<PAGE> 1
<TABLE>
<CAPTION>
PERFORMANCE HIGHLIGHTS--TOTAL RETURNS* SEC AVERAGE ANNUAL
TOTAL RETURNS
6 MONTHS ENDED JUNE 30, 1999 AS OF JUNE 30, 1999
SINCE
FUNDS 1991 1992 1993 1994 1995 1996 1997 1998 1 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY FUNDS
EAFE Index (Instl. 10.10% -12.22% 28.97% 6.83% 9.03% 6.45% 0.40% 19.15% 8.17% 7.42% 8.09%
Class)(+)
EAFE Index (Serv. 10.10 -12.22 28.97 6.83 8.63 6.37 0.08 18.83 7.93 7.19 7.95
Class)(++)
GROWTH EQUITY (INSTL. 67.00 5.63 9.59 -2.23 37.88 21.62 24.73 40.50 26.65 27.51 23.41
CLASS)(+)
GROWTH EQUITY (SERV. 67.00 5.63 9.59 -2.23 37.50 21.29 24.50 40.18 26.35 27.22 23.25
CLASS)(++)
Indexed Equity (Instl. 29.80 7.19 9.41 0.90 36.88 22.57 32.88 28.62 22.71 27.50 20.67
Class)(+)
Indexed Equity (Serv. 29.80 7.19 9.41 0.90 36.70 22.21 32.60 28.24 22.46 27.24 20.52
Class)(++)
INTERNATIONAL EQUITY N/A -5.37 25.03 8.36 7.17 12.09 5.44 22.41 6.45 9.83 10.80
(INSTL. CLASS)(SEC.)
INTERNATIONAL EQUITY N/A -5.37 25.03 8.36 6.86 11.59 4.88 22.20 6.16 9.48 10.55
(SERV. CLASS)(SEC.)
Asset Manager (Instl. 17.90 7.09 8.79 -0.86 26.81 16.16 26.69 21.31 12.40 19.58 14.87
Class)(+#)
Asset Manager (Serv. 17.90 7.09 8.79 -0.86 26.70 15.89 26.30 21.00 12.17 19.34 14.73
Class)(++#)
VALUE EQUITY (INSTL. 36.60 20.71 14.90 1.22 29.42 22.41 22.63 -8.10 2.04 15.67 17.53
CLASS)(+)
VALUE EQUITY (SERV. 36.60 20.71 14.90 1.22 29.32 22.10 22.28 -8.30 1.78 15.44 17.39
CLASS)(++)
INCOME FUNDS
Bond (Instl. Class)(+) 14.00% 6.39% 9.74% -3.31% 17.88% 2.80% 8.57% 7.93% 1.66% 6.94% 7.07%
Bond (Serv. Class)(++) 14.00 6.39 9.74 -3.31 17.55 2.62 8.21 7.73 1.35 6.69 6.92
INDEXED BOND (INSTL. 14.70 7.09 9.64 -3.44 18.07 2.55 9.01 8.21 1.84 7.03 7.25
CLASS)(+)
INDEXED BOND (SERV. 14.70 7.09 9.64 -3.44 17.97 2.34 8.75 7.86 1.60 6.83 7.13
CLASS)(++)
International Bond 18.73 7.68 14.56 3.11 18.46 14.32 2.62 12.53 -1.06 7.71 8.44
(Instl. Class)(sec.)
International Bond (Serv. 18.73 7.68 14.56 3.11 18.26 14.08 2.27 12.30 -1.21 7.50 8.32
Class)(sec.)
MONEY MARKET (II) (INSTL. 5.95 3.66 2.89 3.88 5.63 5.11 5.27 5.25 4.93 5.17 4.69
CLASS)(+)
MONEY MARKET (II) (SERV. 5.95 3.66 2.89 3.88 5.46 4.85 5.01 4.99 4.67 4.96 4.57
CLASS)(++)
MONEY MARKET (II) (SWEEP 5.95 3.66 2.89 3.88 5.46 4.85 5.01 4.99 4.55 4.93 4.55
SHARES CLASS)(++)
Short-Term Bond (Instl. 11.30 5.94 5.67 0.11 10.27 4.81 6.13 6.37 4.38 5.81 6.00
Class)(+)
Short-Term Bond (Serv. 11.30 5.94 5.67 0.11 10.07 4.46 5.98 5.98 4.11 5.57 5.86
Class)(++)
</TABLE>
<TABLE>
<S> <C>
* 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 gain distributions and dividends,
and, for the Service Class and Sweep Shares Class shares,
include the service fee of .25% on an annualized basis of
the average daily net asset values of the Service Class and
Sweep Shares Class shares. In addition, Sweep Shares Class
shares are sold with an annual 12b-1 fee of .25%.
(+) The inception date of these Institutional Class shares and
the date such shares were first offered to the public is
1/2/91.
(++) Performance figures for the Sweep Shares Class, first
offered to the public on 12/8/98, include the historical
performance of the Service Class from the Service Class's
inception (1/1/95) up to 12/7/98. 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 12/31/94.
Performance figures for these Classes after these dates will
vary based on differences in their expense structures.
(sec.) 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 inception dates
of the International Equity Fund and International Bond
Fund's predecessor separate accounts (Separate Accounts) are
7/31/92 and 1/31/90, respectively. Performance figures
include the historical performance of the respective
Separate Accounts for the period prior to the Fund's
commencement of operations on 1/1/95. MacKay Shields
Financial Corporation, the Funds' investment subadvisor,
served as investment advisor to the Separate Accounts, and
the investment objectives, policies, restrictions,
guidelines, and management style of the Separate Accounts
were substantially similar to those of the respective Funds.
Performance figures for the period prior to 1/1/95 have been
calculated using the Separate Accounts' expense structures,
which generally were higher than the expense structure of
the Funds. The Separate Accounts were not registered under
the Investment Company Act of 1940 ("1940 Act") and
therefore were not subject to certain investment
restrictions imposed under the 1940 Act. If the Separate
Accounts had been registered under the 1940 Act, the
Separate Accounts' performance may have been adversely
affected.
(II) The Money Market Fund had an effective 7-day yield with a
current 7-day yield of 5.27% and 5.14%, respectively, for
the Institutional Class; 5.01% and 4.87%, respectively, for
the Service Class; and 4.74% and 4.64%, respectively, for
the Sweep Shares Class, all as of 6/30/99. These yields
reflect certain expense limitations. Had these expenses not
been limited, the effective 7-day yield and the current
7-day yield would have been 5.16% and 5.03%, respectively,
for the Institutional Class; 4.90% and 4.78%, respectively,
for the Service Class; and 4.63% and 4.53%, respectively,
for the Sweep Shares Class. These expense limitations are
voluntary and may be terminated or revised at any time.
Investments in the Money Market Fund are not insured or
guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Although the Fund seeks to
preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Fund.
(#) Effective 5/1/99, the Multi-Asset Fund was renamed the Asset
Manager Fund.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO
CURRENT MARKET VOLATILITY, PERFORMANCE MAY BE LESS THAN
SHOWN. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE
SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
Performance figures (through 1993 for the Value Equity Fund
and Growth Equity Fund, 1996 for the Asset Manager Fund, and
1998 for the International Equity Fund) reflect certain fee
waivers and/or expense limitations. As a result, total
return figures, which take into account these fee waivers
and/or expense limitations may have been lower had they not
been in effect. The fee waivers and expense limitations are
voluntary and may be terminated at any time. Please read the
prospectuses carefully before you invest or send money.
Most Funds are offered in two classes of shares, except the
Money Market Fund which has three classes. Investors should
consider, when deciding whether to purchase a particular
Class of shares, the services desired and other relevant
factors.
See prospectuses for more detailed information. The Funds'
prospectuses contain more information about advisory fees,
other expenses, and share classes. Please read them
carefully before you invest or send money.
The Institutional Class shares are sold with no sales
charge. The Service Class and Sweep Shares Class shares,
first offered 1/1/95 and 12/8/98, respectively, are sold
with no initial or contingent deferred sales charge, but are
subject to an annual shareholder service fee of .25%. In
addition, Sweep Shares Class shares are sold with an annual
12b-1 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.
</TABLE>
<PAGE> 2
TABLE OF CONTENTS
Chairman's Letter 2
PORTFOLIO MANAGEMENTS' DISCUSSIONS & ANALYSES
&
FINANCIAL STATEMENTS
EQUITY FUNDS
EAFE Index Fund 3
Growth Equity Fund 20
Indexed Equity Fund 30
International Equity Fund 46
Asset Manager Fund (formerly known as Multi-Asset
Fund) 58
Value Equity Fund 76
INCOME FUNDS
Bond Fund 86
Indexed Bond Fund 96
International Bond Fund 106
Money Market Fund 116
Short-Term Bond Fund 126
Note 1 Organization and Business 134
Note 2 Significant Accounting Policies 135
Note 3 Fees and Related Party Policies 143
Note 4 Federal Income Tax 145
Note 5 Financial Investments 146
Note 6 Line of Credit 146
Note 7 Purchases and Sales of Securities 148
Note 8 Capital Share Transactions 148
<PAGE> 3
CHAIRMAN'S LETTER
- --------------------------------------------------------------------------------
REPORT TO SHAREHOLDERS FOR THE SIX MONTHS
ENDED JUNE 30, 1999
This report outlines the key events that affected the MainStay Institutional
Funds during the first half of 1999. Throughout this period, each MainStay
Institutional Fund continued to be managed with a consistent, disciplined
process, seeking competitive returns in all market environments. Our Funds
invest across a wide range of issuers and most are also diversified by industry,
market sector, or geographic region.
During the six-month reporting period, the U.S. stock market provided returns
well above historical norms, reaching new highs in mid-May, then backing off
before surging ahead again at the end of June. Coming on the heels of three
consecutive years of above-average returns, recent stock market advances have
been impressive, supported by an expanding economy, relatively low interest
rates, and benign inflation. To maintain realistic expectations, however,
MainStay recommends considering short-term results in relation to longer-term
market trends and volatility patterns. While the past doesn't guarantee the
direction of future results, knowledge of historical return relationships can
help investors prepare for the possibility of both up and down markets.
Recent performance shifts among international stocks have provided a case in
point. Asian and Latin American stocks, which had experienced severe setbacks in
1998, showed strong recoveries in the first half of 1999, bringing performance
trends more closely in line with historical norms.
A long-term perspective could also benefit income investors, who saw prices on
most domestic bonds decline as yields rose throughout the first half of the
year. After carefully signaling its intentions, the Federal Reserve Board moved
to raise the targeted federal funds rate by 0.25% at the end of June. In Europe,
bonds also suffered primarily due to weakness in the euro and uncertainty over
Kosovo. Emerging market bonds, on the other hand, generally recovered during the
first half of the year.
By offering a wide range of Funds with different investment objectives and
portfolio management styles, MainStay can help you diversify your portfolio,
which may help to cushion the effects of volatility in any single market.
On the following pages, you'll review the results of your specific MainStay
Institutional Fund investments, with commentary from the portfolio managers. We
hope you find this helpful as you assess your overall investment goals and make
any appropriate adjustments as we approach the new millennium.
Sincerely,
/s/ STEPHEN C. ROUSSIN
Stephen C. Roussin
July 1999
2
<PAGE> 4
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
EAFE INDEX FUND
- --------------------------------------------------------------------------------
The first half of 1999 saw some significant market rotations in the
international equity markets. Performance in European markets pulled back,
while Asian and Pacific Rim markets recovered strongly. Slowing domestic growth
rates and a strong U.S. dollar vis-a-vis the euro hurt the previously strong
European markets. In contrast, the previously weak Asian and Pacific Rim
markets recovered from their earlier setbacks, primarily due to falling
domestic interest rates, strong domestic consumption, and improving exports.
Most international markets posted gains for the six-month period ended June 30,
1999.
BENCHMARK-BEATING PERFORMANCE
For the six months ended June 30, 1999, the MainStay Institutional EAFE Index
Fund returned 4.79% for Institutional Class Shares and 4.72% for Service Class
shares. Both share classes underperformed the average Lipper(1) international
fund, which returned 7.38% for the six-month period. However, both share classes
outperformed the Morgan Stanley Capital International Europe, Australia, and Far
East Index (EAFE Index),(2) which returned 3.97% for the same period.
The Fund is designed to track the total-return performance of the EAFE Index by
holding a subset of the benchmark's securities. The Fund primarily holds a
basket of stocks within each EAFE country. These baskets are weighted to closely
mirror the overall weight, risk, and return profiles of each individual country
in the Index. The Fund does not seek to emphasize any region, country, or
industry except as reflected in the Index.
JAPANESE STOCK AND EURO-IMPACTED INDEX
We believe that during the first half of the year, the two biggest influences on
the EAFE Index's performance, and thus the Fund, were the stunning reversal of
the Japanese equity market's performance and the introduction of the euro.
With Japan representing 23.3% of the EAFE Index, the portfolio's allocation to
Japan accounted for the single-largest impact on the Fund's performance,
returning 21.3% in U.S.-dollar terms during the first half of the year. This
dramatic recovery suggested that Japan may be moving toward greater economic
strength. The positive impact of Japanese stocks, however, was offset by
lackluster returns of the Fund's next four largest foreign market allocations.
Measuring each in U.S.-dollar terms, the equity markets of the United Kingdom
returned 3.6% on a portfolio allocation of 21.3%; Germany returned -10.7% on an
allocation of 9.1%; France returned -2.9% on an allocation of 9.0%; and
Switzerland returned -14.4% on an allocation of 6.3%.
Great expectations built on the euro's January introduction had fueled a strong
European market in 1998. As it happened, however, the euro's value versus the
U.S. dollar declined approximately 13% through June 30, 1999, dampening European
equity returns.
During the first half of 1999, the top-performing markets in U.S.-dollar terms
were Singapore, Hong Kong, Japan, and Australia. The worst-performing markets
were Belgium, Portugal, Ireland, and Switzerland.
LOOKING AHEAD
The MainStay Institutional EAFE Index Fund seeks to track the total-return
performance of its benchmark, the EAFE Index. As a result, we do not seek to
anticipate or react to changing market conditions in the Fund's investment
portfolio.
Rapid changes in various countries during the reporting period, however,
underscored the value
- --------------------------------------------------------------------------------
(1) Lipper, 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.
(2) The Morgan Stanley Capital International Europe, Australia, and Far East
Index--the EAFE Index--is an unmanaged index generally considered to be
representative of the international stock market. An investment cannot be
made directly into an index.
3
<PAGE> 5
of geographic diversification and its use as a risk management tool.
In Europe, we expect growth to improve gradually over the balance of the year,
bringing at least a temporary end to monetary easing--and we see no reason to
anticipate monetary tightening there in the near future. Equity markets in
Europe should perform well against the backdrop of improving growth as long as
inflation remains benign. We remain somewhat skeptical that a full-fledged
recovery is underway in Japan, though the worst is probably past. As for the
impact of U.S. monetary policy, if further tightening by the Federal Reserve
Board remains modest, we believe it is unlikely that such policy will cause
serious repercussions in the rest of the world.
Whatever happens, the Fund will continue to seek 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 EAFE Index.
Jefferson C. Boyce
Stephen B. Killian
Portfolio Managers
Monitor Capital Advisors, Inc.
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
4
<PAGE> 6
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
EAFE INDEX FUND VS MSCI EAFE INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
EAFE INDEX FUND MSCI EAFE INDEX
--------------- ---------------
<S> <C> <C>
1/2/91 10000.00 10000.00
3/31/91 10630.00 10743.00
6/30/91 10180.00 10156.00
9/30/91 10930.00 11027.00
12/31/91 11010.00 11212.00
3/31/92 9665.00 9881.00
6/30/92 9866.00 10090.00
9/30/92 10027.00 10242.00
12/31/92 9665.00 9847.00
3/31/93 10681.00 11027.00
6/30/93 11635.00 12137.00
9/30/93 12427.00 12941.00
12/31/93 12464.00 13053.00
3/31/94 12858.00 13509.00
6/30/94 13542.00 14200.00
9/30/94 13521.00 14214.00
12/31/94 13315.00 14069.00
3/31/95 13526.00 14331.00
6/30/95 13547.00 14435.00
9/30/95 14043.00 15037.00
12/31/95 14518.00 15646.00
3/31/96 14989.00 16098.00
6/30/96 15246.00 16353.00
9/30/96 15235.00 16332.00
12/31/96 15453.00 16591.00
3/31/97 15199.00 16331.00
6/30/97 17153.00 18451.00
9/30/97 17010.00 18321.00
12/31/97 15515.00 16887.00
3/31/98 17636.00 19371.00
6/30/98 17909.00 19576.00
9/30/98 15424.00 16794.00
12/31/98 18485.00 20264.00
6/30/99 19371.00 21068.00
</TABLE>
Source: Lipper, Inc.
THESE GRAPHS ASSUME A $10,000 INVESTMENT MADE ON 1/2/91.
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
EAFE INDEX FUND VS MSCI EAFE INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
EAFE INDEX FUND MSCI EAFE INDEX
--------------- ---------------
<S> <C> <C>
1/2/91 10000.00 10000.00
3/31/91 10630.00 10743.00
6/30/91 10180.00 10156.00
9/30/91 10930.00 11027.00
12/31/91 11010.00 11212.00
3/31/92 9665.00 9881.00
6/30/92 9866.00 10090.00
9/30/92 10027.00 10242.00
12/31/92 9665.00 9847.00
3/31/93 10681.00 11027.00
6/30/93 11635.00 12137.00
9/30/93 12427.00 12941.00
12/31/93 12464.00 13053.00
3/31/94 12858.00 13509.00
6/30/94 13542.00 14200.00
9/30/94 13521.00 14214.00
12/31/94 13315.00 14069.00
3/31/95 13537.00 14331.00
6/30/95 13547.00 14435.00
9/30/95 14011.00 15037.00
12/31/95 14465.00 15646.00
3/31/96 14947.00 16098.00
6/30/96 15182.00 16353.00
9/30/96 15150.00 16332.00
12/31/96 15386.00 16591.00
3/31/97 15110.00 16331.00
6/30/97 17049.00 18451.00
9/30/97 16894.00 18321.00
12/31/97 15397.00 16887.00
3/31/98 17496.00 19371.00
6/30/98 17752.00 19576.00
9/30/98 15292.00 16794.00
12/31/98 18296.00 20264.00
6/30/99 19160.00 21068.00
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF JUNE 30, 1999 AS OF JUNE 30, 1999
- -------------------------------------------------------------------------------------------------------
YEAR TO DATE ONE YEAR FIVE YEAR SINCE INCEPTION
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EAFE Index Fund Institutional Class 4.79% 8.17% 7.42% 8.09%
EAFE Index Fund Service Class(+) 4.72% 7.93% 7.19% 7.95%
Average Lipper International Fund 7.38% 4.83% 8.89% 10.43%
MSCI EAFE Index 3.97% 7.62% 8.21% 9.16%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
YEAR END
----------------------------------------------------------------------------------------------------------------
1999 AS
OF
1991 1992 1993 1994 1995 1996 1997 1998 6/30/99
------ ------ ------ ------ ------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10.10 -12.22 28.97 6.83 9.03 6.45 0.40 19.15 4.79
</TABLE>
- --------------------------------------------------------------------------------
* 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 gain distributions and
dividends, and, for the Service Class shares, include the service fee of .25%
on an annualized basis of the average daily net asset value of the Service
Class shares.
+ 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 12/31/94. Performance figures for these two
Classes after this date will vary based on differences in their expense
structure.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO CURRENT MARKET
VOLATILITY, PERFORMANCE MAY BE LESS THAN SHOWN. 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 and the Service Class shares are sold with no
sales charge or contingent deferred sales charge. The Service Class shares,
first offered 1/1/95, are subject to an annual shareholder service fee of
.25%.
Index funds seek to match their respective indices, unlike other funds which
generally seek to beat an index or indices.
5
<PAGE> 7
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (95.1%)+
SHARES VALUE
------------------------
<S> <C> <C>
AUSTRALIA (2.4%)
AMP, Ltd. (insurance)........... 15,056 $ 164,597
Boral, Ltd. (building materials
& components).................. 15,897 26,938
Brambles Industries, Ltd.
(business & public services)... 3,133 82,537
Broken Hill Proprietary Co.,
Ltd. (energy sources).......... 24,189 280,196
Coles Myer, Ltd.
(merchandising)................ 14,858 86,448
Lend Lease Corp., Ltd. (real
estate)........................ 7,023 96,427
National Australia Bank, Ltd.
(banking)...................... 17,423 288,316
News Corp., Ltd. (The)
(broadcasting & publishing).... 19,650 167,658
Pacific Dunlop, Ltd.
(multi-industry)............... 19,118 27,587
Pioneer International, Ltd.
(building materials &
components).................... 11,538 29,403
Rio Tinto, Ltd.
(metals-nonferrous)............ 4,034 66,146
Smith (Howard), Ltd. (multi-
industry)...................... 2,670 20,413
Star City Holdings, Ltd.
(leisure & tourism)............ 8,018 7,801
Telstra Corp., Ltd.
(telecommunications)........... 45,208 259,055
Westpac Banking Corp., Ltd.
(banking)...................... 26,107 169,351
WMC, Ltd. (metals-nonferrous)... 15,938 68,468
-----------
1,841,341
-----------
AUSTRIA (0.1%)
Bank Austria AG (banking)....... 1,579 83,047
Flughafen Wien AG (business &
public services)............... 293 12,295
Generali Holding Vienna AG
(insurance).................... 107 19,642
-----------
114,984
-----------
BELGIUM (1.0%)
Electrabel, S.A.
(utilities-electrical & gas)... 451 145,578
Fortis AG (insurance)........... 6,905 216,832
Fortis AG CVG (insurance)....... 700 3,985
Fortis AG STRIPS (insurance).... 6,300 65
KBC Bancassurance Holding N.V.
(banking)...................... 4,155 246,384
Tractebel, S.A.
(utilities-electrical & gas)... 871 122,160
-----------
735,004
-----------
DENMARK (0.7%)
Dampskibsselskabet AF 1912 Class
B (transportation-shipping).... 15 133,069
Dampskibsselskabet Svendborg AS
Class B
(transportation-shipping)...... 10 123,891
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
DENMARK (Continued)
Den Danske Bank Group
(banking)...................... 689 $ 74,727
FLS Industries AS Class B
(machinery & engineering)...... 435 11,311
Novo Nordisk AS Class B (health
& personal care)............... 965 104,258
Tele Danmark AS Class B
(telecommunications)........... 2,300 113,213
-----------
560,469
-----------
FINLAND (1.7%)
Kesko Oyj (wholesale &
international trade)........... 1,300 17,496
Kone Corp. Class B (machinery &
engineering)................... 174 21,712
Metra Oyj Class B
(multi-industry)............... 539 11,395
Nokia Oyj Class A (electrical &
electronics)................... 13,624 1,194,255
Pohjola Group Insurance Corp.
Class B (insurance)............ 329 16,880
-----------
1,261,738
-----------
FRANCE (9.0%)
Air Liquide, S.A. (chemicals)... 1,139 179,130
Accor, S.A. (leisure &
tourism)....................... 505 126,813
Alcatel, S.A. (electrical &
electronics)................... 2,156 303,497
AXA, S.A. (insurance)........... 2,987 364,413
Banque Nationale de Paris
(banking)...................... 2,128 177,319
Cap Gemini, S.A. (business &
public services)............... 991 155,751
Carrefour, S.A.
(merchandising)................ 2,445 359,308
Casino Guichard Perrachon
(merchandising)................ 1,045 91,603
Compagnie de Saint Gobain, S.A.
(building materials &
components).................... 1,343 213,982
Compagnie Generale de
Geophysique, S.A. (energy
equipment & services) (a)...... 71 3,771
Elf Aquitaine, S.A. (energy
sources)....................... 2,822 414,129
France Telecom, S.A.
(telecommunications)........... 9,747 736,295
Groupe Danone, S.A. (food &
household products)............ 732 188,723
Lafarge, S.A. (building
materials & components)........ 1,437 136,635
L'Oreal, S.A. (health & personal
care).......................... 475 321,099
LVMH (Louis Vuitton Moet
Hennessy), S.A. (recreation &
other consumer goods).......... 980 286,923
</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.
6
<PAGE> 8
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
FRANCE (Continued)
LVMH (Louis Vuitton Moet
Hennessy), S.A. Bonus Rights
(recreation & other consumer
goods)......................... 980 $ 29,308
Michelin (CGDE), S.A. Class B
(industrial components)........ 2,173 88,899
Paribas, S.A. (banking)......... 1,620 181,601
Pinault-Printemps-Redoute, S.A.
(merchandising)................ 1,069 183,444
Promodes, S.A.
(merchandising)................ 203 133,250
PSA Peugeot, S.A.
(automobiles).................. 628 99,089
Rhone-Poulenc, S.A. (health &
personal care)................. 4,053 185,205
Sanofi Synthelabo, S.A. (health
& personal care)............... 7,580 321,672
Schneider, S.A. (electrical &
electronics)................... 2,418 135,777
Societe Generale, S.A. Class A
(banking)...................... 1,140 200,919
Suez Lyonnaise des Eaux, S.A.
(business & public services)... 1,408 253,960
Total Fina, S.A. Class B (energy
sources) (a)................... 3,745 483,151
Total Fina, S.A. Strip (energy
sources) (a)................... 1,696 17
Valeo, S.A. (industrial
components).................... 1,153 95,125
Vivendi, S.A. (business & public
services)...................... 4,806 389,317
-----------
6,840,125
-----------
GERMANY (8.9%)
Adidas-Salomon AG (recreation &
other consumer goods).......... 650 63,279
AGIV AG (multi-industry)........ 904 20,491
Allianz AG Registered
(insurance).................... 1,806 504,732
AMB Aachener & Muenchener
Beteiligungs AG (insurance).... 550 55,018
BASF AG (chemicals)............. 8,684 381,507
Bayer AG (chemicals)............ 10,217 425,148
Bayerische Hypo-und Vereinsbank
AG (banking)................... 4,549 289,451
Beiersdorf AG (health & personal
care).......................... 1,196 79,554
DaimlerChrysler AG
(automobiles).................. 4,685 409,229
Deutsche Bank AG (banking)...... 6,050 368,737
Deutsche Lufthansa AG Registered
(transportation-airlines)...... 5,300 96,471
Deutsche Telekom AG
(telecommunications)........... 20,400 857,298
Dresdner Bank AG (banking)...... 5,750 223,554
Heidelberger Zement AG (building
materials & components)........ 665 53,835
Hochtief AG (construction &
housing)....................... 986 44,741
Linde AG (machinery &
engineering)................... 100 60,020
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
GERMANY (Continued)
Mannesmann AG
(telecommunications)........... 3,250 $ 485,987
Merck KGaA (health & personal
care).......................... 2,100 68,002
Metro AG (merchandising) (a).... 2,650 168,618
Muenchener Rueckverischerungs-
Gesellschaft AG Registered
(insurance) (a)................ 1,608 302,969
Preussag AG (multi-industry).... 2,350 126,506
RWE AG (utilities-electrical &
gas)........................... 3,739 173,131
SAP AG (business & public
services)...................... 600 205,739
Schering AG (health & personal
care).......................... 950 101,498
Siemens AG (electrical &
electronics)................... 5,458 421,026
Strabag AG (construction &
housing)....................... 216 11,695
Thyssen AG (metals-steel)....... 7,200 157,784
Veba AG (utilities-electrical &
gas)........................... 3,729 219,969
Viag AG (utilities-electrical &
gas)........................... 294 136,437
Volkswagen AG (automobiles)..... 3,650 235,522
-----------
6,747,948
-----------
HONG KONG (2.4%)
Cathay Pacific Airways, Ltd.
