14,226,300
------------
TELECOMMUNICATION EQUIPMENT (2.0%)
AT&T Corp. ........................................... 225,600 13,987,200
------------
TEXTILE & APPAREL (1.0%)
Burlington Industries, Inc. (a)....................... 414,900 5,860,463
Reebok International Ltd.............................. 40,500 1,361,812
------------
7,222,275
------------
TIRE & RUBBER (2.0%)
Goodyear Tire & Rubber Co. (The)...................... 289,100 13,949,075
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
TRANSPORTATION (0.3%)
Arkansas Best Corp. .................................. 305,500 $ 2,253,063
------------
UTILITIES--ELECTRIC (2.7%)
Entergy Corp.......................................... 134,700 3,822,113
Long Island Lighting Co............................... 491,500 8,232,625
Unicom Corp. ......................................... 233,400 6,506,025
------------
18,560,763
------------
Total Common Stocks
(Cost $542,097,328).................................. 642,496,425
------------
SHORT-TERM
INVESTMENTS (7.9%)
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
COMMERCIAL PAPER (7.9%)
American Express Credit Corp.
5.46%, due 7/3/96.................................... $15,804,000 15,804,000
Chevron Oil Finance Co.
5.33%, due 7/5/96.................................... 11,566,000 11,566,000
Ford Motor Credit Co.
5.37%, due 7/1/96.................................... 11,277,000 11,277,000
General Electric Capital Corp.
5.35%, due 7/2/96.................................... 16,695,000 16,695,000
------------
Total Short-Term Investments
(Cost $55,342,000)................................... 55,342,000
------------
Total Investments
(Cost $597,439,328) (c).............................. 99.6% 697,838,425 (d)
Cash and Other Assets,
Less Liabilities..................................... 0.4 3,110,534
------------ ------------
Net Assets............................................ 100.0% $700,948,959
============ ============
</TABLE>
- --------
(a) Non-income producing securities.
(b) ADR--American Depository Receipt.
(c) The cost for Federal income tax purpose is $597,505,279.
(d) At June 30, 1996 net unrealized appreciation was $100,333,146, 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 $110,955,221 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $10,622,075.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
73
<PAGE>
VALUE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
As of June 30, 1996 (Unaudited) For the six months ended June 30,
1996 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$597,439,328)................................................... $697,838,425
Cash............................................................. 353
Receivables:
Investment securities sold....................................... 16,712,991
Fund shares sold................................................. 2,608,950
Dividends and interest........................................... 2,084,121
Other assets..................................................... 1,506
------------
Total assets................................................... 719,246,346
------------
LIABILITIES:
Payables:
Investment securities purchased.................................. 17,572,725
Administrator.................................................... 342,944
Adviser.......................................................... 142,893
Fund shares redeemed............................................. 126,703
Directors........................................................ 11,661
Custodian........................................................ 10,619
Transfer agent................................................... 4,380
Accrued expenses................................................. 85,462
------------
Total liabilities.............................................. 18,297,387
------------
Net assets....................................................... $700,948,959
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized
Institutional Class.............................................. $ 44,765
Institutional Service Class...................................... 352
Additional paid-in capital....................................... 541,954,567
Accumulated undistributed net investment income.................. 5,589,352
Accumulated undistributed net realized gain on investments....... 52,960,826
Net unrealized appreciation on investments....................... 100,399,097
------------
Net assets....................................................... $700,948,959
============
Institutional Class
Net assets applicable to outstanding shares...................... $695,482,177
============
Shares of capital stock outstanding.............................. 44,765,310
============
Net asset value per share outstanding............................ $ 15.54
============
Institutional Service Class
Net assets applicable to outstanding shares...................... $ 5,466,782
============
Shares of capital stock outstanding.............................. 352,321
============
Net asset value per share outstanding............................ $ 15.52
============
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)..................................................... $ 7,210,915
Interest.......................................................... 1,400,239
-----------
Total income.................................................... 8,611,154
-----------
Expenses: (Note 2)
Administration (Note 3)........................................... 1,973,599
Advisory (Note 3)................................................. 822,333
Legal............................................................. 41,322
Auditing.......................................................... 38,342
Custodian......................................................... 31,895
Shareholder communication......................................... 31,828
Registration...................................................... 25,069
Directors......................................................... 21,856
Transfer agent.................................................... 17,580
Service (Note 3).................................................. 5,456
Miscellaneous..................................................... 12,522
-----------
Total expenses.................................................. 3,021,802
-----------
Net investment income............................................. 5,589,352
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments.................................. 46,966,132
Net change in unrealized appreciation on investments.............. (5,430,319)
-----------
Net realized and unrealized gain on investments................... 41,535,813
-----------
Net increase in net assets resulting from operations.............. $47,125,165
===========
</TABLE>
- --------
(a) Dividends recorded net of foreign withholding taxes of $15,659.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
74
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
VALUE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996 (Unaudited) and the year ended December
31, 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income............................. $ 5,589,352 $ 8,377,559
Net realized gain on investments.................. 46,966,132 20,263,540
Net change in unrealized appreciation on
investments...................................... (5,430,319) 101,419,028
------------ ------------
Net increase in net assets resulting from
operations....................................... 47,125,165 130,060,127
------------ ------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class.............................. -- (8,337,828)
Institutional Service Class...................... -- (41,210)
From net realized gain on investments:
Institutional Class.............................. -- (14,061,287)
Institutional Service Class...................... -- (73,769)
------------ ------------
Total dividends and distributions to
shareholders................................... -- (22,514,094)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class.............................. 76,917,462 141,414,162
Institutional Service Class...................... 2,302,071 3,038,197
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions:
Institutional Class.............................. -- 22,375,101
Institutional Service Class...................... -- 114,977
------------ ------------
79,219,533 166,942,437
Cost of shares redeemed:
Institutional Class.............................. (32,019,754) (64,008,663)
Institutional Service Class...................... (337,896) (55,323)
------------ ------------
Increase in net assets derived from capital
share transactions.............................. 46,861,883 102,878,451
------------ ------------
Net increase in net assets....................... 93,987,048 210,424,484
NET ASSETS:
Beginning of period............................... 606,961,911 396,537,427
------------ ------------
End of period..................................... $700,948,959 $606,961,911
============ ============
Accumulated undistributed net investment income... $ 5,589,352 $ --
============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
75
<PAGE>
VALUE EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
CLASS SERVICE CLASS CLASS SERVICE CLASS INSTITUTIONAL CLASS
------------- ------------- ------------- ------------- ------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31 JANUARY 2, 1991(a)
ENDED -------------------------------------------------------- THROUGH
JUNE 30, 1996* 1995 1994 1993 1992 DECEMBER 31, 1991
--------------------------- --------------------------- -------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of
period........... $ 14.43 $ 14.43 $ 11.58 $ 11.58 $ 12.40 $ 14.16 $ 13.66 $ 10.00
-------- -------- -------- -------- -------- -------- -------- --------
Net investment
income........... 0.13 0.11 0.21 0.20 0.17 0.16 0.21 0.28
Net realized and
unrealized gain
(loss) on
investments...... 0.98 0.98 3.20 3.20 (0.02) 1.63 2.22 3.38
-------- -------- -------- -------- -------- -------- -------- --------
Total from
investment
operations....... 1.11 1.09 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.... $ 15.54 $ 15.52 $ 14.43 $ 14.43 $ 11.58 $ 12.40 $ 14.16 $ 13.66
======== ======== ======== ======== ======== ======== ======== ========
Total investment
return (b)....... 7.69% 7.55% 29.42% 29.32% 1.22% 14.90% 20.71% 36.60%
Ratios (to average
net assets)/
Supplemental
Data:
Net investment
income.......... 1.70%+ 1.45%+ 1.64% 1.39% 1.50% 1.38% 1.67% 2.33%
Net expenses..... 0.92%+ 1.17%+ 0.93% 1.18% 0.92% 0.90% 0.90% 0.90%
Expenses (before
reimbursement).. 0.92%+ 1.17%+ 0.93% 1.18% 0.92% 0.93% 0.95% 0.99%
Portfolio turnover
rate............. 27% 27% 51% 51% 43% 83% 133% 142%
Average commission
rate paid........ $ 0.0594 $ 0.0594 (c) (c) (c) (c) (c) (c)
Net assets at end
of period (in
000's)........... $695,482 $ 5,467 $603,749 $ 3,213 $396,537 $305,060 $230,836 $182,627
</TABLE>
- --------
* Unaudited.
+ Annualized.
(a) Commencement of operations.
(b) Total return is not annualized.
(c) Disclosure of amount required for fiscal years beginning on or after
September 1, 1995.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
76
<PAGE>
Bond Fund
- --------------------------------------------------------------------------------
Fund Highlights for the six months ended June 30, 1996
. One-year total returns of 4.38% and 4.09% for Institutional Class and Service
Class shares, respectively, as of 6/30/96
. Institutional Class shares earned a four-star overall ranking from
Morningstar, Inc.* as of 6/30/96
. Performance benefited from our neutral duration position, security selection
in the mortgage market, and the addition of Yankee bonds
. Exposure to mortgage securities negatively impacted the Fund's return
For the six months ended June 30, 1996, the MainStay Institutional Bond Fund
posted total returns of -1.83% and -1.93% for Institutional Class and Service
Class shares, respectively. These returns were relatively in line with the
Lehman Brothers Government/Corporate Bond Index+ return of -1.88%, but lagged
the average Lipper(S) intermediate U.S. Government fund, which returned -1.49%
for the reporting period.
Even though the Fund's short-term results were negative, the Fund earned an
overall four-star rating from Morningstar, Inc., placing it among the top 33% of
all funds in the Morningstar universe. The Bond Fund's individual Morningstar
ratings for the three- and five-year periods ending 6/30/96 were 3 stars and 4
stars, respectively, out of a universe of 889 and 464 funds in the fixed-income
category for their respective periods.
The economy experienced solid growth during the first six months of 1996. This
strength pushed yields higher in the bond market, which lowered prices and
contributed to negative returns in most bond sectors. In this difficult period,
only short-term and high-yield bonds posted positive returns.
During the first quarter, the Fund's maturity was kept neutral to the Lehman
Brothers Government/Corporate Bond Index due to the conflicting indicators in
the economy. Our decision to keep the Fund's maturity neutral to the Index
neither helped nor hurt performance. During the volatile second quarter,
however, our maturity decisions contributed positively to performance.
In the first quarter, mortgage-backed securities offered attractive valuations,
yet ended the quarter hurting the Fund's overall performance. Since the Index
does not contain mortgage-backed securities, these holdings also caused the Fund
to slightly lag behind the Index performance. In the second quarter, however, we
added higher-yielding, high-quality short-term mortgage assets, which helped
boost the Fund's performance. We also included Yankee bonds in the Fund during
the first half, which helped our returns, as investors began to recognize values
in this under-followed sector.
In Treasuries, newer issues held in the portfolio added value compared to older
issues in the first quarter. This trend reversed during the second quarter, as
did we. As a result, the older issues added value during this period. We
believe the trend will yet again reverse during the third quarter and, if it
does, we intend to swap our older issues into newer ones as the quarter unfolds.
The Fund continues to stress quality, as the portfolio ended the first half of
the year with an average weighted quality rating of AA+**.
Ravi Akhoury
Edward Munshower
Portfolio Managers
Yield The income per share (or current value of a security) paid to investors
over a specified period of time as a percentage of the cost of the security.
Maturity The termination date of an obligation of the length of time a fixed-
income security is required to pay interest. The maturity of a portfolio or
Index generally refers to the average of the maturities of the individual
securities in it.
Mortgage-backed securities Securities representing interests in "pools" of
mortgages in which principal and interest payments by the holders of underlying
fixed- or adjustable-rate mortgages are, in effect, "passed through" to
investors (net of fees paid to the issuer or guarantor of the securities).
Yankee bonds Dollar-denominated bonds issued in the United States by foreign
banks and corporations when U.S. rates are more favorable than those available
in local foreign markets.
- --------------------------------------------------------------------------------
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-, 5- & 10-year average annual returns with fee
adjustments, and a risk factor that reflects fund performance relative to
3-month Treasury bill monthly returns. A one-year rating is calculated
using the same methodology, but is not a component of the overall rating.
As of 6/30/96, the individual 1, 3 and 5 year ratings for the MainStay
Institutional Bond Fund was 3, 3 and 4 stars, respectively. For the one-
year period, the Fund was rated among 1,487 funds in the fixed income
category. Only 10% of the funds in an investment category may receive 5
stars, 22.5% may receive 4 stars and 35% may receive 3 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.
+ The Lehman Brothers Government/Corporate Bond Index is an unmanaged index
generally considered representative of the U.S. intermediate-term 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.
** Standard & Poor's considers debt rated AA to have a very strong capacity to
pay interest and repay principal and differs from the highest rated issues
only in a small degree. The plus sign shows relative standing within the
major rating category of AA. This rating is based solely on the
creditworthiness of the bonds in the portfolio and is not meant to
represent the stability or safety of the Fund.
77
<PAGE>
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
BOND FUND vs LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND INDEX
INSTITUTIONAL CLASS SHARES
- --------------------------------------------------
[LINE GRAPH APPEARS HERE]
Bond Fund LB Gvt/Corp BI
1/2/91 $10,000 $10,000
1Q 1991 $10,240 $10,269
2Q 1991 $10,350 $10,425
3Q 1991 $10,960 $11,025
4Q 1991 $11,400 $11,613
1Q 1992 $11,264 $11,438
2Q 1992 $11,647 $11,902
3Q 1992 $12,063 $12,483
4Q 1992 $12,128 $12,492
1Q 1993 $12,627 $13,075
2Q 1993 $12,961 $13,468
3Q 1993 $13,342 $13,914
4Q 1993 $13,310 $13,874
1Q 1994 $12,950 $13,438
2Q 1994 $12,776 $13,271
3Q 1994 $12,830 $13,338
4Q 1994 $12,870 $13,387
1Q 1995 $13,460 $14,054
2Q 1995 $14,268 $14,965
3Q 1995 $14,527 $15,252
4Q 1995 $15,170 $15,962
1Q 1996 $14,800 $15,589
6/30/96 $14,893 $15,662
- --------------------------------------------------
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
BOND FUND vs LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND INDEX
SERVICES CLASS SHARES
- --------------------------------------------------
[LINE GRAPH APPEARS HERE]
Bond Fund LB Gvt/Corp BI
1/2/91 $10,000 $10,000
1Q 1991 $10,240 $10,269
2Q 1991 $10,350 $10,425
3Q 1991 $10,960 $11,025
4Q 1991 $11,400 $11,613
1Q 1992 $11,264 $11,438
2Q 1992 $11,647 $11,902
3Q 1992 $12,063 $12,483
4Q 1992 $12,128 $12,492
1Q 1993 $12,627 $13,075
2Q 1993 $12,961 $13,468
3Q 1993 $13,342 $13,914
4Q 1993 $13,310 $13,874
1Q 1994 $13,950 $13,438
2Q 1994 $12,776 $13,271
3Q 1994 $12,830 $13,338
4Q 1994 $12,870 $13,387
1Q 1995 $13,446 $14,054
2Q 1995 $14,253 $14,965
3Q 1995 $14,512 $15,252
4Q 1995 $15,128 $15,962
1Q 1996 $14,759 $15,589
6/30/96 $14,836 $15,662
- --------------------------------------------------
[_] Bond Fund [_] Lehman Brothers Gov't/Corp Bond Index
Source: (C) 1996 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 June 30, 1996 as of June 30, 1996
- -----------------------------------------------------------------------------------------------------------------
Year to Date One Year Five Year Since Inception
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bond Fund Institutional Class -1.83% 4.38% 7.55% 7.51%
Bond Fund Service Class** -1.93% 4.09% 7.47% 7.43%
Average Lipper Intermediate U.S.