(transportation-airlines)...... 47,409 72,716
Cheung Kong (Holdings), Ltd.
(real estate).................. 21,000 186,759
Chinese Estates Holdings, Ltd.
(real estate).................. 68,854 12,511
CLP Holdings, Ltd. (utilities-
electrical & gas).............. 23,932 116,288
Hang Lung Development Co., Ltd.
(real estate).................. 18,946 23,442
Hang Seng Bank, Ltd.
(banking)...................... 18,530 207,186
Hong Kong & China Gas Co., Ltd.
(utilities-electrical & gas)... 51,503 74,679
Hong Kong Telecom, Ltd.
(telecommunications)........... 128,458 333,618
Hopewell Holdings, Ltd. (multi-
industry)...................... 18,706 14,224
Hutchison Whampoa, Ltd. (multi-
industry)...................... 37,381 338,466
Miramar Hotel & Investment, Ltd.
(real estate).................. 31,028 37,792
New World Development Co., Ltd.
(real estate).................. 29,772 89,218
Shangri-La Asia, Ltd. (leisure &
tourism)....................... 25,464 31,507
Sun Hung Kai Properties, Ltd.
(real estate).................. 22,000 200,616
Swire Pacific, Ltd. Class A
(multi-industry)............... 21,885 108,315
-----------
1,847,337
-----------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
7
<PAGE> 9
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
IRELAND (0.3%)
Allied Irish Banks PLC
(banking)...................... 12,000 $ 157,784
Irish Life & Permanent PLC
(insurance).................... 4,199 44,386
-----------
202,170
-----------
ITALY (4.3%)
Assicurazioni Generali S.p.A.
(insurance).................... 8,500 294,532
Banca Commerciale Italiana
S.p.A. (banking)............... 23,820 173,919
Bulgari S.p.A. (recreation &
other consumer goods).......... 5,548 37,304
Cementir S.p.A. (building
materials & components)........ 4,510 4,791
Edison S.p.A.
(utilities-electrical & gas)... 9,000 77,964
ENI S.p.A. (energy sources)..... 89,248 532,909
Fiat S.p.A. (automobiles)....... 51,566 163,258
Istituto Nazionale delle
Assicurazioni S.p.A.
(insurance).................... 59,698 138,523
Magneti Marelli S.p.A.
(industrial components)........ 16,000 21,203
Mediaset S.p.A. (broadcasting &
publishing).................... 16,500 146,678
Mediobanca S.p.A. (banking)
(a)............................ 8,523 89,214
Montedison S.p.A.
(multi-industry)............... 39,451 64,282
Olivetti S.p.A.
(telecommunications) (a)....... 47,500 114,138
Olivetti S.p.A. Rights
(teleommunications) (a)........ 40,000 5,384
Pirelli S.p.A. (industrial
components).................... 26,468 72,062
San Paolo-IMI S.p.A.
(banking)...................... 19,035 259,120
Snia S.p.A. (multi-industry).... 9,873 12,371
Telecom Italia S.p.A.
(telecommunications) (a)....... 33,920 352,605
Telecom Italia Mobile S.p.A.
(telecommunications)........... 71,696 428,104
Unicredito Italiano S.p.A.
(banking)...................... 56,119 246,542
Unione Immobiliare S.p.A. (real
estate)........................ 59,698 26,470
-----------
3,261,373
-----------
JAPAN (23.3%)
Acom Co., Ltd. (financial
services)...................... 1,600 138,140
Ajinomoto Co., Inc. (food &
household products)............ 9,567 109,079
Arabian Oil Co., Ltd. (energy
sources)....................... 1,387 24,695
Asahi Bank, Ltd. (banking)...... 25,986 124,525
Asahi Breweries, Ltd. (beverages
& tobacco)..................... 7,098 88,318
Asahi Chemical Industry Co.,
Ltd. (chemicals)............... 20,649 114,474
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
JAPAN (Continued)
Asahi Glass Co., Ltd.
(miscellaneous-materials &
commodities)................... 17,000 $ 110,257
Ashikaga Bank, Ltd. (banking)... 3,043 5,933
Bank of Tokyo-Mitsubishi, Ltd.
(banking) (c).................. 38,375 546,283
Bank of Yokohama, Ltd.
(banking)...................... 11,000 28,265
Bridgestone Corp. (industrial
components).................... 10,935 330,662
Brother Industries, Ltd.
(appliances & household
durables)...................... 6,601 22,742
Canon, Inc. (data processing &
reproduction).................. 10,288 295,797
Chiba Bank, Ltd. (banking)...... 11,600 42,840
Chiyoda Corp. (machinery &
engineering) (a)............... 6,000 12,393
Chugai Pharmaceutical Co., Ltd.
(health & personal care)....... 2,974 32,041
Citizen Watch Co., Ltd.
(recreation & other consumer
goods)......................... 3,678 31,907
Dai Nippon Printing Co., Ltd.
(business & public services)... 10,133 161,996
Daiei, Inc. (merchandising)
(a)............................ 11,467 39,223
Daikin Industries, Ltd.
(machinery & engineering)...... 4,000 46,432
Dainippon Ink & Chemical, Inc.
(chemicals).................... 11,203 38,134
Daiwa House Industry Co., Ltd.
(construction & housing)....... 6,667 70,120
Daiwa Securities Group Inc.
(financial services)........... 13,287 87,822
Denso Corp. (industrial
components) (c)................ 12,331 250,621
East Japan Railway Co.
(transportation-road & rail)... 56 300,737
Ebara Corp. (machinery &
engineering)................... 3,660 43,514
Eisai Co., Ltd. (health &
personal care)................. 3,677 72,455
Fanuc, Ltd. (electronic
components & instruments)...... 3,323 178,455
Fuji Bank, Ltd. (banking) (c)... 31,432 219,178
Fuji Photo Film, Ltd.
(recreation & other consumer
goods) (c)..................... 7,394 279,788
Fujitsu, Ltd. (data processing &
reproduction).................. 18,107 364,277
Furukawa Electric Co., Ltd.
(industrial components)........ 11,558 52,998
Gunma Bank, Ltd. (banking)...... 6,766 42,484
Hitachi, Ltd. (electrical &
electronics) (a)(c)............ 31,857 298,736
Hitachi Zosen Corp. (machinery &
engineering)................... 19,634 23,684
Hokuriku Bank, Ltd. (banking)
(a)............................ 15,952 31,631
Honda Motor Co., Ltd.
(automobiles) (c).............. 9,345 396,078
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
8
<PAGE> 10
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
JAPAN (Continued)
Industrial Bank of Japan, Ltd.
(The) (banking)................ 18,283 $ 145,012
Ito-Yokado Co., Ltd.
(merchandising)................ 4,375 292,784
Japan Airlines Co., Ltd.
(transportation-airlines)...... 25,138 83,076
Japan Energy Corp. (energy
sources)....................... 15,637 18,345
Japan Steel Works, Ltd.
(machinery & engineering)
(a)............................ 5,176 6,458
Joyo Bank, Ltd. (banking)....... 13,550 52,729
Jusco Co., Ltd.
(merchandising)................ 5,000 90,882
Kajima Corp. (construction &
housing)....................... 12,910 46,932
Kamigumi Co., Ltd. (business &
public services)............... 3,456 17,732
Kansai Electric Power Co., Inc.
(utilities-electrical & gas)... 5,528 105,046
Kao Corp. (food & household
products)...................... 6,000 168,545
Kawasaki Heavy Industries, Ltd.
(machinery & engineering)...... 19,050 51,624
Kawasaki Steel Corp. (metals-
steel) (a)..................... 45,815 85,546
Keihin Electric Express Railway
(transportation-road & rail)... 3,000 9,914
Kinki Nippon Railway Co., Ltd.
(transportation-road & rail)... 22,124 108,759
Kirin Brewery Co., Ltd.
(beverages & tobacco).......... 14,154 169,564
Komatsu, Ltd. (machinery &
engineering)................... 12,162 77,673
Kubota Corp. (machinery &
engineering)................... 17,806 53,254
Kumagai Gumi Co., Ltd.
(construction & housing)....... 9,812 10,944
Kyocera Corp. (electronic
components & instruments)...... 2,490 146,064
Kyowa Hakko Kogyo (health &
personal care)................. 4,234 24,242
Makita Corp. (electrical &
electronics)................... 2,448 27,689
Marubeni Corp. (wholesale &
international trade)........... 20,723 43,317
Marui Co., Ltd.
(merchandising)................ 5,378 88,866
Matsushita Electric Industrial
Co., Ltd. (appliances &
household durables)............ 19,247 373,694
Mitsubishi Chemical Corp.
(chemicals).................... 29,833 103,273
Mitsubishi Corp. (wholesale &
international trade)........... 21,531 145,868
Mitsubishi Electric Corp.
(electrical & electronics)..... 30,000 115,254
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
JAPAN (Continued)
Mitsubishi Estate Co., Ltd.
(real estate).................. 15,191 $ 148,225
Mitsubishi Heavy Industries,
Ltd. (machinery &
engineering)................... 47,059 190,900
Mitsubishi Trust & Banking Corp.
(banking)...................... 12,031 116,894
Mitsui & Co., Ltd. (wholesale &
international trade)........... 18,822 131,248
Mitsui Fudosan Co., Ltd. (real
estate)........................ 11,129 90,109
Mitsui Marine & Fire Insurance
Co., Ltd. (insurance).......... 8,359 41,092
Mitsui O.S.K. Lines, Ltd.
(transportation-shipping)...... 12,266 26,349
Mitsui Trust & Banking Co., Ltd.
(banking)...................... 21,000 33,487
Mitsukoshi, Ltd. (merchandising)
(a)............................ 6,758 29,369
Murata Manufacturing Co., Ltd.
(electronic components &
instruments)................... 2,000 131,531
NEC Corp. (electrical &
electronics)................... 17,416 216,556
NGK Insulators, Ltd. (industrial
components).................... 4,800 50,127
Niigata Engineering Co., Ltd.
(machinery & engineering)
(a)............................ 11,000 10,542
Nikon Corp. (electronic
components & instruments)...... 5,407 88,451
Nippon Express Co., Ltd.
(transportation-road & rail)... 14,446 86,530
Nippon Fire & Marine Insurance,
Ltd. (insurance)............... 9,686 32,810
Nippon Light Metal Co., Ltd.
(metals-nonferrous)............ 7,577 11,331
Nippon Meat Packers, Inc. (food
& household products).......... 3,357 43,822
Nippon Mitsubishi Oil Co.
(energy sources)............... 20,136 84,845
Nippon Steel Corp.
(metals-steel)................. 95,313 221,279
Nippon Telegraph & Telephone
Corp. (telecommunications)..... 110 1,281,435
Nissan Motor Co., Ltd.
(automobiles).................. 29,121 139,064
Nisshinbo Industries, Inc.
(textile & apparel)............ 3,363 15,310
Nissin Food Products Co., Ltd.
(food & household products).... 1,384 33,732
NKK Corp. (metals-steel) (a).... 35,919 29,378
Nomura Securities Co., Ltd.
(financial services)........... 17,955 210,203
Obayashi Corp. (construction &
housing)....................... 10,799 54,336
Oji Paper Co., Ltd. (forest
products & paper).............. 14,490 83,801
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
9
<PAGE> 11
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
JAPAN (Continued)
Olympus Optical Co., Ltd.
(electronic components &
instruments)................... 4,000 $ 59,123
Orient Corp. (financial
services)...................... 4,483 13,037
Osaka Gas Co.
(utilities-electrical & gas)... 23,126 78,529
Penta-Ocean Construction Co.,
Ltd. (construction & housing)
(a)............................ 10,000 17,433
Pioneer Electronic Corp.
(appliances & household
durables)...................... 2,078 40,432
Rohm Co., Ltd. (electronic
components & instruments)...... 1,000 156,565
Sakura Bank, Ltd. (banking)..... 36,834 139,686
Sankyo Co., Ltd. (health &
personal care)................. 6,654 167,675
Sanrio Co., Ltd. (recreation &
other consumer goods).......... 861 29,308
Sanyo Electric Co., Ltd.
(appliances & household
durables)...................... 26,684 108,468
Sapporo Breweries, Ltd.
(beverages & tobacco).......... 5,692 25,254
Sato Kogyo Co., Ltd.
(construction & housing)....... 12,000 10,014
Secom Co., Ltd. (business &
public services)............... 1,000 104,101
Sekisui House, Ltd.
(construction & housing)....... 10,000 107,902
Sharp Corp. (appliances &
household durables)............ 10,279 121,443
Shimizu Corp. (construction &
housing)....................... 11,055 43,111
Shin-Etsu Chemical Co., Ltd.
(chemicals).................... 4,830 161,617
Shionogi & Co., Ltd. (health &
personal care)................. 5,396 42,665
Shiseido Co., Ltd. (health &
personal care)................. 5,739 86,012
Shizuoka Bank, Ltd. (banking)... 11,494 114,526
SMC Corp. (machinery &
engineering)................... 900 100,755
Sony Corp. (appliances &
household durables)............ 3,741 403,351
Sumitomo Bank, Ltd. (banking)
(c)............................ 25,242 313,034
Sumitomo Chemical Co., Ltd.
(chemicals).................... 22,403 102,727
Sumitomo Corp. (wholesale &
international trade)........... 13,864 101,372
Sumitomo Electric Industries
(industrial components)........ 9,982 113,480
Sumitomo Marine & Fire Insurance
Co., Ltd. (insurance).......... 8,126 49,010
Sumitomo Metal Industries, Ltd.
(metals-steel) (a)............. 50,343 62,808
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
JAPAN (Continued)
Sumitomo Metal Mining Co.
(metals-nonferrous) (a)........ 11,298 $ 46,672
Taiheiyo Cement Corp. (building
materials & components)........ 12,783 36,648
Taisei Corp. (construction &
housing)....................... 13,713 30,137
Taisho Pharmaceutical Co., Ltd.
(health & personal care)....... 5,066 167,421
Taiyo Yuden Co., Ltd.
(electronic components &
instruments)................... 2,127 34,900
Takashimaya Co., Ltd.
(merchandising)................ 4,574 43,723
Takeda Chemical Industries, Ltd.
(health & personal care)....... 7,318 339,188
Teikoku Oil Co., Ltd. (energy
sources)....................... 6,646 21,524
Tobu Railway Co., Ltd.
(transportation-road & rail)... 12,000 34,007
Tohoku Electric Power Co., Inc.
(utilities-electrical & gas)... 6,968 105,468
Tokai Bank, Ltd. (banking)...... 18,989 108,252
Tokio Marine & Fire Insurance
Co., Ltd. (insurance).......... 12,540 136,241
Tokyo Electric Power Co., Inc.
(utilities-electrical & gas)... 10,751 226,947
Tokyo Electron, Ltd. (electronic
components & instruments)...... 2,192 148,686
Tokyo Gas Co.
(utilities-electrical & gas)... 41,091 101,170
Tokyo Steel Manufacturing Co.,
Ltd. (metals-steel)............ 2,194 11,529
Tokyu Corp. (transportation-road
& rail)........................ 15,451 38,935
Toppan Printing Co., Ltd.
(business & public services)... 10,076 112,468
Toray Industries, Inc.
(chemicals).................... 20,000 100,136
Tostem Corp. (building materials
& components).................. 2,935 56,379
Toto, Ltd. (building materials &
components).................... 5,467 42,233
Toyo Seikan Kaisha, Ltd.
(miscellaneous-materials &
commodities)................... 3,445 77,418
Toyoda Automatic Loom Works,
Ltd. (machinery &
engineering)................... 4,000 67,914
Toyota Motor Corp. (automobiles)
(c)............................ 34,152 1,080,685
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
10
<PAGE> 12
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
JAPAN (Continued)
Ube Industries, Ltd.
(miscellaneous-materials &
commodities)................... 11,768 $ 25,377
Uny Co., Ltd. (merchandising)... 2,346 35,276
Yamaha Corp. (recreation & other
consumer goods)................ 4,188 50,345
Yamanouchi Pharmaceutical Co.,
Ltd. (health & personal
care).......................... 5,000 191,265
-----------
17,696,938
-----------
MALAYSIA (0.6%)
Golden Hope Plantations Berhad
(miscellaneous-materials &
commodities)................... 39,056 30,171
Hong Leong Properties Berhad
(real estate).................. 56,625 19,592
Kuala Lumpur Kepong Berhad
(miscellaneous-materials &
commodities)................... 21,044 25,933
Leader Universal Holdings Berhad
(industrial components) (a).... 30,000 11,304
Malayan Banking Berhad
(banking)...................... 21,588 58,320
Malaysia International Shipping
Corp. Berhad Foreign Registered
(transportation-shipping)...... 14,236 23,447
Malaysian Airline System Berhad
(transportation-airlines)...... 856 1,055
Malaysian Resources Corp. Berhad
(real estate).................. 25,333 15,309
Metroplex Berhad (real
estate)........................ 10,434 2,249
Multi-Purpose Holdings Berhad
(multi-industry) (a)........... 27,000 14,396
Perlis Plantations Berhad (food
& household products).......... 13,560 14,268
Resorts World Berhad (leisure &
tourism)....................... 19,000 40,297
Sime Darby Berhad
(multi-industry)............... 464 548
Technology Resources Industries
Berhad (telecommunications).... 25,409 18,665
Telekom Malaysia Berhad
(telecommunications)........... 28,700 96,575
Tenaga Nasional Berhad
(utilities-electrical & gas)... 23,117 47,933
-----------
420,062
-----------
NETHERLANDS (5.4%)
ABN AMRO Holding N.V.
(banking)...................... 11,506 249,181
Aegon N.V (insurance)........... 4,979 361,227
Akzo Nobel N.V. (chemicals)..... 3,984 167,630
Elsevier N.V. (broadcasting &
publishing).................... 9,310 108,013
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
NETHERLANDS (Continued)
Heineken N.V. (beverages &
tobacco)....................... 4,292 $ 219,762
ING Groep N.V. (financial
services)...................... 8,614 466,377
Koninklijke Ahold N.V.
(merchandising)................ 6,297 216,897
Koninklijke Hoogovens CVA N.V.
(metals-steel)................. 526 27,448
Koninklijke KPN N.V.
(telecommunications)........... 5,400 253,384
Koninklijke Nedlloyd Groep N.V.
(transportation-road & rail)... 319 7,895
Koninklijke Pakhoed N.V. (energy
equipment & service)........... 921 21,846
Koninklijke (Royal) Philips
Electronics N.V. (appliances &
household durables)............ 3,384 333,802
Royal Dutch Petroleum Co.
(energy sources)............... 19,880 1,164,497
TNT Post Group N.V. (business &
public services)............... 4,812 114,882
Unilever CVA N.V. (food &
household products)............ 5,566 375,142
-----------
4,087,983
-----------
NEW ZEALAND (0.2%)
Carter Holt Harvey Ltd. (forest
products & paper).............. 21,197 25,385
Fletcher Challenge Energy
(energy sources)............... 2,375 6,444
Fletcher Challenge Forests
(forest products & paper)...... 20,290 11,397
Telecom Corp. of New Zealand
Ltd. (telecommunications)...... 24,470 105,035
-----------
148,261
-----------
NORWAY (0.2%)
Christiania Bank Og Kreditkasse
(banking)...................... 7,653 27,512
Elkem ASA Class A (metals-
nonferrous).................... 733 13,036
Norsk Hydro ASA (energy
sources)....................... 3,159 119,181
Orkla ASA Class A
(multi-industry)............... 2,000 31,122
-----------
190,851
-----------
PORTUGAL (0.5%)
Banco Comercial Portugues, S.A.
Registered (banking)........... 2,749 71,243
Banco Espirito Santo e Comercial
de Lisboa, S.A. Registered
(banking)...................... 1,200 27,919
Cimpor-Cementos de Portugal,
SGPS, S.A. (building materials
& components).................. 1,200 30,938
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
11
<PAGE> 13
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
PORTUGAL (Continued)
Electricidade de Portugal, S.A.
(utilities-electrical & gas)... 8,374 $ 150,782
Portugal Telecom, S.A.
Registered (telecommunications)
(a)............................ 2,450 99,675
Portugal Telecom, S.A. Bonus
Rights (telecommunications)
(a)............................ 2,450 25
-----------
380,582
-----------
SINGAPORE (0.7%)
City Developments, Ltd. (real
estate)........................ 9,348 59,851
Development Bank of Singapore,
Ltd. Foreign Registered
(banking)...................... 6,212 75,896
Sembcorp Industries Ltd. (multi-
industry)...................... 29,512 46,803
Singapore Airlines, Ltd. Foreign
Registered (transportation-
airlines) (a).................. 12,273 116,785
Singapore Telecommunications,
Ltd. (telecommunications)...... 83,258 142,804
United Overseas Bank, Ltd.
Foreign Registered (banking)... 9,898 69,186
-----------
511,325
-----------
SPAIN (3.1%)
Argentaria, Caja Postal y Banco
Hipotecario de Espana, S.A.
Registered (banking)........... 6,846 155,957
Autopistas Concesionaria
Espanola, S.A. (business &
public services)............... 2,800 32,774
Autopistas Concesionaria
Espanola, S.A. Bonus Rights
(business & public services)
(a)............................ 2,800 1,618
Banco Bilbao Vizcaya, S.A.
Registered (banking)........... 26,453 382,196
Banco Santander Central Hispano,
S.A. (banking)................. 34,700 361,432
Empresa Nacional de Celulosas,
S.A. (forest products &
paper)......................... 296 5,281
Endesa, S.A.
(utilities-electrical & gas)... 11,653 248,520
Gas Natural SDG, S.A.
(utilities-electrical & gas)... 1,546 112,401
Iberdrola, S.A.
(utilities-electrical & gas)... 12,581 191,633
Repsol, S.A. (energy sources)... 12,559 256,445
Tabacalera, S.A. (beverages &
tobacco)....................... 2,572 51,988
Telefonica, S.A.
(telecommunications) (a)....... 11,514 554,637
-----------
2,354,882
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
SWEDEN (2.2%)
ABB AB (electrical &
electronics)................... 6,380 $ 84,424
Drott AB Series B (real
estate)........................ 1,000 8,116
Electrolux AB Series B
(appliances & household
durables)...................... 5,100 106,778
ForeningsSparbanken AB
(banking)...................... 7,400 104,450
Hennes & Mauritz AB Series B
(merchandising)................ 8,700 214,897
Mandmus AB (real estate)........ 130 688
NetCom AB Series B
(telecommunications)........... 1,500 50,460
Skandia Forsakrings AB
(insurance).................... 7,100 132,784
Skanska AB Series B
(construction & housing)....... 1,600 60,317
Svenska Cellulosa AB Series B
(forest products & paper)...... 2,750 71,162
Svenska Handelsbanken Series A
(banking)...................... 6,300 75,584
Swedish Match AB (beverages &
tobacco)....................... 5,983 21,324
Telefonaktiebolaget LM Ericsson
Series B (electrical &
electronics)................... 20,084 643,736
Volvo AB Series B
(automobiles).................. 4,225 122,500
-----------
1,697,220
-----------
SWITZERLAND (6.3%)
ABB AG Bearer (electrical &
elelctronics).................. 80 118,359
Adecco, S.A. (business & public
services)...................... 200 107,166
Alusuisse Lonza Group AG
Registered (multi-industry).... 90 104,902
Credit Suisse Group Registered
(banking)...................... 2,570 444,702
Holderbank Financiere Glarus AG
Bearer (building materials &
components).................... 70 82,626
Holderbank Financiere Glarus AG
Registered (building materials
& components).................. 150 47,762
Jelmoli Holdings, Ltd. Bearer
(merchandising)................ 10 9,263
Nestle S.A. Registered (food &
household products)............ 395 711,696
Novartis A.G. Registered (health
& personal care)............... 640 934,523
Roche Holdings AG Bearer (health
& personal care)............... 14 230,543
Roche Holdings AG Genusscheine
(health & personal care)....... 64 657,871
Schindler Holding AG
Participating Certificates
(machinery & engineering)...... 10 15,309
Schindler Holding AG Registered
(machinery & engineering)...... 10 15,438
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
12
<PAGE> 14
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
SWITZERLAND (Continued)
Societe Generale de Surveillance
Holding S.A. Bearer (business &
public services)............... 15 $ 15,535
Societe Generale de Surveillance
Holding S.A. Registered
(business & public service).... 70 17,336
Sulzer AG Registered (machinery
& engineering) (a)............. 50 30,394
Swatch Group AG Registered
(recreation & other consumer
goods)......................... 200 28,561
Schweizerische
Rueckversicherungs Gesellschaft
Registered (insurance)......... 145 276,086
Swisscom AG
(telecommunications)........... 770 289,755
UBS AG Registered (banking)..... 1,910 570,080
Zurich Allied AG Registered
(insurance).................... 200 113,728
-----------
4,821,635
-----------
UNITED KINGDOM (21.3%)
Abbey National PLC (banking).... 13,800 258,208
Allied Zurich PLC (insurance)... 17,418 217,589
Associated British Foods PLC
(food & household products).... 11,054 73,095
AstraZeneca Group PLC (health &
personal care)................. 16,708 647,360
BAA PLC (business & public
services)...................... 13,374 128,281
Barclays PLC (banking).......... 14,028 408,857
Bass PLC (leisure & tourism).... 11,114 161,613
BG PLC (utilities-electrical &
gas)........................... 36,991 226,385
Boots Co. PLC (merchandising)... 12,773 152,415
BP Amoco PLC (energy sources)... 88,971 1,593,186
British Aerospace PLC (aerospace
& military technology)......... 24,695 161,448
British Airways PLC
(transportation-airlines)...... 14,700 101,086
British American Tobacco PLC
(beverages & tobacco).......... 27,893 260,289
British Sky Broadcasting Group
PLC (broadcasting &
publishing).................... 19,247 177,938
British Steel PLC
(metals-steel)................. 27,636 71,116
British Telecommunications PLC
(telecommunications) (a)....... 58,165 971,867
BTR PLC (multi-industry)........ 49,684 235,343
Cable & Wireless PLC
(telecommunications)........... 25,089 319,348
Cadbury Schwepps PLC (beverages
& tobacco)..................... 28,606 182,172
Centrica PLC (energy sources)... 43,637 102,489
CGU PLC (insurance)............. 14,752 212,388
Coats Viyella PLC (textiles &
apparel)....................... 9,814 7,812
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
UNITED KINGDOM (Continued)
De La Rue PLC (business & public
services)...................... 1,910 $ 11,456
Diageo PLC (beverages &
tobacco)....................... 37,816 394,016
Elementis PLC (chemicals)....... 11,290 18,775
General Electric Co. PLC
(electrical & electronics)..... 31,816 321,972
GKN PLC (machinery &
engineering)................... 9,928 169,953
Glaxo Wellcome PLC (health &
personal care)................. 32,226 895,058
Granada Group PLC (leisure &
tourism)....................... 12,782 238,556
Great Universal Stores PLC (The)
(merchandising)................ 15,300 171,112
Halifax PLC (banking)........... 22,202 264,928
Hanson PLC (building materials &
components).................... 9,656 84,627
Hilton Group PLC (leisure &
tourism)....................... 18,213 72,275
HSBC Holdings PLC (HK par)
(banking) (i).................. 16,192 573,767
HSBC Holdings PLC (L par)
(banking) (i).................. 7,100 251,814
Imperial Chemical Industries PLC
(chemicals).................... 8,666 85,650
Kingfisher PLC
(merchandising)................ 14,922 171,825
Land Securities PLC (real
estate)........................ 7,747 103,921
LASMO PLC (energy sources)...... 22,009 49,525
Legal & General Group PLC
(insurance).................... 75,200 191,437
Lloyds TSB Group PLC
(banking)...................... 49,824 673,461
Marks & Spencer PLC
(merchandising)................ 39,940 232,311
National Grid Group PLC
(utilities-electrical & gas)... 18,314 126,804
National Power PLC (utilities-
electrical & gas).............. 17,290 126,459
Next PLC (merchandising)........ 5,222 63,465
Pearson PLC (broadcasting &
publishing).................... 8,509 172,085
Peninsular & Oriental Steam
Navigation Co. Deferred Stock
(The) (transportation-
shipping)...................... 8,975 134,823
Prudential Corp. PLC
(insurance).................... 18,366 271,844
Racal Electronic PLC (electrical
& electronics)................. 4,570 27,842
Railtrack Group PLC (business &
public services)............... 6,824 139,191
Rank Group PLC (leisure &
tourism)....................... 12,294 48,641
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
13
<PAGE> 15
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
UNITED KINGDOM (Continued)
Rentokil Initial PLC (business &
public services)............... 40,009 $ 156,403
Reuters Group PLC (business &
public services)............... 15,068 198,446
Rio Tinto PLC Registered
(metals-nonferrous)............ 14,775 245,940
Rolls-Royce PLC (aerospace &
military technology)........... 20,600 87,431
Royal & Sun Alliance Insurance
Group PLC (insurance).......... 19,859 178,121
Royal Bank of Scotland Group PLC
(banking)...................... 9,138 185,958
Sainsbury (J.) PLC
(merchandising)................ 26,617 167,405
Scottish & Newcastle PLC
(leisure & tourism)............ 8,661 90,447
Scottish Power PLC (utilities-
electrical & gas).............. 14,198 122,868
SmithKline Beecham PLC (health &
personal care)................. 50,481 655,284
Tarmac PLC (building materials &
components).................... 7,257 13,641
Tesco PLC (merchandising)....... 87,553 227,025
Thames Water PLC (business &
public services)............... 5,760 91,703
Unilever PLC (food & household
products)...................... 33,788 300,651
United Biscuits (Holdings) PLC
(food & household products).... 9,940 29,849
Vodafone PLC
(telecommunications)........... 28,456 562,484
Williams PLC (electronic
components & instruments)...... 10,172 67,183
Wilson Connolly Holdings PLC
(construction & housing)....... 5,216 14,183
-----------
16,152,900
-----------
UNITED STATES (0.5%)
DaimlerChrysler AG
(automobiles).................. 4,177 371,231
-----------
371,231
-----------
Total Common Stocks (Cost
$56,278,861)................... 72,246,359(f)
-----------
PREFERRED STOCKS (0.4%)
AUSTRALIA (0.2%)
News Corp., Ltd.