Government Fund -1.49% 3.76% 6.96% 6.93%
Lehman Brothers Gov't/Corporate Bond Index -1.88% 4.66% 8.48% 8.50%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
[BAR CHART APPEARS HERE]
Institutional Class Shares
Total Return *
1991 14.00%
1992 6.39%
1993 9.74%
1994 (3.31%)
1995 17.88%
1996 (1.83%) (as of 6/30/96)
================================================================================
PORTFOLIO COMPOSITION
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Cash & Equivalents (2.90%)
U.S. Government & Federal Agencies 49.47%
Domestic Bonds 38.40%
Foreign Bonds 15.03%
# Adjusted for liabilities
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS
(% of net assets as of June 30, 1996)
- ------------------------------------------------------------
1. US Treasury Bond, 8.875%, 8/15/17 9.34%
2. GNMA, 8.00%, 7/1/26 5.04%
3. FNMA, 8.50%, 2/1/05 4.41%
4. US Treasury Note, 7.875%, 11/15/99 4.29%
5. US Treasury Bond, 6.25%, 8/15/23 3.25%
6. FNMA, 6.25%, 12/15/02 2.41%
7. US Treasury Bond, 11.25%, 2/15/15 2.10%
8. Nova Scotia, 8.25%, 11/15/19 1.85%
9. Sears Roebuck, 5.82%, 12/7/98 1.83%
10. Associates Corp. of North America, 7.75%, 2/15/05 1.75%
- --------------------------------------------------------------------------------
TOP 5 INDUSTRY
HOLDINGS
(% of net assets as of June 30, 1996)
1. US Government & Federal Agencies 49.47%
2. Yankee Bonds 14.16%
3. Finance 9.42%
4. Brokerage 6.85%
5. First Mortgage Loans 6.37%
Average Weighted Effective Maturity 10.0 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 Fund's 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%.
78
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
LONG-TERM INVESTMENTS (100.6%)+
ASSET-BACKED
SECURITIES (17.2%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
AIRCRAFT LEASE (1.2%)
Aircraft Lease Portfolio Securitization Limited
Series 1996-1 Class C
6.788%, due 6/15/06 (a)(b)......................... $ 2,095,000 $ 2,095,000
------------
AUTO LEASE (1.2%)
World Omni Automobile Lease Securitization Trust
Series 1996-A Class A1
6.30%, due 6/25/02................................. 2,125,000 2,116,330
------------
AUTO LOANS (4.1%)
Chevy Chase Auto Receivables Trust
Series 1995-2 Class A
5.80%, due 6/15/02................................. 1,561,107 1,550,133
NationsBank Auto Grantor Trust
Series 1995-A Class A
5.85%, due 6/15/02................................. 2,156,434 2,148,003
Olympic Automobile Receivables Trust
Series 1996-B Class A4
6.70%, due 3/15/02................................. 1,456,000 1,462,377
WFS Financial Owner Trust Series 1996-B Class A3
6.65%, due 8/20/00................................. 2,050,000 2,058,159
------------
7,218,672
------------
CREDIT CARD RECEIVABLES (2.9%)
Household Affinity Credit Card Master Trust I
Series 1994-2 Class A
7.00%, due 12/15/99................................ 2,725,000 2,756,937
Standard Credit Card Master Trust, Series 1995-4
Class A 5.60%, due 2/15/00 (a)..................... 2,375,000 2,376,188
------------
5,133,125
------------
FIRST MORTGAGE LOANS (COLLATERALIZED MORTGAGE
OBLIGATIONS) (6.4%)
General Electric Capital Mortgage Services, Inc.
Series 1995-9 Class A2 6.375%, due 11/25/25........ 2,101,546 2,091,690
Mortgage Capital Funding, Inc. Series 1996-MC1 Class
A-2A 7.35%, due 7/15/28............................ 1,450,000 1,456,119
Paine Webber Mortgage Acceptance Corp.
Series 1994-6 Class A2
6.00%, due 4/25/09................................. 1,973,309 1,947,715
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
FIRST MORTGAGE LOANS (COLLATERALIZED MORTGAGE
OBLIGATIONS) (Continued)
Residential Asset Securitization Trust
Series 1996-A5 Class A3 7.75%, due 7/31/26......... $ 1,540,000 $ 1,547,053
Residential Funding Mortgage Security I
Series 1994-S12 Class A1 6.50%, due 4/25/09........ 1,365,942 1,361,243
Structured Asset Securities Corp.
Series 1996-CFL Class A1A 5.711%, due 2/25/28...... 1,040,330 1,031,550
Series 1996-2 Class A1
7.00%, due 8/25/26................................. 1,700,000 1,705,321
------------
11,140,691
------------
SUPERMARKETS (COLLATERALIZED MORTGAGE OBLIGATION)
(1.4%)
Asset Securitization Corp.
Series 1996-D2 Class A1
6.92%, due 2/14/29................................. 2,445,648 2,367,314
------------
Total Asset-Backed Securities (Cost $30,083,863).... 30,071,132
------------
CERTIFICATE OF DEPOSIT (0.7%)
BANKS (0.7%)
Mercantile Safe Deposit & Trust Co., Baltimore, MD
5.16%, due 1/30/98................................. 1,275,000 1,253,465
------------
Total Certificate of Deposit (Cost $1,275,000)...... 1,253,465
------------
CORPORATE BONDS (21.3%)
BANKS (4.6%)
Capital One Bank
8.125%, due 2/27/98................................ 1,650,000 1,686,185
First Union Corp.
7.50%, due 4/15/35................................. 1,750,000 1,793,278
First USA Bank
6.25%, due 10/9/98................................. 2,650,000 2,619,498
SouthTrust Bank of Alabama (Birmingham)
7.69%, due 5/15/25................................. 1,875,000 1,951,125
------------
8,050,086
------------
BROKERAGE (6.8%)
Bankers Trust NY Corp.
7.50%, due 11/15/15................................ 2,015,000 1,934,481
8.125%, due 5/15/02................................ 2,725,000 2,854,111
Lehman Brothers Holdings, Inc. 7.375%, due 5/15/07.. 2,000,000 2,030,840
</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.
79
<PAGE>
BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996 (Unaudited)
CORPORATE BONDS (Continued)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
BROKERAGE (Continued)
Merrill Lynch & Co., Inc.
6.65%, due 1/15/99................................... $ 1,875,000 $ 1,875,975
Morgan Stanley Group, Inc. 5.625%, due 3/1/99......... 1,685,000 1,643,802
Salomon, Inc. Series D
7.39%, due 2/27/98................................... 1,625,000 1,641,786
------------
11,980,995
------------
FINANCE (6.7%)
ADVANTA Corp.
7.00%, due 5/1/01.................................... 2,120,000 2,097,592
Associates Corp. of North America
7.75%, due 2/15/05................................... 2,905,000 3,060,359
Chrysler Financial Corp.
Series Q
5.65%, due 1/30/98................................... 1,420,000 1,405,445
Ford Capital BV
9.00%, due 8/15/98................................... 1,900,000 1,992,283
Sears Roebuck Acceptence Corp.
Series I
5.82%, due 12/7/98................................... 3,250,000 3,202,322
------------
11,758,001
------------
FOREIGN (0.9%)
Financiera Ener Nacional 9.375%, due 6/15/06 (b)...... 1,500,000 1,517,310
------------
INDUSTRIAL (2.3%)
Lockheed Martin Corp.
7.45%, due 6/15/04................................... 2,205,000 2,244,470
Philip Morris Companies Inc. 6.95%, due 6/1/06........ 1,750,000 1,752,730
------------
3,997,200
------------
Total Corporate Bonds
(Cost $37,655,800)................................... 37,303,592
------------
U.S. GOVERNMENT &
FEDERAL AGENCIES (47.2%)
FEDERAL HOME LOAN MORTGAGE CORPORATION GOLD
(COLLATERALIZED MORTGAGE OBLIGATIONS) (2.9%)
Series 1627 Class PZ
5.60%, due 8/15/17................................... 2,069,819 1,990,917
Series 1645 Class ZA
5.50%, due 4/15/05................................... 3,125,688 2,999,691
------------
4,990,608
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION GOLD (MORTGAGE
PASS- THROUGH SECURITY) (1.0%)
7.61%, due 5/24/06................................... 1,770,000 1,762,035
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-------------------------
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION (MORTGAGE
PASS- THROUGH SECURITIES) (5.6%)
7.85%, due 9/10/04.................................. $ 2,080,000 $ 2,110,409
8.50%, due 2/1/05................................... 7,380,000 7,712,543
------------
9,822,952
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (COLLATERALIZED
MORTGAGE OBLIGATIONS) (4.6%)
Series 1992-209 Class D 6.25%, due 12/25/02......... 4,210,000 4,204,064
Series 1993-118 Class A 6.50%, due 7/25/98.......... 1,167,783 1,168,145
Series 1996-30 Class PB 7.00%, due 1/1/00........... 2,643,000 2,657,880
------------
8,030,089
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (MORTGAGE
PASS- THROUGH SECURITY) (5.0%)
8.00%, due 7/1/26 TBA (c)........................... 8,725,000 8,806,841
------------
TENNESSEE VALLEY AUTHORITY (2.5%)
Power Board 1992 Series D 8.25%, due 4/15/42......... 2,030,000 2,165,990
Power Board 1993
7.25%, due 7/15/43.................................. 2,275,000 2,117,547
------------
4,283,537
------------
UNITED STATES TREASURY BONDS (17.3%)
6.25%, due 8/15/23.................................. 6,266,000 5,680,505
6.875%, due 8/15/25................................. 2,229,000 2,206,353
8.875%, due 8/15/17 (d)............................. 13,595,000 16,322,429
11.25%, due 2/15/15................................. 2,541,000 3,666,968
11.625%, due, 11/15/04.............................. 1,800,000 2,360,538
------------
30,236,793
------------
UNITED STATES TREASURY NOTES (8.3%)
5.625%, due 11/30/00................................ 2,641,000 2,558,046
6.375%, due 8/15/02................................. 1,650,000 1,636,849
7.875%, due 11/15/99................................ 7,176,000 7,495,547
7.875%, due 11/15/04................................ 45,000 48,368
8.125%, due 2/15/98................................. 2,702,000 2,786,438
------------
14,525,248
------------
Total U.S. Government & Federal Agencies
(Cost $82,606,224).................................. 82,458,103
------------
YANKEE BONDS (14.2%)
African Development Bank 8.80%, due 9/1/19........... 2,390,000 2,747,472
China International Trust & Investment Corp.
9.00%, due 10/15/06................................. 1,715,000 1,831,586
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
80
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
YANKEE BONDS (Continued)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
Grand Metropolitan Investment Corp.
7.45%, due 4/15/35.................................... $ 835,000 $ 862,864
Hydro-Quebec (Province of) Canada
8.05%, due 7/7/24..................................... 1,990,000 2,115,887
Korea Electric Power Corp. 6.375, due 12/1/03.......... 2,580,000 2,449,271
Korea Telecom
7.50%, due 6/1/06..................................... 2,925,000 2,931,991
Naples, City of
7.52%, due 7/15/06.................................... 1,750,000 1,794,485
Novia Scotia, (Province of) Canada
8.25%, due 11/15/19................................... 2,935,000 3,236,190
Republic of Columbia
7.25%, due 2/15/03.................................... 1,775,000 1,658,773
Santander Financial Issuances 7.75%, due 5/15/05....... 2,950,000 3,007,436
Wharf Capital International Ltd. 8.875%, due 11/1/04... 2,050,000 2,117,711
------------
Total Yankee Bonds (Cost $24,737,136).................. 24,753,666
------------
Total Long-Term Investments (Cost $176,358,023)........ 175,839,958
------------
SHORT-TERM
INVESTMENTS (5.0%)
COMMERCIAL PAPER (2.7%)
American Express Credit Corp. 5.326%, due 7/1/96....... 4,000,000 4,000,000
Travelers Group Inc.
5.432%, due 7/1/96.................................... 700,000 700,000
------------
Total Commercial Paper (Cost $4,700,000)............... 4,700,000
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
U.S. GOVERNMENT (2.3%)
United States Treasury Note 6.25%, due 8/31/96......... $ 4,000,000 $ 4,004,360
------------
Total U.S. Government (Cost $4,005,156)................ 4,004,360
------------
Total Short-Term Investments (Cost $8,705,156)......... 8,704,360
------------
Total Investments (Cost $185,063,179) (e).............. 105.6% 184,544,318 (f)
Liabilities in Excess of Cash and Other Assets......... (5.6) (9,763,583)
----------- ------------
Net Assets............................................. 100.0% $174,780,735
=========== ============
</TABLE>
- --------
(a) Floating rate. Rate shown is the rate in effect at June 30, 1996.
(b) May be sold to institutional investors only.
(c) 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.
(d) Segregated or partially segregated as collateral for TBAs.
(e) The cost for Federal income tax purposes is $185,136,010.
(f) At June 30, 1996 net unrealized depreciation was $591,692, 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 $869,353 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $1,461,045.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
81
<PAGE>
BOND FUND
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
As of June 30, 1996 (Unaudited) For the six months ended June 30,
1996 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$185,063,179).................................................. $184,544,318
Cash............................................................ 2,809
Receivables:
Investment securities sold...................................... 15,410,131
Interest........................................................ 2,650,386
Fund shares sold................................................ 7,267
Other assets.................................................... 520
------------
Total assets.................................................. 202,615,431
------------
LIABILITIES:
Payables:
Investment securities purchased................................. 27,602,334
Fund shares redeemed............................................ 85,093
Administrator................................................... 61,754
Adviser......................................................... 28,265
Custodian....................................................... 5,200
Transfer agent.................................................. 5,000
Directors....................................................... 3,325
Accrued expenses................................................ 43,725
------------
Total liabilities............................................. 27,834,696
------------
Net assets...................................................... $174,780,735
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized
Institutional Class............................................. $ 17,954
Institutional Service Class..................................... 123
Additional paid-in capital...................................... 185,664,177
Accumulated undistributed net investment income................. 5,368,865
Accumulated net realized loss on investments.................... (15,751,523)
Net unrealized depreciation on investments...................... (518,861)
------------
Net assets...................................................... $174,780,735
============
Institutional Class
Net assets applicable to outstanding shares..................... $173,590,335
============
Shares of capital stock outstanding............................. 17,953,960
============
Net asset value per share outstanding........................... $ 9.67
============
Institutional Service Class
Net assets applicable to outstanding shares..................... $ 1,190,400
============
Shares of capital stock outstanding............................. 123,491
============
Net asset value per share outstanding........................... $ 9.64
============
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest........................................................ $ 6,037,673
-----------
Expenses: (Note 2)
Administration (Note 3)......................................... 490,375
Advisory (Note 3)............................................... 178,318
Custodian....................................................... 18,248
Transfer agent.................................................. 15,376
Auditing........................................................ 14,475
Registration.................................................... 12,498
Legal........................................................... 11,555
Shareholder communication....................................... 11,361
Directors....................................................... 5,682
Service (Note 3)................................................ 1,257
Miscellaneous................................................... 10,321
-----------
Total expenses before
reimbursement................................................ 769,466
Expense reimbursement from Administrator (Note 3)............... (99,619)
-----------
Net expenses.................................................. 669,847
-----------
Net investment income........................................... 5,367,826
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments................................ (2,698,952)
Net change in unrealized appreciation on investments............ (6,163,329)
-----------
Net realized and unrealized loss on investments................. (8,862,281)
-----------
Net decrease in net assets resulting from operations............ $(3,494,455)
===========
</TABLE>
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.
BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996 (Unaudited) and the year ended December
31, 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
DECREASE IN NET ASSETS:
Operations:
Net investment income............................. $ 5,367,826 $ 12,547,360
Net realized gain (loss) on investments........... (2,698,952) 9,840,727
Net change in unrealized appreciation
(depreciation) on investments.................... (6,163,329) 8,872,585
------------ ------------
Net increase (decrease) in net assets resulting
from operations.................................. (3,494,455) 31,260,672
------------ ------------
Dividends to shareholders:
From net investment income:
Institutional Class.............................. -- (12,434,009)
Institutional Service Class...................... -- (47,550)
------------ ------------
Total dividends to shareholders................. -- (12,481,559)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class.............................. 7,677,429 13,089,512
Institutional Service Class...................... 557,641 776,469
Net asset value of shares issued to shareholders
in reinvestment of dividends:
Institutional Class.............................. -- 12,434,009
Institutional Service Class...................... -- 47,418
------------ ------------
8,235,070 26,347,408
Cost of shares redeemed:
Institutional Class.............................. (24,127,034) (53,765,148)
Institutional Service Class...................... (100,214) (64,150)
------------ ------------
Decrease in net assets derived from capital
share transactions.............................. (15,992,178) (27,481,890)
------------ ------------
Net decrease in net assets....................... (19,486,633) (8,702,777)
NET ASSETS:
Beginning of period............................... 194,267,368 202,970,145
------------ ------------
End of period..................................... $174,780,735 $194,267,368
============ ============
Accumulated undistributed net investment income... $ 5,368,865 $ 1,039
============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
83
<PAGE>
BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
CLASS SERVICE CLASS CLASS SERVICE CLASS INSTITUTIONAL CLASS
------------- ------------- ------------- ------------- -------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31 JANUARY 2, 1991(a)
ENDED --------------------------------------------------------- THROUGH
JUNE 30, 1996* 1995 1994 1993 1992 DECEMBER 31, 1991
--------------------------- --------------------------- -------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of
period........... $ 9.85 $ 9.83 $ 8.93 $ 8.93 $ 9.98 $ 11.08 $ 11.40 $ 10.00
-------- ------ -------- ------ -------- -------- -------- --------
Net investment
income........... 0.30 0.29 0.68 0.67 0.72 0.74 0.61 0.70
Net realized and
unrealized gain
(loss)
on investments... (0.48) (0.48) 0.92 0.90 (1.05) 0.26 0.05 0.70
-------- ------ -------- ------ -------- -------- -------- --------
Total from
investment
operations....... (0.18) (0.19) 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.... $ 9.67 $ 9.64 $ 9.85 $ 9.83 $ 8.93 $ 9.98 $ 11.08 $ 11.40
======== ====== ======== ====== ======== ======== ======== ========
Total investment
return (b)....... 4.38% 4.09% 17.88% 17.55% (3.31%) 9.74% 6.39% 14.00%
Ratios (to average
net assets)/
Supplemental Data:
Net investment
income.......... 6.02%+ 5.77%+ 6.62% 6.37% 7.13% 6.86% 6.02% 7.05%
Net expenses..... 0.75%+ 1.00%+ 0.75% 1.00% 0.75% 0.70% 0.70% 0.70%
Expenses (before
reimbursement).. 0.86%+ 1.11%+ 0.86% 1.11% 0.82% 0.84% 0.85% 0.90%
Portfolio turnover
rate............. 209% 209% 470% 470% 478% 567% 609% 301%
Net assets at end
of period (in
000's)........... $173,590 $1,190 $193,518 $ 749 $202,970 $219,834 $203,531 $186,253
</TABLE>
- --------
* Unaudited.
+ Annualized.
(a) Commencement of operations.
(b) Total return is not annualized.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
84
<PAGE>
INDEXED BOND FUND
================================================================================
Fund Highlights for the six months ended June 30, 1996
. One-year total returns of 4.31% and 3.94% for Institutional Class and Service
Class shares, respectively, as of 6/30/96
. For the six months ended 6/30/96, both share Classes outperformed the average
Lipper+ general U.S. Government fund
. The Fund tracked the Salomon Brothers Broad Investment Grade Index*
throughout the reporting period
For the six months ended June 30, 1996, the MainStay Institutional Indexed Bond
Fund returned -1.82% and-1.91% for Institutional Class and Service Class shares,
respectively. Even though returns were negative, both share classes outperformed
their peers, with the average Lipper general U.S. Government fund posting a
- -2.62% return over the same period.
Rising interest rates made the first six months of 1996 a challenging period for
fixed-income investors. The aggregate bond market, as represented by the Salomon
Brothers Broad Investment Grade (BIG) Index, fell 1.26% during the reporting
period. Most of the damage occurred in the first quarter, when the Index
declined 1.75%. In the second quarter, fixed-income prices generally fell, but
principal income brought the Salomon BIG Index's total return up 0.49% at the
end of the first half of the year.
For the first six months of 1996, the only sector of the Salomon BIG Index to
post a gain -- albeit a small one of just 0.30% -- was the mortgage sector.
Since mortgage securities tend to have a much lower duration than most other
sectors of the bond market, they tend to be less sensitive to interest rate
changes.
Investment-grade bonds have been battered by a continually strengthening
economy, which has driven inflation expectations and interest rates higher. Non-
investment-grade bonds, on the other hand, thrive under these conditions, as
credit risk becomes less threatening. The Lipper high current yield category,
for example, rose almost 5% in the first six months of 1996, while higher
quality corporate issues declined substantially. The high-grade corporate sector
of the Salomon BIG Index lost 4.7% during the reporting period. This contributed
to the Fund's negative performance in the first half since the Indexed Bond Fund
invests only in investment-grade bonds that are included in the Index. These
securities are typically less risky than high yield "junk" bonds, which tend to
experience much wider swings in returns.
James A. Mehling, CFA
Portfolio Manager
================================================================================
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.
+ 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.
85
<PAGE>
$10,000 INVESTED IN MAIN STAY INSTITUTIONAL
INDEXED BOND FUND VS SALOMON BROTHERS BIG INDEX
[LINE GRAPH APPEARS HERE]
Institutional Class Shares
- --------------------------------------------------------------------------------
INDEXED BOND FUND SALOMON BROTHERS BIG INDEX
1/2/91 $10,000 $10,000
1Q 1991 $10,220 $10,263
2Q 1991 $10,380 $10,448
3Q 1991 $10,930 $11,042
4Q 1991 $11,470 $11,597
1Q 1992 $11,334 $11,462
2Q 1992 $11,756 $11,927
3Q 1992 $12,262 $12,442
4Q 1992 $12,283 $12,477
1Q 1993 $12,788 $12,996
2Q 1993 $13,128 $13,355
3Q 1993 $13,491 $13,708
4Q 1993 $13,467 $13,711
1Q 1994 $13,066 $13,326
2Q 1994 $12,908 $13,197
3Q 1994 $12,956 $13,269
4Q 1994 $13,003 $13,320
1Q 1995 $13,637 $13,995
2Q 1995 $14,451 $14,853
3Q 1995 $14,723 $15,135
4Q 1995 $15,354 $15,782
1Q 1996 $15,032 $15,516
6/30/96 $15,074 $15,592
- --------------------------------------------------------------------------------
$10,000 INVESTED IN MAIN STAY INSTITUTIONAL
INDEXED BOND FUND VS SALOMON BROTHERS BIG INDEX
[LINE GRAPH APPEARS HERE]
Service Class Shares
- --------------------------------------------------------------------------------
INDEXED BOND FUND SALOMON BROTHERS BIG INDEX
1/2/91 $10,000 $10,000
1Q 1991 $10,220 $10,263
2Q 1991 $10,380 $10,448
3Q 1991 $10,930 $11,042
4Q 1991 $11,470 $11,597
1Q 1992 $11,334 $11,462
2Q 1992 $11,756 $11,927
3Q 1992 $12,262 $12,442
4Q 1992 $12,283 $12,477
1Q 1993 $12,788 $12,996
2Q 1993 $13,128 $13,355
3Q 1993 $13,491 $13,708
4Q 1993 $13,467 $13,711
1Q 1994 $13,066 $13,326
2Q 1994 $12,908 $13,197
3Q 1994 $12,956 $13,269
4Q 1994 $13,003 $13,320
1Q 1995 $13,663 $13,995
2Q 1995 $14,477 $14,853
3Q 1995 $14,723 $15,135
4Q 1995 $15,341 $15,782
1Q 1996 $15,020 $15,516
6/30/96 $15,047 $15,592
- --------------------------------------------------------------------------------
[_] Indexed Bond Fund [_] Salomon Brothers BIG Index
Source: (C) 1996 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 June 30, 1996 as of June 30, 1996
- ---------------------------------------------------------------------------------------------------------------
Year to Date One Year Five Year Since Inception
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Indexed Bond Fund Institutional Class -1.82% 4.31% 7.75% 7.75%
Indexed Bond Fund Service Class** -1.91% 3.94% 7.71% 7.71%
Average Lipper General U.S. Government Fund -2.62% 3.48% 7.13% 7.08%
Salomon Brothers BIG Bond Index -1.26% 4.98% 8.34% 8.41%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
[BAR CHART APPEARS HERE]
Institutional Class Shares
Total Return*
1991 14.70%
1992 7.09%
1993 9.64%
1994 (3.44%)
1995 18.07%
1996 (1.82%) (as of 6/30/96)
================================================================================
PORTFOLIO COMPOSITION
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
U.S. Government & Federal Agencies 87.80%
Domestic Bonds--Non-Convertible 14.86%
Other 2.03%
Foreign & Other Non-Convertible Bonds 1.98%
Adjusted for liabilities (6.67%)
TOP 10 HOLDINGS
(% of net assets as of June 30, 1996)
1. US Treasury Bill, 9.125%, 5/15/99 3.07%
2. US Treasury Note, 6.75%, 5/31/97 2.88%
3. US Treasury Note, 6.375%, 7/15/99 2.29%
4. US Treasury Note, 7.875%, 11/15/99 1.99%
5. US Treasury Note, 6.00%, 10/15/99 1.98%
6. US Treasury Notes, 7.00%, 4/15/99 1.94%
7. FNCI 15 Yr., 8.00%, 5/1/07 1.88%
8. FNCI 15 Yr., 7.00%, 12/1/07 1.88%
9. FNCI 15 Yr., 6.50%, 3/1/08 1.84%
10. US Treasury Note, 8.25%, 7/15/98 1.78%
TOP 5 INDUSTRY HOLDINGS
(% of net assets as of June 30, 1996)
1. U.S. Government & Federal Agencies 87.80%
2. Financial Services 12.77%
3. Electric Utilities 6.68%
4. Consumer Financial Services 3.43%
5. Banks 1.99%
Weighted Average Years to Maturity 8.58 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 Fund's 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.
86
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
LONG-TERM INVESTMENTS (97.5%)+
ASSET-BACKED SECURITIES (2.0%)
<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.................................... $ 148,877 $ 146,714
------------
CREDIT CARD RECEIVABLES (1.9%)
Chase Manhattan Credit Card Master Trust
Series 1992-1 Class A
7.40%, due 5/15/00................................... 1,000,000 1,009,000
Standard Credit Card Master Trust, Series 1993-3 Class
A
5.50%, due 2/7/00.................................... 1,000,000 978,000
------------
1,987,000
------------
Total Asset-Backed Securities
(Cost $2,207,806).................................... 2,133,714
------------
CORPORATE BONDS (14.9%)
AEROSPACE (0.9%)
Boeing Co.
6.35%, due 6/15/03................................... 1,000,000 971,250
------------
AUTOMOTIVE RENTALS (0.7%)
Hertz Corp.
7.00%, due 7/15/03................................... 700,000 690,375
------------
BANKS (1.0%)
First Union Corp.
8.77%, due 11/15/04.................................. 1,000,000 1,050,000
------------
COMPUTERS & OFFICE EQUIPMENT (0.5%)
Xerox Corp.
9.75%, due 3/15/00................................... 500,000 547,500
------------
CONSUMER FINANCIAL SERVICES (3.4%)
General Motors Acceptance Corp.
8.40%, due 10/15/99.................................. 500,000 523,750
Japan Financial Corp.
8.70%, due 7/30/01................................... 1,000,000 1,078,750
KFW International Finance Inc.
9.125%, due 5/15/01.................................. 500,000 546,875
Norwest Financial, Inc.
6.00%, due 2/1/04.................................... 1,000,000 935,000
Transamerica Finance Corp.
8.375%, due 2/15/98.................................. 500,000 513,750
------------
3,598,125
------------
FOOD, BEVERAGES & TOBACCO (1.5%)
Coca-Cola Enterprises
8.50%, due 2/1/22.................................... 500,000 548,125
Philip Morris Companies, Inc.
9.00%, due 1/1/01.................................... 500,000 538,750
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
FOOD, BEVERAGES & TOBACCO (Continued)
RJR Nabisco, Inc.
8.75%, due 4/15/04................................... $ 500,000 $ 500,000
------------
1,586,875
------------
MACHINERY (0.6%)
Caterpillar Inc.
9.00%, due 4/15/06................................... 500,000 561,875
------------
OIL & GAS (0.9%)
Texaco Capital, Inc.
9.75%, due 3/15/20................................... 750,000 930,000
------------
PAPER & FOREST PRODUCTS (1.1%)
Scott Paper Co.
7.00%, due 8/15/23................................... 1,250,000 1,160,937
------------
RAILROADS (0.5%)
CSX Corp.
8.625%, due 5/15/22.................................. 500,000 550,625
------------
RETAIL--GENERAL MERCHANDISE (0.4%)
Limited, Inc.
7.50%, due 3/15/23................................... 500,000 435,000
------------
UTILITIES--ELECTRIC (1.8%)
Niagara Mohawk Power Co.
7.375%, due 8/1/03................................... 500,000 444,375
Pennsylvania Power & Light Co.
7.30%, due 3/1/24.................................... 1,000,000 915,000
Texas Utility Electric Co.
8.25%, due 4/1/04.................................... 500,000 524,375
------------
1,883,750
------------
UTILITIES--TELEPHONE (1.6%)
Southwestern Bell Telephone Co.
7.625%, due 10/1/13.................................. 500,000 506,875
United Telecommunication, Inc.
9.50%, due 4/1/03.................................... 1,000,000 1,123,750
------------
1,630,625
------------
Total Corporate Bonds
(Cost $15,303,281)................................... 15,596,937
------------
FOREIGN GOVERNMENT (1.0%)
CANADA (1.0%)
Ontario Hydro
7.45%, due 3/31/13................................... 500,000 501,250
Quebec (Province of)
9.375%, due 4/1/99................................... 500,000 534,375
------------
Total Foreign Government
(Cost $1,016,776).................................... 1,035,625
------------
</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.
87
<PAGE>
INDEXED BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996 (Unaudited)
INTERNATIONAL CORPORATE BOND (1.0%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
BANK (1.0%)
International Bank For Reconstruction & Development
9.875%, due 10/1/97............................... $ 1,000,000 $ 1,042,500
------------
Total International
Corporate Bond
(Cost $1,068,125)................................. 1,042,500
------------
U.S. GOVERNMENT &
FEDERAL AGENCIES (78.6%)
FEDERAL HOME LOAN MORTGAGE CORPORATION (MORTGAGE PASS-THROUGH SECURITIES)
(8.4%)
6.50%, due 1/1/01 TBA (a)......................... 1,000,000 991,875
6.50%, due 1/1/11 TBA (a)......................... 1,000,000 967,500
6.50%, due 9/1/26 TBA (a)......................... 1,000,000 935,313
7.00%, due 9/1/03 TBA (a)......................... 1,000,000 997,188
7.00%, due 1/1/11 TBA (a)......................... 1,000,000 986,875
7.00%, due 1/1/26 TBA (a)......................... 1,000,000 962,500
7.50%, due 1/1/11 TBA (a)......................... 1,000,000 1,004,688
7.50%, due 1/1/26 TBA (a)......................... 1,000,000 987,500
8.00%, due 1/1/26 TBA (a)......................... 1,000,000 1,008,750
------------
8,842,189
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (MORTGAGE PASS-THROUGH SECURITIES)
(9.4%)
6.50%, due 1/1/11 TBA (a)......................... 2,000,000 1,933,750
6.50%, due 3/1/26 TBA (a)......................... 1,000,000 980,938
7.00%, due 1/1/11 TBA (a)......................... 2,000,000 1,973,750
7.00%, due 1/1/26 TBA (a)......................... 1,500,000 1,442,813
8.00%, due 1/1/11 TBA (a)......................... 2,000,000 2,040,626
8.00%, due 1/1/26 TBA (a)......................... 1,500,000 1,511,250
------------
9,883,127
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (MORTGAGE PASS-THROUGH SECURITIES)
(8.1%)
7.00%, due 5/1/11 TBA (a)......................... 1,000,000 990,000
7.00%, due 1/1/26 TBA (a)......................... 1,000,000 959,063
7.50%, due 5/1/11 TBA (a)......................... 1,000,000 1,007,813
7.50%, due 1/1/26 TBA (a)......................... 1,000,000 985,625
7.50%, due 1/1/26 TBA (a)......................... 1,000,000 985,625
8.00%, due 1/1/26 TBA (a)......................... 1,500,000 1,513,125
8.50%, due 1/1/26 TBA (a)......................... 1,000,000 1,028,438
8.50%, due 1/1/26 TBA (a)......................... 1,000,000 1,028,438
------------
8,498,127
------------
STUDENT LOAN MARKETING ASSOCIATION (0.2%)
(zero coupon), due 10/3/22........................ 1,300,000 192,270
------------
TENNESSEE VALLEY AUTHORITY (1.0%)
Power Board 1989 Series G
8.625%, due 11/15/29.............................. 1,000,000 1,066,250
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------------
<S> <C> <C>
UNITED STATES TREASURY BONDS (14.3%)
7.25%, due 5/15/16................................ $ 1,000,000 $ 1,024,780
7.50%, due 11/15/16............................... 800,000 840,680
8.00%, due 11/15/21............................... 1,300,000 1,445,639
8.125%, due 8/15/19-5/15/21 1,900,000 2,135,442
8.25%, due 5/15/05................................ 1,000,000 1,051,970
8.75%, due 5/15/17................................ 500,000 593,020
8.875%, due 2/15/19............................... 1,000,000 1,205,390
9.375%, due 2/15/06............................... 1,230,000 1,460,625
9.875%, due 11/15/15.............................. 600,000 781,734
10.375%, due 11/15/12............................. 1,000,000 1,269,980
12.75%, due 11/15/10.............................. 1,000,000 1,405,750
13.375%, due 8/15/01.............................. 1,400,000 1,817,508
------------
15,032,518
------------
UNITED STATES TREASURY NOTES (37.2%)
4.75%, due 2/15/97................................ 400,000 397,732
5.125%, due 2/28/98-12/31/98 3,000,000 2,945,440
5.25%, due 7/31/98................................ 1,000,000 983,160
5.375%, due 5/31/98............................... 1,000,000 986,830
5.50%, due 9/30/97................................ 750,000 746,363
5.75%, due 10/31/97............................... 500,000 498,940
5.875%, due 3/31/99............................... 1,000,000 990,290
6.00%, due 10/15/99............................... 2,100,000 2,079,462
6.25%, due 1/31/97-2/15/03........................ 4,000,000 3,961,638
6.375%, due 7/15/99-8/15/02....................... 4,100,000 4,091,107
6.75%, due 5/31/97................................ 3,000,000 3,025,950
7.00%, due 4/15/99................................ 2,000,000 2,036,040
7.125%, due 10/15/98.............................. 1,000,000 1,020,390
7.50%, due 11/15/01-5/15/02 3,400,000 3,555,603
7.875%, due 11/15/99.............................. 2,000,000 2,089,200
8.00%, due 1/15/97................................ 1,300,000 1,316,627
8.25%, due 7/15/98................................ 1,800,000 1,872,018
8.50%, due 5/15/97-2/15/20........................ 1,500,000 1,677,720
8.75%, due 10/15/97............................... 1,500,000 1,551,705
9.125%, due 5/15/99............................... 3,000,000 3,218,310
------------
39,044,525
------------
Total U.S. Government &
Federal Agencies
(Cost $82,256,381)................................ 82,559,006 (c)
------------
Total Long-Term Investments
(Cost $101,852,369)............................... 102,367,782
------------
SHORT-TERM
INVESTMENTS (26.8%)
COMMERCIAL PAPER (17.6%)
American Honda Finance Co.