A$ 0.075
(broadcasting & publishing)
(d)(i)......................... 19,878 151,445
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
GERMANY (0.2%)
RWE AG
E 0.92
(utilities-electrical & gas)
(d)(i)......................... 1,154 $ 40,344
SAP AG
E 1.60
(business & public services)
(d)(i)......................... 400 159,022
-----------
199,366
-----------
Total Preferred Stocks
(Cost $364,598)................ 350,811
-----------
WARRANTS (0.0%) (B)
HONG KONG (0.0%) (b)
Chinese Estates Holdings, Ltd.
Call Warrants
Strike price HK 0.97
Expire 11/24/99
(real estate) (a)(i)........... 6,885 443
Chinese Estates Holdings, Ltd.
Call Warrants
Strike price HK 1.02
Expire 11/24/00
(real estate) (a)(i)........... 6,885 568
Hong Kong & China Gas Co., Ltd.
Call Warrants
Strike price HK 12.27
Expire 9/30/99
(utilities-electrical & gas)
(a)(i)......................... 1,797 292
-----------
Total Warrants.................. 1,303
-----------
<CAPTION>
SHORT-TERM INVESTMENTS (7.7%)
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
U.S. GOVERNMENT (7.7%)
United States Treasury Bill
4.56%, due 9/16/99 (c)......... $ 300,000 297,055
4.51%, due 9/23/99 (c)......... 400,000 395,744
4.52%, due 9/23/99 (c)......... 100,000 98,936
4.53%, due 9/23/99 (c)......... 900,000 890,424
4.55%, due 9/23/99 (c)......... 300,000 296,808
4.56%, due 9/23/99 (c)......... 100,000 98,936
4.59%, due 9/23/99 (c)......... 3,300,000 3,264,888
4.60%, due 9/23/99 (c)......... 400,000 395,744
4.64%, due 9/23/99 (c)......... 100,000 98,936
-----------
Total Short-Term Investments
(Cost $5,837,337).............. 5,837,471
-----------
Total Investments
(Cost $62,480,796) (g)......... 103.2% 78,435,944(h)
Liabilities in Excess of
Cash and Other Assets.......... (3.2) (2,436,683)
---------- -----------
Net Assets...................... 100.0% $75,999,261
========== ===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
14
<PAGE> 16
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
FUTURES CONTRACTS (0.0%) (B)
UNREALIZED
CONTRACTS APPRECIATION
LONG (DEPRECIATION)(e)
------------------------------
<S> <C> <C>
FRANCE (0.0%) (b)
Euro, CAC 40 Index, July
1999.................. 4 $ 5,924
--------
GERMANY (0.0%) (b)
Euro, DAX Index,
September 1999........ 3 8,658
--------
JAPAN (0.0%) (b)
Japanese Yen, TOPIX
Index,
September 1999........ 5 30,570
--------
UNITED KINGDOM (0.0%) (b)
Pound Sterling, FTSE 100
Index, September
1999.................. 6 (13,387)
--------
Total Futures Contracts
(Settlement Value
$1,785,788)........... $ 31,765
========
</TABLE>
- ------------
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) Segregated or partially segregated as collateral for futures contracts.
(d) Dividend rate shown represents the most recent annual payment.
(e) Represents the difference between the value of the contracts at the time
they were opened and the value at June 30, 1999.
(f) The combined market value of common stocks and settlement value of Index
futures contracts represents 97.4% of net assets.
(g) The cost for Federal income tax purposes is $63,400,014.
(h) At June 30, 1999 net unrealized appreciation for securities was $15,035,930,
based on cost for Federal income tax purposes. This consisted of aggregate
gross unrealized appreciation for all investments on which there was an
excess of market value over cost of $20,318,267 and aggregate gross
unrealized depreciation for all investments on which there was an excess of
cost over market value of $5,282,337.
(i) A$ --Australian Dollar
E --Euro
HK--Hong Kong Dollar
L --Pound Sterling
The table below sets forth the diversification of EAFE Index Fund investments by
industry.
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
VALUE PERCENT+
-----------------------
<S> <C> <C>
Aerospace & Military
Technology.................. $ 248,879 0.3%
Appliances & Household
Durables.................... 1,510,710 2.0
Automobiles................... 3,016,657 4.0
Banking....................... 10,792,580 14.2
Beverages & Tobacco........... 1,412,685 1.9
Broadcasting & Publishing..... 923,817 1.2
Building Materials &
Components.................. 860,437 1.1
Business & Public Services.... 2,669,709 3.5
Chemicals..................... 1,878,200 2.5
Construction & Housing........ 521,865 0.7
Data Processing &
Reproduction................ 660,074 0.9
Electrical & Electronics...... 3,909,123 5.1
Electronic Components &
Instruments................. 1,246,301 1.6
Energy Equipment & Service.... 25,616 0.0*
Energy Sources................ 5,049,088 6.6
Financial Services............ 915,580 1.2
Food & Household Products..... 2,048,602 2.7
Forest Products & Paper....... 197,027 0.3
Health & Personal Care........ 6,324,891 8.3
Industrial Components......... 1,086,482 1.4
Insurance..................... 4,340,929 5.7
Leisure & Tourism............. 817,950 1.1
Machinery & Engineering....... 1,009,280 1.3
Merchandising................. 3,269,411 4.3
Metals-Nonferrous............. 451,593 0.6
Metals-Steel.................. 666,887 0.9
Miscellaneous-Materials &
Commodities................. 269,155 0.4
Multi-Industry................ 941,823 1.2
Real Estate................... 1,122,306 1.5
Recreation & Other Consumer
Goods....................... 836,722 1.1
Telecommunications............ 8,431,848 11.1
Textile & Apparel............. 23,122 0.0*
Transportation-Airlines....... 471,188 0.6
Transportation-Road & Rail.... 586,778 0.8
Transportation-Shipping....... 441,579 0.6
U.S. Government............... 5,837,471 7.7
Utilities-Electrical & Gas.... 3,180,278 4.2
Wholesale & International
Trade....................... 439,301 0.6
----------- -----
78,435,944 103.2
Liabilities in Excess of
Cash and Other Assets....... (2,436,683) (3.2)
----------- -----
Net Assets.................... $75,999,261 100.0%
=========== =====
</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.
15
<PAGE> 17
EAFE INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $62,480,796)...... $ 78,435,944
Cash denominated in foreign
currencies (identified cost
$16,833)........................... 17,339
Deposit with broker for futures
contracts.......................... 385,583
Receivables:
Investment securities sold......... 6,374,222
Fund shares sold................... 634,862
Dividends and interest............. 408,310
Unrealized gain on futures
contracts.......................... 31,765
--------------
Total assets................... 86,288,025
--------------
LIABILITIES:
Payables:
Investment securities purchased.... 10,123,733
Custodian.......................... 76,177
MainStay Management................ 37,589
Transfer agent..................... 2,116
Accrued expenses..................... 49,149
--------------
Total liabilities.............. 10,288,764
--------------
Net assets........................... $ 75,999,261
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per
share)
1 billion shares authorized
Institutional Class................ $ 6,389
Institutional Service Class........ 46
Additional paid-in capital........... 58,861,888
Accumulated distribution in excess of
net investment income.............. (276,124)
Accumulated undistributed net
realized gain on investments....... 1,449,156
Accumulated net realized loss on
foreign currency................... (10,411)
Net unrealized appreciation on
investments........................ 15,986,913
Net unrealized depreciation on
translation of other assets and
liabilities in foreign
currencies......................... (18,596)
--------------
Net assets........................... $ 75,999,261
==============
Institutional Class
Net assets applicable to outstanding
shares............................. $ 75,453,130
==============
Shares of capital stock
outstanding........................ 6,388,551
==============
Net asset value per share
outstanding........................ $ 11.81
==============
Institutional Service Class
Net assets applicable to outstanding
shares............................. $ 546,131
==============
Shares of capital stock
outstanding........................ 46,477
==============
Net asset value per share
outstanding........................ $ 11.75
==============
<CAPTION>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)...................... $ 865,389
Interest........................... 47,272
--------------
Total income................... 912,661
--------------
Expenses:
Management......................... 324,090
Portfolio pricing.................. 40,132
Professional....................... 21,346
Custodian.......................... 18,123
Transfer agent..................... 13,724
Registration....................... 10,874
Shareholder communication.......... 3,113
Directors.......................... 777
Service............................ 657
Miscellaneous...................... 6,123
--------------
Total expenses before
reimbursement................ 438,959
Expense reimbursement from
Manager.......................... (117,623)
--------------
Net expenses................... 321,336
--------------
Net investment income................ 591,325
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) from:
Security transactions.............. 1,013,330
Futures transactions............... 149,229
Foreign currency transactions...... (10,411)
--------------
Net realized gain on investments and
foreign currency transactions...... 1,152,148
--------------
Net change in unrealized appreciation
on investments:
Security transactions.............. 1,497,699
Futures transactions............... 38,786
Translation of other assets and
liabilities in foreign
currencies....................... (20,648)
--------------
Net unrealized gain on investments
and foreign currency
transactions....................... 1,515,837
--------------
Net realized and unrealized gain on
investments and foreign currency
transactions....................... 2,667,985
--------------
Net increase in net assets resulting
from operations.................... $ 3,259,310
==============
</TABLE>
- ------------
(a) Dividends recorded net of foreign withholding taxes of $124,254.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
16
<PAGE> 18
MAINSTAY
INSTITUTIONAL FUNDS INC.
EAFE INDEX FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited) and the year ended December
31, 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income................................... $ 591,325 $ 529,655
Net realized gain on investments........................ 1,162,559 4,415,135
Net realized loss on foreign currency transactions...... (10,411) (491)
Net change in unrealized appreciation on investments.... 1,536,485 6,085,831
Net change in unrealized appreciation (depreciation) on
translation of other assets and liabilities in foreign
currencies............................................. (20,648) 15,803
-------------- --------------
Net increase in net assets resulting from operations.... 3,259,310 11,045,933
-------------- --------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class................................... -- (526,186)
Institutional Service Class........................... -- (3,469)
From net realized gain on investments and foreign
currency transactions:
Institutional Class................................... -- (3,871,228)
Institutional Service Class........................... -- (29,729)
In excess of net investment income:
Institutional Class................................... -- (560,314)
Institutional Service Class........................... -- (3,666)
-------------- --------------
Total dividends and distributions to shareholders... -- (4,994,592)
-------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 42,061,027 29,896,062
Institutional Service Class........................... 60,034 86,552
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... -- 4,948,383
Institutional Service Class........................... -- 36,795
-------------- --------------
42,121,061 34,967,792
Cost of shares redeemed:
Institutional Class................................... (34,929,117) (30,946,559)
Institutional Service Class........................... (37,922) (102,752)
-------------- --------------
Increase in net assets derived from capital share
transactions......................................... 7,154,022 3,918,481
-------------- --------------
Net increase in net assets............................ 10,413,332 9,969,822
NET ASSETS:
Beginning of period....................................... 65,585,929 55,616,107
-------------- --------------
End of period............................................. $ 75,999,261 $ 65,585,929
============== ==============
Accumulated distribution in excess of net investment
income at end of period................................. $ (276,124) $ (867,449)
============== ==============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
17
<PAGE> 19
EAFE INDEX FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999* DECEMBER 31, 1998
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period.................... $ 11.27 $ 11.22 $ 10.24 $ 10.20
---------- ---------- ---------- ----------
Net investment income..................................... 0.11 0.09 0.11 0.08
Net realized and unrealized gain (loss) on investments.... 0.44 0.45 1.84 1.83
Net realized and unrealized gain (loss) on foreign
currency transactions................................... (0.01) (0.01) 0.00(a) 0.00(a)
---------- ---------- ---------- ----------
Total from investment operations.......................... 0.54 0.53 1.95 1.91
---------- ---------- ---------- ----------
Less dividends and distributions:
From net investment income................................ -- -- (0.11) (0.08)
From net realized gain on investments and foreign currency
transactions............................................ -- -- (0.72) (0.72)
In excess of net investment income........................ -- -- (0.09) (0.09)
---------- ---------- ---------- ----------
Total dividends and distributions......................... -- -- (0.92) (0.89)
---------- ---------- ---------- ----------
Net asset value at end of period.......................... $ 11.81 $ 11.75 $ 11.27 $ 11.22
========== ========== ========== ==========
Total investment return................................... 4.79%(b) 4.72%(b) 19.15% 18.83%
Ratios (to average net assets)/Supplemental Data:
Net investment income................................... 1.74%+ 1.49%+ 0.90% 0.65%
Net expenses............................................ 0.94%+ 1.19%+ 0.94% 1.19%
Expenses (before reimbursement)......................... 1.28%+ 1.53%+ 1.38% 1.63%
Portfolio turnover rate................................... 11% 11% 24% 24%
Net assets at end of period (in 000's).................... $ 75,453 $ 546 $ 65,087 $ 499
</TABLE>
- ------------
* Unaudited.
+ Annualized.
(a) Less than one cent per share.
(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.
18
<PAGE> 20
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- ------------- -------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994
----------------------------- ----------------------------- ----------------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 14.00 $ 13.97 $ 13.56 $ 13.51 $ 12.63 $ 12.63 $ 12.03
---------- ---------- ---------- ---------- ---------- ---------- ----------
0.22 0.19 0.16 0.12 0.13 0.14 0.10
(0.28) (0.29) 0.71 0.73 1.11 1.05 0.70
(0.00)(a) (0.00)(a) (0.00)(a) (0.00)(a) (0.10) (0.10) 0.03
---------- ---------- ---------- ---------- ---------- ---------- ----------
(0.06) (0.10) 0.87 0.85 1.14 1.09 0.83
---------- ---------- ---------- ---------- ---------- ---------- ----------
(0.22) (0.19) (0.16) (0.12) (0.04) (0.04) (0.09)
(3.39) (3.39) (0.25) (0.25) (0.14) (0.14) (0.14)
(0.09) (0.09) (0.02) (0.02) (0.03) (0.03) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
(3.70) (3.67) (0.43) (0.39) (0.21) (0.21) (0.23)
---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 10.24 $ 10.20 $ 14.00 $ 13.97 $ 13.56 $ 13.51 $ 12.63
========== ========== ========== ========== ========== ========== ==========
0.40% 0.08% 6.45% 6.37% 9.03% 8.63% 6.83%
1.04% 0.79% 1.11% 0.86% 1.01% 0.76% 0.57%
0.94% 1.19% 0.94% 1.19% 1.03% 1.28% 1.26%
1.26% 1.51% 1.23% 1.48% 1.24% 1.49% 1.26%
6% 6% 4% 4% 6% 6% 7%
$ 55,177 $ 439 $ 89,029 $ 396 $ 80,087 $ 257 $ 72,265
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
19
<PAGE> 21
GROWTH EQUITY FUND
- --------------------------------------------------------------------------------
For several years, growth stocks have shown extraordinary strength. In April of
1999, however, improving prospects for a world economic recovery turned the
market's focus to value stocks. Cyclical issues selling at low valuations drew
the attention of many investors because they believed the earnings of these
stocks might accelerate in that environment. When the Federal Reserve Board
announced in May that it was likely to raise interest rates, highly valued
growth stocks came under considerable pressure.
By mid-June, fears began to ease about the possibility of multiple interest-rate
hikes to control inflation. On June 30, 1999, the Federal Reserve Board raised
the targeted federal funds rate by a quarter of a percent--a move that was well
anticipated by the market. The Federal Reserve also shifted to a neutral stance,
which the stock market took as positive news.
FACING CHALLENGES IN A MOVING MARKET
For the first six months of 1999, the MainStay Institutional Growth Equity Fund
returned 7.62% for Institutional Class shares and 7.46% for Service Class
shares. While the Fund outperformed the S&P 500 Index(1) and its average
Lipper(2) peer fund during the month of June, the comeback was not enough to
offset weaknesses in April and May. As a result, the Fund underperformed the
11.65% return of the average Lipper growth fund for the six months ended June
30, 1999.
The Fund's underperformance resulted largely from the market's movement away
from defensive sectors, such as pharmaceuticals and supermarkets, where the Fund
was overweighted--and the market's preference for sectors that were
underrepresented in the Fund's portfolio, such as capital goods and energy.
It is worth noting that Morningstar(3) rated the Fund's Institutional Class
shares 5 stars overall as of June 30, 1999. This class of shares also received 4
stars for the 3-year period and 5 stars for the 5-year period ended June 30,
1999, from among 3,043 and 1,878 domestic equity funds, respectively.
REPOSITIONING THE PORTFOLIO
During the second quarter of 1999, we reduced the Fund's exposure to defensive
groups by selling Eli Lilly and Monsanto shares in May and reducing the Fund's
positions in Kroger and Safeway supermarkets in June. Eli Lilly and Safeway were
among the portfolio's worst-performing investments in the second quarter. These
sales allowed the Fund to pursue more productive investments.
We added several stocks to the Fund's portfolio during the reporting period,
including shares of consumer electronics retailer Circuit City and
communications companies Omnicom, ALLTEL, and Time Warner--all of which made
positive contributions to performance.
Significant sales during the first half of the year included McKesson HBOC, a
leading drug distributor, and Waste Management, Inc., a pollution-control
company, both of which suffered from weakening fundamentals. Fortunately, both
stocks were sold before major earnings disappointments were announced. We also
sold shares of Service Corp. International at a loss when an earnings shortfall
caused a major setback for this leading funeral and cemetery company.
As interest rates rose in April and May, we reduced the Fund's financial
holdings to a slightly underweighted position by selling Conseco (insurance),
Fannie Mae (mortgages), and South-Trust
- --------------------------------------------------------------------------------
(1) "S&P 500(R)" is a trademark of The McGraw-Hill Companies, Inc. The S&P 500
is an unmanaged index and is considered to be generally representative of
the U.S. stock market. Results assume the reinvestment of all income and
capital gain distributions. An investment cannot be made directly into an
index.
(2) Lipper, 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.
(3) Morningstar, Inc. is an independent fund performance monitor. Its ratings
reflect historic risk-adjusted performance, taking into account fees and
other sales charges and may change monthly. Its ratings of 1 (low) to 5
(high) stars are based on a fund's 3-, 5-, and 10-year average annual
returns (if applicable) in excess of 90-day Treasury bill returns with
appropriate fee adjustments, and a risk factor that reflects fund
performance below 90-day Treasury bill returns. The top 10% of the funds in
a rating group receive 5 stars, the next 22.5% receive 4 stars, the middle
35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10%
receive 1 star.
20
<PAGE> 22
Corp. (banking). The net impact of these sales for the quarter was neutral.
TECHNOLOGY PLAYS A LEADING ROLE
Throughout the first half of the year, the Fund remained overweighted in
technology stocks, which were particularly strong performers. With strong demand
for its Internet-related products and services, Sun Microsystems rose 65% during
the first half of 1999 and had the greatest positive impact on performance.
Cisco Systems, EMC Corp., and Microsoft were other technology companies that
contributed positively to the Fund's performance, with returns ranging from 30%
to 40% for the first half of the year. Despite technology's general advance,
however, software and service provider Compuware declined substantially on
year-2000 concerns, with a negative impact on the Fund's performance.
Tyco International Ltd., a diversified manufacturing and service company, also
showed strong performance during first half of 1999. The company benefited from
its impeccable record of acquisitions and the market's focus on capital goods
stocks.
At the end of June, the Fund was overweighted in consumer staples and health
care, which had a negative impact on performance, as these sectors lagged the
market. Underweighting the basic materials, capital goods, communication
services, and energy sectors also hurt performance, as these groups advanced.
The Fund's overweighted position in technology and underweighted position in
utilities had a positive impact, as the former sector advanced and the latter
underperformed.
LOOKING AHEAD
We believe that consumer confidence, stable interest rates, and a recovering
world economy suggest a positive outlook for U.S. corporate profits. While we
believe inflation will remain a concern, at the end of this reporting period it
appeared to be benign. We believe the economy will continue to grow at a slower
pace during the second half of the year, which may be positive for stocks in
general and growth stocks in particular. Whatever the markets bring, the Fund
will continue to seek long-term growth of capital, with dividend income, if any,
as an incidental consideration.
Rudolph C. Carryl
Edmund C. Spelman
Portfolio Managers
MacKay Shields Financial Corporation
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
21
<PAGE> 23
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
GROWTH EQUITY FUND VS S&P 500 INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
GROWTH EQUITY FUND S&P 500 INDEX
------------------ -------------
<S> <C> <C>
12/31/90 10000.00 10000.00
3/31/91 12560.00 11453.00
6/30/91 12100.00 11427.00
9/30/91 14680.00 12038.00
12/31/91 16700.00 13047.00
3/31/92 16369.00 12717.00
6/30/92 14175.00 12958.00
9/30/92 14738.00 13366.00
12/31/92 17640.00 14040.00
3/31/93 17434.00 14654.00
6/30/93 17663.00 14726.00
9/30/93 19168.00 15105.00
12/31/93 19333.00 15456.00
3/31/94 19064.00 14870.00
6/30/94 17735.00 14933.00
9/30/94 19453.00 15663.00
12/31/94 18901.00 15660.00
3/31/95 20628.00 17185.00
6/30/95 22729.00 18826.00
9/30/95 25437.00 20323.00
12/31/95 26062.00 21546.00
3/31/96 28040.00 22703.00
6/30/96 28939.00 23723.00
9/30/96 30793.00 24456.00
12/31/96 31696.00 26493.00
3/31/97 30355.00 27203.00
6/30/97 35905.00 31955.00
9/30/97 39537.00 34345.00
12/31/97 39535.00 35331.00
3/31/98 45303.00 40260.00
6/30/98 47200.00 41588.00
9/30/98 43407.00 37450.00
12/31/98 55548.00 45427.00
6/30/99 59779.00 51061.00
</TABLE>
Source: Lipper, Inc.
THESE GRAPHS ASSUME A $10,000 INVESTMENT MADE ON 1/2/91.
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
GROWTH EQUITY FUND VS S&P 500 INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
GROWTH EQUITY FUND S&P 500 INDEX
------------------ -------------
<S> <C> <C>
12/31/90 10000 10000
3/31/91 12560.00 11453.00
6/30/91 12100.00 11427.00
9/30/91 14680.00 12038.00
12/31/91 16700.00 13047.00
3/31/92 16369.00 12717.00
6/30/92 14175.00 12958.00
9/30/92 14738.00 13366.00
12/31/92 17640.00 14040.00
3/31/93 17434.00 14654.00
6/30/93 17663.00 14726.00
9/30/93 19168.00 15105.00
12/31/93 19333.00 15456.00
3/31/94 19064.00 14870.00
6/30/94 17735.00 14933.00
9/30/94 19453.00 15663.00
12/31/94 18901.00 15660.00
3/31/95 20615.00 17185.00
6/30/95 22701.00 18826.00
9/30/95 25381.00 20323.00
12/31/95 25990.00 21546.00
3/31/96 27939.00 22703.00
6/30/96 28810.00 23723.00
9/30/96 30649.00 24456.00
12/31/96 31523.00 26493.00
3/31/97 30169.00 27203.00
6/30/97 35658.00 31955.00
9/30/97 39246.00 34345.00
12/31/97 39245.00 35331.00
3/31/98 44936.00 40260.00
6/30/98 46786.00 41588.00
9/30/98 43008.00 37450.00
12/31/98 55012.00 45427.00
6/30/99 59113.00 51061.00
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF JUNE 30, 1999 AS OF JUNE 30, 1999
- --------------------------------------------------------------------------------------------------------
YEAR TO DATE ONE YEAR FIVE YEAR SINCE INCEPTION
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Equity Fund Institutional Class 7.62% 26.65% 27.51% 23.41%
Growth Equity Fund Service Class(+) 7.46% 26.35% 27.22% 23.25%
Average Lipper Growth Fund 11.65% 18.87% 22.64% 19.03%
S&P 500 Index 12.39% 22.77% 27.87% 21.53%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
YEAR END
--------------------------------------------------------------------------------------------------------------
1999 AS
OF
1991 1992 1993 1994 1995 1996 1997 1998 6/30/99
------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
67.00 5.63 9.59 -2.23 37.88 21.62 24.73 40.50 7.62
</TABLE>
- --------------------------------------------------------------------------------
* 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 gain distributions and
dividends, and, for the Service Class shares, include the service fee of .25%
on an annualized basis of the average daily net asset value of the Service
Class shares.