5.33%, due 7/11/96................................ 4,000,000 3,994,076
Dic Americas, Inc.
5.36%, due 7/19/95................................ 710,000 708,097
Dynamic Funding Corp.
Series A
5.47%, due 8/5/96................................. 100,000 99,468
Empire District Electric Co.
5.45%, due 7/29/96................................ 5,000,000 4,978,805
5.45%, due 7/29/96................................ 150,000 149,364
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
88
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
SHORT-TERMINVESTMENTS (Continued)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
COMMERCIAL PAPER (Continued)
Minolta Corp.
5.40%, due 7/16/96............................... $ 1,350,000 $ 1,346,962
Mitsui & Co. (USA), Inc.
5.38%, due 8/2/96................................ 1,150,000 1,144,501
Sanwa Business Credit Corp.
5.35%, due 7/15/96............................... 4,400,000 4,390,844
Shinhan Bank
5.55%, due 7/15/96............................... 1,730,000 1,726,267
------------
Total Commercial Paper
(Cost $18,538,384)............................... 18,538,384
------------
U.S. GOVERNMENT &
FEDERAL AGENCY (9.2%)
Federal National Mortgage Association
5.311%, due 7/22/96 (b).......................... 2,400,000 2,391,569
United States Treasury Bills
5.125%, due 10/17/96 (b)......................... 7,350,000 7,233,061
------------
Total U.S. Government &
Federal Agency
(Cost $9,629,856)................................ 9,624,630
------------
Total Short-Term Investments
(Cost $28,168,240)............................... 28,163,014
------------
Total Investments
(Cost $130,020,609) (d).......................... 124.3% 130,530,796 (e)
Liabilities in Excess of
Cash and Other Assets............................ (24.3) (25,537,297)
----------- ------------
Net Assets........................................ 100.0% $104,993,499
=========== ============
</TABLE>
FUTURES CONTRACTS (0.0%) (f)
<TABLE>
<CAPTION>
CONTRACTS UNREALIZED
LONG APPRECIATION
-------------------------
<S> <C> <C>
United States Treasury Note
September 1996 (5 year).......................... 4 $ 6,085 (g)
United States Treasury Note
September 1996 (10 year)......................... 2 4,293 (g)
United States Treasury Bond
September 1996 (30 year)......................... 2 6,292 (g)
------------
Total Futures Contracts
(Settlement Value $857,063)...................... $ 16,670
============
</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 future 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 87.8% of net assets.
(d) The cost for Federal income tax purpose is $130,923,515.
(e) At June 30, 1996 net unrealized depreciation was $392,719, 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 $1,632,651 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $2,025,370.
(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 June 30, 1996.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
89
<PAGE>
INDEXED BOND FUND
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
As of June 30, 1996 (Unaudited) For the six months ended June 30,
1996 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$130,020,609).................................................. $130,530,796
Cash............................................................ 80,430
Receivables:
Interest........................................................ 1,378,805
Fund shares sold................................................ 11,246
Other assets.................................................... 439
Variation margin receivable on futures contracts................ 10,000
------------
Total assets.................................................. 132,011,716
------------
LIABILITIES:
Payables:
Investment securities purchased................................. 26,940,859
Administrator................................................... 18,949
Adviser......................................................... 8,489
Custodian....................................................... 6,242
Transfer agent.................................................. 4,036
Fund shares redeemed............................................ 3,153
Directors....................................................... 2,694
Accrued expenses................................................ 33,795
------------
Total liabilities............................................. 27,018,217
------------
Net assets...................................................... $104,993,499
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized
Institutional Class............................................. $ 9,493
Institutional Service Class..................................... 234
Additional paid-in capital...................................... 101,910,841
Accumulated undistributed net investment income................. 4,151,167
Accumulated net realized loss on investments.................... (1,605,093)
Net unrealized appreciation on investments...................... 526,857
------------
Net assets...................................................... $104,993,499
============
Institutional Class
Net assets applicable to outstanding shares..................... $102,474,939
============
Shares of capital stock outstanding............................. 9,493,057
============
Net asset value per share outstanding........................... $ 10.79
============
Institutional Service Class
Net assets applicable to outstanding shares..................... $ 2,518,560
============
Shares of capital stock outstanding............................. 233,539
============
Net asset value per share outstanding........................... $ 10.78
============
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest........................................................ $ 4,562,516
------------
Expenses: (Note 2)
Administration (Note 3)......................................... 276,069
Advisory (Note 3)............................................... 69,017
Custodian....................................................... 17,583
Registration.................................................... 14,850
Transfer agent.................................................. 13,912
Auditing........................................................ 12,678
Shareholder communication....................................... 9,366
Legal........................................................... 9,308
Directors....................................................... 4,747
Service (Note 3)................................................ 2,408
Miscellaneous................................................... 14,196
------------
Total expenses before
reimbursement................................................ 444,134
Expense reimbursement from Administrator (Note 3)............... (96,640)
------------
Net expenses.................................................. 347,494
------------
Net investment income........................................... 4,215,022
------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss from:
Security transactions........................................... (215,013)
Futures transactions............................................ (123,551)
------------
Net realized loss on investments................................ (338,564)
------------
Net change in unrealized appreciation on investments:
Security transactions........................................... (6,558,645)
Futures transactions............................................ (40,627)
------------
Net unrealized loss on investments.............................. (6,599,272)
------------
Net realized and unrealized loss on investments................. (6,937,836)
------------
Net decrease in net assets resulting from operations............ $ (2,722,814)
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
90
<PAGE>
MAINSTAY INSTITUTIONAL
FUNDS INC.
INDEXED BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996 (Unaudited) and the year ended December
31, 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
DECREASE IN NET ASSETS:
Operations:
Net investment income............................. $ 4,215,022 $ 10,722,057
Net realized gain (loss) on investments........... (338,564) 4,130,729
Net change in unrealized appreciation (deprecia-
tion) on investments............................. (6,599,272) 13,058,011
------------ ------------
Net increase (decrease) in net assets resulting
from operations.................................. (2,722,814) 27,910,797
------------ ------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class.............................. -- (11,220,560)
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)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class.............................. 17,514,980 20,545,438
Institutional Service Class...................... 2,199,902 451,329
Net asset value of shares issued to shareholders
in reinvestment of dividends and distributions:
Institutional Class.............................. -- 12,122,750
Institutional Service Class...................... -- 31,130
------------ ------------
19,714,882 33,150,647
Cost of shares redeemed:
Institutional Class.............................. (75,573,028) (54,548,971)
Institutional Service Class...................... (115,482) (1,915)
------------ ------------
Decrease in net assets derived from capital
share transactions.............................. (55,973,628) (21,400,239)
------------ ------------
Net decrease in net assets....................... (58,696,442) (5,714,510)
NET ASSETS:
Beginning of period............................... 163,689,941 169,404,451
------------ ------------
End of period..................................... $104,993,499 $163,689,941
============ ============
Accumulated undistributed net investment
income/(excess distribution)..................... $ 4,151,167 $ (63,855)
============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
91
<PAGE>
INDEXED BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS INSTITUTIONAL CLASS
------------- ------------- ------------- ------------- -------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31 JANUARY 2, 1991(a)
ENDED --------------------------------------------------------- THROUGH
JUNE 30, 1996* 1995 1994 1993 1992 DECEMBER 31, 1991
--------------------------- --------------------------- -------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of
period........... $ 10.99 $10.99 $ 10.06 $10.06 $ 11.08 $ 11.65 $ 11.47 $ 10.00
-------- ------ -------- ------ -------- -------- -------- --------
Net investment
income........... 0.43 0.42 0.82 0.81 0.65 0.67 0.79 0.56
Net realized and
unrealized gain
(loss) on
investments...... (0.63) (0.63) 1.00 1.00 (1.03) 0.38 (0.02) 0.91
-------- ------ -------- ------ -------- -------- -------- --------
Total from
investment
operations....... (0.20) (0.21) 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.... $ 10.79 $10.78 $ 10.99 $10.99 $ 10.06 $ 11.08 $ 11.65 $ 11.47
======== ====== ======== ====== ======== ======== ======== ========
Total investment
return (b)....... 4.31% 3.94% 18.07% 17.97% (3.44%) 9.64% 7.09% 14.70%
Ratios (to average
net assets)/
Supplemental
Data:
Net investment
income.......... 6.11%+ 5.86%+ 6.38% 6.13% 6.13% 6.19% 7.30% 7.80%
Net expenses..... 0.50%+ 0.75%+ 0.50% 0.75% 0.50% 0.45% 0.45% 0.45%
Expenses (before
reimbursement).. 0.64%+ 0.89%+ 0.63% 0.88% 0.61% 0.61% 0.61% 0.73%
Portfolio turnover
rate............. 168% 168% 284% 284% 274% 213% 78% 34%
Net assets at end
of period (in
000's)........... $102,475 $2,518 $163,219 $ 471 $169,404 $159,792 $125,003 $109,744
</TABLE>
- --------
* Unaudited.
+ Annualized.
(a) Commencement of operations.
(b) Total return is not annualized.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
92
<PAGE>
International Bond Fund
================================================================================
Fund Highlights for the six months ended June 30, 1996
. One-year total returns of 11.77% and 11.40% for Institutional Class and
Service Class shares, respectively, as of 6/30/96
. Outperformed the average Lipper* general world income fund for the six-month
and one-year periods ended 6/30/96
. Favorable results from country allocation, currency management, and maturity
exposure
For the six-month period ended June 30, 1996, the MainStay Institutional
International Bond Fund provided total returns of 5.02% and 4.85% for
Institutional Class and Service Class shares, respectively. These results placed
both of the Fund's share Classes well ahead of the average Lipper general world
income fund, which returned only 1.69%. The Fund also outpaced the Salomon
Brothers Non-U.S. Dollar World Government Bond Index,+ which returned -1.30%
over the reporting period.
Our strong performance in the first half of the year resulted from a combination
of factors, including fruitful decisions on country allocation, currency
management, and maturity selection. Regarding country allocation, our best
decision was to emphasize European bonds, particularly in peripheral European
markets such as Sweden and Italy which were up 6.5% and 10.2% respectively, both
in local terms. We also limited our exposure to one of the worst-performing bond
markets, Japan, which returned less than 1% over the same period.
Latin America and other emerging markets were strong performers in the second
quarter. As of June 30, 1996, the Fund's portfolio did not include any
investments in emerging markets. Given the instability and volatility of
emerging markets, we prefer to forego profits on occasion rather than expose
investors to undue risk. The Fund also uses strict liquidity and diversification
disciplines to help manage risks the portfolio may encounter.
On the currency management front, the Fund benefited from our decision to
selectively hedge against foreign currency declines, as several currencies
continued to drop against the U.S. dollar. Out of our universe of 14 bond
markets, only four (Italy, U.K., Sweden, and Australia) were associated with
rising currencies against the U.S. dollar. Fortunately, the Australian dollar
was up 5.0%, and since we decided not to hedge our Australian bond holdings, the
Fund captured the gains. In the second quarter, the Fund wisely moderated
hedging activity in the Italian lira, U.K. pound, and Swedish krona, allowing us
to capture most of the gains in those currencies. By actively hedging other
European currencies, however, we avoided significant currency losses in bonds in
core European countries.
Maturity management benefited the portfolio in the first quarter, when we
emphasized short- and intermediate-term securities, while many markets
experienced vicious sell-offs in longer-maturity bonds. Our strategy provided
opportunities to purchase longer-maturity bonds at attractive prices during the
second quarter. These longer positions brought us to a neutral duration, which
helped the portfolio as we entered the third quarter.
Looking ahead, the Fund continues to favor high yielding European bond markets,
such as Italy, Spain, and Sweden at the expense of markets with low yields, such
as Japan and Switzerland. Recently, the Fund has been purchasing bonds in the
U.K., where yields have finally risen to attractive levels. Since we anticipate
continued appreciation in the U.S. dollar, we are seeking to help protect the
portfolio against further declines in foreign currencies.
Michael Perelstein
Portfolio Manager
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.
* 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-U.S. Dollar World Government Bond Index is an
unmanaged index generally considered representative of the world bond market.
Liquidity The ability of a security to be readily traded or exchanged for cash.
Generally speaking, the larger the capitalization of an issuer, the more liquid
its securities are likely to be.
International Diversification Purchasing securities in several international
markets, which may react differently to economic, monetary, and market trends.
This diversification may provide opportunities for investors to pursue higher
returns while seeking to manage the risks of domestic investments.
Currency management/hedging The process of managing or "hedging" the risks
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.
Maturity management Purchasing securities of selected maturities to shorten or
lengthen the duration of a portfolio. Duration is a measure of average maturity,
which adjusts for the time value of the payments investors will receive and
which takes into account interest payments as well as principal payments.
93
<PAGE>
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
INTERNATIONAL BOND FUND vs SALOMON BROTHERS
NON-U.S. DOLLAR WORLD GOVERNMENT BOND INDEX
INSTITUTIONAL CLASS SHARES
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Solomon Bros
Intl. Bond Fund Non-US World Gov't Bond Index
1/1/95 $10,000 $10,000
1Q 1995 $10,790 $11,444
2Q 1995 $11,130 $12,003
3Q 1995 $11,270 $11,712
4Q 1995 $11,846 $11,955
1Q 1996 $12,048 $11,753
6/30/96 $12,440 $11,800
- --------------------------------------------------------------------------------
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
INTERNATIONAL BOND FUND vs SALOMON BROTHERS
NON-U.S. DOLLAR WORLD GOVERNMENT BOND INDEX
SERVICE CLASS SHARES
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Solomon Bros
Intl. Bond Fund Non-US World Gov't Bond Index
1/1/95 $10,000 $10,000
1Q 1995 $10,790 $11,444
2Q 1995 $11,130 $12,003
3Q 1995 $11,260 $11,712
4Q 1995 $11,826 $11,955
1Q 1996 $12,023 $11,753
6/30/96 $12,399 $11,800
- --------------------------------------------------------------------------------
. International Bond Fund . Salomon Brothers Non-U.S. Dollar World Gov't Bond
Index
Source: (C) 1996 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 June 30, 1996 as of June 30, 1996
- -----------------------------------------------------------------------------------------------------------------------------
Year to Date One Year Five Year Since Inception
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
International Bond Fund Institutional Class 5.02% 11.77% N/A 15.66%
International Bond Fund Service Class 4.85% 11.40% N/A 15.40%
Average Lipper General World Income Fund 1.69% 8.67% 8.27% 12.95%
Salomon Brothers Non-U.S. Dollar World Gov't Bond Index -1.30% -1.70% 13.02% 11.66%
</TABLE>
================================================================================
PORTFOLIO COMPOSITION
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Foreign & Other Non-Convertible Bonds 87.87%
Cash & Fixed Income (maturities [less than or equal to] 1 year) 12.13%
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
1. Buoni Poliennali del Tesoro, 8.50%, 1/1/04, Italy 3.57%
2. UK Treasury, 8.50%, 7/16/07, United Kingdom 3.35%
3. Buoni Poliennali del Tesoro, 8.50%, 4/1/99, Italy 3.07%
4. Republic of Deutschland, 7.50%, 11/11/04, Germany 3.02%
5. Province of Ontario, 7.25%, 9/27/05, Canada 2.81%
6. Kingdom of Denmark, 9.00%, 11/15/98, Denmark 2.69%
7. Autobahn Schnell, 6.00%, 3/11/00, Japan 2.47%
8. UK Treasury, 10.00%, 9/8/03, United Kingdom 2.35%
9. Buoni Poliennali del Tesoro, 8.50%, 8/1/97, Italy 2.32%
10. Kingdom of Denmark, 7.00%, 12/15/04, Denmark 2.25%
- --------------------------------------------------------------------------------
TOP 5 COUNTRIES
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
1. Italy 13.39%
2. Germany 12.56%
3. Canada 9.73%
4. France 7.88%
5. United Kingdom 7.71%
Average Weighted Effective Maturity 6.86 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, 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%.
The inception date of the International Bond Fund and the date such shares
were first offered to the public was 1/1/95.
94
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
LONG-TERM GOVERNMENT BONDS (87.9%)+
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
AUSTRALIA (7.0%)
Australian Government
Series 302
9.75%, due 3/15/02................................... A$ 745,000 $ 612,336
Series 1101
12.00%, due 11/15/01................................. 765,000 688,123
New South Wales Treasury Corp.
Series 6
6.50%, due 5/1/06.................................... 1,540,000 1,008,341
Series Euro
7.50%, due 2/1/98.................................... 800,000 624,956
Queensland Treasury Corp. Series 7
8.00%, due 9/14/07................................... 390,000 283,178
------------
3,216,934
------------
AUSTRIA (3.7%)
Republic of Austria
Series 3
5.75%, due 3/22/99................................... AS5,500,000 525,747
Series 93-1
7.00%, due 1/20/03................................... 4,850,000 470,858
Series 95-1
7.50%, due 1/24/05................................... 7,120,000 703,534
------------
1,700,139
------------
CANADA (9.7%)
Canadian Government Series A76
9.00%, due 6/1/25.................................... C$ 280,000 224,737
9.75%, due 6/1/01.................................... 1,160,000 944,042
Series H74
10.00%, due 6/1/08................................... 210,000 179,510
Series A33
11.50%, due 9/1/00................................... 880,000 750,812
Province of British Columbia
Series BCCD
8.00%, due 8/23/05................................... 1,225,000 914,342
Series EC-8
10.75%, due 2/19/01.................................. 215,000 177,894
Province of Ontario
7.25%, due 9/27/05................................... 1,860,000 1,292,990
------------
4,484,327
------------
DENMARK (7.5%)
Kingdom of Denmark
7.00%, due 12/15/04.................................. DK6,150,000 1,037,529
7.00%, due 11/10/24.................................. 1,850,000 271,887
8.00%, due 11/15/01.................................. 3,910,000 712,296
9.00%, due 11/15/98.................................. 6,710,000 1,241,027
9.00%, due 11/15/00.................................. 1,055,000 199,207
------------
3,461,946
------------
</TABLE>
- --------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------------
<S> <C> <C>
FRANCE (7.9%)
France Bons du Tresor Negociables
5.75%, due 11/12/98............................. FF 1,500,000 $ 297,722
France Obligations Assimilables du Tresor
6.00%, due 10/25/25............................. 900,000 146,064
7.50%, due 4/25/05.............................. 3,960,000 824,679
8.25%, due 2/27/04.............................. 2,480,000 536,987
8.50%, due 3/28/00.............................. 3,000,000 644,745
8.50%, due 11/25/02............................. 4,200,000 923,446
8.50%, due 10/25/08............................. 850,000 190,917
8.50%, due 12/26/12............................. 300,000 67,243
------------
3,631,803
------------
GERMANY (12.6%)
Bundesobligation
Series 97
8.50%, due 9/20/96.............................. DM 1,550,000 1,029,098
German Unity Fund
8.50%, due 2/20/01.............................. 1,050,000 770,803
International Bank of Reconstruction &
Development
7.125%, due 4/12/05............................. 400,000 272,248
Republic of Deutschland
6.25%, due 1/4/24............................... 1,000,000 577,805
7.375%, due 1/3/05.............................. 255,000 176,993
7.50%, due 11/11/04............................. 1,990,000 1,392,872
Treuhand-Obligationen
6.125%, due 6/25/98............................. 940,000 639,537
Treuhandanstalt
6.50%, due 4/23/03.............................. 470,000 313,840
7.50%, due 9/9/04............................... 875,000 612,386
------------
5,785,582
------------
IRELAND (3.3%)
Irish Government
6.25%, due 4/1/99............................... IP 179,000 285,108
8.25%, due 8/18/15.............................. 111,000 185,488
8.75%, due 7/27/97.............................. 179,000 295,331
8.75%, due 9/30/12.............................. 179,000 313,704
9.25%, due 7/11/03.............................. 258,000 458,544
------------
1,538,175
------------
ITALY (13.4%)
Buoni Poliennali del Tesoro
8.50%, due 8/1/97............................... IL1,640,000,000 1,068,739
8.50%, due 4/1/99............................... 2,155,000,000 1,414,197
8.50%, due 1/1/04............................... 2,590,000,000 1,643,925
9.00%, due 11/1/23.............................. 400,000,000 247,448
9.50%, due 2/1/01............................... 1,425,000,000 958,184
10.00%, due 8/1/03.............................. 1,220,000,000 834,016
------------
6,166,509
------------
JAPAN (2.5%)
Autobahn Schnell
6.00%, due 3/11/00.............................. (Yen)110,000,000 1,138,548
------------
</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.
95
<PAGE>
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996 (Unaudited)
LONG-TERM GOVERNMENT BONDS (Continued)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------------------------------
<S> <C> <C>
SPAIN (5.6%)
Spanish Government
9.00%, due 2/28/97........................... SP 43,720,000 $ 345,279
10.50%, due 10/30/03......................... 120,060,000 1,030,357
11.30%, due 1/15/02.......................... 50,270,000 442,552
12.25%, due 3/25/00.......................... 83,500,000 738,249
------------
2,556,437
------------
SWEDEN (7.0%)
Banque Nationale de Paris
Series EMTN
11.00%, due 11/4/99.......................... SK 6,050,000 1,002,909
Swedish Government
Series 1035
6.00%, due 2/9/05............................ 100,000 13,063
Series 1034
9.00%, due 4/20/09........................... 4,900,000 771,397
Series 1033
10.25%, due 5/5/03........................... 5,000,000 844,438
Series 1020
10.75%, due 1/23/97.......................... 1,600,000 247,096
Series 1030
13.00%, due 6/15/01.......................... 2,000,000 368,549
------------
3,247,452
------------
UNITED KINGDOM (7.7%)
United Kingdom Treasury Bonds
8.50%, due 7/16/07........................... (Pounds)965,000 1,545,338
9.75%, due 8/27/02........................... 220,000 378,263
10.00%, due 2/26/01.......................... 320,000 548,025
10.00%, due 9/8/03........................... 620,000 1,081,970
------------
3,553,596
------------
Total Long-Term Government Bonds
(Cost $38,888,255)........................... 40,481,448
------------
SHORT-TERM
INVESTMENT (0.2%)
COMMERCIAL PAPER (0.2%)
UNITED STATES (0.2%)
A.I. Credit Corp.
5.47%, due 7/1/96............................ $ 120,000 120,000
------------
Total Short-Term Investment
(Cost $120,000).............................. 120,000
------------
Total Investments
(Cost $39,008,255) (a)....................... 88.1% 40,601,448 (b)
Cash and Other Assets, Less Liabilities....... 11.9 5,467,652
--------------- ------------
Net Assets.................................... 100.0% $ 46,069,100
=============== ============
</TABLE>
- --------
(a) The cost for Federal income tax purposes is $39,039,087.
(b) At June 30, 1996 net unrealized appreciation for securities was
$1,562,361, 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 $2,062,777 and aggregate
gross unrealized depreciation for all investments on which there was an
excess of cost over market value of $500,416.
(c) Forward Foreign Currency Contracts Open at June 30, 1996:
<TABLE>
<CAPTION>
GROSS
CONTRACT IN DELIVERY UNREALIZED
TO DELIVER EXCHANGE FOR DATE APPRECIATION
- ----------------- ----------------- -------- ------------
<S> <C> <C> <C>
A$ 393,500 DM 475,112 8/22/96 $ 4,455
A$ 2,095,000 $ 1,650,441 8/28/96 7,368
DM 5,305,449 (Pounds)2,321,695 7/2/96 121,151
DM 30,421 (Pounds) 13,200 7/2/96 520
DM 21,170,000 $ 14,856,140 7/5/96 942,878
DM 1,238,883 FF 4,200,000 8/2/96 1,515
DM 3,350,000 $ 2,272,265 8/5/96 66,461
DM 3,480,000 $ 2,404,976 8/20/96 111,367
DM 5,480,000 $ 3,754,325 9/23/96 135,157
DM 5,545,000 $ 3,731,494 10/18/96 63,438
DM 1,735,000 $ 1,159,759 12/20/96 7,280
FF 3,850,000 DM 1,138,750 8/2/96 657
IP 945,000 (Pounds) 975,996 7/2/96 6,783
(Yen) 238,400,000 $ 2,368,978 7/2/96 194,293
(Pounds) 970,515 IP 945,000 7/2/96 1,734
$ 1,123,632 A$ 1,445,000 7/2/96 13,465
$ 464,037 FF 2,400,000 8/2/96 2,878
----------
1,681,400
----------
<CAPTION>
GROSS
CONTRACT IN DELIVERY UNREALIZED
TO DELIVER EXCHANGE FOR DATE DEPRECIATION
- ----------------- ----------------- -------- ------------
<S> <C> <C> <C>
C$ 325,000 $ 237,834 9/16/96 546
DK 14,150,000 DM 3,661,819 8/9/96 5,123
DM 95,000 SP 7,980,000 7/22/96 342
DM 912,000 $ 600,000 9/23/96 2,314
DM 900,000 $ 594,059 10/18/96 1,297
DM 3,170,000 $ 2,092,824 11/4/96 6,487
IP 945,000 (Pounds) 971,555 10/2/96 2,030
IL 1,570,000,000 DM 1,476,535 7/23/96 50,634
(Pounds)2,321,695 DM 5,345,178 7/2/96 95,046
(Pounds) 13,200 DM 31,152 7/2/96 40
(Pounds) 779,000 DM 1,828,313 10/2/96 1,681
SP 109,400,000 DM 1,291,617 7/22/96 2,391
SK 3,280,000 DM 728,597 7/24/96 14,751
$ 2,272,316 (Yen) 238,400,000 7/2/96 97,631
$ 3,060,000 DM 4,478,157 7/5/96 116,883
$ 3,835,000 DM 5,614,440 8/5/96 138,178
----------
535,374
----------
Net Appreciation........................................ $1,146,026
==========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
96
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
(d) Foreign cash held at June 30, 1996:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
- ---------------- ---------- ----------
<S> <C> <C>
A$ 284,358 $ 224,729 $ 223,818
AS 2,660,841 264,987 248,381
C$ 318,184 233,902 232,982
DK 327,194 55,744 55,783
DM 751,584 490,227 493,748
FF 672,979 129,027 130,719
IP 39,802 62,861 63,583
IL 1,475,024,277 951,391 961,716
(Pounds) 1 2 2
SP 787 6 6
SK 1,747,058 257,011 263,282
---------- ----------
$2,669,887 $2,674,020
========== ==========
</TABLE>
(e) The following abbreviations are used throughout the portfolio:
A$--Australian Dollar
AS--Austrian Schilling
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.
97
<PAGE>
INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
As of June 30, 1996 (Unaudited) For the six months ended June 30,
1996 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$39,008,255).................................................... $40,601,448
Cash denominated in foreign currencies (identified cost
$2,669,887)..................................................... 2,674,020
Cash............................................................. 392
Receivables:
Investment securities sold....................................... 1,355,450
Interest......................................................... 450,165
Fund shares sold................................................. 479
Unrealized appreciation on foreign currency contracts............ 1,681,400
Unamortized organization expense
(Note 2)........................................................ 42,719
Other assets..................................................... 60
-----------
Total assets................................................... 46,806,133
-----------
LIABILITIES:
Payables:
Investment securities purchased.................................. 119,945
Organization..................................................... 41,402
Administrator.................................................... 13,754
Adviser.......................................................... 11,249
Directors........................................................ 822
Transfer agent................................................... 405
Custodian........................................................ 315
Accrued expenses................................................. 13,767
Unrealized depreciation on foreign currency contracts............ 535,374
-----------
Total liabilities.............................................. 737,033
-----------
Net assets....................................................... $46,069,100
===========
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized Institutional Class.................................. $ 3,917
Institutional Service Class...................................... 14
Additional paid-in capital....................................... 39,583,119
Accumulated undistributed net investment income.................. 1,999,858
Accumulated undistributed net realized gain on investments....... 836,084
Accumulated undistributed net realized gain on foreign currency
transactions.................................................... 907,957
Net unrealized appreciation on investments....................... 1,593,193
Net unrealized appreciation on translation of assets and
liabilities in foreign currencies............................... 1,144,958
-----------
Net assets....................................................... $46,069,100
===========
Institutional Class
Net assets applicable to outstanding shares...................... $45,899,821
===========
Shares of capital stock outstanding.............................. 3,916,544
===========
Net asset value per share outstanding............................ $ 11.72
===========
Institutional Service Class
Net assets applicable to outstanding shares...................... $ 169,279
===========
Shares of capital stock outstanding.............................. 14,489
===========
Net asset value per share outstanding............................ $ 11.68
===========
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest (a)..................................................... $ 1,588,547
----------
Expenses: (Note 2)
Administration (Note 3).......................................... 112,929
Advisory (Note 3)................................................ 67,757
Registration..................................................... 12,687
Transfer agent................................................... 9,274
Custodian........................................................ 7,850
Auditing......................................................... 7,320
Amortization of organization expense............................. 6,083
Legal............................................................ 2,890
Shareholder communication........................................ 2,033
Directors........................................................ 1,166
Service (Note 3)................................................. 134
Miscellaneous.................................................... 4,876
----------
Total expenses before
reimbursement................................................. 234,999
Expense reimbursement from Administrator (Note 3)................ (20,302)
----------
Net expenses................................................... 214,697
----------
Net investment income............................................ 1,373,850
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain from:
Security transactions............................................ 549,036
Foreign currency transactions.................................... 837,884
----------
Net realized gain on investments and foreign currency
transactions.................................................... 1,386,920
----------
Net change in unrealized appreciation (depreciation) on
investments:
Security transactions............................................ (1,691,933)
Translation of assets and liabilities in foreign currencies...... 1,163,673
----------
Net unrealized loss on investments and
foreign currencies.............................................. (528,260)
----------
Net realized and unrealized gain on investments and foreign
currency transactions........................................... 858,660
----------
Net increase in net assets resulting from operations............. $2,232,510
==========
</TABLE>
- --------
(a) Interest recorded net of foreign withholding taxes of $29,395.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
98
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996 (Unaudited) and the period January 1,
1995 (Commencement of operations) through December 31, 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income............................... $ 1,373,850 $ 2,683,099
Net realized gain on investments.................... 549,036 781,828
Net realized gain on foreign currency transac-
tions.............................................. 837,884 89,561
Net change in unrealized appreciation on invest-
ments.............................................. (1,691,933) 3,285,126
Net change in unrealized appreciation (deprecia-
tion) on translation of assets and liabilities in
foreign currencies................................. 1,163,673 (18,715)
----------- -----------
Net increase in net assets resulting from opera-
tions.............................................. 2,232,510 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 sharehold-
ers............................................. -- (2,571,359)
----------- -----------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................ 82,673 895,688
Institutional Service Class........................ 163,526 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
----------- -----------
246,199 3,472,797
Cost of shares redeemed:
Institutional Class................................ (798,378) --
Institutional Service Class........................ (5,567) (38)
----------- -----------
Increase (decrease) in net assets derived from
capital share transactions........................ (557,746) 3,472,759
----------- -----------
Net increase in net assets......................... 1,674,764 7,722,299
NET ASSETS:
Beginning of period................................. 44,394,336 36,672,037
----------- -----------
End of period....................................... $46,069,100 $44,394,336
=========== ===========
Accumulated undistributed net investment income..... $ 1,999,858 $ 626,008
=========== ===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
99
<PAGE>
INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
SIX MONTHS JANUARY 1, 1995(a)
ENDED THROUGH
JUNE 30, 1996* DECEMBER 31, 1995
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
Net asset value at
beginning of period.... $ 11.16 $ 11.14 $ 10.00 $ 10.00
------- ------- ------- -------
Net investment income... 0.35 0.35 0.70 0.70
Net realized and
unrealized gain (loss)
on investments......... (0.28) (0.25) 1.12 1.10
Net realized and
unrealized gain on
foreign currency
transactions........... 0.49 0.44 0.02 0.02
------- ------- ------- -------
Total from investment
operations............. 0.56 0.54 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.............. $ 11.72 $ 11.68 $ 11.16 $ 11.14
======= ======= ======= =======
Total investment return
(b).................... 5.02% 4.85% 18.46% 18.26%
Ratios (to average net
assets)/Supplemental
Data:
Net investment income.. 6.08%+ 5.83%+ 6.61% 6.36%
Net expenses........... 0.95%+ 1.20%+ 0.95% 1.20%
Expenses (before
reimbursement)........ 1.04%+ 1.29%+ 1.03% 1.28%
Portfolio turnover
rate................... 44% 44% 92% 92%
Net assets at end of
period (in 000's)...... $45,900 $ 169 $44,388 $ 6
</TABLE>
- --------
* Unaudited.