+ 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 12/31/94. Performance figures for these two
Classes after this date will vary based on differences in their expense
structures.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO CURRENT MARKET
VOLATILITY, PERFORMANCE MAY BE LESS THAN SHOWN. 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 and the Service Class shares are sold with no
sales charge or contingent deferred sales charge. The Service Class shares,
first offered 1/1/95, are subject to an annual shareholder service fee of
.25%.
22
<PAGE> 24
MAINSTAY
INSTITUTIONAL FUNDS INC.
GROWTH EQUITY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (98.1%)+
SHARES VALUE
----------------------------
<S> <C> <C>
BANKS (1.9%)
Firstar Corp. .................. 170,000 $ 4,760,000
Wells Fargo & Co. .............. 354,700 15,163,425
--------------
19,923,425
--------------
BROADCAST/MEDIA (3.1%)
Chancellor Media Corp. (a)...... 233,000 12,844,125
Clear Channel Communications,
Inc. (a)....................... 248,200 17,110,288
Fox Entertainment Group, Inc.
(a)............................ 100,000 2,693,750
--------------
32,648,163
--------------
COMMUNICATIONS--EQUIPMENT (8.0%)
Cisco Systems, Inc. (a)......... 669,450 43,054,003
Lucent Technologies Inc. ....... 614,800 41,460,575
--------------
84,514,578
--------------
COMPUTER SOFTWARE & SERVICES (8.7%)
America Online, Inc. (a)........ 54,000 5,967,000
Compuware Corp. (a)............. 708,000 22,523,250
Equifax Inc. ................... 251,000 8,957,562
Microsoft Corp. (a)............. 400,000 36,075,000
Oracle Corp. (a)................ 482,037 17,895,624
--------------
91,418,436
--------------
COMPUTER SYSTEMS (6.8%)
EMC Corp. (a)................... 566,400 31,152,000
Sun Microsystems, Inc. (a)...... 582,200 40,099,025
--------------
71,251,025
--------------
ELECTRONICS--SEMICONDUCTORS (3.1%)
Intel Corp. .................... 312,400 18,587,800
Motorola, Inc. ................. 145,600 13,795,600
--------------
32,383,400
--------------
ENTERTAINMENT (1.4%)
Time Warner, Inc. .............. 197,700 14,234,400
--------------
FINANCIAL--MISCELLANEOUS (5.8%)
Associates First Capital Corp.
Class A........................ 577,900 25,608,194
Citigroup Inc. ................. 534,895 25,407,512
Freddie Mac..................... 181,700 10,538,600
--------------
61,554,306
--------------
HEALTH CARE DISTRIBUTORS (1.7%)
Cardinal Health Inc. ........... 278,050 17,829,956
--------------
HEALTH CARE--DRUGS (6.6%)
Elan Corp. PLC ADR (a)(b)....... 406,000 11,266,500
Merck & Co., Inc. .............. 195,200 14,444,800
Pfizer Inc. .................... 144,800 15,891,800
Schering-Plough Corp. .......... 525,800 27,867,400
--------------
69,470,500
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------
<S> <C> <C>
HEALTH CARE--MEDICAL PRODUCTS (5.1%)
Guidant Corp. .................. 490,800 $ 25,245,525
Medtronic, Inc. ................ 373,600 29,094,100
--------------
54,339,625
--------------
HEALTH CARE--MISCELLANEOUS (2.6%)
Johnson & Johnson............... 283,104 27,744,192
--------------
HOTEL/MOTEL (1.1%)
Carnival Corp. ................. 238,000 11,543,000
--------------
HOUSEHOLD PRODUCTS (1.9%)
Colgate-Palmolive Co. .......... 201,000 19,848,750
--------------
INSURANCE (3.1%)
American International Group,
Inc. .......................... 277,010 32,427,483
--------------
LEISURE TIME (2.0%)
Harley-Davidson, Inc. .......... 398,000 21,641,250
--------------
MANUFACTURING--DIVERSIFIED (4.5%)
Tyco International Ltd. ........ 505,100 47,858,225
--------------
PERSONAL LOANS (1.7%)
Providian Financial Corp. ...... 195,550 18,283,925
--------------
RETAIL (20.0%)
Bed Bath & Beyond, Inc. (a)..... 409,400 15,761,900
CVS Corp. ...................... 419,200 21,431,600
Circuit City Stores, Inc. ...... 238,200 22,152,600
Dollar General Corp. ........... 469,370 13,611,730
Home Depot, Inc. (The).......... 458,900 29,570,369
Kohl's Corp. (a)................ 380,000 29,331,250
Kroger Co. (a).................. 806,200 22,523,212
Nordstrom, Inc. ................ 353,100 11,828,850
Safeway Inc. (a)................ 385,100 19,062,450
Staples, Inc. (a)............... 831,000 25,709,063
--------------
210,983,024
--------------
SPECIALIZED SERVICES (3.9%)
Cendant Corp. (a)............... 591,910 12,134,155
IMS Health Inc. ................ 450,500 14,078,125
Omnicom Group Inc. ............. 193,300 15,464,000
--------------
41,676,280
--------------
TELECOMMUNICATIONS--LONG DISTANCE (3.3%)
MCI WorldCom, Inc. (a).......... 409,088 35,283,840
--------------
TELEPHONE (1.8%)
ALLTEL Corp. ................... 267,500 19,126,250
--------------
Total Common Stocks
(Cost $492,900,188)............ 1,035,984,033
--------------
</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.
23
<PAGE> 25
GROWTH EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS (2.3%)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
COMMERCIAL PAPER (2.3%)
American Express Credit Corp.
4.92%, due 7/7/99.............. $ 8,400,000 $ 8,393,103
Chevron USA Inc.
4.94%, due 7/8/99.............. 10,000,000 9,990,381
General Electric Co.
4.99%, due 7/9/99.............. 5,280,000 5,274,138
--------------
Total Short-Term Investments
(Cost $23,657,622)............. 23,657,622
--------------
Total Investments
(Cost $516,557,810) (c)........ 100.4% 1,059,641,655(d)
Liabilities in Excess of
Cash and Other Assets.......... (0.4) (3,793,905)
---------- -----------
Net Assets...................... 100.0% $1,055,847,750
========== ===========
</TABLE>
- ------------
(a) Non-income producing security.
(b) ADR--American Depository Receipt.
(c) The cost stated also represents the aggregate cost for Federal income tax
purposes.
(d) At June 30, 1999, net unrealized appreciation was $543,083,845, 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 $550,245,326 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $7,161,481.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
24
<PAGE> 26
MAINSTAY
INSTITUTIONAL FUNDS INC.
GROWTH EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $516,557,810)..... $1,059,641,655
Cash................................. 1,117
Receivables:
Investment securities sold......... 2,508,255
Fund shares sold................... 358,923
Dividends.......................... 245,684
--------------
Total assets................... 1,062,755,634
--------------
LIABILITIES:
Payables:
Investment securities purchased.... 5,002,363
Fund shares redeemed............... 1,025,494
MainStay Management................ 698,832
Transfer agent..................... 35,175
Custodian.......................... 26,122
Accrued expenses..................... 119,898
--------------
Total liabilities.............. 6,907,884
--------------
Net assets........................... $1,055,847,750
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per
share)
1 billion shares authorized
Institutional Class................ $ 28,836
Institutional Service Class........ 472
Additional paid-in capital........... 444,843,852
Accumulated net investment loss...... (2,353,985)
Accumulated undistributed net
realized gain on investments....... 70,244,730
Net unrealized appreciation on
investments........................ 543,083,845
--------------
Net assets........................... $1,055,847,750
==============
Institutional Class
Net assets applicable to outstanding
shares............................. $1,039,044,485
==============
Shares of capital stock
outstanding........................ 28,835,947
==============
Net asset value per share
outstanding........................ $ 36.03
==============
Institutional Service Class
Net assets applicable to outstanding
shares............................. $ 16,803,265
==============
Shares of capital stock
outstanding........................ 471,946
==============
Net asset value per share
outstanding........................ $ 35.60
==============
<CAPTION>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<S> <C>
INVESTMENT INCOME:
Income:
Dividends.......................... $ 2,012,118
Interest........................... 407,322
--------------
Total income................... 2,419,440
--------------
Expenses:
Management......................... 4,329,552
Transfer agent..................... 237,319
Professional....................... 52,486
Shareholder communication.......... 46,549
Custodian.......................... 39,373
Service............................ 20,148
Registration....................... 15,151
Directors.......................... 11,279
Miscellaneous...................... 21,568
--------------
Total expenses................. 4,773,425
--------------
Net investment loss.................. (2,353,985)
--------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on investments..... 60,358,259
Net change in unrealized appreciation
on investments..................... 17,256,393
--------------
Net realized and unrealized gain on
investments........................ 77,614,652
--------------
Net increase in net assets resulting
from operations.................... $ 75,260,667
==============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
25
<PAGE> 27
GROWTH EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited) and the year ended December
31, 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment loss..................................... $ (2,353,985) $ (2,571,953)
Net realized gain on investments........................ 60,358,259 62,407,353
Net change in unrealized appreciation on investments.... 17,256,393 227,097,694
-------------- --------------
Net increase in net assets resulting from operations.... 75,260,667 286,933,094
-------------- --------------
Distributions to shareholders:
From net realized gain on investments:
Institutional Class................................... -- (60,369,694)
Institutional Service Class........................... -- (994,776)
-------------- --------------
Total distributions to shareholders................. -- (61,364,470)
-------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 159,167,690 135,442,134
Institutional Service Class........................... 2,130,154 3,436,490
Net asset value of shares issued to shareholders in
reinvestment of distributions:
Institutional Class................................... -- 60,366,383
Institutional Service Class........................... -- 900,466
-------------- --------------
161,297,844 200,145,473
Cost of shares redeemed:
Institutional Class................................... (169,235,686) (142,993,936)
Institutional Service Class........................... (2,299,550) (2,633,729)
-------------- --------------
Increase (decrease) in net assets derived from capital
share transactions................................... (10,237,392) 54,517,808
-------------- --------------
Net increase in net assets............................ 65,023,275 280,086,432
NET ASSETS:
Beginning of period....................................... 990,824,475 710,738,043
-------------- --------------
End of period............................................. $1,055,847,750 $ 990,824,475
============== ==============
Accumulated net investment loss at end of period.......... $ (2,353,985) $ --
============== ==============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
26
<PAGE> 28
(THIS PAGE INTENTIONALLY LEFT BLANK)
27
<PAGE> 29
GROWTH EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999* DECEMBER 31, 1998
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period..................... $ 33.48 $ 33.13 $ 25.43 $ 25.24
---------- ---------- ---------- ----------
Net investment income (loss)............................... (0.08)(a) (0.12)(a) (0.09)(a) (0.16)(a)
Net realized and unrealized gain (loss) on investments..... 2.63 2.59 10.35 10.26
---------- ---------- ---------- ----------
Total from investment operations........................... 2.55 2.47 10.26 10.10
---------- ---------- ---------- ----------
Less dividends and distributions:
From net investment income................................. -- -- -- --
From net realized gain on investments...................... -- -- (2.21) (2.21)
In excess of net investment income......................... -- -- -- --
In excess of net realized gain on investments.............. -- -- -- --
---------- ---------- ---------- ----------
Total dividends and distributions.......................... -- -- (2.21) (2.21)
---------- ---------- ---------- ----------
Net asset value at end of period........................... $ 36.03 $ 35.60 $ 33.48 $ 33.13
========== ========== ========== ==========
Total investment return.................................... 7.62%(c) 7.46%(c) 40.50% 40.18%
Ratios (to average net assets)/Supplemental Data:
Net investment income (loss)............................. (0.46%)+ (0.71%)+ (0.31%) (0.56%)
Net expenses............................................. 0.93%+ 1.18%+ 0.94% 1.19%
Portfolio turnover rate.................................... 18% 18% 29% 29%
Net assets at end of period (in 000's)..................... $1,039,044 $ 16,803 $ 975,010 $ 15,814
</TABLE>
- ------------
* Unaudited.
+ Annualized.
(a) Per share data based on average shares outstanding during the period.
(b) Less than one cent per share.
(c) 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.
28
<PAGE> 30
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- ------------- -------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994
----------------------------- ----------------------------- ----------------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 21.99 $ 21.88 $ 18.84 $ 18.80 $ 13.68 $ 13.68 $ 14.40
-------- -------- -------- -------- -------- -------- --------
(0.08)(a) (0.14)(a) (0.06)(a) (0.11)(a) 0.02 (0.01) 0.01
5.45 5.43 4.14 4.12 5.16 5.14 (0.33)
-------- -------- -------- -------- -------- -------- --------
5.37 5.29 4.08 4.01 5.18 5.13 (0.32)
-------- -------- -------- -------- -------- -------- --------
-- -- -- -- (0.02) (0.01) (0.01)
(1.93) (1.93) (0.93) (0.93) -- -- (0.39)
-- -- -- -- (0.00)(b) (0.00)(b) --
-- -- -- -- (0.00)(b) (0.00)(b) (0.00)(b)
-------- -------- -------- -------- -------- -------- --------
(1.93) (1.93) (0.93) (0.93) (0.02) (0.01) (0.40)
-------- -------- -------- -------- -------- -------- --------
$ 25.43 $ 25.24 $ 21.99 $ 21.88 $ 18.84 $ 18.80 $ 13.68
======== ======== ======== ======== ======== ======== ========
24.73% 24.50% 21.62% 21.29% 37.88% 37.50% (2.23%)
(0.31%) (0.56%) (0.27%) (0.52%) 0.12% (0.13%) 0.04%
0.93% 1.18% 0.92% 1.17% 0.93% 1.18% 0.92%
36% 36% 22% 22% 33% 33% 37%
$700,070 $ 10,668 $541,212 $ 6,842 $412,129 $ 2,729 $284,388
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
29
<PAGE> 31
INDEXED EQUITY FUND
- --------------------------------------------------------------------------------
A multitude of positive indicators combined to propel stocks of large U.S.
companies higher during the six months ended June 30, 1999, extending the
remarkable bull market of the past several years. Domestically, economic growth
continued to surge. News on the inflation front remained low key. Prices for
oil, natural gas, lumber, and copper recovered during the reporting period,
while agricultural commodity prices generally declined. Investors welcomed
enhanced stability in global economies.
Within the overall bull market, there were changes among various U.S. equity
sectors. In many respects, the first quarter of 1999 was a continuation of
recent history, with the majority of the equity market's performance
concentrated in a handful of large-capitalization, growth-oriented stocks.
During the second quarter of the year, the tide changed rather dramatically. The
S&P 500 Index(1) continued to fare well, but long out-of-favor value stocks saw
a strong recovery, as many companies reported corporate earnings in line with or
exceeding analysts' expectations. Over the same period, smaller-capitalization
U.S. stocks outperformed their larger-cap counterparts for the first time in
seven quarters.
STRONG PERFORMANCE
For the six months ended June 30, 1999, the MainStay Institutional Indexed
Equity Fund returned 12.16% for Institutional Class shares and 12.05% for
Service Class shares. The Fund slightly outperformed the average Lipper(2) S&P
500 Index objective fund, which returned 11.95% for the same period. The S&P 500
Index, a hypothetical investment that does not face the daily expenses
associated with mutual fund investing, returned 12.39% for the period.
It is worth noting that Morningstar(3) rated the Institutional Class shares 5
stars overall and 5 stars for the 3- and 5-year periods ended June 30, 1999,
from among 3,043 and 1,878 domestic equity funds, respectively. The Service
Class shares were rated 5 stars overall and 5 stars for the 3-year period ended
June 30, 1999, from among 3,043 domestic equity funds.
COMPUTER SECTOR LED S&P 500 INDEX
The two largest constituent sectors of the S&P 500 Index--computer software and
computer systems--together comprise approximately 13% of the Index and were both
up over 20% for the first six months of 1999. During the reporting period, LSI
Logic, up 186%,(4) Tandy, up 137%, and National Semiconductor, up 88%, were
stocks in other sectors that benefited from the computer industry's advance.
Oil-related stocks, also a significant element of the S&P 500 Index, returned
over 20% through June 30, 1999, as oil prices recovered from their precipitous
drop in 1998. Other strong performing sectors of the S&P 500 Index included
investment banks/brokers, led by Schwab, up 96%; basic materials/industries, led
by Case, up 120%; and telecommunications, led by Sprint, up 147%, and Nextel, up
112%.
Housing-related stocks, a relatively small S&P 500 Index component, was the
worst-performing industry sector, struggling as interest rates rose and
home-buying activity began to cool. A more material decline came from the drug
stocks, which comprise almost 5% of the S&P 500 Index, and declined almost 8%.
During the reporting period, McKesson HBOC, down 59%, Rite Aid, down 50%, and
Watson Pharmaceuticals, down 44%, were among the stocks in this and related
sectors that declined
- --------------------------------------------------------------------------------
(1) "S&P 500(R)" is a trademark of The McGraw-Hill Companies, Inc. and has been
licensed for use by Monitor Capital Advisors, Inc. Standard & Poor's does
not sponsor, endorse, sell, or promote the Fund or represent the
advisability of investing in the Indexed Equity Fund. The S&P 500 is an
unmanaged index and is considered to be generally representative of the U.S.
stock market. Results assume the reinvestment of all income and capital gain
distributions. An investment cannot be made directly into an index.
(2) Lipper, 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.
(3) Morningstar, Inc. is an independent fund performance monitor. Its ratings
reflect historic risk-adjusted performance, taking into account fees and
other sales charges and may change monthly. Its ratings of 1 (low) to 5
(high) stars are based on a fund's 3-, 5-, and 10-year average annual
returns (if applicable) in excess of 90-day Treasury bill returns with
appropriate fee adjustments, and a risk factor that reflects fund
performance below 90-day Treasury bill returns. The top 10% of the funds in
a rating group receive 5 stars, the next 22.5% receive 4 stars, the middle
35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10%
receive 1 star.
(4) Returns reflect performance for the six-month period ended 6/30/99.
30
<PAGE> 32
the most. Other declining industries included tobacco, especially Philip Morris,
down 25%; foods/retail food stores, particularly Albertson's and Safeway, each
down 19%; and health care companies, with Tenet Healthcare down 29%, and Humana
down 27%.
The composition of the S&P 500 Index itself remained relatively constant through
the first six months of 1999, with just a few changes resulting from corporate
actions, such as mergers, spin-offs, and acquisitions.
LOOKING AHEAD
On the whole, the U.S. economy and stock market seem quite healthy. At the same
time, we believe that investors should not be lulled into a sense of
complacency, overlooking the risks that come with equity investing. Two areas of
particular concern are inflation and equity valuations.
While inflation appears to remain dormant, numerous indicators may be harbingers
of future inflation. Investors should consider that:
- - unemployment remains at a thirty-year low,
- - economic growth has been inordinately robust in historical terms,
- - oil prices are rebounding, and
- - troubled Pacific Rim and other emerging market economies appear to have
recovered from recent turmoil.
While these new threats to price stability have been absorbed by the bond market
through climbing yields, the stock market has yet to react. A clearer signal
that inflation is rising could have a detrimental effect on stock prices, given
the importance of earnings expectations that are currently priced into the
market.
Equity valuations, as measured by price/earnings ratios, have continued to climb
in 1999, even as interest rates have gone up. While past performance is no
indication of future results, this pattern has historically implied expectations
of strong corporate profitability growth in the years ahead. Disappointing
corporate earnings reports may be met with disappointing stock market
performance.
Of course, the objective of the MainStay Institutional Indexed Equity Fund is to
seek 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 S&P 500 Index. As a result, we do not respond
to or evaluate changing market and economic conditions. Nor do we manage
according to a given outlook for the equity markets or the economy in general.
That said, we feel it is important for investors to diversify their portfolios
and to keep focused on their long-term goals despite inevitable short-term
volatility in the equity market.
Jefferson C. Boyce
Stephen B. Killian
Portfolio Managers
Monitor Capital Advisors, Inc.
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
31
<PAGE> 33
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
INDEXED EQUITY FUND VS S&P 500 INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
INDEXED EQUITY FUND S&P 500 INDEX
------------------- -------------
<S> <C> <C>
12/31/90 10000.00 10000.00
3/31/91 11440.00 11453.00
6/30/91 11390.00 11427.00
9/30/91 11990.00 12038.00
12/31/91 12980.00 13047.00
3/31/92 12645.00 12717.00
6/30/92 12872.00 12958.00
9/30/92 13264.00 13366.00
12/31/92 13913.00 14040.00
3/31/93 14494.00 14654.00
6/30/93 14537.00 14726.00
9/30/93 14888.00 15105.00
12/31/93 15222.00 15456.00
3/31/94 14618.00 14870.00
6/30/94 14662.00 14933.00
9/30/94 15365.00 15663.00
12/31/94 15359.00 15660.00
3/31/95 16846.00 17185.00
6/30/95 18424.00 18826.00
9/30/95 19854.00 20323.00
12/31/95 21024.00 21546.00
3/31/96 22145.00 22703.00
6/30/96 23112.00 23723.00
9/30/96 23796.00 24456.00
12/31/96 25768.00 26493.00
3/31/97 26441.00 27203.00
6/30/97 31044.00 31955.00
9/30/97 33321.00 34345.00
12/31/97 34241.00 35331.00
3/31/98 38988.00 40260.00
6/30/98 40254.00 41588.00
9/30/98 36254.00 37450.00
12/31/98 44041.00 45427.00
6/30/99 49396.00 51061.00
</TABLE>
Source: Lipper, Inc.
THESE GRAPHS ASSUME A $10,000 INVESTMENT MADE ON 1/2/91.
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
INDEXED EQUITY FUND VS S&P 500 INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
INDEXED EQUITY FUND S&P 500 INDEX
------------------- -------------
<S> <C> <C>
12/31/90 10000.00 10000.00
3/31/91 11440.00 11453.00
6/30/91 11390.00 11427.00
9/30/91 11990.00 12038.00
12/31/91 12980.00 13047.00
3/31/92 12645.00 12717.00
6/30/92 12872.00 12958.00
9/30/92 13264.00 13366.00
12/31/92 13913.00 14040.00
3/31/93 14494.00 14654.00
6/30/93 14537.00 14726.00
9/30/93 14888.00 15105.00
12/31/93 15222.00 15456.00
3/31/94 14618.00 14870.00
6/30/94 14662.00 14933.00
9/30/94 15365.00 15663.00
12/31/94 15359.00 15660.00
3/31/95 16846.00 17185.00
6/30/95 18413.00 18826.00
9/30/95 19843.00 20323.00
12/31/95 20995.00 21546.00
3/31/96 22104.00 22703.00
6/30/96 23047.00 23723.00
9/30/96 23707.00 24456.00
12/31/96 25659.00 26493.00
3/31/97 26306.00 27203.00
6/30/97 30874.00 31955.00
9/30/97 33121.00 34345.00
12/31/97 34024.00 35331.00
3/31/98 38701.00 40260.00
6/30/98 39924.00 41588.00
9/30/98 35941.00 37450.00
12/31/98 43632.00 45427.00
6/30/99 48890.00 51061.00
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF JUNE 30, 1999 AS OF JUNE 30, 1999
- ---------------------------------------------------------------------------------------------------------
YEAR TO DATE ONE YEAR FIVE YEAR SINCE INCEPTION
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Indexed Equity Fund Institutional Class 12.16% 22.71% 27.50% 20.67%
Indexed Equity Fund Service Class(+) 12.05% 22.46% 27.24% 20.52%
Average Lipper S&P 500 Index Fund 11.95% 22.18% 27.31% 21.01%
S&P 500 Index 12.39% 22.77% 27.87% 21.53%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
YEAR END
------------------------------------------------------------------------------------------------------------
1999 AS
OF
1991 1992 1993 1994 1995 1996 1997 1998 6/30/99
------ ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
29.80 7.19 9.41 0.90 36.88 22.57 32.88 28.62 12.16
</TABLE>
- --------------------------------------------------------------------------------
* 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 gain distributions and
dividends, and, for the Service Class shares, include the service fee of .25%
on an annualized basis of the average daily net asset value of the Service
Class shares.
+ 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 12/31/94. Performance figures for these two
Classes after this date will vary based on differences in their expense
structures.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO CURRENT MARKET
VOLATILITY, PERFORMANCE MAY BE LESS THAN SHOWN. 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 and the Service Class shares are sold with no
sales charge or contingent deferred sales charge. The Service Class shares,
first offered 1/1/95, are subject to an annual shareholder service fee of
.25%.
Index funds seek to match their respective indices, unlike other funds which
generally seek to beat an index or indices.
32
<PAGE> 34
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (98.3%)+
SHARES VALUE
-------------------------
<S> <C> <C>
AEROSPACE/DEFENSE (1.3%)
Boeing Co. (The)............... 141,531 $ 6,253,901
General Dynamics Corp. ........ 18,519 1,268,551
Goodrich (B.F.) Co. ........... 10,864 461,720
Lockheed Martin Corp. ......... 57,318 2,135,096
Northrop Grumman Corp. ........ 9,973 661,335
Raytheon Co. Class B........... 48,868 3,439,085
Rockwell International
Corp. ........................ 27,624 1,678,158
United Technologies Corp. ..... 70,025 5,019,917
--------------
20,917,763
--------------
AIRLINES (0.3%)
AMR Corp. (a).................. 22,358 1,525,933
Delta Air Lines, Inc. ......... 20,390 1,174,974
Southwest Airlines Co. ........ 48,750 1,517,344
US Airways Group, Inc. (a)..... 10,727 467,295
--------------
4,685,546
--------------
ALUMINUM (0.3%)
Alcan Aluminum Ltd. ........... 32,835 1,048,668
Alcoa Inc. .................... 53,357 3,301,464
Reynolds Metals Co. ........... 9,346 551,414
--------------
4,901,546
--------------
AUTO PARTS & EQUIPMENT (0.2%)
Cooper Tire & Rubber Co. ...... 11,023 260,419
Delphi Automotive Systems
Corp. ........................ 81,821 1,518,802
Genuine Parts Co. ............. 25,975 909,125
Goodyear Tire & Rubber Co.
(The)......................... 22,634 1,331,162
--------------
4,019,508
--------------
AUTOMOBILES (1.0%)
Ford Motor Co. ................ 175,978 9,931,758
General Motors Corp. .......... 94,215 6,218,190
--------------
16,149,948
--------------
BANKS--MAJOR REGIONAL (4.3%)
AmSouth Bancorp................ 25,642 594,574
Bank of New York Co., Inc.
(The)......................... 110,627 4,058,628
Bank One Corp. ................ 171,752 10,229,979
BankBoston Corp. .............. 43,134 2,205,226
BB&T Corp. .................... 45,703 1,676,729
Comerica Inc. ................. 22,741 1,351,668
Fifth Third Bancorp............ 39,024 2,597,535
Firstar Corp. ................. 96,070 2,689,960
Fleet Financial Group, Inc. ... 82,904 3,678,865
Huntington Bancshares Inc. .... 30,498 1,067,430
KeyCorp........................ 65,141 2,092,655
Mellon Bank Corp. ............. 75,705 2,753,769
Mercantile Bancorp., Inc. ..... 22,935 1,310,162
National City Corp. ........... 45,724 2,994,922
Northern Trust Corp. .......... 16,300 1,581,100
PNC Bank Corp. ................ 44,092 2,540,802
Regions Financial Corp. ....... 32,545 1,250,949
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
BANKS--MAJOR REGIONAL (Continued)
Republic New York Corp. ....... 15,330 $ 1,045,314
SouthTrust Corp. .............. 24,313 933,011
State Street Corp. ............ 23,349 1,993,421
Summit Bancorp................. 24,884 1,040,462
SunTrust Banks, Inc. .......... 46,625 3,237,523
Synovus Financial Corp. ....... 39,412 783,314
Union Planters Corp. .......... 20,688 924,495
U.S. Bancorp................... 105,608 3,590,672
Wachovia Corp. ................ 29,478 2,522,211
Wells Fargo Co. ............... 240,139 10,265,942
--------------
71,011,318
--------------
BANKS--MONEY CENTER (2.4%)
Bank of America Corp. ......... 253,372 18,575,335
Chase Manhattan Corp. (The).... 122,803 10,637,810
First Union Corp. ............. 140,687 6,612,289
Morgan (J.P.) & Co., Inc. ..... 25,740 3,616,470
--------------
39,441,904
--------------
BANKS--SAVINGS & LOANS (0.2%)
Golden West Financial Corp. ... 8,122 795,956
Washington Mutual, Inc. ....... 86,917 3,074,689
--------------
3,870,645
--------------
BEVERAGES--ALCOHOLIC (0.4%)
Anheuser-Busch Cos., Inc. ..... 69,123 4,903,413
Brown-Forman Corp.
Class B....................... 9,935 647,638
Coors (Adolph) Co.
Class B....................... 5,397 267,151
--------------
5,818,202
--------------
BEVERAGES--SOFT DRINKS (2.0%)
Coca-Cola Co. (The) (c)........ 358,594 22,412,125
Coca-Cola Enterprises Inc. .... 61,698 1,897,213
PepsiCo, Inc. ................. 211,533 8,183,683
--------------
32,493,021
--------------
BROADCAST/MEDIA (1.1%)
CBS Corp. (a).................. 103,164 4,481,186
Clear Channel Communications,
Inc. (a)...................... 48,286 3,328,716
Comcast Corp.
Special Class A............... 107,583 4,135,222
MediaOne Group Inc. (a)........ 88,039 6,547,901
--------------
18,493,025
--------------
BUILDING MATERIALS (0.1%)
Masco Corp. ................... 48,987 1,414,500
Owens Corning.................. 7,982 274,381
Sherwin-Williams Co. (The)..... 24,746 686,701
--------------
2,375,582
--------------
CHEMICALS (1.5%)
Air Products & Chemicals,
Inc. ......................... 33,397 1,344,229
Dow Chemical Co. (The)......... 31,973 4,056,574
Du Pont (E.I.) De Nemours &
Co. .......................... 163,778 11,188,085
</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.
33
<PAGE> 35
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
CHEMICALS (Continued)
Eastman Chemical Co. .......... 11,332 $ 586,431
Hercules Inc. ................. 14,649 575,889
Monsanto Co. .................. 91,781 3,619,613
Praxair, Inc. ................. 22,898 1,120,571
Rohm & Haas Co. ............... 30,738 1,317,907
Union Carbide Corp. ........... 19,276 939,705
--------------
24,749,004
--------------
CHEMICALS--DIVERSIFIED (0.2%)
Avery Dennison Corp. .......... 16,552 999,327
Engelhard Corp. ............... 18,110 409,739
FMC Corp. (a).................. 4,633 316,492
PPG Industries, Inc. .......... 25,268 1,492,391
--------------
3,217,949
--------------
CHEMICALS--SPECIALTY (0.1%)
Grace (W.R.) & Co. (a)......... 10,044 184,559
Great Lakes Chemical Corp. .... 8,455 389,459
Nalco Chemical Co. ............ 9,559 495,873
Sigma-Aldrich Corp. ........... 14,643 504,268
--------------
1,574,159
--------------
COMMUNICATIONS--EQUIPMENT MANUFACTURERS (4.6%)
Andrew Corp. (a)............... 11,947 226,246
Cabletron Systems, Inc. (a).... 26,782 348,166
Cisco Systems, Inc. (a)........ 461,854 29,702,985
General Instrument Corp. (a)... 25,082 1,065,985
Lucent Technologies Inc. ...... 441,780 29,792,555
Network Appliance, Inc. (a).... 7,234 404,200
Nortel Networks Corp. ......... 96,386 8,367,510
Scientific-Atlanta, Inc. ...... 10,837 390,132
Tellabs, Inc. (a).............. 56,890 3,843,631
3Com Corp. (a)................. 52,606 1,403,923
--------------
75,545,333
--------------
COMPUTER SOFTWARE & SERVICES (7.2%)
Adobe Systems Inc. ............ 8,817 724,372
America Online Inc. (a)........ 157,887 17,446,514
Autodesk, Inc. ................ 8,601 254,267
Automatic Data Processing,
Inc. ......................... 89,879 3,954,676
BMC Software, Inc. (a)......... 34,378 1,856,412
Ceridian Corp. (a)............. 20,988 686,045
Computer Associates
International, Inc. .......... 77,929 4,286,095
Computer Sciences Corp. (a).... 23,122 1,599,754
Compuware Corp. (a)............ 53,450 1,700,378
Electronic Data Systems
Corp. ........................ 71,514 4,045,011
Equifax Inc. .................. 20,956 747,867
First Data Corp. .............. 62,749 3,070,779
Microsoft Corp. (a)(c)......... 741,641 66,886,748
Novell, Inc. (a)............... 48,852 1,294,578
Oracle Corp. (a)............... 209,146 7,764,545
Parametric Technology Corp.
(a)........................... 39,343 545,884
Paychex, Inc. ................. 35,702 1,138,001
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
COMPUTER SOFTWARE & SERVICES (Continued)
PeopleSoft, Inc. (a)........... 35,016 $ 604,026
Shared Medical Systems
Corp. ........................ 3,874 252,779
--------------
118,858,731
--------------
COMPUTER SYSTEMS (5.4%)
Apple Computer, Inc. (a)....... 23,068 1,068,337
Compaq Computer Corp. ......... 247,039 5,851,736
Data General Corp. (a)......... 7,331 106,758
Dell Computer Corp. (a)........ 368,516 13,635,092
EMC Corp. (a).................. 147,143 8,092,865
Gateway Inc. (a)............... 22,793 1,344,787
Hewlett-Packard Co............. 147,248 14,798,424
International Business Machines
Corp. ........................ 263,720 34,085,810
Seagate Technology, Inc. (a)... 32,357 829,148
Silicon Graphics, Inc. (a)..... 27,473 449,871
Sun Microsystems, Inc. (a)..... 112,464 7,745,958
Unisys Corp. (a)............... 39,195 1,526,155
--------------
89,534,941
--------------
CONGLOMERATES (0.1%)
Tenneco Inc. .................. 24,818 592,530
Textron Inc. .................. 21,942 1,806,101
--------------
2,398,631
--------------
CONTAINERS--METAL & GLASS (0.1%)
Ball Corp. .................... 4,491 189,745
Crown Cork & Seal Co., Inc. ... 17,789 506,987
Owens-Illinois, Inc. (a)....... 22,668 740,960
--------------
1,437,692
--------------
CONTAINERS--PAPER (0.1%)
Bemis Co., Inc. ............... 7,641 303,730
Temple-Inland Inc. ............ 8,066 550,504
--------------
854,234
--------------
COSMETICS/PERSONAL CARE (0.6%)
Alberto-Culver Co. Class B..... 8,186 217,952
Avon Products, Inc. ........... 38,063 2,112,497
Gillette Co. (The)............. 161,397 6,617,277
International Flavors &
Fragrances Inc. .............. 15,421 684,307
--------------
9,632,033
--------------
ELECTRIC POWER COMPANIES (2.0%)
Ameren Corp. .................. 19,972 766,426
American Electric Power Co.,
Inc. ......................... 28,022 1,052,576
Carolina Power & Light Co. .... 21,954 939,906
Central & South West Corp. .... 30,883 721,890
Cinergy Corp. ................. 23,077 738,464
CMS Energy Corp. .............. 17,029 713,089
Consolidated Edison, Inc. ..... 32,988 1,492,707
Constellation Energy Group..... 21,716 643,337
Dominion Resources, Inc. ...... 27,875 1,207,336
DTE Energy Co. ................ 21,065 842,600
Duke Energy Corp. ............. 52,820 2,872,088
Edison International........... 50,472 1,350,126
Entergy Corp. ................. 35,869 1,120,906
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
34
<PAGE> 36
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
ELECTRIC POWER COMPANIES (Continued)
FirstEnergy Corp. ............. 34,064 $ 1,055,984
Florida Progress Corp. ........ 14,174 585,563
FPL Group, Inc. ............... 26,172 1,429,646
GPU, Inc. ..................... 18,290 771,609
New Century Energies Inc. ..... 16,615 644,870
Niagara Mohawk Holdings Inc.
(a)........................... 27,192 436,772
Northern States Power Co. ..... 22,177 536,406
PacifiCorp..................... 43,231 794,370
PECO Energy Co. ............... 27,890 1,173,123
PG&E Corp. .................... 55,794 1,813,305
PP&L Resources, Inc. .......... 22,878 703,499
Public Service Enterprise Group
Inc. ......................... 31,940 1,305,548
Reliant Energy, Inc. .......... 43,017 1,188,344
Southern Co. (The)............. 101,279 2,683,893
Texas Utilities Co. ........... 40,814 1,683,577
Unicom Corp. .................. 31,546 1,216,493
--------------
32,484,453
--------------
ELECTRICAL EQUIPMENT (3.9%)
Cooper Industries, Inc. ....... 13,770 716,040
Emerson Electric Co. .......... 63,224 3,975,209
General Electric Co. (c)....... 475,462 53,727,206
Grainger (W.W.), Inc. ......... 13,566 730,020
Honeywell Inc. ................ 18,286 2,118,890
Raychem Corp. ................. 11,221 415,177
Solectron Corp. (a)............ 36,616 2,441,830
Thomas & Betts Corp. .......... 8,307 392,506
--------------
64,516,878
--------------
ELECTRONICS--DEFENSE (0.0%) (b)
EG&G, Inc...................... 6,589 234,733
--------------
ELECTRONICS--INSTRUMENTATION (0.1%)
PE Corp.-PE Biosystems Group... 7,414 850,757
Tektronix, Inc. ............... 6,806 205,456
--------------
1,056,213
--------------
ELECTRONICS--SEMICONDUCTORS (3.2%)
Advanced Micro Devices, Inc.
(a)........................... 21,390 386,357
Applied Materials, Inc. (a).... 54,206 4,004,468
Intel Corp. ................... 482,174 28,689,353
KLA-Tencor Corp. (a)........... 12,853 833,838
LSI Logic Corp. (a)............ 20,773 958,155
Micron Technology, Inc. (a).... 36,230 1,460,522
Motorola, Inc.................. 87,606 8,300,668
National Semiconductor Corp.
(a)........................... 24,437 618,562
Texas Instruments Inc. ........ 56,930 8,254,850
--------------
53,506,773
--------------
ENGINEERING & CONSTRUCTION (0.0%) (b)
Fluor Corp. ................... 11,058 447,849
Foster Wheeler Corp. .......... 5,883 83,097
--------------
530,946
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
ENTERTAINMENT (1.8%)
King World Productions, Inc.
(a)........................... 10,052 $ 349,935
Seagram Co. Ltd. .............. 62,184 3,132,519
Time Warner Inc. .............. 173,372 12,482,784
Viacom Inc. Class B (a)........ 100,281 4,412,364
Walt Disney Co. (The).......... 299,277 9,221,473
--------------
29,599,075
--------------
FINANCIAL--MISCELLANEOUS (4.5%)
AFLAC Inc. .................... 38,782 1,856,688
American Express Co. .......... 65,509 8,524,359
American General Corp. ........ 36,426 2,745,611
Associates First Capital Corp.
Class A....................... 105,848 4,690,390
Citigroup Inc. ................ 489,021 23,228,497
Fannie Mae .................... 148,994 10,187,465
Franklin Resources Inc. ....... 36,616 1,487,525
Freddie Mac.................... 101,025 5,859,450
MBIA Inc. ..................... 14,364 930,069
MBNA Corp. .................... 116,543 3,569,129
Morgan Stanley Dean Witter &
Co. .......................... 82,864 8,493,560
SLM Holding Corp. ............. 23,712 1,086,306
Transamerica Corp. ............ 18,102 1,357,650
--------------
74,016,699
--------------
FOOD (1.7%)
Bestfoods ..................... 40,570 2,008,215
Campbell Soup Co. ............. 63,410 2,845,524
ConAgra, Inc. ................. 70,981 1,889,869
General Mills, Inc. ........... 22,243 1,787,781
Heinz (H.J.) Co. .............. 52,267 2,619,883
Hershey Foods Corp. ........... 20,342 1,207,806
Kellogg Co. ................... 58,871 1,942,743
Nabisco Group Holdings
Corp. ........................ 47,198 923,322
Quaker Oats Co. (The).......... 19,600 1,300,950
Ralston-Ralston Purina Group... 47,364 1,441,642
Sara Lee Corp. ................ 131,296 2,978,778
Unilever N.V. ................. 83,086 5,795,249
Wrigley (Wm.) Jr. Co. ......... 16,952 1,525,680
--------------
28,267,442
--------------
FOOD & HEALTH CARE DISTRIBUTORS (0.3%)
Cardinal Health, Inc. ......... 39,612 2,540,119
McKesson HBOC, Inc. ........... 40,324 1,295,409
SUPERVALU Inc. ................ 17,308 444,599
SYSCO Corp. ................... 48,098 1,433,922
--------------
5,714,049
--------------
GOLD & PRECIOUS METALS MINING (0.1%)
Barrick Gold Corp. ............ 56,651 1,097,613
Battle Mountain Gold Co. (a)... 33,439 81,508
Homestake Mining Co. .......... 37,799 309,480
Newmont Mining Corp. .......... 24,343 483,817
Placer Dome Inc. .............. 47,327 559,050
--------------
2,531,468
--------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
35
<PAGE> 37
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
HARDWARE & TOOLS (0.1%)
Black & Decker Corp. (The)..... 12,701 $ 801,751
Snap-on Inc. .................. 9,567 346,206
Stanley Works (The)............ 12,872 414,317
--------------
1,562,274
--------------
HEALTH CARE--DIVERSIFIED (4.2%)
Abbott Laboratories............ 220,938 10,052,679
Allergan, Inc. ................ 9,717 1,078,587
American Home Products
Corp. ........................ 189,845 10,916,087
Bristol-Myers Squibb Co. ...... 288,571 20,326,220
Johnson & Johnson.............. 195,339 19,143,222
Mallinckrodt Inc. ............. 10,320 375,390
Warner-Lambert Co. ............ 123,591 8,574,126
--------------
70,466,311
--------------
HEALTH CARE--DRUGS (4.4%)
Lilly (Eli) & Co. ............. 159,972 11,457,995
Merck & Co., Inc. ............. 342,388 25,336,712
Pfizer Inc. ................... 188,091 20,642,987
Pharmacia & Upjohn, Inc. ...... 73,582 4,180,377
Schering-Plough Corp. ......... 213,317 11,305,801
Watson Pharmaceuticals, Inc.
(a)........................... 13,879 486,633
--------------
73,410,505
--------------
HEALTH CARE--HMOs (0.3%)
Aetna Inc. .................... 20,516 1,834,900
Humana Inc. (a)................ 24,393 315,584
United Healthcare Corp. ....... 25,123 1,573,328
Wellpoint Health Networks Inc.
(a)........................... 9,844 835,510
--------------
4,559,322
--------------
HEALTH CARE--HOSPITAL MANAGEMENT (0.2%)
Columbia/HCA Healthcare
Corp. ........................ 82,498 1,881,986
Tenet Healthcare Corp. (a)..... 45,057 836,370
--------------
2,718,356
--------------
HEALTH CARE--MEDICAL PRODUCTS (1.0%)
Bard (C.R.), Inc. ............. 7,516 359,359
Bausch & Lomb Inc. ............ 8,289 634,108
Baxter International Inc. ..... 42,332 2,566,377
Becton, Dickinson & Co. ....... 36,458 1,093,740
Biomet, Inc. .................. 16,288 647,448
Boston Scientific Corp. (a).... 57,493 2,526,099
Guidant Corp. (a).............. 43,915 2,258,878
Medtronic, Inc. ............... 84,955 6,615,871
St. Jude Medical, Inc. (a)..... 12,263 436,869
--------------
17,138,749
--------------
HEALTH CARE--MISCELLANEOUS (0.4%)
ALZA Corp. (a)................. 14,649 745,268
Amgen Inc. (a)................. 74,342 4,525,569
HCR Manor Care, Inc. (a)....... 16,160 390,870
HEALTHSOUTH Corp. (a).......... 60,241 899,850
--------------
6,561,557
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
HEAVY DUTY TRUCKS & PARTS (0.2%)
Cummins Engine Co., Inc. ...... 6,120 $ 349,605
Dana Corp. .................... 24,127 1,111,350
Eaton Corp. ................... 10,454 961,768
ITT Industries, Inc. .......... 12,766 486,704
Navistar International Corp.
(a)........................... 9,666 483,300
PACCAR Inc. ................... 11,316 603,991
--------------
3,996,718
--------------
HOMEBUILDING (0.0%) (b)
Centex Corp. .................. 8,645 324,728
Kaufman & Broad Home Corp. .... 6,899 171,612
Pulte Corp. ................... 6,278 145,179
--------------
641,519
--------------
HOTEL/MOTEL (0.4%)
Carnival Corp. ................ 89,182 4,325,327
Harrah's Entertainment, Inc.
(a)........................... 18,570 408,540
Hilton Hotels Corp. ........... 37,503 532,074
Marriott International, Inc.
Class A....................... 36,300 1,356,712
--------------
6,622,653
--------------
HOUSEHOLD--FURNISHINGS & APPLIANCES (0.1%)
Armstrong World Industries,
Inc. ......................... 5,830 337,047
Maytag Corp. .................. 12,844 895,066
Whirlpool Corp. ............... 10,951 810,374
--------------
2,042,487
--------------
HOUSEHOLD PRODUCTS (1.7%)
Clorox Co. (The)............... 17,073 1,823,610
Colgate-Palmolive Co. ......... 42,600 4,206,750
Fort James Corp. .............. 32,043 1,213,628
Kimberly-Clark Corp. .......... 77,268 4,404,276
Procter & Gamble Co. (The)..... 193,007 17,225,875
--------------
28,874,139
--------------
HOUSEWARES (0.2%)
Fortune Brands, Inc. .......... 24,274 1,004,337
Newell Rubbermaid Inc. ........ 41,012 1,907,058
Tupperware Corp. .............. 8,381 213,715
--------------
3,125,110
--------------
INSURANCE BROKERS (0.3%)
Aon Corp. ..................... 37,192 1,534,170
Marsh & McLennan Cos., Inc. ... 38,264 2,888,932
--------------
4,423,102
--------------
INSURANCE--LIFE (0.4%)
Conseco, Inc. ................. 47,040 1,431,780
Jefferson-Pilot Corp. ......... 15,546 1,028,951
Lincoln National Corp. ........ 29,383 1,537,098
Provident Cos., Inc. .......... 19,732 789,280
Torchmark Corp. ............... 19,336 659,841
UNUM Corp. .................... 20,168 1,104,198
--------------
6,551,148
--------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
36
<PAGE> 38
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
INSURANCE--MULTI-LINE (1.5%)
American International Group,
Inc. ......................... 180,052 $ 21,077,337
CIGNA Corp. ................... 29,566 2,631,374
Hartford Financial Services
Group, Inc. (The)............. 33,002 1,924,429
--------------
25,633,140
--------------
INSURANCE--PROPERTY & CASUALTY (0.7%)
Allstate Corp. (The)........... 117,298 4,208,066
Chubb Corp. (The).............. 23,474 1,631,443
Cincinnati Financial Corp. .... 23,973 900,486
Loews Corp. ................... 15,898 1,257,929
MGIC Investment Corp. ......... 15,800 740,625
Progressive Corp. (The)........ 10,608 1,538,160
SAFECO Corp. .................. 19,787 873,102
St. Paul Cos., Inc. (The)...... 32,900 1,046,631
--------------
12,196,442
--------------
INVESTMENT BANK/BROKERAGE (0.8%)
Bear Stearns Cos., Inc.
(The)......................... 17,013 795,358
Lehman Brothers Holdings
Inc. ......................... 17,268 1,074,933
Merrill Lynch & Co., Inc. ..... 53,474 4,274,578
Paine Webber Group Inc. ....... 21,062 984,648
Schwab (Charles) Corp. (The)... 59,358 6,521,960
--------------
13,651,477
--------------
LEISURE TIME (0.1%)
Brunswick Corp. ............... 13,470 375,476
Mirage Resorts, Inc. (a)....... 28,892 483,941
--------------
859,417
--------------
MACHINE TOOLS (0.0%) (b)
Milacron Inc. ................. 5,411 100,104
--------------
MACHINERY--DIVERSIFIED (0.4%)
Briggs & Stratton Corp. ....... 3,389 195,715
Case Corp. .................... 10,827 521,049
Caterpillar Inc. .............. 51,749 3,104,940
Deere & Co. ................... 33,716 1,335,997
Ingersoll-Rand Co. ............ 24,105 1,557,786
NACCO Industries, Inc.
Class A....................... 1,185 87,097
Thermo Electron Corp. (a)...... 22,943 460,294
Timken Co. (The)............... 9,032 176,124
--------------
7,439,002
--------------
MANUFACTURED HOUSING (0.0%) (b)
Fleetwood Enterprises, Inc..... 5,097 134,752
--------------
MANUFACTURING--DIVERSIFIED (1.5%)
AlliedSignal Inc. ............. 80,288 5,058,144
Crane Co. ..................... 9,884 310,728
Danaher Corp. ................. 19,584 1,138,320
Dover Corp. ................... 31,032 1,186,974
Illinois Tool Works Inc. ...... 36,394 2,984,308
Johnson Controls, Inc. ........ 12,348 855,871
Millipore Corp. ............... 6,408 259,925
Pall Corp. .................... 18,133 402,326
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
MANUFACTURING--DIVERSIFIED (Continued)
Parker-Hannifin Corp. ......... 15,783 $ 722,072
Sealed Air Corp. (a)........... 12,166 789,269
Tyco International Ltd. ....... 119,226 11,296,664
--------------
25,004,601
--------------
METALS--MINING (0.1%)
ASARCO Inc. ................... 5,790 108,925
Cyprus Amax Minerals Co. ...... 13,099 198,941
Freeport-McMoRan Copper & Gold
Inc. Class B (a).............. 23,762 426,231
Inco Ltd. (a).................. 27,919 502,542
Phelps Dodge Corp. ............ 8,412 521,018
--------------
1,757,657
--------------
MISCELLANEOUS (1.2%)
AES Corp. (The) (a)............ 27,688 1,609,365
American Greetings Corp. Class
A............................. 9,841 296,460
Archer-Daniels-Midland Co. .... 85,508 1,320,030
Corning Inc. .................. 35,375 2,480,672
Harcourt General, Inc. ........ 10,299 531,042
Harris Corp. .................. 11,545 452,420
Jostens, Inc. ................. 5,009 105,502
Minnesota Mining &
Manufacturing Co. ............ 58,508 5,086,539
Nextel Communications, Inc.
Class A (a)................... 43,053 2,160,722
Pioneer Hi-Bred International,
Inc. ......................... 34,911 1,359,347
Sprint Corp. (PCS Group) (a)... 63,931 3,652,058
TRW, Inc. ..................... 17,452 957,679
--------------
20,011,836
--------------
NATURAL GAS DISTRIBUTORS & PIPELINES (0.7%)
Coastal Corp. (The)............ 30,937 1,237,480
Columbia Energy Group.......... 12,154 761,904
Consolidated Natural Gas
Co. .......................... 13,952 847,584
Eastern Enterprises............ 3,321 132,010
Enron Corp. ................... 51,351 4,197,944
NICOR Inc. .................... 6,846 260,576
ONEOK, Inc. ................... 4,587 145,637
Peoples Energy Corp. .......... 5,126 193,186
Sempra Energy.................. 34,994 791,740
Sonat, Inc. ................... 15,951 528,377
Williams Cos., Inc. (The)...... 62,633 2,665,817
--------------
11,762,255
--------------
OFFICE EQUIPMENT & SUPPLIES (0.5%)
Pitney Bowes Inc. ............. 38,988 2,504,979
Xerox Corp. ................... 96,082 5,674,843
--------------
8,179,822
--------------
OIL & GAS DRILLING (0.0%) (b)
Helmerich & Payne, Inc. ....... 7,160 170,498
Rowan Cos., Inc. (a)........... 12,120 223,462
--------------
393,960
--------------
OIL & GAS--EQUIPMENT & SERVICES (0.6%)
Baker Hughes Inc. ............. 47,571 1,593,629
Halliburton Co. ............... 64,017 2,896,769
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
37
<PAGE> 39
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
OIL & GAS--EQUIPMENT & SERVICES (Continued)
McDermott International
Inc. ......................... 8,558 $ 241,764
Schlumberger Ltd. ............. 79,500 5,063,156
--------------
9,795,318
--------------
OIL & GAS--EXPLORATION & PRODUCTION (0.3%)
Anadarko Petroleum Corp. ...... 17,564 646,575
Apache Corp. .................. 16,186 631,254
Burlington Resources Inc. ..... 25,735 1,113,039
Union Pacific Resources Group,
Inc. ......................... 36,655 597,935
Unocal Corp. .................. 35,290 1,398,366
--------------
4,387,169
--------------
OIL--INTEGRATED DOMESTIC (0.6%)
Amerada Hess Corp. ............ 13,203 785,579
Ashland Inc. .................. 10,762 431,825
Atlantic Richfield Co. ........ 46,767 3,907,967
Kerr-McGee Corp. .............. 12,517 628,197
Occidental Petroleum Corp. .... 50,613 1,069,200
Phillips Petroleum Co. ........ 36,714 1,847,173
Sunoco Inc. ................... 13,094 395,275
USX-Marathon Group............. 44,807 1,459,028
--------------
10,524,244
--------------
OIL--INTEGRATED INTERNATIONAL (4.3%)
Chevron Corp. ................. 95,202 9,062,040
Exxon Corp. ................... 352,763 27,206,846
Mobil Corp. ................... 113,740 11,260,260
Royal Dutch Petroleum Co. ADR
(d)........................... 311,580 18,772,695
Texaco Inc. ................... 77,945 4,871,563
--------------
71,173,404
--------------
PAPER & FOREST PRODUCTS (0.6%)
Boise Cascade Corp. ........... 8,186 351,998
Champion International
Corp. ........................ 14,017 671,064
Georgia-Pacific Group.......... 24,943 1,181,675
International Paper Co. ....... 59,730 3,016,365
Louisiana-Pacific Corp. ....... 15,656 371,830
Mead Corp. (The)............... 14,740 615,395
Potlatch Corp. ................ 4,205 184,757
Westvaco Corp. ................ 14,535 421,515
Weyerhaeuser Co. .............. 29,165 2,005,094
Willamette Industries, Inc. ... 16,072 740,316
--------------
9,560,009
--------------
PERSONAL LOANS (0.5%)
Capital One Financial Corp. ... 28,682 1,597,229
Countrywide Credit Industries,
Inc. ......................... 16,259 695,072
Household International,
Inc. ......................... 69,639 3,299,148
Providian Financial Corp. ..... 20,712 1,936,572
--------------
7,528,021
--------------
PHOTOGRAPHY/IMAGING (0.2%)
Eastman Kodak Co. ............. 46,924 3,179,101
IKON Office Solutions, Inc. ... 21,620 324,300
Polaroid Corp. ................ 6,408 177,021
--------------
3,680,422
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
POLLUTION CONTROL (0.3%)
Browning-Ferris Industries,
Inc. ......................... 22,815 $ 981,045
Waste Management, Inc. ........ 88,527 4,758,326
--------------
5,739,371
--------------
PUBLISHING (0.1%)
McGraw-Hill Cos., Inc. (The)... 28,703 1,548,168
Meredith Corp. ................ 7,582 262,527
--------------
1,810,695
--------------
PUBLISHING--NEWSPAPER (0.4%)
Dow Jones & Co., Inc. ......... 13,202 700,531
Gannett Co., Inc. ............. 40,641 2,900,751
Knight-Ridder, Inc. ........... 11,474 630,353
New York Times Co. (The)
Class A....................... 25,685 945,529
Times Mirror Co. (The)
Class A....................... 10,494 621,770
Tribune Co. ................... 17,261 1,503,865
--------------
7,302,799
--------------
RAILROADS (0.5%)
Burlington Northern
Santa Fe Corp. ............... 68,280 2,116,680
CSX Corp. ..................... 31,621 1,432,827
Kansas City Southern
Industries, Inc. ............. 15,945 1,017,490
Norfolk Southern Corp. ........ 55,250 1,664,406
Union Pacific Corp. ........... 35,967 2,097,326
--------------
8,328,729
--------------
RESTAURANTS (0.6%)
Darden Restaurants, Inc. ...... 19,478 424,864
McDonald's Corp. .............. 197,031 8,139,843
Tricon Global Restaurants, Inc.