+ Annualized.
(a) Commencement of operations.
(b) Total return is not annualized.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
100
<PAGE>
MONEY MARKET FUND
================================================================================
Fund Highlights for the six-months ended June 30, 1996
. One-year total returns of 5.28% and 5.02% for Institutional Class and Service
Class shares, respectively, as of 6/30/96
. Six-month performance lagged the Lipper+ institutional money market fund
average
The MainStay Institutional Money Market Fund provided total returns of 2.49% and
2.37% for Institutional Class and Service Class shares, respectively, for the
six-month period ended June 30, 1996. This compared with a 2.54% return for the
average Lipper institutional money market fund over the same period.
The first six months of the year proved to be very interesting for fixed-income
investors. During January, the Federal Reserve Board lowered its targeted
federal funds overnight lending rate by 25 basis points, based on a moderating
economic expansion and reduced inflationary pressures. By March, however, the
release of an exceptionally strong February employment report led some market
participants to believe they had underestimated the strength of the economy, and
some investor sentiment turned from bullish (expecting lower rates) to bearish
(expecting higher ones).
We believe this change in sentiment can best be seen by money market investors
in the 3-month and 1-year Treasury bill. At year-end 1995, these two instruments
had yields of 5.08% and 5.14%, respectively. Before the release of February
numbers the yields dropped below 5.00%. By the end of June, these rates rose to
5.16% and 5.68%, respectively. Yields continuously fluctuated throughout the
first half of the year, as the Federal Reserve, as well as investors, kept a
sharp eye on all economic news. Many investors believed the Federal Reserve
Board would raise interest rates, but the Fed tightening never occurred.
In response to the market's interest-rate volatility, we shortened our average
maturity steadily throughout the six month period. The Fund's average maturity
was 55 days at the beginning of the year, 47 days at the end of the first
quarter, and 39 days at the end of the second quarter. Our target at the
beginning of the third quarter was 35 to 45 days, which is neutral, with a bias
toward Fed tightening.
In addition to duration management, we also continued to comb the money market
subsectors for attractive opportunities. We found value in both bankers'
acceptances and loan participations. We also saw value in the short corporate
subsectors, however, additions of these to the portfolio have been light because
of a lack of supply.
For the remainder of the year, we believe Fed activity to be modest, with a
tightening move being the most likely course of action. Consequently, we expect
to keep our average maturity in the 35 to 45 day range until market fundamentals
change.
Dave Clement, CFA
Portfolio Manager
Basis point One hundredth of one percent in the yield of an investment. So 100
basis points equals 1.00%.
Fed tightening A move by the Federal Reserve Board to control economic growth by
raising the interest rates on federal funds. Depending on the desired effect,
the Fed's open market committee sells short-, intermediate-, or long-term
maturities.
Duration A measure of average maturity, which adjusts for the time value of the
payments investors will receive and which takes into account interest payments
as well as principal payments.
================================================================================
Past performance is no guarantee of future results.
+ 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.
101
<PAGE>
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
MONEY MARKET FUND VS
LIPPER INSTITUTIONAL MONEY MARKET AVERAGE
INSTITUTIONAL CLASS SHARES
- --------------------------------------------------------------------------------
[LINE CHART APPEARS HERE]
Money Market Lipper Instutitional
Fund Money Market Average
1/2/91 $10,000 $10,000
1Q 1991 $10,162 $10,169
2Q 1991 $10,313 $10,320
3Q 1991 $10,461 $10,467
4Q 1991 $10,596 $10,601
1Q 1992 $10,707 $10,711
2Q 1992 $10,808 $10,812
3Q 1992 $10,899 $10,902
4Q 1992 $10,983 $10,987
1Q 1993 $11,063 $11,067
2Q 1993 $11,140 $11,146
3Q 1993 $11,220 $11,226
4Q 1993 $11,300 $11,308
1Q 1994 $11,382 $11,391
2Q 1994 $11,479 $11,493
3Q 1994 $11,600 $11,615
4Q 1994 $11,738 $11,759
1Q 1995 $11,903 $11,924
2Q 1995 $12,070 $12,096
3Q 1995 $12,234 $12,250
4Q 1995 $12,399 $12,419
1Q 1996 $12,556 $12,578
6/30/96 $12,708 $12,733
- --------------------------------------------------------------------------------
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
MONEY MARKET FUND VS
LIPPER INSTITUTIONAL MONEY MARKET AVERAGE
SERVICE CLASS SHARES
- --------------------------------------------------------------------------------
[LINE CHART APPEARS HERE]
Money Market Lipper Instutitional
Fund Money Market Average
1/2/91 $10,000 $10,000
1Q 1991 $10,162 $10,169
2Q 1991 $10,313 $10,320
3Q 1991 $10,461 $10,467
4Q 1991 $10,596 $10,601
1Q 1992 $10,707 $10,711
2Q 1992 $10,808 $10,812
3Q 1992 $10,899 $10,902
4Q 1992 $10,983 $10,987
1Q 1993 $11,063 $11,067
2Q 1993 $11,140 $11,146
3Q 1993 $11,220 $11,226
4Q 1993 $11,300 $11,308
1Q 1994 $11,382 $11,391
2Q 1994 $11,479 $11,493
3Q 1994 $11,600 $11,615
4Q 1994 $11,738 $11,759
1Q 1995 $11,903 $11,924
2Q 1995 $12,066 $12,096
3Q 1995 $12,222 $12,250
4Q 1995 $12,379 $12,419
1Q 1996 $12,528 $12,578
6/30/96 $12,672 $12,733
- --------------------------------------------------------------------------------
. Money Market Fund . Lipper Institutional Money Market Average
Source: (C) 1996 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 June 30, 1996 as of June 30, 1996
- -----------------------------------------------------------------------------------------------------------------------------
Year to Date One Year Five Year Since Inception
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market Fund Institutional Class 2.49% 5.28% 4.27% 4.45%
Money Market Fund Service Class** 2.37% 5.02% 4.21% 4.40%
Average Lipper Institutional Money Market Fund 2.54% 5.41% 4.30% 4.49%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
[BAR CHART APPEARS HERE]
Institutional Class Shares
Total Return*
1991 5.95%
1992 3.66%
1993 2.89%
1994 3.88%
1995 5.63%
1996 2.49% (as of 6/30/96)
================================================================================
PORTFOLIO COMPOSITION
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
[PIE GRAPH APPEARS HERE]
Commercial Paper 74.17%
Medium-Term Notes Non Convertible 8.16%
Other 9.92%
MM Bankers' Acceptances 7.75%
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS
(% of net assets as of June 30, 1996)
1. Cargill Inc., 5.50%, 7/1/96 7.37%
2. Ford Motor Co., 5.65%, 10/1/96 5.29%
3. Frontier Corp., 5.40%, 7/9/96 5.28%
4. Caterpillar Financial Services, 5.37%, 7/26/96 5.27%
5. Xerox Credit Corp., 5.29%, 7/29/96 5.26%
6. GE Capital Corp., 5.27%, 8/7/96 5.26%
7. Deere (John) Capital Corp., 5.26%, 8/14/96 5.25%
8. American Home Products, 5.41%, 8/23/96 5.24%
9. American Brands Inc., 5.28%, 8/27/96 5.24%
10. General Motors Acceptance Corp., 5.42%, 8/29/96 5.24%
- --------------------------------------------------------------------------------
TOP 5 INDUSTRY HOLDINGS
(% of net assets as of June 30, 1996)
1. Finance 16.85%
2. Banks 16.20%
3. Conglomerates 10.50%
4. Consumer Financial Services 7.35%
5. Auto Manufacturing 5.29%
Average Maturity 39 Days
================================================================================
** 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 Fund's 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
5.07% and a 7-day average yield of 4.95%, both as of 6/26/96. The Money
Market Fund-Service Class had a 7-day effective yield of 4.81% with a 7-day
average yield of 4.70%, both as of 6/26/96. 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 4.89% and 4.78%, respectively, for the
Institutional Class and 4.63% and 4.53%, 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%.
102
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
SHORT-TERM INVESTMENTS (100.2%)+
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
------------------------
<S> <C> <C>
BANKERS' ACCEPTANCES (7.7%)
Huntington National Bank- Columbus, Ohio
4.91%, due 7/1/96..................................... $ 1,000,000 $ 1,000,000
5.25%, due 7/24/96.................................... 500,000 498,323
5.40%, due 7/29/96.................................... 1,200,000 1,194,960
Mellon Bank N.A.-
Pittsburgh, Pennsylvania
5.30%, due 7/23/96.................................... 3,000,000 2,990,283
5.36%, due 8/19/96.................................... 1,662,934 1,650,802
------------
7,334,368
------------
CORPORATE BONDS (2.3%)
PepsiCo Inc.
7.00%, due 11/15/96 (c)............................... 500,000 503,090
7.88%, due 8/15/96 (c)................................ 1,650,000 1,653,602
------------
2,156,692
------------
LOAN PARTICIPATION NOTE (5.3%)
Ford Motor Co.
5.65%, due 10/1/96 (c)................................ 5,000,000 5,000,000
------------
MEDIUM-TERM NOTES (8.2%)
Beneficial Corp.
5.40%, due 12/2/96 (b)(c)............................. 2,000,000 1,999,529
Citicorp
8.42%, due 2/12/97 (c)................................ 975,000 993,370
Pacific Gas & Electric Co.
7.16%, due 12/5/96 (c)................................ 400,000 403,172
PacifiCorp
4.53%, due 9/16/96 (c)................................ 1,000,000 997,755
8.49%, due 8/15/96 (c)................................ 1,325,000 1,328,819
Wells Fargo & Co.
5.63%, due 7/19/96 (b)(c)............................. 2,000,000 2,000,096
------------
7,722,741
------------
YANKEE BOND (2.5%)
Government of New Zealand
8.25%, due 9/25/96 (c)................................ 2,400,000 2,415,400
------------
COMMERCIAL PAPER (74.2%)
American Brands Inc.
5.28%, due 8/27/96 (a)................................ 5,000,000 4,958,200
American Home Products Corp. 5.41%, due 8/23/96 (a).... 5,000,000 4,960,176
Canadian Wheat Board
4.92%, due 7/8/96..................................... 2,000,000 1,998,087
Cargill Inc.
5.50%, due 7/1/96..................................... 6,977,000 6,977,000
Caterpillar Financial Services Corp.
5.37%, due 7/26/96.................................... 5,000,000 4,981,354
Deere (John) Capital Corp.
5.26%, due 8/14/96.................................... 5,000,000 4,967,856
Frontier Corp.
5.40%, due 7/9/96 (a)................................. 5,000,000 4,994,000
</TABLE>
- --------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
------------------------
<S> <C> <C>
COMMERCIAL PAPER (Continued)
General Electric Capital Corp.
5.27%, due 8/7/96..................................... $ 5,000,000 $ 4,972,918
General Motors Acceptance Corp.
5.42%, due 8/29/96.................................... 5,000,000 4,955,586
Heller Financial Inc.
5.36%, due 7/19/96.................................... 4,000,000 3,989,280
Household Finance Corp.
5.31%, due 9/4/96..................................... 3,000,000 2,971,237
Jefferson Smurfit Finance Corp.
Series B
5.32%, due 7/2/96..................................... 3,500,000 3,499,483
McGraw-Hill Companies Inc. (The)
5.38%, due 8/16/96.................................... 2,000,000 1,986,251
Morgan (J.P.) & Co. Inc.
5.32%, due 9/3/96..................................... 1,000,000 990,542
Parker-Hannifin Corp.
5.40%, due 7/9/96 (a)................................. 4,000,000 3,995,200
Sears Roebuck Acceptance Corp.
5.34%, due 7/10/96.................................... 4,000,000 3,994,660
Xerox Credit Corp.
5.29%, due 7/29/96.................................... 5,000,000 4,979,428
------------
70,171,258
------------
Total Short-Term Investments
(Amortized Cost $94,800,459) (d)...................... 100.2% 94,800,459
Liabilities In Excess of
Cash and Other Assets................................. (0.2) (193,798)
----------- -----------
Net Assets............................................. 100.0% $ 94,606,661
=========== ===========
</TABLE>
- --------
(a) May be sold to institutional investors only.
(b) Floating rate. Rate shown is the rate in effect at June 30, 1996.
(c) Coupon interest bearing security.
(d) The cost stated also represents the aggregate cost for Federal income tax
purposes.
- --------------
+ 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.
103
<PAGE>
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996 (Unaudited)
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....................................... $ 5,000,000 5.3%
Banks.................................................... 15,321,833 16.2
Brokerage................................................ 990,542 1.0
Capital Goods............................................ 4,967,856 5.2
Computer & Office Equipment.............................. 4,979,428 5.3
Conglomerates............................................ 9,931,118 10.5
Consumer Financial Services.............................. 6,955,115 7.4
Drugs.................................................... 4,960,176 5.2
Electrical Equipment..................................... 3,995,200 4.2
Finance.................................................. 15,936,532 16.8
Food..................................................... 11,131,779 11.8
Paper & Forest Products.................................. 3,499,483 3.7
Publishing............................................... 1,986,251 2.1
Utilities-Electric....................................... 2,729,746 2.9
Yankee Bond.............................................. 2,415,400 2.6
----------- -----
94,800,459 100.2
Liabilities in Excess of
Cash and Other Assets................................... (193,798) (0.2)
----------- -----
Net Assets............................................... $94,606,661 100.0%
=========== =====
</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.