(a)........................... 22,346 1,209,477
Wendy's International, Inc. ... 17,882 506,284
--------------
10,280,468
--------------
RETAIL STORES--APPAREL (0.6%)
Gap, Inc. (The)................ 124,710 6,282,266
Limited, Inc. (The)............ 31,015 1,407,306
TJX Cos., Inc. (The)........... 46,789 1,558,659
--------------
9,248,231
--------------
RETAIL STORES--DEPARTMENT (0.5%)
Dillard's, Inc. Class A........ 15,557 546,440
Federated Department Stores,
Inc. (a)...................... 30,303 1,604,165
Kohl's Corp. (a)............... 23,679 1,827,723
May Department Stores Co.
(The)......................... 48,592 1,986,198
Nordstrom, Inc. ............... 20,618 690,703
Penney (J.C.) Co., Inc. ....... 38,212 1,855,670
--------------
8,510,899
--------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
38
<PAGE> 40
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
RETAIL STORES--DRUGS (0.3%)
Longs Drug Stores Corp. ....... 5,731 $ 198,078
Rite Aid Corp. ................ 37,628 926,589
Walgreen Co. .................. 144,895 4,256,291
--------------
5,380,958
--------------
RETAIL STORES--FOOD (0.7%)
Albertson's, Inc. ............. 60,994 3,145,003
Great Atlantic & Pacific Tea
Co., Inc. (The)............... 5,546 187,524
Kroger Co. (The) (a)........... 120,032 3,353,394
Safeway Inc. (a)............... 72,149 3,571,375
Winn-Dixie Stores, Inc. ....... 21,620 798,589
--------------
11,055,885
--------------
RETAIL STORES--GENERAL MERCHANDISE (2.4%)
Dayton Hudson Corp. ........... 64,286 4,178,590
Kmart Corp. (a)................ 71,631 1,177,435
Sears, Roebuck & Co. .......... 55,343 2,466,222
Wal-Mart Stores, Inc. ......... 646,711 31,203,806
--------------
39,026,053
--------------
RETAIL STORES--SPECIALTY (2.0%)
AutoZone, Inc. (a)............. 21,712 654,074
Best Buy Co., Inc. (a)......... 18,000 1,215,000
Circuit City Stores-Circuit
City Group.................... 14,584 1,356,312
Consolidated Stores Corp.
(a)........................... 15,928 430,056
Costco Cos., Inc. (a).......... 31,849 2,549,911
CVS Corp. ..................... 56,746 2,901,139
Dollar General Corp. .......... 32,309 936,961
Home Depot, Inc. (The)......... 215,325 13,875,005
Lowe's Cos., Inc. ............. 53,982 3,060,105
Office Depot, Inc. (a)......... 48,835 1,077,422
Pep Boys-Manny, Moe & Jack
(The)......................... 7,636 165,129
Staples Inc. (a)............... 67,524 2,089,024
Tandy Corp. ................... 28,540 1,394,892
Toys "R" Us, Inc. (a).......... 36,079 746,384
--------------
32,451,414
--------------
SHOES (0.2%)
NIKE, Inc. Class B............. 40,958 2,593,153
Reebok International Ltd.
(a)........................... 8,142 151,645
--------------
2,744,798
--------------
SPECIALIZED SERVICES (0.7%)
Block (H&R), Inc. ............. 14,117 705,850
Cendant Corp. (a).............. 111,568 2,287,144
Dun & Bradstreet Corp. (The)... 23,808 843,696
Ecolab Inc. ................... 18,913 825,080
IMS Health Inc. ............... 46,011 1,437,844
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
SPECIALIZED SERVICES (Continued)
Interpublic Group of
Cos., Inc. (The).............. 20,394 $ 1,766,630
Laidlaw Inc. .................. 48,055 354,406
National Service Industries,
Inc. ......................... 5,981 215,316
Omnicom Group Inc. ............ 25,952 2,076,160
Service Corp. International ... 39,521 760,779
--------------
11,272,905
--------------
SPECIALTY PRINTING (0.1%)
Deluxe Corp. .................. 11,294 439,760
Donnelley (R.R.) & Sons Co..... 18,971 703,113
--------------
1,142,873
--------------
STEEL (0.1%)
Allegheny Teledyne Inc. ....... 27,956 632,505
Bethlehem Steel Corp. (a)...... 18,927 145,501
Nucor Corp. ................... 12,784 606,441
USX-U.S. Steel Group........... 12,835 346,545
Worthington Industries,
Inc. ......................... 13,382 219,967
--------------
1,950,959
--------------
TELECOMMUNICATIONS--LONG DISTANCE (3.3%)
AT&T Corp. .................... 462,390 25,807,142
MCI WorldCom, Inc. (a)......... 270,384 23,320,620
Sprint Corp. (FON Group)....... 125,721 6,639,640
--------------
55,767,402
--------------
TELEPHONE (4.6%)
ALLTEL Corp. .................. 40,890 2,923,635
Ameritech Corp. ............... 159,709 11,738,611
Bell Atlantic Corp. ........... 225,526 14,743,762
BellSouth Corp. ............... 275,227 12,901,266
CenturyTel, Inc. .............. 20,228 804,063
Frontier Corp. ................ 25,078 1,479,602
GTE Corp. ..................... 140,992 10,671,332
SBC Communications Inc. ....... 285,367 16,551,286
US West Inc. .................. 73,177 4,299,149
--------------
76,112,706
--------------
TEXTILES--APPAREL MANUFACTURERS (0.1%)
Fruit of the Loom Ltd. (a)..... 10,517 102,541
Liz Claiborne, Inc. ........... 9,139 333,574
Russell Corp. ................. 4,929 96,115
Springs Industries, Inc.
Class A....................... 2,572 112,204
V.F. Corp. .................... 17,406 744,106
--------------
1,388,540
--------------
TOBACCO (0.9%)
Philip Morris Cos. Inc. ....... 350,561 14,088,130
UST Inc. ...................... 25,570 747,923
--------------
14,836,053
--------------
TOYS (0.1%)
Hasbro, Inc. .................. 28,516 796,666
Mattel, Inc. .................. 60,551 1,600,817
--------------
2,397,483
--------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
39
<PAGE> 41
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
TRANSPORTATION--MISCELLANEOUS (0.2%)
FDX Corp. (a).................. 43,232 $ 2,345,336
Ryder System, Inc. ............ 10,306 267,956
--------------
2,613,292
--------------
Total Common Stocks (Cost
$890,856,608)................. 1,630,268,959(e)
--------------
SHORT-TERM
INVESTMENTS (1.1%)
PRINCIPAL
AMOUNT
----------
COMMERCIAL PAPER (0.6%)
Mitsubishi International Corp.
5.85%, due 7/1/99 (c)......... $9,800,000 9,800,000
--------------
Total Commercial Paper
(Cost $9,800,000)............. 9,800,000
--------------
U.S. GOVERNMENT (0.5%)
United States Treasury Bills
4.65%, due 9/16/99 (c)........ 2,000,000 1,980,106
4.65%, due 9/23/99 (c)........ 7,000,000 6,924,040
--------------
Total U.S. Government
(Cost $8,904,146)............. 8,904,146
--------------
Total Short-Term Investments
(Cost $18,704,146)............ 18,704,146
--------------
Total Investments
(Cost $909,560,754) (f)....... 99.4% 1,648,973,105(g)
Cash and Other Assets,
Less Liabilities.............. 0.6 9,322,776
---------- --------------
Net Assets..................... 100.0% $1,658,295,881
========== ==============
</TABLE>
<TABLE>
<CAPTION>
FUTURES CONTRACTS (0.1%)
CONTRACTS UNREALIZED
LONG APPRECIATION(h)
----------------------------
<S> <C> <C>
Standard & Poor's 500
September 1999............. 76 $ 886,307
Mini September 1999........ 4 6,343
--------------
Total Futures Contracts
(Settlement Value
$26,528,640)............... $ 892,650
==============
</TABLE>
- ------------
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) Segregated as collateral for futures contracts.
(d) ADR-American Depository Receipt.
(e) The combined market value of common stocks and settlement value of Standard
& Poor's 500 Index futures contracts represents 99.9% of net assets.
(f) The cost for Federal income tax purposes is $910,258,863.
(g) At June 30, 1999, net unrealized appreciation was $738,714,242, 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 $754,134,719 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $15,420,477.
(h) Represents the difference between the value of the contracts at the time
they were opened and the value at June 30, 1999.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
40
<PAGE> 42
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $909,560,754)..... $1,648,973,105
Receivables:
Investment securities sold......... 34,159,632
Dividends and interest............. 1,561,979
Fund shares sold................... 872,114
Variation margin receivable on
futures contracts.................. 868,419
--------------
Total assets................... 1,686,435,249
--------------
LIABILITIES:
Payables:
Investment securities purchased.... 21,106,711
Fund shares redeemed............... 6,407,494
MainStay Management................ 332,562
Custodian.......................... 75,746
Transfer agent..................... 3,494
Accrued expenses..................... 213,361
--------------
Total liabilities.............. 28,139,368
--------------
Net assets........................... $1,658,295,881
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per
share) 1 billion shares authorized
Institutional Class................ $ 42,869
Institutional Service Class........ 1,416
Additional paid-in capital........... 834,721,148
Accumulated undistributed net
investment income.................. 8,618,695
Accumulated undistributed net
realized gain on investments....... 74,606,752
Net unrealized appreciation on
investments........................ 740,305,001
--------------
Net assets........................... $1,658,295,881
==============
Institutional Class
Net assets applicable to outstanding
shares............................. $1,605,504,517
==============
Shares of capital stock
outstanding........................ 42,868,861
==============
Net asset value per share
outstanding........................ $ 37.45
==============
Institutional Service Class
Net assets applicable to outstanding
shares............................. $ 52,791,364
==============
Shares of capital stock
outstanding........................ 1,415,878
==============
Net asset value per share
outstanding........................ $ 37.29
==============
<CAPTION>
STATEMENT OF OPERATIONS
For the year six months ended June 30, 1999 (Unaudited)
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)...................... $ 10,508,125
Interest........................... 515,995
--------------
Total income................... 11,024,120
--------------
Expenses:
Management......................... 3,921,582
Custodian.......................... 109,320
Shareholder communication.......... 84,417
Professional....................... 67,625
Service............................ 52,476
Registration....................... 42,563
Transfer agent..................... 25,800
Directors.......................... 17,427
Miscellaneous...................... 32,891
--------------
Total expenses before
reimbursement................ 4,354,101
Expense reimbursement from
Manager.......................... (1,948,676)
--------------
Net expenses................... 2,405,425
--------------
Net investment income................ 8,618,695
--------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain from:
Security transactions.............. 60,811,000
Futures transactions............... 600,154
--------------
Net realized gain on investments..... 61,411,154
--------------
Net change in unrealized appreciation
on investments:
Security transactions.............. 109,057,128
Futures transactions............... 575,388
--------------
Net unrealized gain on investments... 109,632,516
--------------
Net realized and unrealized gain on
investments........................ 171,043,670
--------------
Net increase in net assets resulting
from operations.................... $ 179,662,365
==============
</TABLE>
- ------------
(a) Dividends recorded net of foreign withholding taxes of $224,812.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
41
<PAGE> 43
INDEXED EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited) and the year ended December
31, 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income................................... $ 8,618,695 $ 16,035,836
Net realized gain on investments........................ 61,411,154 54,018,731
Net change in unrealized appreciation on investments.... 109,632,516 244,317,325
-------------- --------------
Net increase in net assets resulting from operations.... 179,662,365 314,371,892
-------------- --------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class................................... -- (15,890,238)
Institutional Service Class........................... -- (314,560)
From net realized gain on investments:
Institutional Class................................... -- (43,243,748)
Institutional Service Class........................... -- (1,050,731)
-------------- --------------
Total dividends and distributions to shareholders... -- (60,499,277)
-------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 138,423,305 355,359,146
Institutional Service Class........................... 17,951,669 23,308,027
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... -- 59,128,205
Institutional Service Class........................... -- 1,359,018
-------------- --------------
156,374,974 439,154,396
Cost of shares redeemed:
Institutional Class................................... (180,067,073) (156,430,972)
Institutional Service Class........................... (6,379,758) (7,935,488)
-------------- --------------
Increase (decrease) in net assets derived from capital
share transactions................................... (30,071,857) 274,787,936
-------------- --------------
Net increase in net assets............................ 149,590,508 528,660,551
NET ASSETS:
Beginning of period....................................... 1,508,705,373 980,044,822
-------------- --------------
End of period............................................. $1,658,295,881 $1,508,705,373
============== ==============
Accumulated undistributed net investment income at end of
period.................................................. $ 8,618,695 $ --
============== ==============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
42
<PAGE> 44
(THIS PAGE INTENTIONALLY LEFT BLANK)
43
<PAGE> 45
INDEXED EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999* DECEMBER 31, 1998
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period..................... $ 33.39 $ 33.28 $ 27.05 $ 26.99
---------- ---------- ---------- --------
Net investment income...................................... 0.20 0.13 0.38 0.31
Net realized and unrealized gain (loss) on investments..... 3.86 3.88 7.36 7.31
---------- ---------- ---------- --------
Total from investment operations........................... 4.06 4.01 7.74 7.62
---------- ---------- ---------- --------
Less dividends and distributions:
From net investment income................................. -- -- (0.38) (0.31)
From net realized gain on investments...................... -- -- (1.02) (1.02)
In excess of net realized gain on investments.............. -- -- -- --
---------- ---------- ---------- --------
Total dividends and distributions.......................... -- -- (1.40) (1.33)
---------- ---------- ---------- --------
Net asset value at end of period........................... $ 37.45 $ 37.29 $ 33.39 $ 33.28
========== ========== ========== ========
Total investment return.................................... 12.16%(b) 12.05%(b) 28.62% 28.24%
Ratios (to average net assets)/Supplemental Data:
Net investment income.................................... 1.11%+ 0.86%+ 1.29% 1.04%
Net expenses............................................. 0.30%+ 0.55%+ 0.30% 0.55%
Expenses (before reimbursement).......................... 0.55%+ 0.80%+ 0.56% 0.81%
Portfolio turnover rate.................................... 3% 3% 8% 8%
Net assets at end of period (in 000's)..................... $1,605,505 $ 52,791 $1,472,263 $ 36,442
</TABLE>
- ------------
* Unaudited.
+ Annualized.
(a) Less than one cent per share.
(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.
44
<PAGE> 46
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- ------------- -------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994
----------------------------- ----------------------------- ----------------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 21.05 $ 21.01 $ 17.82 $ 17.81 $ 13.53 $ 13.53 $ 13.86
---------- ---------- ---------- ---------- ---------- ---------- ----------
0.37 0.32 0.34 0.31 0.35 0.33 0.33
6.54 6.52 3.69 3.66 4.64 4.64 (0.20)
---------- ---------- ---------- ---------- ---------- ---------- ----------
6.91 6.84 4.03 3.97 4.99 4.97 0.13
---------- ---------- ---------- ---------- ---------- ---------- ----------
(0.37) (0.32) (0.34) (0.31) (0.34) (0.33) (0.33)
(0.54) (0.54) (0.46) (0.46) (0.36) (0.36) (0.13)
-- -- -- -- -- -- 0.00(a)
---------- ---------- ---------- ---------- ---------- ---------- ----------
(0.91) (0.86) (0.80) (0.77) (0.70) (0.69) (0.46)
---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 27.05 $ 26.99 $ 21.05 $ 21.01 $ 17.82 $ 17.81 $ 13.53
========== ========== ========== ========== ========== ========== ==========
32.88% 32.60% 22.57% 22.21% 36.88% 36.70% 0.90%
1.56% 1.31% 1.96% 1.71% 2.21% 1.96% 2.43%
0.30% 0.55% 0.44% 0.69% 0.50% 0.75% 0.50%
0.56% 0.81% 0.59% 0.84% 0.59% 0.84% 0.58%
3% 3% 8% 8% 4% 4% 5%
$ 966,217 $ 13,828 $ 617,716 $ 5,865 $ 354,420 $ 969 $ 244,685
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
45
<PAGE> 47
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
During the first half of 1999, international equity markets were influenced by a
wide variety of forces. The Brazilian real's devaluation in January and signs of
a Japanese market recovery signaled the end of a two-year global economic
crisis. Commodity prices for oil, natural gas, lumber, and copper rose, which
was positive for stocks but negative for bonds, as inflationary concerns
resurfaced.
In the U.S., the Federal Reserve Board reacted to rising prices, low
unemployment, and the potential for wage increases with an announcement in May
of a bias toward raising interest rates. At the end of June, the Federal Reserve
Board took action by raising the targeted federal funds rate by 0.25%. While the
end of the war in Kosovo helped stabilize eastern European economies, concerns
remain over the cost of reconstruction. Meanwhile, the U.S. dollar charged ahead
versus other major currencies, while the euro suffered from slowing European
growth and the yen faltered as investors pondered the strength of the Japanese
recovery.
FACING MARKET CHALLENGES
For the first half of 1999, the MainStay Institutional International Equity Fund
returned 2.29% for Institutional Class shares and 2.13% for Service Class
shares. Both share classes underperformed the average Lipper(1) international
fund, which returned 7.38% and the Morgan Stanley Capital International Europe,
Australia, and Far East Index (EAFE Index),(2) which returned 3.97% for the same
six-month period.
The Fund's underperformance was largely attributable to its underweighted
position in Japanese securities and overweighted positions in Europe,
particularly in peripheral nations, including Portugal, whose stock market
declined 6.70% in local-currency terms, and Ireland, where the stock market
gained only 0.90% in local terms. Fortunately, the Fund was also overweighted in
Finland, which was Europe's best-performing market, returning 46.40% in local
terms.
While many European markets had positive returns in local-currency terms,
shifting currency values had a negative impact on U.S.-dollar based investors.
As the U.S. dollar's value rose relative to European currencies, the value of
gains in local-currency terms was substantially negated. On a relative basis,
however, the Fund benefited modestly from an appreciating Canadian dollar.
SHIFTING ASSETS IN A CHANGING ENVIRONMENT
The Fund uses a "country-first" approach, seeking to identify the most promising
geographical markets and then to invest in a wide array of companies in each
target market. During the first half of 1999, the Fund shifted assets from core
European markets, such as Germany and France, to markets in the Far East.
Japanese investments, as a percentage of the Fund's total assets, rose through
purchases and appreciation from 11% in January to over 20% at the end of June,
which had a positive impact on performance.
ADVANCING SECTORS AND COMPANIES
The Fund also seeks to identify promising lines of business and to select
companies that are in a position to take advantage of factors which make
industries more competitive. Telecommunication companies have advanced on strong
consumer demand, and the Fund benefited from its positions in Nokia Oyj and NTT
Mobile Communications Network, Inc. Nokia, the number-one supplier of mobile
phones worldwide, rose 63.03% in local terms over the first half of the year.
NTT, which added over 400,000 new subscriptions in June, or over half of the
industry total, rose 76.34% over the same period.
- --------------------------------------------------------------------------------
(1) Lipper, 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.
(2) The Morgan Stanley Capital International Europe, Australia, and Far East
Index--the EAFE Index--is an unmanaged index generally considered to be
representative of the international stock market. An investment cannot be
made directly into an index.
46
<PAGE> 48
Auto manufacturers also advanced. During the reporting period, the Fund was
invested in DaimlerChrysler in Europe and Honda Motor and Toyota Motor in
Japan--all of which made positive contributions to the Fund's performance.
Toyota rose 24.76% in local terms for the six months ended June 30, 1999, and
received the Global 500 Award and recognition from the United Nations for its
environmental initiative.
Irish cement manufacturer CRH PLC rose 16.78% in local terms for the reporting
period as its international operations capitalized on European infrastructure
improvements. BP Amoco PLC (+26.69% in local terms) benefited from rising oil
prices and increasing demand in Asia. Sony Corp. (+58.57% in local terms)
advanced on anticipation of its next-generation game console and announcement of
restructuring measures to cut costs and enhance profitability.
While the Fund had many successes, it also owned a number of companies in
industries that underperformed during the first six months of 1999. The Fund's
largest holding, Allied Irish Banks PLC, declined 16.53% in local-currency terms
for the six months ended June 30, 1999. While the company has broad
international reach and is domiciled in the fastest-growing European economy,
the stock underperformed on inflation concerns that accompanied the global
economic recovery.
LOOKING AHEAD
We remain optimistic for the international economy and believe we may see
continued moderate inflation, low interest rates, increasing cross-border
consolidation in Europe, and recoveries in some Asian countries. The Fund is
still overweighted in Europe, particularly in the peripheral countries, such as
Portugal and Ireland, but we believe Japan has strong potential and anticipate
making additional investments there. Our strategy will be to seek to purchase
new securities or add to existing positions when prices dip and to seek cyclical
companies poised to benefit if the turnaround in the Japanese economy can be
sustained. As of June 30, 1999, we believed that the Fund was appropriately
positioned with respect to foreign currencies, particularly the euro.
Whatever happens, the Fund will continue to seek long-term growth of capital by
investing in a portfolio consisting primarily of non-U.S. equity securities.
Current income is a secondary objective.
Joseph Portera
Portfolio Manager
MacKay Shields Financial Corporation
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
47
<PAGE> 49
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
INTERNATIONAL EQUITY FUND VS
MSCI EAFE INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND MSCI EAFE INDEX
------------------------- ---------------
<S> <C> <C>
7/31/92 10000.00 10000.00
9/30/92 9512.00 10417.00
12/31/92 9463.00 10015.00
3/31/93 10562.00 11216.00
6/30/93 11294.00 12344.00
9/30/93 11781.00 13162.00
12/31/93 11831.00 13276.00
3/31/94 12258.00 13740.00
6/30/94 12724.00 14442.00
9/30/94 12780.00 14457.00
12/31/94 12820.00 14309.00
3/31/95 12602.00 14576.00
6/30/95 12166.00 14682.00
9/30/95 13012.00 15294.00
12/31/95 13739.00 15914.00
3/31/96 14416.00 16373.00
6/30/96 14907.00 16632.00
9/30/96 14867.00 16611.00
12/31/96 15400.00 16875.00
3/31/97 15414.00 16610.00
6/30/97 17254.00 18766.00
9/30/97 17269.00 18634.00
12/31/97 16238.00 17175.00
3/31/98 18495.00 19702.00
6/30/98 19100.00 19911.00
9/30/98 16663.00 17081.00
12/31/98 19877.00 20610.00
6/30/99 20331.00 21427.00
</TABLE>
THESE GRAPHS ASSUME A $10,000 INVESTMENT MADE ON 7/31/92.(+)
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
INTERNATIONAL EQUITY FUND VS
MSCI EAFE INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<S> <C> <C>
7/31/92 10000.00 10000.00
9/30/92 9512.00 10417.00
12/31/92 9463.00 10015.00
3/31/93 10562.00 11216.00
6/30/93 11294.00 12344.00
9/30/93 11781.00 13162.00
12/31/93 11831.00 13276.00
3/31/94 12258.00 13740.00
6/30/94 12724.00 14442.00
9/30/94 12780.00 14457.00
12/31/94 12820.00 14309.00
3/31/95 12602.00 14576.00
6/30/95 12153.00 14682.00
9/30/95 12973.00 15294.00
12/31/95 13699.00 15914.00
3/31/96 14348.00 16373.00
6/30/96 14826.00 16632.00
9/30/96 14773.00 16611.00
12/31/96 15287.00 16875.00
3/31/97 15301.00 16610.00
6/30/97 17122.00 18766.00
9/30/97 17122.00 18634.00
12/31/97 16032.00 17175.00
3/31/98 18229.00 19702.00
6/30/98 18848.00 19911.00
9/30/98 16423.00 17081.00
12/31/98 19591.00 20610.00
6/30/99 20009.00 21427.00
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF JUNE 30, 1999 AS OF JUNE 30, 1999
- ----------------------------------------------------------------------------------------------------------------
YEAR TO DATE ONE YEAR FIVE YEAR SINCE INCEPTION
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
International Equity Fund Institutional
Class(+) 2.29% 6.45% 9.83% 10.80%
International Equity Fund Service Class(+) 2.13% 6.16% 9.48% 10.55%
Average Lipper International Fund 7.38% 4.83% 8.89% 11.22%
MSCI EAFE Index 3.97% 7.62% 8.21% 11.66%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
-5.37 25.03 8.36 7.17 12.09 5.44 22.41
<CAPTION>
1999 AS OF
6/30/99
----------
<S> <C>
2.29
</TABLE>
- --------------------------------------------------------------------------------
* 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 gain distributions and
dividends, and, for the Service Class shares, include the service fee of .25%
on an annualized basis of the average daily net asset value of the Service
Class shares.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO CURRENT MARKET
VOLATILITY, PERFORMANCE MAY BE LESS THAN SHOWN. 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 and the Service Class shares are sold with no
sales charge or contingent deferred sales charge. The Service Class shares 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.
+ The inception date of the International Equity Fund's predecessor separate
account is 7/31/92 ("Separate Account"). Performance figures, and, in the case
of the graphs reflecting the investment of $10,000, investment results include
the historical performance of the Separate Account for the period prior to the
International Equity Fund's commencement of operations on 1/1/95. MacKay
Shields Financial Corporation, the International Equity Fund's subadvisor,
served as investment advisor to the Separate Account, and the investment
objective, policies, restrictions, guidelines, and management style of the
Separate Account were substantially similar to those of the International
Equity Fund. Performance figures and investment results for the period prior
to 1/1/95, have been calculated using the Separate Account's expense
structure, which generally was higher than the expense structure of the
International Equity Fund. The Separate Account was not registered under the
Investment Company Act of 1940 ("1940 Act") and therefore was not subject to
certain investment restrictions imposed under the 1940 Act. If the Separate
Account had been registered under the 1940 Act, the Separate Account's
performance and investment results may have been adversely affected.
48
<PAGE> 50
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (95.9%)+
SHARES VALUE
----------------------
<S> <C> <C>
AUSTRALIA (4.1%)
Australia & New Zealand Banking
Group, Ltd. (banking)............ 97,637 $ 717,931
Broken Hill Proprietary Co., Ltd.
(energy sources)................. 31,628 366,356
Cable & Wireless Optus, Ltd.
(telecommunications)............. 656,995 1,495,938
Commonwealth Bank of Australia
(banking)........................ 42,900 682,913
Telstra Corp., Ltd.
(telecommunications)............. 263,400 1,509,302
WMC, Ltd. (metals-nonferrous)..... 220,082 945,414
------------
5,717,854
------------
BELGIUM (2.3%)
Delhaize-Le Lion, S.A.
(merchandising).................. 4,940 420,561
Electrabel, S.A.
(utilities-electrical & gas)..... 2,550 823,132
Fortis AG (insurance)............. 32,040 1,006,155
Solvay, S.A. Class A
(chemicals)...................... 6,850 454,595
Tractebel, S.A.
(utilities-electrical & gas)..... 4,160 583,468
------------
3,287,911
------------
FINLAND (4.7%)
Merita PLC (banking).............. 72,650 412,831
Nokia Oyj Class A
(electrical & electronics)....... 44,560 3,906,152
Outokumpu Oyj
(metals-nonferrous).............. 47,190 530,471
Pohjola Group Insurance Corp.
Class B (insurance).............. 19,630 1,007,160
Sampo Insurance Co., Ltd. Class A
(insurance)...................... 7,490 217,056
UPM-Kymmene Oyj
(forest products & paper)........ 20,060 575,123
------------
6,648,793
------------
FRANCE (8.5%)
Air Liquide, S.A. (chemicals)..... 2,990 470,247
AXA, S.A. (insurance)............. 5,774 704,444
Carrefour, S.A. (merchandising)... 9,150 1,344,686
Elf Aquitaine, S.A. (energy
sources)......................... 7,095 1,041,220
Eridania Beghin-Say, S.A.
(food & household products)...... 2,140 306,770
France Telecom, S.A.
(telecommunications)............. 9,630 727,476
Groupe Danone, S.A.
(food & household products)...... 3,367 868,097
Lafarge, S.A.
(building materials &
components)...................... 3,973 377,776
L'Oreal, S.A.
(health & personal care)......... 2,198 1,485,886
Pernod-Ricard, S.A.
(beverages & tobacco)............ 4,950 331,821
Pinault-Printemps-Redoute, S.A.
(merchandising).................. 2,250 386,119
</TABLE>
- -------
+ Percentages indicated are based on Fund net assets.
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
FRANCE (Continued)
Schneider, S.A.
(electrical & electronics)....... 5,626 $ 315,924
Societe Generale, S.A. Class A
(banking)........................ 2,054 362,016
Thomson CSF, S.A.
(aerospace & military
technology)...................... 10,205 354,673
Total Fina, S.A. Class B
(energy sources) (a)............. 9,725 1,254,677
Total Fina, S.A. Strip
(energy sources) (a)............. 5,445 56
Vivendi, S.A.
(business & public services)..... 19,026 1,541,270
------------
11,873,158
------------
GERMANY (9.7%)
Allianz AG Registered
(insurance)...................... 3,600 998,711
Bayer AG (chemicals).............. 27,850 1,160,357
DaimlerChrysler AG
(automobiles).................... 25,195 2,182,623
Deutsche Bank AG (banking)........ 10,700 652,715
Deutsche Telekom AG
(telecommunications)............. 31,360 1,316,302
Dresdner Bank AG (banking)........ 16,900 660,558
Karstadt AG (merchandising)....... 1,400 672,820
Mannesmann AG
(telecommunications)............. 5,352 798,674
Metro AG (merchandising).......... 9,900 614,634
Muenchener Rueckversicherungs-
Gesellschaft AG Registered
(insurance)...................... 1,390 257,314
RWE AG (utilities-electrical &
gas)............................. 15,800 731,462
SAP AG (business & public
services)........................ 2,170 734,038
Schering AG (health &
personal care)................... 14,320 1,518,173
Veba AG (utilities-electrical &
gas)............................. 15,050 884,701
Viag AG (utilities-electrical &
gas)............................. 1,000 472,335
------------
13,655,417
------------
HONG KONG (0.5%)
Hutchison Whampoa, Ltd.
(multi-industry)................. 73,000 660,949
------------
IRELAND (4.6%)
Allied Irish Banks PLC
(banking)........................ 122,550 1,611,419
CRH PLC (building materials &
components)...................... 109,084 1,934,971
Elan Corp. PLC
(health & personal care) (a)..... 42,400 1,217,801
Irish Life & Permanent PLC
(insurance)...................... 30,063 317,791
Kerry Group PLC Class A
(food & household products)...... 40,277 477,683
Smurfit (Jefferson) Group PLC
(forest products & paper)........ 347,647 815,652
------------
6,375,317
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
49
<PAGE> 51
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
----------------------
<S> <C> <C>
ITALY (4.0%)
Assicurazioni Generali S.p.A.
(insurance)...................... 14,015 $ 485,643
Banca Commerciale Italiana S.p.A.
(banking)........................ 78,400 572,446
Benetton Group S.p.A.
(textile & apparel).............. 114,400 225,343
ENI S.p.A. (energy sources)....... 217,140 1,296,592
Italgas S.p.A.
(utilities-electrical & gas)..... 43,000 180,488
Parmalat Finanziaria S.p.A.
(food & household products)...... 43,000 56,319
Pirelli S.p.A. (industrial
components)...................... 35,000 95,292
Riunione Adriatica di Sicurta
S.p.A. (insurance)............... 8,600 83,548
Telecom Italia S.p.A.
(telecommunications) (a)......... 113,230 1,177,083
Telecom Italia Mobile S.p.A.
(telecommunications)............. 161,300 963,159
Unicredito Italiano S.p.A.
(banking)........................ 114,700 503,916
------------
5,639,829
------------
JAPAN (20.3%)
Ajinomoto Co., Inc.
(food & household products)
(b).............................. 37,000 421,858
Bank of Tokyo-Mitsubishi, Ltd.
(banking)........................ 89,000 1,266,953
Bridgestone Corp.
(industrial components).......... 15,000 453,584
Fujitsu, Ltd. (data processing &
reproduction).................... 38,000 764,483
Hitachi, Ltd. (electrical &
electronics) (b)................. 54,000 506,378
Honda Motor Co., Ltd.
(automobiles) (b)................ 25,000 1,059,602
Industrial Bank of Japan, Ltd.
(The) (banking) (b).............. 102,000 809,015
Ito-Yokado Co., Ltd.
(merchandising).................. 11,000 736,144
Kirin Brewery Co., Ltd.
(beverages & tobacco) (b)........ 26,000 311,477
Matsushita Electric Industrial
Co., Ltd.
(appliances & household
durables) (b).................... 22,000 427,145
Mitsubishi Electric Corp.
(electrical & electronics) (b)... 104,000 399,550
Mitsubishi Estate Co., Ltd.
(real estate) (b)................ 22,000 214,663
Mitsubishi Heavy Industries, Ltd.
(machinery & engineering)........ 90,000 365,098
Mitsui Fudosan Co., Ltd.
(real estate).................... 21,000 170,032
NEC Corp.
(electrical & electronics)....... 37,000 460,069
Nintendo Co., Ltd. (recreation &
other consumer goods)............ 4,000 562,146
Nippon Express Co., Ltd.
(transportation-road & rail)..... 15,000 89,849
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
JAPAN (Continued)
Nippon Mitsubishi Oil Co.
(energy sources)................. 56,000 $ 235,963
Nippon Steel Corp.
(metals-steel)................... 146,000 338,957
Nippon Telegraph & Telephone Corp.
(telecommunications)............. 84 978,551
Nomura Securities Co., Ltd.
(financial services)............. 35,000 409,754
NTT Data Corp. (business & public
services)........................ 190 1,510,128
NTT Mobile Communications
Network, Inc.
(telecommunications) (a)......... 36 487,789
NTT Mobile Communications
Network, Inc. New
(telecommunications) (a)......... 144 1,951,154
Olympus Optical Co., Ltd.
(electronic components &
instruments)..................... 31,000 458,202
Rohm Co., Ltd. (electronic
components & instruments)........ 4,000 626,260
Sanyo Electric Co., Ltd.
(appliances & household
durables)........................ 55,000 223,570
Sharp Corp. (appliances &
household durables).............. 23,000 271,737
Softbank Corp. First Section
(business & public services)..... 2,200 445,504
Sony Corp. (appliances & household
durables)........................ 15,000 1,617,287
Sumitomo Bank, Ltd. (banking)..... 56,000 694,471
Sumitomo Electric Industries
(industrial components).......... 19,000 216,002
Sumitomo Forestry Co., Ltd.
(building materials &
components)...................... 52,000 404,706
Sumitomo Marine & Fire Insurance
Co. (insurance).................. 213,000 1,284,658
Takeda Chemical Industries, Ltd.
(health & personal care)......... 20,000 926,996
TDK Corp. (electronic components &
instruments)..................... 4,000 365,841
Tokio Marine & Fire Insurance Co.
(insurance)...................... 125,000 1,358,066
Tokyo Electric Power Co., Inc.
(utilities-electrical & gas)..... 15,300 322,974
Tokyo Seimitsu Co., Ltd.
(electronic components &
instruments)..................... 10,000 637,000
Toshiba Corp.
(electrical & electronics)....... 120,000 855,613
Tostem Corp. (building materials &
components)...................... 18,000 345,765
Toyota Motor Corp.
(automobiles).................... 64,000 2,025,181
Yamanouchi Pharmaceutical Co.,
Ltd. (health & personal care).... 9,000 344,278
------------
28,354,453
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
50
<PAGE> 52
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
----------------------
<S> <C> <C>
NETHERLANDS (3.6%)
ABN AMRO Holding N.V.
(banking)........................ 30,600 $ 662,713
Akzo Nobel N.V. (chemicals)....... 8,800 370,278
Elsevier N.V. (broadcasting &
publishing)...................... 10,900 126,463
Heineken N.V. (beverages &
tobacco)......................... 9,100 465,957
ING Groep N.V. (financial
services)........................ 20,505 1,110,207
Koninklijke KPN N.V.
(telecommunications)............. 10,586 496,739
Royal Dutch Petroleum Co.
(energy sources)................. 22,921 1,342,663
TNT Post Group N.V.
(business & public services)..... 10,286 245,574
Wolters Kluwer CVA N.V.
(broadcasting & publishing)...... 5,240 208,595
------------
5,029,189
------------
NEW ZEALAND (1.0%)
Contact Energy Ltd. (utilities-
electrical & gas) (a)............ 180,684 292,978
Fletcher Challenge Building
(building materials &
components)...................... 226,314 329,790
Telecom Corp. of New Zealand Ltd.
(telecommunications)............. 172,713 741,317
------------
1,364,085
------------
PORTUGAL (2.0%)
Banco Comercial Portugues, S.A.
Registered (banking)............. 34,773 901,197
Banco Espirito Santo e Comercial
de Lisboa, S.A. Registered
(banking)........................ 40,069 932,250
Electricidade de Portugal, S.A.
(utilities-electrical & gas)..... 23,500 423,153
Jeronimo Martins SGPS, S.A.
(merchandising).................. 4,000 132,130
Portugal Telecom, S.A. Registered
(telecommunications)............. 11,600 471,943
Portugal Telecom, S.A. Rights
(telecommunications) (a)......... 11,600 120
------------
2,860,793
------------
SPAIN (4.0%)
Acerinox, S.A. (metals-steel)..... 4,620 135,077
Autopistas Concesionaria Espanola,
S.A. (business & public
services)........................ 11,893 139,211
Autopistas Concesionaria Espanola,
S.A. Bonus Rights (business &
public services)................. 11,893 6,868
Banco Bilbao Vizcaya, S.A.
Registered (banking)............. 54,840 792,356
Banco Santander Central Hispano,
S.A. (banking)................... 100,576 1,047,613
Endesa, S.A.
(utilities-electrical & gas)..... 28,370 605,055
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
SPAIN (Continued)
Fomento de Construcciones y
Contratas, S.A.
(construction & housing)......... 2,180 $ 124,777
Gas Natural SDG, S.A.
(utilities-electrical & gas)..... 4,060 295,189
Iberdrola, S.A.
(utilities-electrical & gas)..... 36,370 553,999
Repsol, S.A. (energy sources)..... 28,650 585,025
Telefonica, S.A.
(telecommunications) (a)......... 26,260 1,264,997
------------
5,550,167
------------
SWEDEN (1.4%)
AstraZeneca Group PLC
(health & personal care)......... 22,803 887,763
ForeningsSparbanken AB
(banking)........................ 19,950 281,580
Hennes & Mauritz AB Series B
(merchandising).................. 11,600 286,520
Skandia Forsakrings AB
(insurance)...................... 14,800 276,781
Svenska Handelsbanken Series A
(banking)........................ 23,100 277,134
------------
2,009,778
------------
SWITZERLAND (6.1%)
Credit Suisse Group Registered
(banking)........................ 5,200 899,781
Nestle S.A. Registered (food &
household products).............. 900 1,621,574
Novartis AG Registered (health &
personal care)................... 726 1,060,092
Roche Holdings AG Genusscheine
(health & personal care)......... 200 2,055,834
Schweizerische Rueckversicherungs
Gesellschaft Registered
(insurance)...................... 400 761,610
UBS AG Registered (banking)....... 5,084 1,517,416
Zurich Allied AG Registered
(insurance)...................... 1,000 568,635
------------
8,484,942
------------
UNITED KINGDOM (18.8%)
Abbey National PLC (banking)
(b).............................. 33,338 625,876
Allied Zurich PLC (insurance)
(b).............................. 21,703 272,827
Barclays PLC (banking) (b)........ 33,031 961,148
Bass PLC (leisure & tourism)
(b).............................. 86,203 1,250,786
BG PLC (utilities-
electrical & gas) (b)............ 120,167 733,996
Boots Co. PLC (merchandising)
(b).............................. 39,404 468,016
BP Amoco PLC (energy sources)
(b).............................. 91,340 1,637,037
British Airways PLC
(transportation-airlines)........ 96,104 663,139
British American Tobacco PLC
(beverages & tobacco) (b)........ 21,703 204,064
British Telecommunications PLC
(telecommunications) (b)......... 124,236 2,081,698
Cable & Wireless PLC
(telecommunications) (b)......... 116,658 1,486,728
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
51
<PAGE> 53
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
----------------------
<S> <C> <C>
UNITED KINGDOM (Continued)
CGU PLC (insurance) (b)........... 38,124 $ 550,767
Diageo PLC (beverages &
tobacco) (b)..................... 79,623 831,498
EMI Group PLC (recreation & other
consumer goods) (b).............. 116,840 937,446
General Electric Co. PLC
(electrical & electronics) (b)... 100,912 1,029,163
Granada Group PLC
(leisure & tourism) (b).......... 20,166 374,139
Great Universal Stores PLC (The)
(merchandising) (b).............. 48,686 539,506
Imperial Chemical Industries PLC
(chemicals) (b).................. 105,460 1,042,299
Kingfisher PLC
(merchandising) (b).............. 43,556 501,196
Lloyds TSB Group PLC (banking)
(b).............................. 100,858 1,367,243
Marks & Spencer PLC
(merchandising) (b).............. 82,288 476,036
National Power PLC
(utilities-electrical & gas)
(b).............................. 28,450 207,186
National Westminster Bank PLC
(banking)........................ 40,180 851,862
Peninsular & Oriental Steam
Navigation Co. Deferred Stock
(The) (transportation-shipping)
(b).............................. 22,626 339,711
Prudential Corp. PLC
(insurance) (b).................. 47,209 695,038
Reed International PLC
(broadcasting & publishing)
(b).............................. 47,962 319,986
Rio Tinto PLC Registered
(metals-nonferrous) (b).......... 34,448 577,482
Royal Bank of Scotland Group PLC
(banking)........................ 48,500 987,737
Sainsbury (J.) PLC
(merchandising) (b).............. 56,459 355,984
Scottish Power PLC
(utilities-electrical & gas)
(b).............................. 47,860 413,419
SmithKline Beecham PLC
(health & personal care)......... 133,840 1,739,456
Unilever PLC (food & household
products) (b).................... 92,102 819,540
Vodafone Group PLC
(telecommunications) (b)......... 49,265 970,701
------------
26,312,710
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
UNITED STATES (0.3%)
Hellenic Telecommunications
Organization S.A.
(telecommunications)............. 38,200 $ 422,588
------------
Total Common Stocks
(Cost $110,949,736).............. 134,247,933
------------
<CAPTION>
OPTIONS (0.1%)
NOTIONAL
AMOUNT
----------
<S> <C> <C>
UNITED STATES (0.1%)
U.S. Dollar Call/Euro Put Strike
price E1.024
Expire 8/31/99 (a)(e)............ 6,700,000 74,779
------------
Total Options
(Cost $73,365)................... 74,779
------------
SHORT-TERM
INVESTMENT (1.8%)
PRINCIPAL
AMOUNT
----------
COMMERCIAL PAPER (1.8%)
UNITED STATES (1.8%)
Ford Motor Credit Corp.
5.65%, due 7/1/99
(financial services)............. $2,550,000 2,550,000
------------
Total Short-Term Investment
(Cost $2,550,000)................ 2,550,000
------------
Total Investments
(Cost $113,573,101) (c).......... 97.8% 136,872,712(d)
Cash and Other Assets,
Less Liabilities................. 2.2 3,122,225
---------- ------------
Net Assets........................ 100.0% $139,994,937
========== ============
</TABLE>
- ------------
(a) Non-income producing security.
(b) Segregated or partially segregated as collateral for foreign currency
forward contracts.
(c) The cost for Federal income tax purposes is $115,276,566.
(d) At June 30, 1999 net unrealized appreciation for securities was
$21,596,146, 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 $26,045,547 and aggregate
gross unrealized depreciation for all investments on which there was an
excess of cost over market value of $4,449,401.
(e) E - Euro.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
52
<PAGE> 54
MAINSTAY
INSTITUTIONAL FUNDS INC.
The table below sets forth the diversification of International Equity Fund
investments by industry.
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
VALUE PERCENT+
------------------------
<S> <C> <C>
Aerospace
& Military Technology...... $ 354,673 0.2%
Appliances & Household
Durables................... 2,539,739 1.8
Automobiles.................. 5,267,406 3.8
Banking...................... 21,053,089 15.0
Beverages & Tobacco.......... 2,144,818 1.5
Broadcasting & Publishing.... 655,044 0.5
Building Materials &
Components................. 3,393,008 2.4
Business & Public Services... 4,622,593 3.3
Chemicals.................... 3,497,775 2.5
Construction & Housing....... 124,777 0.1
Data Processing &
Reproduction............... 764,483 0.5
Electrical & Electronics..... 7,472,849 5.3
Electronic Components &
Instruments................ 2,087,304 1.5
Energy Sources............... 7,759,588 5.5
Financial Services........... 4,069,961 2.9
Food & Household Products.... 4,571,841 3.3
Forest Products & Paper...... 1,390,775 1.0
Health & Personal Care....... 11,236,278 8.0
Industrial Components........ 764,878 0.5
Insurance.................... 10,846,206 7.7
Leisure & Tourism............ 1,624,926 1.2
Machinery & Engineering...... 365,098 0.3
Merchandising................ 6,934,352 5.0
Metals-Nonferrous............ 2,053,367 1.5
Metals-Steel................. 474,033 0.3
Multi-Industry............... 660,949 0.5
Real Estate.................. 384,695 0.3
Recreation & Other Consumer
Goods...................... 1,499,592 1.1
Telecommunications........... 19,342,259 13.8
Textile & Apparel............ 225,343 0.2
Transportation-Airlines...... 663,139 0.5
Transportation-Road & Rail... 89,849 0.1
Transportation-Shipping...... 339,711 0.2
Utilities-Electrical & Gas... 7,523,535 5.4
------------ ------
136,797,933 97.7
Cash and Other Assets,
Less Liabilities........... 3,197,004 2.3
------------ ------
Net Assets................... $139,994,937 100.0%
============ ======
</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.
53
<PAGE> 55
INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $113,573,101)..... $ 136,872,712
Cash denominated in foreign
currencies (identified cost
$2,642,332)........................ 2,638,222
Cash................................. 81,153
Receivables:
Investment securities sold......... 1,991,109
Fund shares sold................... 651,271
Dividends and interest............. 641,063
Unrealized appreciation on foreign
currency forward contracts......... 871,586
Unamortized organization expense..... 1,141
--------------
Total assets................... 143,748,257
--------------
LIABILITIES:
Payables:
Investment securities purchased.... 2,908,857
MainStay Management................ 97,011
Custodian.......................... 8,834
Transfer agent..................... 2,109
Accrued expenses..................... 51,849
Unrealized depreciation on foreign
currency forward contracts......... 684,660
--------------
Total liabilities.............. 3,753,320
--------------
Net assets........................... $ 139,994,937
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per
share)
1 billion shares authorized
Institutional Class................ $ 11,536
Institutional Service Class........ 52
Additional paid-in capital........... 113,361,759
Accumulated distribution in excess of
net investment income.............. (373,071)
Accumulated undistributed net
realized gain on investments....... 3,972,089
Accumulated net realized loss on
foreign currency transactions...... (410,642)
Net unrealized appreciation on
investments........................ 23,299,611
Net unrealized depreciation on
translation of other assets and
liabilities in foreign currencies
and foreign currency forward
contracts.......................... 133,603
--------------
Net assets........................... $ 139,994,937
==============
Institutional Class
Net assets applicable to outstanding
shares............................. $ 139,370,529
==============
Shares of capital stock
outstanding........................ 11,536,086
==============
Net asset value per share
outstanding........................ $ 12.08
==============
Institutional Service Class
Net assets applicable to outstanding
shares............................. $ 624,408
==============
Shares of capital stock
outstanding........................ 52,148
==============
Net asset value per share
outstanding........................ $ 11.97
==============
<CAPTION>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)...................... $ 1,782,440
Interest........................... 35,010
--------------
Total income................... 1,817,450
--------------
Expenses:
Management......................... 594,967
Custodian.......................... 23,607
Professional....................... 23,085
Transfer agent..................... 13,634
Registration....................... 11,898
Shareholder communication.......... 5,693
Directors.......................... 1,628
Amortization of organization
expense.......................... 1,124
Service............................ 839
Miscellaneous...................... 17,248
--------------
Total expenses................. 693,723
--------------
Net investment income................ 1,123,727
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) from:
Security transactions.............. 7,489,517
Option transactions................ (94,725)
Foreign currency transactions...... (410,642)
--------------
Net realized gain on investments and
foreign currency transactions...... 6,984,150
--------------
Net change in unrealized appreciation
(depreciation) on investments:
Security transactions.............. (5,241,559)
Translation of other assets and
liabilities in foreign currencies
and foreign currency forward
contracts........................ 430,395
--------------
Net unrealized loss on investments
and foreign currency
transactions....................... (4,811,164)
--------------
Net realized and unrealized gain on
investments and foreign currency
transactions....................... 2,172,986
--------------
Net increase in net assets resulting
from operations.................... $ 3,296,713
==============
</TABLE>
- ------------
(a) Dividends recorded net of foreign withholding taxes of $242,747.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
54
<PAGE> 56
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited) and the year ended December
31, 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 1,123,727 $ 1,485,360
Net realized gain on investments........................ 7,489,517 3,455,663
Net realized loss on option transactions................ (94,725) (131,742)
Net realized gain (loss) on foreign currency
transactions........................................... (410,642) 215,414
Net change in unrealized appreciation on investments.... (5,241,559) 21,531,002
Net change in unrealized appreciation (depreciation) on
translation of other assets and liabilities in foreign
currencies and foreign currency forward contracts...... 430,395 (517,137)
------------ ------------
Net increase in net assets resulting from operations.... 3,296,713 26,038,560
------------ ------------
Dividends and distributions to shareholders:
From net investment income and net realized gain on
foreign currency transactions:
Institutional Class................................... -- (2,785,467)
Institutional Service Class........................... -- (12,219)
In excess of net investment income:
Institutional Class................................... -- (1,254,408)
Institutional Service Class........................... -- (5,503)
------------ ------------
Total dividends and distributions to shareholders... -- (4,057,597)
------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 11,667,493 40,302,257
Institutional Service Class........................... 96,070 44,972
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... -- 4,039,873
Institutional Service Class........................... -- 17,705
------------ ------------
11,763,563 44,404,807
Cost of shares redeemed:
Institutional Class................................... (16,208,093) (39,356,137)
Institutional Service Class........................... (162,277) (105,878)
------------ ------------
Increase (decrease) in net assets derived from capital
share transactions................................... (4,606,807) 4,942,792
------------ ------------
Net increase (decrease) in net assets................. (1,310,094) 26,923,755
NET ASSETS:
Beginning of period....................................... 141,305,031 114,381,276
------------ ------------
End of period............................................. $139,994,937 $141,305,031
============ ============
Accumulated distribution in excess of net investment
income at end of period................................. $ (373,071) $ (1,496,798)
============ ============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
55
<PAGE> 57
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 ENDED YEAR ENDED
JUNE 30, 1999* DECEMBER 31, 1998
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period..................... $ 11.81 $ 11.72 $ 9.93 $ 9.85
---------- ---------- ---------- ----------
Net investment income...................................... 0.09 0.09 0.13 0.11
Net realized and unrealized gain (loss) on investments..... 0.18 0.16 2.12 2.11
Net realized and unrealized gain (loss) on foreign currency
transactions............................................. 0.00(b) 0.00(b) (0.03) (0.03)
---------- ---------- ---------- ----------
Total from investment operations........................... 0.27 0.25 2.22 2.19
---------- ---------- ---------- ----------
Less dividends and distributions:
From net investment income and net realized gain on foreign
currency transactions.................................... -- -- (0.24) (0.22)
From net realized gain on investments...................... -- -- -- --
In excess of net investment income......................... -- -- (0.10) (0.10)
---------- ---------- ---------- ----------
Total dividends and distributions.......................... -- -- (0.34) (0.32)
---------- ---------- ---------- ----------
Net asset value at end of period........................... $ 12.08 $ 11.97 $ 11.81 $ 11.72
========== ========== ========== ==========
Total investment return.................................... 2.29%(c) 2.13%(c) 22.41% 22.20%
Ratios (to average net assets)/Supplemental Data:
Net investment income.................................... 1.61%+ 1.36%+ 1.14% 0.89%
Net expenses............................................. 0.99%+ 1.24%+ 1.00% 1.25%
Expenses (before reimbursement).......................... 0.99%+ 1.24%+ 1.03% 1.28%
Portfolio turnover rate.................................... 25% 25% 51% 51%
Net assets at end of period (in 000's)..................... $ 139,371 $ 624 $ 140,630 $ 675
</TABLE>
- ------------
* Unaudited.
+ Annualized.
(a) Commencement of operations.
(b) Less than one cent per share.
(c) 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.