104
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
As of June 30, 1996 (Unaudited) For the six months ended June 30,
1996 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (amortized cost
$94,800,459)................................................... $ 94,800,459
Receivables:
Investment securities sold...................................... 13,858,103
Fund shares sold................................................ 468,965
Interest........................................................ 219,162
Other assets.................................................... 284
------------
Total assets.................................................. 109,346,973
------------
LIABILITIES:
Payables:
Investment securities purchased................................. 11,973,802
Fund shares redeemed............................................ 2,349,156
Administrator................................................... 17,998
Adviser......................................................... 7,372
Transfer agent.................................................. 4,726
Custodian....................................................... 3,995
Directors....................................................... 1,513
Accrued expenses................................................ 28,057
Dividend payable................................................ 353,693
------------
Total liabilities............................................. 14,740,312
------------
Net assets...................................................... $ 94,606,661
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 12 billion shares
authorized
Institutional Class............................................. $ 79,402
Institutional Service Class..................................... 15,205
Additional paid-in capital...................................... 94,512,941
Accumulated net realized loss on investments.................... (887)
------------
Net assets...................................................... $ 94,606,661
============
Institutional Class
Net assets applicable to outstanding shares..................... $ 79,401,438
============
Shares of capital stock outstanding............................. 79,402,325
============
Net asset value per share outstanding........................... $ 1.00
============
Institutional Service Class
Net assets applicable to outstanding shares..................... $ 15,205,223
============
Shares of capital stock outstanding............................. 15,205,223
============
Net asset value per share outstanding........................... $ 1.00
============
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest......................................................... $2,415,657
----------
Expenses: (Note 2)
Administration (Note 3)........................................... 175,980
Advisory (Note 3)................................................. 43,995
Registration...................................................... 20,558
Transfer agent.................................................... 14,580
Service (Note 3).................................................. 12,587
Custodian......................................................... 9,308
Auditing.......................................................... 9,292
Shareholder communication......................................... 5,649
Legal............................................................. 5,428
Directors......................................................... 2,648
Miscellaneous..................................................... 4,452
----------
Total expenses before
reimbursement.................................................. 304,477
Expense reimbursement from Administrator (Note 3)................. (71,917)
----------
Net expenses.................................................... 232,560
----------
Net investment income............................................. 2,183,097
----------
REALIZED LOSS ON INVESTMENTS:
Net realized loss on investments.................................. (887)
----------
Net increase in net assets resulting from operations.............. $2,182,210
==========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
105
<PAGE>
MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996 (Unaudited) and the year ended December
31, 1995
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income........................... $ 2,183,097 $ 3,283,517
Net realized gain (loss) on investments......... (887) 129
------------- -------------
Net increase in net assets resulting from
operations..................................... 2,182,210 3,283,646
------------- -------------
Dividends to shareholders:
From net investment income:
Institutional Class............................ (1,944,513) (3,234,067)
Institutional Service Class.................... (238,713) (51,376)
------------- -------------
Total dividends to shareholders............... (2,183,226) (3,285,443)
------------- -------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class............................ 144,819,233 193,425,248
Institutional Service Class.................... 23,223,448 4,420,373
Net asset value of shares issued to
shareholders in reinvestment of dividends:
Institutional Class............................ 1,925,502 3,150,373
Institutional Service Class.................... 193,172 40,688
------------- -------------
170,161,355 201,036,682
Cost of shares redeemed:
Institutional Class............................ (135,210,898) (193,810,740)
Institutional Service Class.................... (10,995,499) (1,677,059)
------------- -------------
Increase in net assets derived from capital
share transactions............................ 23,954,958 5,548,883
------------- -------------
Net increase in net assets..................... 23,953,942 5,547,086
NET ASSETS:
Beginning of period............................. 70,652,719 65,105,633
------------- -------------
End of period................................... $ 94,606,661 $ 70,652,719
============= =============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
106
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS INSTITUTIONAL CLASS
------------- ------------- ------------- ------------- ------------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31 JANUARY 2, 1991(A)
ENDED -------------------------------------------------------- THROUGH
JUNE 30, 1996* 1995 1994 1993 1992 DECEMBER 31, 1991
--------------------------- --------------------------- -------- -------- -------- ------------------
<S> <C> <C> <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 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- --------
Net investment
income........... 0.02 0.02 0.05 0.05 0.04 0.03 0.03 0.06
-------- -------- -------- -------- -------- -------- -------- --------
Less dividends
from net
investment
income........... (0.02) (0.02) (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 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ========
Total investment
return (b)....... 2.49% 2.37% 5.63% 5.46% 3.88% 2.89% 3.66% 5.95%
Ratios (to average
net assets)/
Supplemental
Data:
Net investment
income.......... 4.99%+ 4.74%+ 5.48% 5.23% 3.89% 2.85% 3.64% 5.84%
Net expenses..... 0.50%+ 0.75%+ 0.50% 0.75% 0.50% 0.45% 0.45% 0.45%
Expenses (before
reimbursement).. 0.66%+ 0.91%+ 0.73% 0.98% 0.68% 0.67% 0.65% 0.65%
Net assets at end
of period
(in 000's)....... $ 79,401 $ 15,205 $67,869 $ 2,784 $ 65,106 $ 75,832 $ 71,573 $126,690
</TABLE>
- --------
* Unaudited.
+ Annualized.
(a) Commencement of operations.
(b) Total return is not annualized.
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
================================================================================
Fund Highlights for the six months ended June 30, 1996
. One-year total returns of 5.14% and 4.83% for Institutional Class and
Service Class shares, respectively, as of 6/30/96
. Institutional Class shares earned a four-star overall rating from
Morningstar, Inc.* as of 6/30/96
. Six-month performance of Institutional Class shares was ahead of the average
Lipper(S) short-term investment grade debt fund while Service
Class shares were slightly behind the average
For the six-month period ended June 30, 1996, the MainStay Institutional Short-
Term Bond Fund provided total returns of 1.34% and 1.14% for Institutional Class
and Service Class shares, respectively. These results were in line with or ahead
of the average Lipper short investment grade debt fund's return of 1.18% for the
same period. Both the Fund and its Lipper category peers lagged the Salomon 1-3
Year Treasury Index,++ which returned 1.47% for the first half of 1996.
The Fund's Institutional Class shares also received a four-star overall rating
from Morningstar, Inc., placing them among the top 33% of the Morningstar
universe, which consisted of 889 fixed-income funds for the 3-year and 464
fixed-income funds for the 5-year period ended 6/30/96.
With some investors anticipating changes in Federal Reserve policy, short-term
securities had a turbulent six months. Short-term interest rates rose 80 basis
points, which depressed the value of bonds in the portfolio. While the Fund held
Treasury securities during the first half of the year, it also owned asset-
backed securities and corporate bonds due to their attractive valuations. These
holdings contributed to the Fund's positive performance. During the second
quarter, higher-yielding, high-quality mortgage-related products were added to
the Fund's portfolio which also contributed positively to performance compared
to the Index.
The overall portfolio credit quality of the Fund at the end of the first half of
the year remained Agency rated, which is above AAA.***
Ravi Akhoury
Edward Munshower
Portfolio Managers
Basis point One hundredth of one percent in the yield of an investment. So 100
basis points equals 1.00%.
Asset-backed securities Bonds or notes backed by loans or accounts receivable
(such as automobile loans, computer leases, or credit card debt), and often
"enhanced" by a letter of credit or insurance.
Mortgage-backed securities Securities representing interests in "pools" of
mortgages in which principal and interest payments by the holders of underlying
fixed- or adjustable-rate mortgages are, in effect, "passed through" to
investors (net of fees paid to the issuer or guarantor of the securities).
================================================================================
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-, 5- & 10-year average annual returns with fee
adjustments, and a risk factor that reflects fund performance relative to
3-month Treasury bill monthly returns. A one-year rating is calculated
using the same methodology, but is not a component of the overall rating.
As of 6/30/96, the individual 1, 3 and 5 year ratings for the MainStay
Institutional Short-Term Bond Fund was 4, 4 and 4 stars, respectively. For
the 1-, 3-, and 5- year periods, the fund was rated among 1,487 funds, 889
funds and 464 funds, respectively, in the fixed income category. Only 10%
of the funds in an investment category may receive 5 stars and 22.5% may
receive 4 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.
++ The Salomon 1-3 Year Treasury Index is an unmanaged index generally
considered representative of the U.S. short-term bond market.
*** Agency rating is above AAA. Currently, debt rated AAA has the highest
rating assigned by Standard & Poor's. These ratings are based solely on the
creditworthiness of the bonds in the portfolio and is not meant to
represent the stability or safety of the Fund.
108
<PAGE>
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
SHORT-TERM BOND FUND VS
SALOMON 1-3 YEAR TREASURY INDEX
INSTITUTIONAL CLASS SHARES
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Short Term Salomon 1-3 Year
Bond Fund Treasury Index
1/2/91 $10,000 $10,000
1Q 1991 $10,220 $10,220
2Q 1991 $10,420 $10,418
3Q 1991 $10,760 $10,768
4Q 1991 $11,130 $11,164
1Q 1992 $11,140 $11,178
2Q 1992 $11,455 $11,498
3Q 1992 $11,749 $11,841
4Q 1992 $11,791 $11,867
1Q 1993 $12,079 $12,122
2Q 1993 $12,214 $12,258
3Q 1993 $12,383 $12,431
4Q 1993 $12,459 $12,507
1Q 1994 $12,374 $12,445
2Q 1994 $12,374 $12,451
3Q 1994 $12,495 $12,570
4Q 1994 $12,473 $12,574
1Q 1995 $12,885 $12,987
2Q 1995 $13,258 $13,394
3Q 1995 $13,444 $13,588
4Q 1995 $13,754 $13,923
1Q 1996 $13,797 $13,982
6/30/96 $13,939 $14,128
- --------------------------------------------------------------------------------
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
SHORT-TERM BOND FUND VS
SALOMON 1-3 YEAR TREASURY INDEX
SERVICE CLASS SHARES
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
Short Term Salomon 1-3 Year
Bond Fund Treasury Index
1/2/91 $10,000 $10,000
1Q 1991 $10,220 $10,220
2Q 1991 $10,420 $10,418
3Q 1991 $10,760 $10,768
4Q 1991 $11,130 $11,164
1Q 1992 $11,140 $11,178
2Q 1992 $11,455 $11,498
3Q 1992 $11,749 $11,841
4Q 1992 $11,791 $11,867
1Q 1993 $12,079 $12,122
2Q 1993 $12,214 $12,258
3Q 1993 $12,383 $12,431
4Q 1993 $12,459 $12,507
1Q 1994 $12,374 $12,445
2Q 1994 $12,374 $12,451
3Q 1994 $12,495 $12,570
4Q 1994 $12,473 $12,574
1Q 1995 $12,885 $12,987
2Q 1995 $13,245 $13,394
3Q 1995 $13,418 $13,588
4Q 1995 $13,728 $13,923
1Q 1996 $13,756 $13,982
6/30/96 $13,884 $14,128
- --------------------------------------------------------------------------------
. Short-Term Bond Fund . Salomon 1-3 Year Treasury Index
Source: (C) 1996 Ibbotson Associates EnCorr Software
The graphs assume a $10,000 investment made on 1/2/91.
<TABLE>
<CAPTION>
Total Return* SEC Average Annual Total Return*
PERFORMANCE as of June 30, 1996 as of June 30, 1996
- ---------------------------------------------------------------------------------------------------------------------------
Year to Date One Year Five Year Since Inception
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Short-Term Bond Fund Institutional Class 1.34% 5.14% 5.99% 6.22%
Short-Term Bond Fund Service Class** 1.14% 4.83% 5.91% 6.15%
Average Lipper Short-Term Investment Grade Fund 1.18% 5.05% 5.98% 6.36%
Salomon 1-3 Year Treasury Index 1.47% 5.48% 6.28% 6.48%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
[BAR CHART APPEARS HERE]
Institutional Class Shares
1991 11.30%
1992 5.94%
1993 5.67%
1994 0.11%
1995 10.27%
1996 1.34% (as of 6/30/96)
================================================================================
PORTFOLIO COMPOSITION
(% of net assets as June 30, 1996)
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
U.S. Government & Agency Bonds 57.10%
Other 34.17%
Domestic Bonds - Non-Convertible 4.56%
Foreign & Other Non-Convertible Bonds 2.13%
Cash & Equivalents 2.04%
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
1. US Treasury Note, 7.375%, 11/15/97 9.70%
2. US Treasury Note, 6.125%, 5/15/98 8.43%
3. US Treasury Note, 4.75%, 8/31/98 7.65%
4. US Treasury Note, 4.75%, 10/31/98 7.49%
5. US Treasury Note, 6.375%, 5/15/99 5.47%
6. Structured Assets Secs. Corp., 5.75%, 2/25/28 4.73%
7. FNMA, 7.00%, 1/1/00 3.62%
8. FHLMC, 8.00%, 2/15/00 3.49%
9. US Treasury Note, 5.00%, 2/15/99 3.46%
10. Standard Credit Card Trust, 9.375%, 9/10/98 3.25%
- --------------------------------------------------------------------------------
TOP 5 INDUSTRY HOLDINGS
(% of net assets as of June 30, 1996)
- --------------------------------------------------------------------------------
1. US Government/Agencies 57.10%
2. First Mortgage Loans 12.89%
3. Financial 10.34%
4. Auto Loans 9.31%
5. Credit Card Receivables 6.08%
Average Weighted
Effective Maturity 2.0 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 Fund's 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%.
109
<PAGE>
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
LONG-TERM INVESTMENTS (98.0%)+
ASSET-BACKED SECURITIES (34.2%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
AUTO LEASE (3.2%)
World Omni Automobile Lease Securitization Trust
Series 1996-A Class A1
6.30%, due 6/25/02................................... $ 2,290,000 $ 2,280,657
------------
AUTO LOANS (9.3%)
NationsBank Auto Grantor Trust
Series 1995-A Class A
5.85%, due 6/15/02................................... 1,139,883 1,135,426
Old Kent Auto Receivables Series 1995-A Class A
6.20%, due 8/15/01................................... 1,150,541 1,151,438
Olympic Automobile Receivables Trust
Series 1996-B Class A4
6.70%, due 3/15/02................................... 2,300,000 2,310,074
WFS Financial Owner Trust Series 1996-B Class A3
6.65%, due 8/20/00................................... 2,050,000 2,058,159
------------
6,655,097
------------
BOAT LOAN (0.7%)
Chrysler Financial Corp. Grantor Trust
Series 11-A Class A
8.90%, due 8/15/97................................... 457,038 463,894
------------
CREDIT CARD RECEIVABLES (6.1%)
Household Affinity Credit Card Master Trust I
Series 1994-2 Class A
7.00%, due 12/15/99.................................. 2,000,000 2,023,440
Standard Credit Card Trust Series 1990-6 Class A
9.375%, due 9/10/98.................................. 2,250,000 2,323,823
------------
4,347,263
------------
FIRST MORTGAGE LOANS (COLLATERALIZED MORTGAGE OBLIGATIONS) (12.9%)
Residential Funding Mortgage Securities I
Series 1994-S12 Class A1
6.50%, due 4/25/09................................... 1,791,881 1,785,717
Series 1996-S13 Class A1
7.00%, due 5/25/11................................... 2,286,516 2,282,584
Resolution Trust Corp. Series 1992-C4 Class A1
8.15%, due 6/25/24................................... 1,741,245 1,758,657
Structured Asset Securities Corp.
Series 1996-CFL Class A-1B
5.751%, due 2/25/28.................................. 3,450,000 3,382,621
------------
9,209,579
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
RECREATIONAL VEHICLES (2.0%)
Fleetwood Credit Corp. Grantor Trust
Series 1996-A Class A 6.75%, due 10/17/11............ $ 1,462,134 $ 1,460,979
------------
Total Asset-Backed Securities (Cost $24,551,089)...... 24,417,469
------------
CERTIFICATE OF DEPOSIT (2.1%)
BANK (2.1%)
Mercantile Safe Deposit & Trust Co., Baltimore, MD
5.16%, due 3/2/98.................................... 1,550,000 1,521,867
------------
Total Certificate of Deposit (Cost $1,550,000)........ 1,521,867
------------
CORPORATE BONDS (4.6%)
BANK (2.4%)
First Fidelity Bancorp
8.50%, due 4/1/98.................................... 1,616,000 1,672,528
------------
FINANCIAL (2.2%)
Chrysler Financial Corp.
5.65%, due 1/30/98................................... 1,600,000 1,583,600
------------
Total Corporate Bonds
(Cost $3,316,078).................................... 3,256,128
------------
U.S. GOVERNMENT & FEDERAL AGENCIES (57.1%)
FEDERAL HOME LOAN MORTGAGE CORPORATION (COLLATERALIZED MORTGAGE OBLIGATION)
(3.5%)
Series 1783-A Class A
8.00%, due 2/15/00................................... 2,441,990 2,494,444
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (COLLATERALIZED MORTGAGE OBLIGATIONS)
(7.9%)
Series 1993-93 Class C 5.50%, due 2/25/06............ 1,762,031 1,730,103
Series 1992-209 Class D 6.25%, due 12/25/02.......... 1,050,000 1,048,520
Series 1993-118 Class A 6.50%, due 7/25/98........... 314,026 314,123
Series 1996-30 PB
7.00%, due 1/1/00.................................... 2,575,000 2,589,497
------------
5,682,243
------------
UNITED STATES TREASURY NOTES (45.7%)
4.75%, due 8/31/98................................... 5,625,000 5,465,925
4.75%, due 10/31/98.................................. 5,525,000 5,353,228
5.00%, due 2/15/99................................... 2,550,000 2,473,908
6.125%, due 5/15/98.................................. 6,025,000 6,025,000
6.375%, due 5/15/99.................................. 3,900,000 3,908,541
7.25%, due 2/15/98................................... 875,000 890,452
</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.
110
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
U.S. GOVERNMENT & FEDERAL AGENCIES (Continued)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-------------------------
<S> <C> <C>
UNITED STATES TREASURY NOTES (Continued)
7.375%, due 11/15/97............................. $ 6,810,000 $ 6,931,286
8.125%, due 2/15/98.............................. 1,537,000 1,585,031
------------
32,633,371
------------
Total U.S. Government &
Federal Agencies
(Cost $40,928,391)............................... 40,810,058
------------
Total Long-Term Investments
(Cost $70,345,558)............................... 70,005,522
------------
SHORT-TERM
INVESTMENTS (8.1%)
COMMERCIAL PAPER (8.1%)
American Express Corp.
5.326%, due 7/1/96............................... 2,000,000 2,000,000
Travelers Group, Inc.
5.432%, due 7/1/96............................... 3,805,000 3,805,000
------------
Total Short-Term Investments
(Cost $5,805,000)................................ 5,805,000
------------
Total Investments
(Cost $76,150,558) (a)........................... 106.1% 75,810,522 (b)
Liabilities in Excess of
Cash and Other Assets............................ (6.1) (4,342,876)
----------- ------------
Net Assets........................................ 100.0% $ 71,467,646
=========== ============
</TABLE>
- --------
(a) The cost stated also represents the aggregate cost for Federal income tax
purposes.
(b) At June 30, 1996 net unrealized depreciation was $340,036, 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 $111,642 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $451,678.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
111
<PAGE>
SHORT-TERM BOND FUND
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
As of June 30, 1996 (Unaudited) For the six months ended June 30,
1996 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (Note 2) (identified cost
$76,150,558).................................................... $75,810,522
Cash............................................................. 2,546
Receivables:
Investment securities sold....................................... 3,765,544
Interest......................................................... 737,387
Fund shares sold................................................. 125,206
Other assets..................................................... 139
-----------
Total assets................................................... 80,441,344
-----------
LIABILITIES:
Payables:
Investment securities purchased.................................. 8,828,058
Fund shares redeemed............................................. 83,790
Administrator.................................................... 17,585
Adviser.......................................................... 8,924
Transfer agent................................................... 4,358
Custodian........................................................ 2,361
Directors........................................................ 1,243
Accrued expenses................................................. 27,379
-----------
Total liabilities.............................................. 8,973,698
-----------
Net assets....................................................... $71,467,646
===========
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1 billion shares
authorized
Institutional Class.............................................. $ 7,162
Institutional Service Class...................................... 126
Additional paid-in capital....................................... 76,512,687
Accumulated undistributed net investment income.................. 2,016,419
Accumulated net realized loss on investments..................... (6,728,712)
Net unrealized depreciation on investments....................... (340,036)
-----------
Net assets....................................................... $71,467,646
===========
Institutional Class
Net assets applicable to outstanding shares...................... $70,236,705
===========
Shares of capital stock outstanding.............................. 7,161,507
===========
Net asset value per share outstanding............................ $ 9.81
===========
Institutional Service Class
Net assets applicable to outstanding shares...................... $ 1,230,941
===========
Shares of capital stock outstanding.............................. 125,840
===========
Net asset value per share outstanding............................ $ 9.78
===========
</TABLE>
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest......................................................... $ 2,200,422
-----------
Expenses: (Note 2)
Administration (Note 3).......................................... 156,375
Advisory (Note 3)................................................ 52,125
Registration..................................................... 13,841
Transfer Agent................................................... 13,555
Auditing......................................................... 8,525
Custodian........................................................ 7,244
Legal............................................................ 4,524
Shareholder communication........................................ 4,252
Directors........................................................ 2,096
Service (Note 3)................................................. 1,590
Miscellaneous.................................................... 5,034
-----------
Total expenses before
reimbursement................................................. 269,161
Expense reimbursement from Administrator (Note 3)................ (59,072)
-----------
Net expenses................................................... 210,089
-----------
Net investment income............................................ 1,990,333
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments................................. (315,015)
Net change in unrealized appreciation on investments............. (1,003,669)
-----------
Net realized and unrealized loss on investments.................. (1,318,684)
-----------
Net increase in net assets resulting from operations............. $ 671,649
===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
112
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
SHORT-TERM BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1996 (Unaudited) and the year ended December
31, 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income............................. $ 1,990,333 $ 3,364,918
Net realized loss on investments.................. (315,015) (33,269)
Net change in unrealized appreciation
(depreciation) on investments.................... (1,003,669) 1,869,072
------------ ------------
Net increase in net assets resulting from
operations....................................... 671,649 5,200,721
------------ ------------
Dividends to shareholders:
From net investment income:
Institutional Class.............................. -- (3,241,928)
Institutional Service Class...................... -- (70,366)
------------ ------------
Total dividends to shareholders................. -- (3,312,294)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class.............................. 33,365,686 25,700,541
Institutional Service Class...................... 610,071 1,404,973
Net asset value of shares issued to shareholders
in reinvestment of dividends:
Institutional Class.............................. -- 3,215,966
Institutional Service Class...................... -- 70,083
------------ ------------
33,975,757 30,391,563
Cost of shares redeemed:
Institutional Class.............................. (14,694,296) (42,279,444)
Institutional Service Class...................... (515,768) (310,374)
------------ ------------
Increase (decrease) in net assets derived from
capital share transactions...................... 18,765,693 (12,198,255)
------------ ------------
Net increase (decrease) in net assets............ 19,437,342 (10,309,828)
NET ASSETS:
Beginning of period............................... 52,030,304 62,340,132
------------ ------------
End of period..................................... $ 71,467,646 $ 52,030,304
============ ============
Accumulated undistributed net investment income... $ 2,016,419 $ 26,086
============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
113
<PAGE>
SHORT-TERM BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS INSTITUTIONAL CLASS
------------- ------------- ------------- ------------- -----------------------------------------------
SIX MONTHS YEAR ENDED DECEMBER 31 JANUARY 2, 1991(a)
ENDED ------------------------------------------------------- THROUGH
JUNE 30, 1996* 1995 1994 1993 1992 DECEMBER 31, 1991
--------------------------- --------------------------- ------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of
period............ $ 9.68 $ 9.67 $ 9.37 $ 9.37 $ 10.33 $ 11.23 $ 11.13 $ 10.00
------- ------ ------- ------ ------- -------- -------- --------
Net investment
income............ 0.28 0.26 0.65 0.64 0.97 0.72 0.66 0.48
Net realized and
unrealized gain
(loss) on
investments....... (0.15) (0.15) 0.31 0.30 (0.96) (0.12) (0.03) 0.65
------- ------ ------- ------ ------- -------- -------- --------
Total from
investment
operations........ 0.13 0.11 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..... $ 9.81 $ 9.78 $ 9.68 $ 9.67 $ 9.37 $ 10.33 $ 11.23 $ 11.13
======= ====== ======= ====== ======= ======== ======== ========
Total investment
return (b)........ 5.14% 4.83% 10.27% 10.07% 0.11% 5.67% 5.94% 11.30%
Ratios (to average
net assets)/
Supplemental Data:
Net investment
income........... 5.73%+ 5.48%+ 6.38% 6.13% 5.90% 6.32% 6.64% 7.33%
Net expenses...... 0.60%+ 0.85%+ 0.60% 0.85% 0.60% 0.55% 0.55% 0.55%
Expenses (before
reimbursement)... 0.77%+ 1.02%+ 0.82% 1.07% 0.72% 0.68% 0.72% 0.81%
Portfolio turnover
rate.............. 95% 95% 171% 171% 269% 232% 270% 151%
Net assets at end
of period
(in 000's)........ $70,237 $1,231 $50,902 $1,128 $62,340 $148,846 $161,499 $130,141
</TABLE>
- --------
* Unaudited.
+ Annualized.
(a) Commencement of operations.
(b) Total return is not annualized.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
114
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 June 30, 1996 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 and 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 & Poor's 500
Composite Stock Price Index.
The International Equity Fund seeks 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.
115
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (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.
116
<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)
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.
(E)
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.
(F)
ORGANIZATION COSTS. 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 January 1, 1995, the date such Funds
commmenced operations. 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.
(G)
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.
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.
(H)
USE OF ESTIMATES. The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
(I)
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 period. 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.
117
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
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 period-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.
(J)
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.
(K)
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).
(L)
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).
(M)
MORTGAGE DOLLAR ROLLS. A mortgage dollar roll ("MDR") is a transaction in
which a Fund sells mortgage backed securities 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.
(N)
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 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
118
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
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
Capital"), is a registered investment adviser and 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 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>
The Administrator has voluntarily agreed to assume the portion of the Funds'
operating expenses for the six months ended June 30, 1996, 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%
</TABLE>
<TABLE>
<S> <C>
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 six months ended June 30, 1996:
<TABLE>
<S> <C>
EAFE Index Fund......... $118,808
Indexed Equity Fund..... 168,305
International Equity
Fund................... 34,616
Multi-Asset Fund........ 75,427
</TABLE>
<TABLE>
<S> <C>
Bond Fund................ $99,619
Indexed Bond Fund........ 96,640
International Bond Fund.. 20,302
Money Market Fund........ 71,917
Short-Term Bond Fund..... 59,072
</TABLE>
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.
119
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
(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. ("NYLIFE Distributors"), 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 of Directors and Audit Committee meeting
attended plus reimbursement for travel and out-of-pocket expenses.
(E)
CAPITAL. The Funds have been advised that at June 30, 1996 affiliates of New
York Life owned shares of the Funds with the following market values:
<TABLE>
<S> <C>
EAFE Index Fund...... $ 64,707,822
Growth Equity Fund... 389,481,712
Indexed Equity Fund.. 436,711,829
International Equity
Fund................ 97,080,450
Multi-Asset Fund..... 154,390,199
Value Equity Fund.... 474,974,538
</TABLE>
<TABLE>
<S> <C>
Bond Fund............ $116,028,766
Indexed Bond Fund.... 69,859,263
International Bond
Fund................ 45,621,322
Money Market Fund.... 28,399,434
Short-Term Bond
Fund................ 28,278,679
</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
six months ended June 30, 1996 these fees were as follows:
<TABLE>
<S> <C>
EAFE Index Fund......... $ 5,225
Growth Equity Fund...... 27,256
Indexed Equity Fund..... 24,191
International Equity
Fund................... 6,384
Multi-Asset Fund........ 18,198
Value Equity Fund....... 40,130
</TABLE>
<TABLE>
<S> <C>
Bond Fund............... $12,168
Indexed Bond Fund....... 10,080
International Bond Fund. 2,882
Money Market Fund....... 4,921
Short-Term Bond Fund.... 3,837
</TABLE>
120
<PAGE>
MAINSTAY
INSTITUTIONAL FUNDS INC.
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
NOTE 5--Financial Investments:
- -------------------------------------------------------------------------------
The EAFE Index Fund's, International Equity Fund's, Multi-Asset Fund's and
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 each 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 each Fund's exposure at period end to credit loss in the
event of a counterparty's failure to perform its obligations.
The EAFE Index Fund's and Multi-Asset Fund's use of 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 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, Indexed Equity Fund's, Multi-Asset Fund's and
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 each 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,
each Fund's activities in futures contracts are conducted through regulated
exchanges which minimize counterparty credit risks.
The EAFE Index Fund and 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 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.
121
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 6--Purchases and Sales of Securities (in 000's):
- --------------------------------------------------------------------------------
During the six months ended June 30, 1996, purchases and sales of securities,
other than securities subject to repurchase transactions and short-term
securities, were as follows:
<TABLE>
<CAPTION>
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
securities $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
All others 1,558 2,128 58,746 61,394 145,893 2,705 31,520 13,907
----------------------------------------------------------------------------
Total $1,558 $2,128 $58,746 $61,394 $145,893 $2,705 $ 31,520 $ 13,907
----------------------------------------------------------------------------
----------------------------------------------------------------------------
</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 Institutional Institutional
Class Service Class Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Six months ended Year Ended Six months ended Year Ended
June 30, 1996 1995 June 30, 1996 1995
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 860 14 1,843 19 4,702 125 9,698 146
Shares issued in
reinvestment of
dividends and
distributions -- -- 90 -- * -- -- 32 -- *
---------------------------------------------------------------------------------------------------------------
860 14 1,933 19 4,702 125 9,730 146
Shares redeemed 924 4 1,749 -- 4,566 7 8,640 1
---------------------------------------------------------------------------------------------------------------
Net increase
(decrease) (64) 10 184 19 136 118 1,090 145
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
<CAPTION>
Multi-Asset Value Equity
Fund Fund
Institutional Institutional Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Six months ended Year Ended Six months ended Year Ended
June 30, 1996 1995 June 30, 1996 1995
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 1,615 154 3,333 262 5,073 152 10,840 219
Shares issued in
reinvestment of
dividends and
distributions -- -- 2,980 38 -- -- 1,551 8
---------------------------------------------------------------------------------------------------------------
1,615 154 6,313 300 5,073 152 12,391 227
Shares redeemed 953 20 4,595 -- * 2,137 23 4,818 4
---------------------------------------------------------------------------------------------------------------
Net increase
(decrease) 662 134 1,718 300 2,936 129 7,573 223
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
<CAPTION>
International Bond Money Market
Fund Fund
Institutional Institutional Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Six months ended Year Ended Six months ended Year Ended
June 30, 1996 1995 June 30, 1996 1995
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 7 14 81 1 144,819 23,224 193,425 4,420
Shares issued in
reinvestment of
dividends and
distributions -- -- 230 -- * 1,926 193 3,150 41
---------------------------------------------------------------------------------------------------------------
7 14 311 1 146,745 23,417 196,575 4,461
Shares redeemed 69 -- * -- -- * 135,211 10,996 193,811 1,677
---------------------------------------------------------------------------------------------------------------
Net increase
(decrease) (62) 14 311 1 11,534 12,421 2,764 2,784
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
</TABLE>
*Less than one thousand shares.
122
<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>
$103,945 $104,725 $ -- $ -- $220,546 $296,198 $220,946 $255,314 $ -- $ -- $63,191 $43,622
35,848 2,520 194,551 163,301 121,541 75,869 1,047 9,697 18,531 17,089 30,235 20,691
- -------------------------------------------------------------------------------------------------------------------
$139,793 $107,245 $194,551 $163,301 $372,087 $372,067 $221,993 $265,011 $ 18,531 $ 17,089 $93,426 $64,313
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Indexed Equity International Equity
Fund Fund
Institutional Institutional Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class Class Service Class
- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Six months ended Year Ended Six months ended Year Ended
June 30, 1996 1995 June 30, 1996 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
8,675 151 4,814 53 1,372 39 2,383 20
-- -- 750 2 -- -- 320 1
- ----------------------------------------------------------------------------------------------------------------
8,675 151 5,564 55 1,372 39 2,703 21
1,836 5 3,763 1 36 1 19 -- *
- ----------------------------------------------------------------------------------------------------------------
6,839 146 1,801 54 1,336 38 2,684 21
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Bond Indexed Bond
Fund Fund
Institutional Institutional Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class Class Service Class
- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Six months ended Year Ended Six months ended Year Ended
June 30, 1996 1995 June 30, 1996 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
796 58 1,326 78 1,613 202 1,876 40
-- -- 1,262 5 -- -- 1,103 3
- ----------------------------------------------------------------------------------------------------------------
796 58 2,588 83 1,613 202 2,979 43
2,490 11 5,680 7 6,977 11 4,960 -- *
- ----------------------------------------------------------------------------------------------------------------
(1,694) 47 (3,092) 76 (5,364) 191 (1,981) 43
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Short-Term Bond
Fund
Institutional Institutional Institutional Institutional
Class Service Class Class Service Class
- ------------- ------------- ------------- -------------
Six months ended Year Ended
June 30, 1996 1995
- --------------------------------------------------------
<S> <C> <C> <C>
3,415 62 2,617 140
-- -- 332 7
- --------------------------------------------------------
3,415 62 2,949 147
1,509 53 4,347 30
- --------------------------------------------------------
1,906 9 (1,398) 117
- --------------------------------------------------------
- --------------------------------------------------------
</TABLE>
123
<PAGE>
OFFICERS AND DIRECTORS
Alice T. Kane
Chairperson and Director
Patrick G. Boyle
Director
Lawrence Glacken
Director
Robert P. Mulhearn
Director
Susan B. Kerley
Director
Linda M. Livornese
President
Jefferson C. Boyce
Senior Vice President
Robert Fenster
Vice President
Michael J. Harrington
Vice President
Richard Zuccaro
Tax Vice President
Anthony W. Polis
Treasurer
A. Thomas Smith III
Secretary
INVESTMENT ADVISERS
New York Life Insurance Company
MacKay-Shields Financial Corporation
Monitor Capital Advisors, Inc.
ADMINISTRATOR
New York Life Insurance Company
DISTRIBUTOR
NYLIFE Distributors Inc.
TRANSFER AGENT
Boston Financial Data Services
CUSTODIAN
The Bank of New York
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
LEGAL COUNSEL
Dechert Price & Rhoads
The financial information included herein is taken from the records of the Fund
without examination by the Fund's independent accountants, who do not express an
opinion thereon.
<PAGE>
- --------------------------------------------------------------------------------
MAINSTAY(R) INSTITUTIONAL FUNDS INC.
[LOGO OF MAINSTAY 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.
D O N ' T M I S S T H E B O A T
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]
02-008-0896
- --------------------------------------------------------------------------------