56
<PAGE> 58
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- -------------
YEAR ENDED DECEMBER 31 JANUARY 1, 1995(a)
------------------------------------------------------------- THROUGH
1997 1996 DECEMBER 31, 1995
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 10.63 $ 10.58 $ 10.35 $ 10.33 $ 10.00 $ 10.00
-------- -------- -------- -------- -------- --------
1.14 1.11 0.64 0.62 0.36 0.35
(0.10) (0.10) 0.09 0.09 0.17 0.16
(0.49) (0.52) 0.51 0.48 0.18 0.17
-------- -------- -------- -------- -------- --------
0.55 0.49 1.24 1.19 0.71 0.68
-------- -------- -------- -------- -------- --------
(0.96) (0.93) (0.84) (0.82) (0.10) (0.09)
(0.29) (0.29) (0.12) (0.12) (0.26) (0.26)
-- -- -- -- (0.00)(b) (0.00)(b)
-------- -------- -------- -------- -------- --------
(1.25) (1.22) (0.96) (0.94) (0.36) (0.35)
-------- -------- -------- -------- -------- --------
$ 9.93 $ 9.85 $ 10.63 $ 10.58 $ 10.35 $ 10.33
======== ======== ======== ======== ======== ========
5.44% 4.88% 12.09% 11.59% 7.17% 6.86%
1.23% 0.98% 0.83% 0.58% 1.05% 0.80%
1.00% 1.25% 1.00% 1.25% 1.00% 1.25%
1.04% 1.29% 1.07% 1.32% 1.07% 1.32%
37% 37% 23% 23% 26% 26%
$113,774 $ 607 $126,280 $ 725 $ 96,714 $ 213
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
57
<PAGE> 59
ASSET MANAGER FUND (formerly known as the Multi-Asset Fund)
- --------------------------------------------------------------------------------
A multitude of positive indicators combined to propel stocks of large U.S.
companies higher during the six months ended June 30, 1999. This rise extended
the remarkable bull market of the past several years as domestic economic growth
continued to surge. News on the inflation front remained low key. Prices for
oil, natural gas, lumber, and copper recovered during the reporting period,
while agricultural commodity prices generally declined. Investors welcomed
enhanced stability in global economies.
Within the overall bull market, there were changes among U.S. equity sectors. In
many respects, the first quarter of 1999 was a continuation of recent history,
with the majority of the equity market's performance concentrated in a handful
of large-capitalization, growth-oriented stocks. During the second quarter of
the year, the tide changed rather dramatically. The S&P 500 Index(1) continued
to fare well, but as corporate earnings exceeded expectations, long out-of-favor
value stocks saw a strong recovery. In the second quarter,
smaller-capitalization U.S. stocks outperformed their larger-cap counterparts
for the first time in seven quarters.
The first half of 1999 also saw some significant rotations in international
equity markets. Performance in European markets pulled back, while Asian and
Pacific Rim markets recovered strongly. Slowing domestic growth rates and a
strong U.S. dollar vis-a-vis the euro hurt the previously strong European
markets. In contrast, the previously weak Asian and Pacific Rim markets
recovered from their earlier setbacks, primarily due to falling domestic
interest rates, strong domestic consumption, and improving exports.
Overall, the U.S. bond markets showed weak performance during the first half of
1999, with the 10-year Treasury yield rising from 4.65% on December 31, 1998, to
5.92% on June 30, 1999. The major force affecting performance was the general
trend toward higher interest rates. As a result of inflation concerns and
growing consumer spending, the Federal Reserve Board moved to raise the targeted
federal funds rate by 0.25% to 5.00% at the end of June.
PERFORMANCE OVERVIEW
For the six months ended June 30, 1999, the MainStay Institutional Asset Manager
Fund (formerly the Institutional Multi-Asset Fund) returned 5.40% for
Institutional Class shares and 5.28% for Service Class shares. Both share
classes underperformed the average Lipper(2) flexible portfolio fund, which
returned 6.24% for the six-month period.
The Fund began the year with strong relative returns, with Institutional and
Service Class shares outperforming their average Lipper peer fund by
approximately 1.90% and 1.83%, respectively, during the first quarter. In the
second quarter, however, the Fund underperformed, primarily because of its
underweighting in U.S. stocks and overweighting in U.S. bonds.
TACTICAL ASSET-ALLOCATION STRATEGY
The Fund's tactical asset-allocation model evaluates several fundamental and
technical factors to determine its portfolio weightings in domestic and foreign
equities, as well as U.S. bonds and cash--taking into consideration the risk,
expected return, and correlation relationships for each asset class. During the
first quarter, the Fund was overweighted in equities versus bonds. As the second
quarter began, the model indicated that the U.S. equity market was rich relative
to U.S. bonds. The resulting allocation shift had a negative impact on relative
returns, as U.S. stock returns continued to rise and U.S. bond prices fell.
- --------------------------------------------------------------------------------
(1) "S&P 500(R)" is a trademark of The McGraw-Hill Companies, Inc. The S&P 500
is an unmanaged index and is considered to be generally representative of
the U.S. stock market. Results assume the reinvestment of all income and
capital gain distributions. An investment cannot be made directly into an
index.
(2) Lipper, 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.
58
<PAGE> 60
Hong Kong and Japan were the best-performing equity markets for the first six
months of the year, returning 36.58% and 21.26% in U.S.-dollar terms,
respectively. This compares to a 12.39% S&P 500 Index return for the same
period. The worst-performing sectors were equities in Germany, -10.73%, and
France, -2.91%, and bonds in the United States, -1.38%, all in U.S.-dollar
terms, with U.S. bonds measured by the Salomon Smith Barney Broad Investment
Grade (BIG) Bond Index.(3)
LOOKING AHEAD
The U.S. economy has continued to stump those experts who argue that the equity
market is due for a correction. Many investors had expected weak stock prices
due to:
- - uncertainty over how international financial turmoil would affect exports,
- - the potential for a profit squeeze as companies face rising labor costs,
- - a slowdown in capital spending as companies seek to control costs, and
- - the overall burden of year-2000 readiness.
These factors could determine the near-term fate of U.S. stocks, despite a
general consensus that the economy will continue to expand rapidly in the second
half of 1999. While the Federal Reserve Board has carefully signaled its moves
in recent months, the possibility of additional rate hikes cannot be ruled out.
Of course, it is important to note that the Fund's portfolio is primarily model
driven, with relative-value analysis determining the asset allocation as well as
specific security purchases and sales. For the near term, the most influential
factor driving allocation for the Fund is the earnings yield on U.S. stocks. We
believe this yield continues to suggest that the stock market is somewhat
overpriced relative to other asset classes. As a result, the Fund is positioned
with a comparatively low exposure to U.S. equities. Wherever the markets may
move, the Fund will continue to seek to maximize total return, consistent with
certain percentage constraints on amounts allocated to each asset class, from a
combination of U.S. common stocks, fixed-income securities, and money-market
investments.
Jefferson C. Boyce
Jonathan B. Swaney
Portfolio Managers
Monitor Capital Advisors, Inc.
- --------------------------------------------------------------------------------
(3) The Salomon Smith Barney Broad Investment Grade (BIG) Bond Index is an
unmanaged index that is considered representative of the U.S. bond market.
An investment cannot be made directly into an index.
Past performance is no guarantee of future results.
59
<PAGE> 61
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
ASSET MANAGER FUND VS
AVERAGE LIPPER FLEXIBLE PORTFOLIO FUND
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
AVERAGE LIPPER FLEXIBLE PORTFOLIO
ASSET MANAGER FUND FUND
------------------ ---------------------------------
<S> <C> <C>
12/31/90 10000.00 10000.00
3/31/91 10560.00 11132.00
6/30/91 10650.00 11154.00
9/30/91 11130.00 11710.00
12/31/91 11790.00 12542.00
3/31/92 11607.00 12554.00
6/30/92 11912.00 12572.00
9/30/92 12332.00 12990.00
12/31/92 12626.00 13559.00
3/31/93 13098.00 14108.00
6/30/93 13244.00 14321.00
9/30/93 13548.00 14806.00
12/31/93 13736.00 15027.00
3/31/94 13313.00 14590.00
6/30/94 13289.00 14444.00
9/30/94 13583.00 14850.00
12/31/94 13618.00 14710.00
3/31/95 14460.00 15599.00
6/30/95 15379.00 16758.00
9/30/95 16362.00 17689.00
12/31/95 17269.00 18363.00
3/31/96 18031.00 18903.00
6/30/96 18676.00 19380.00
9/30/96 18793.00 19827.00
12/31/96 20061.00 20842.00
3/31/97 20593.00 20805.00
6/30/97 23422.00 23002.00
9/30/97 24973.00 24557.00
12/31/97 25415.00 24689.00
3/31/98 28105.00 26798.00
6/30/98 28911.00 27122.00
9/30/98 27231.00 24993.00
12/31/98 30830.00 28115.00
6/30/99 32496.00 29854.00
</TABLE>
THESE GRAPHS ASSUME A $10,000 INVESTMENT MADE ON 1/2/91.
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
ASSET MANAGER FUND VS
AVERAGE LIPPER FLEXIBLE PORTFOLIO FUND
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
SERVICE CLASS SHARES AVG. FLEX PORT FD INDEX
-------------------- -----------------------
<S> <C> <C>
12/31/90 10000.00 10000.00
3/31/91 10560.00 11132.00
6/30/91 10650.00 11154.00
9/30/91 11130.00 11710.00
12/31/91 11790.00 12542.00
3/31/92 11607.00 12554.00
6/30/92 11912.00 12572.00
9/30/92 12332.00 12990.00
12/31/92 12626.00 13559.00
3/31/93 13098.00 14108.00
6/30/93 13244.00 14321.00
9/30/93 13548.00 14806.00
12/31/93 13736.00 15027.00
3/31/94 13313.00 14590.00
6/30/94 13289.00 14444.00
9/30/94 13583.00 14850.00
12/31/94 13618.00 14710.00
3/31/95 14473.00 15599.00
6/30/95 15379.00 16758.00
9/30/95 16349.00 17689.00
12/31/95 17254.00 18363.00
3/31/96 18000.00 18903.00
6/30/96 18629.00 19380.00
9/30/96 18732.00 19827.00
12/31/96 19995.00 20842.00
3/31/97 20511.00 20805.00
6/30/97 23315.00 23002.00
9/30/97 24831.00 24557.00
12/31/97 25255.00 24689.00
3/31/98 27915.00 26798.00
6/30/98 28682.00 27122.00
9/30/98 27011.00 24993.00
12/31/98 30558.00 28115.00
6/30/99 32172.00 29854.00
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF JUNE 30, 1999 AS OF JUNE 30, 1999
- ------------------------------------------------------------------------------------------------------------------
YEAR TO DATE ONE YEAR FIVE YEAR SINCE INCEPTION
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Manager Fund Institutional Class(++) 5.40% 12.40% 19.58% 14.87%
Asset Manager Fund Service Class(++) 5.28% 12.17% 19.34% 14.73%
Average Lipper Flexible Portfolio Fund 6.24% 10.46% 16.25% 14.62%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
17.90 7.09 8.79 -0.86 26.81 16.16 26.69 21.31
<CAPTION>
1999 AS
OF
6/30/99
-------
<S> <C>
5.40
</TABLE>
- --------------------------------------------------------------------------------
* 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 gain distributions and
dividends, and, for the Service Class shares, include the service fee of .25%
on an annualized basis of the average daily net asset value of the Service
Class shares.
+ 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 12/31/94. Performance figures for these two
Classes after this date will vary based on differences in their expense
structures.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO CURRENT MARKET
VOLATILITY, PERFORMANCE MAY BE LESS THAN SHOWN. 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 and the Service Class shares are sold with no
sales charge or contingent deferred sales charge. The Service Class shares,
first offered 1/1/95, are subject to an annual shareholder service fee of
.25%.
++ Effective 5/1/99, the Multi-Asset Fund was renamed the Asset Manager Fund.
60
<PAGE> 62
MAINSTAY
INSTITUTIONAL FUNDS INC.
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
LONG-TERM BONDS (25.1%)+
CORPORATE BONDS (13.4%)
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
AUTOMOBILES (0.2%)
Daimler-Benz North America Corp.
Series A
7.375%, due 9/15/06............. $ 1,000,000 $ 1,031,250
------------
BANKS--MONEY CENTER (0.3%)
First Union Corp.
8.77%, due 11/15/04............. 1,000,000 1,010,000
Morgan (J.P.) & Co., Inc.
8.50%, due 8/15/03.............. 500,000 533,750
------------
1,543,750
------------
BANKS--REGIONAL (0.5%)
National Bank of Canada
Series B
8.125%, due 8/15/04 (d)......... 2,850,000 3,017,438
------------
BEVERAGES--ALCOHOLIC (0.4%)
Bass North America Inc.
6.625%, due 3/1/03.............. 2,250,000 2,250,000
------------
BROADCAST/MEDIA (0.2%)
Cox Communications Inc.
6.50%, due 11/15/02............. 1,000,000 992,500
------------
CHEMICALS (0.1%)
Rhone-Poulenc S.A.
7.75%, due 1/15/02 (d).......... 350,000 357,875
------------
COMMUNICATIONS--EQUIPMENT
MANUFACTURERS (0.5%)
Nortel Networks Corp.
6.875%, due 10/1/02 (d)......... 3,000,000 3,048,750
------------
CONTAINERS--METAL & GLASS (0.9%)
Crown Cork & Seal Finance PLC
7.00%, due 12/15/06 (d)......... 5,000,000 4,906,250
------------
ELECTRIC POWER COMPANIES (3.1%)
Arkansas Power & Light Co.
6.00%, due 10/1/03.............. 3,000,000 2,910,000
Citizens Utilities Co.
7.45%, due 1/15/04.............. 1,000,000 1,027,500
Florida Power & Light Co.
6.875%, due 4/1/04.............. 500,000 511,875
Houston Lighting & Power Co.
Series C
6.50%, due 4/21/03.............. 8,500,000 8,500,000
Philadelphia Electric Co.
5.625%, due 11/1/01............. 1,000,000 982,500
Wisconsin Electric Power Co.
7.70%, due 12/15/27............. 3,000,000 2,996,250
------------
16,928,125
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
FINANCE (0.3%)
Ford Motor Credit Co.
7.00%, due 9/25/01.............. $ 1,600,000 $ 1,622,000
------------
FINANCIAL--MISCELLANEOUS (2.3%)
Ambac Financial Group Inc.
9.375%, due 8/1/11.............. 1,000,000 1,202,500
MBIA Inc.
7.15%, due 7/15/27.............. 6,900,000 6,701,625
Morgan Stanley Group Inc.
7.50%, due 2/1/24............... 5,000,000 4,800,000
------------
12,704,125
------------
INSURANCE--PROPERTY & CASUALTY (1.4%)
American Re Corp.
Series B
7.45%, due 12/15/26............. 7,920,000 7,999,200
------------
INVESTMENT BANK/BROKERAGE (0.2%)
Bear Stearns Cos., Inc. (The)
6.625%, due 1/15/04............. 500,000 495,000
PaineWebber Group, Inc.
7.75%, due 9/1/02............... 400,000 408,500
------------
903,500
------------
OIL & GAS--EQUIPMENT & SERVICES (0.2%)
Petroleum Geo-Services ASA
6.625%, due 3/30/08 (d)......... 1,000,000 952,500
------------
OIL--INTEGRATED DOMESTIC (0.1%)
Occidental Petroleum Corp.
10.125%, due 11/15/01........... 500,000 535,625
------------
OIL--INTEGRATED INTERNATIONAL (1.5%)
Imperial Oil Ltd.
8.30%, due 8/20/01 (d).......... 6,000,000 6,247,500
Societe Nationale Elf Aquitaine
8.00%, due 10/15/01 (d)......... 2,000,000 2,075,000
------------
8,322,500
------------
PAPER & FOREST PRODUCTS (0.1%)
Georgia-Pacific Corp.
9.125%, due 7/1/22.............. 500,000 526,875
------------
TELEPHONE (1.1%)
GTE South Inc.
Series C
6.00%, due 2/15/08.............. 1,300,000 1,227,275
New York Telephone Co.
6.125%, due 1/15/10............. 5,000,000 4,756,310
------------
5,983,585
------------
Total Corporate Bonds
(Cost $79,782,502).............. 73,625,848
------------
</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.
61
<PAGE> 63
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
U.S. GOVERNMENT &
FEDERAL AGENCIES (11.7%)
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION GOLD
(MORTGAGE PASS-THROUGH SECURITIES) (0.6%)
6.00%, due 1/1/26-1/1/28........ $ 1,013,785 $ 954,854
7.00%, due 3/1/26-10/1/26....... 654,002 647,664
7.50%, due 7/1/11-9/1/11........ 522,296 530,783
7.75%, due 10/1/07.............. 416,850 428,701
8.00%, due 10/1/11-11/1/11...... 472,268 486,436
------------
3,048,438
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (0.6%)
6.50%, due 11/1/03.............. 603,446 597,411
7.00%, due 10/1/03-6/1/26....... 903,076 897,749
7.50%, due 7/1/11-10/1/11....... 437,220 444,050
8.00%, due 7/1/09-11/1/11....... 795,554 819,421
8.50%, due 6/1/26-10/1/26....... 168,221 175,527
9.00%, due 6/1/26-9/1/26........ 332,018 351,626
------------
3,285,784
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION I
(MORTGAGE PASS-THROUGH SECURITIES) (0.4%)
7.00%, due 7/15/11-10/15/11..... 742,992 747,636
7.50%, due 3/15/26-6/15/26...... 614,411 620,555
8.00%, due 8/15/26-10/15/26..... 487,657 500,912
8.50%, due 11/15/26............. 263,792 275,992
9.00%, due 4/15/25-11/15/26..... 316,819 336,224
------------
2,481,319
------------
RESOLUTION FUNDING CORP. (0.2%)
(zero coupon), due 10/15/10..... 2,600,000 1,285,180
------------
UNITED STATES TREASURY BONDS (1.1%)
6.125%, due 11/15/27............ 1,500,000 1,489,920
6.25%, due 8/15/23.............. 1,000,000 1,004,240
8.125%, due 5/15/21............. 1,000,000 1,214,330
10.625%, due 8/15/15............ 1,000,000 1,437,110
11.875%, due 11/15/03........... 700,000 858,277
------------
6,003,877
------------
UNITED STATES TREASURY NOTES (8.8%)
4.75%, due 11/15/08............. 10,000,000 9,174,100
5.625%, due 12/31/02............ 8,500,000 8,469,400
5.75%, due 8/15/03.............. 2,300,000 2,294,204
6.875%, due 3/31/00............. 23,000,000 23,283,360
7.00%, due 7/15/06.............. 2,100,000 2,223,900
7.50%, due 11/15/01-5/15/02..... 2,000,000 2,088,960
7.875%, due 11/15/99............ 1,000,000 1,010,310
------------
48,544,234
------------
Total U.S. Government & Federal
Agencies
(Cost $64,776,231).............. 64,648,832(f)
------------
Total Long-Term Bonds
(Cost $144,558,733)............. 138,274,680
------------
<CAPTION>
COMMON STOCKS (30.1%)
SHARES VALUE
-----------------------
<S> <C> <C>
AEROSPACE/DEFENSE (0.4%)
Boeing Co. (The)................. 14,368 $ 634,886
General Dynamics Corp. .......... 1,936 132,616
Goodrich (B.F.) Co. ............. 1,123 47,727
Lockheed Martin Corp. ........... 5,808 216,348
Northrop Grumman Corp. .......... 1,051 69,694
Raytheon Co. Class B............. 5,079 357,434
Rockwell International Corp. .... 2,846 172,894
United Technologies Corp. ....... 7,093 508,479
------------
2,140,078
------------
AIRLINES (0.1%)
AMR Corp. (a).................... 2,263 154,450
Delta Air Lines, Inc. ........... 2,024 116,633
Southwest Airlines Co. .......... 4,981 155,034
US Airways Group, Inc. (a)....... 1,126 49,051
------------
475,168
------------
ALUMINUM (0.1%)
Alcan Aluminum Ltd. ............. 3,301 105,426
Alcoa Inc. ...................... 5,447 337,033
Reynolds Metals Co. ............. 940 55,460
------------
497,919
------------
AUTO PARTS & EQUIPMENT (0.1%)
Cooper Tire & Rubber Co. ........ 1,088 25,704
Delphi Automotive Systems
Corp. .......................... 8,278 153,660
Genuine Parts Co. ............... 2,609 91,315
Goodyear Tire & Rubber Co.
(The)........................... 2,254 132,563
------------
403,242
------------
AUTOMOBILES (0.3%)
Ford Motor Co. .................. 17,907 1,010,626
General Motors Corp. ............ 9,639 636,174
------------
1,646,800
------------
BANKS--MAJOR REGIONAL (1.3%)
AmSouth Bancorp.................. 2,642 61,261
Bank of New York Co., Inc.
(The)........................... 11,268 413,395
Bank One Corp. .................. 17,444 1,039,008
BankBoston Corp. ................ 4,416 225,768
BB&T Corp. ...................... 4,618 169,423
Comerica Inc. ................... 2,353 139,856
Fifth Third Bancorp.............. 3,916 260,659
Firstar Corp. ................... 9,770 273,560
Fleet Financial Group, Inc. ..... 8,441 374,569
Huntington Bancshares Inc. ...... 3,134 109,690
KeyCorp.......................... 6,580 211,382
Mellon Bank Corp. ............... 7,729 281,142
Mercantile Bancorp., Inc. ....... 2,330 133,101
National City Corp. ............. 4,663 305,427
Northern Trust Corp. ............ 1,684 163,348
PNC Bank Corp. .................. 4,482 258,275
Regions Financial Corp. ......... 3,328 127,920
Republic New York Corp. ......... 1,586 108,145
SouthTrust Corp. ................ 2,413 92,599
State Street Corp. .............. 2,342 199,948
Summit Bancorp................... 2,582 107,960
SunTrust Banks, Inc. ............ 4,707 326,842
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
62
<PAGE> 64
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
BANKS--MAJOR REGIONAL (Continued)
Synovus Financial Corp. ......... 3,979 $ 79,083
Union Planters Corp. ............ 2,099 93,799
U.S. Bancorp..................... 10,754 365,636
Wachovia Corp. .................. 3,116 266,613
Wells Fargo Co. ................. 24,385 1,042,459
------------
7,230,868
------------
BANKS--MONEY CENTER (0.7%)
Bank of America Corp. ........... 25,695 1,883,765
Chase Manhattan Corp. (The)...... 12,453 1,078,741
First Union Corp. ............... 14,311 672,617
Morgan (J.P.) & Co., Inc. ....... 2,639 370,779
------------
4,005,902
------------
BANKS--SAVINGS & LOANS (0.1%)
Golden West Financial Corp. ..... 829 81,242
Washington Mutual, Inc. ......... 8,745 309,354
------------
390,596
------------
BEVERAGES--ALCOHOLIC (0.1%)
Anheuser-Busch Cos., Inc. ....... 7,013 497,485
Brown-Forman Corp.
Class B......................... 1,064 69,359
Coors (Adolph) Co.
Class B......................... 533 26,383
------------
593,227
------------
BEVERAGES--SOFT DRINKS (0.6%)
Coca-Cola Co. (The).............. 36,381 2,273,813
Coca-Cola Enterprises Inc. ...... 6,293 193,510
PepsiCo, Inc. ................... 21,470 830,621
------------
3,297,944
------------
BROADCAST/MEDIA (0.3%)
CBS Corp. ....................... 10,475 455,008
Clear Channel Communications,
Inc. (a)........................ 4,783 329,728
Comcast Corp. Special Class A.... 10,959 421,237
MediaOne Group Inc. (a).......... 9,074 674,879
------------
1,880,852
------------
BUILDING MATERIALS (0.1%)
Masco Corp. ..................... 4,992 144,144
Owens Corning.................... 850 29,219
Sherwin-Williams Co. (The)....... 2,587 71,789
------------
245,152
------------
CHEMICALS (0.5%)
Air Products & Chemicals,
Inc. ........................... 3,375 135,844
Dow Chemical Co. (The)........... 3,342 424,016
Du Pont (E.I.) De Nemours &
Co. ............................ 16,605 1,134,329
Eastman Chemical Co. ............ 1,230 63,653
Hercules Inc. ................... 1,439 56,571
Monsanto Co. .................... 9,221 363,653
Praxair, Inc. ................... 2,368 115,884
Rohm & Haas Co. ................. 3,128 134,095
Union Carbide Corp. ............. 1,950 95,063
------------
2,523,108
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
CHEMICALS--DIVERSIFIED (0.1%)
Avery Dennison Corp. ............ 1,752 $ 105,777
Engelhard Corp. ................. 1,849 41,834
FMC Corp. (a).................... 478 32,653
PPG Industries, Inc. ............ 2,605 153,858
------------
334,122
------------
CHEMICALS--SPECIALTY (0.0%) (b)
Grace (W.R.) & Co. (a)........... 1,054 19,367
Great Lakes Chemical Corp. ...... 870 40,074
Nalco Chemical Co. .............. 1,085 56,284
Sigma-Aldrich Corp. ............. 1,456 50,141
------------
165,866
------------
COMMUNICATIONS--EQUIPMENT
MANUFACTURERS (1.4%)
Andrew Corp. (a)................. 1,218 23,066
Cabletron Systems, Inc. (a)...... 2,751 35,763
Cisco Systems, Inc. (a).......... 46,754 3,006,867
General Instrument Corp. (a)..... 2,590 110,075
Lucent Technologies Inc. ........ 44,708 3,015,019
Network Appliance, Inc. (a)...... 634 35,425
Nortel Networks Corp. ........... 9,832 853,541
Scientific-Atlanta, Inc. ........ 1,118 40,248
Tellabs, Inc. (a)................ 5,812 392,673
3Com Corp. (a)................... 5,255 140,243
------------
7,652,920
------------
COMPUTER SOFTWARE & SERVICES (2.2%)
Adobe Systems Inc. .............. 885 72,708
America Online Inc. (a).......... 16,087 1,777,614
Autodesk, Inc. .................. 836 24,714
Automatic Data Processing,
Inc. ........................... 9,103 400,532
BMC Software, Inc. (a)........... 3,466 187,164
Ceridian Corp. (a)............... 2,112 69,036
Computer Associates
International, Inc. ............ 7,907 434,885
Computer Sciences Corp. (a)...... 2,386 165,081
Compuware Corp. (a).............. 5,450 173,378
Electronic Data Systems Corp. ... 7,272 411,323
Equifax Inc. .................... 2,099 74,908
First Data Corp. ................ 6,363 311,389
Microsoft Corp. (a).............. 75,359 6,796,440
Novell, Inc. (a)................. 4,988 132,182
Oracle Corp. (a)................. 21,251 788,943
Parametric Technology Corp.
(a)............................. 3,948 54,779
Paychex, Inc. ................... 3,649 116,312
PeopleSoft, Inc. (a)............. 3,552 61,272
Shared Medical Systems Corp. .... 416 27,144
------------
12,079,804
------------
COMPUTER SYSTEMS (1.7%)
Apple Computer, Inc. (a)......... 2,300 106,519
Compaq Computer Corp. ........... 25,127 595,196
Data General Corp. (a)........... 791 11,519
Dell Computer Corp. (a).......... 37,484 1,386,908
EMC Corp. (a).................... 14,931 821,205
Gateway Inc. (a)................. 2,330 137,470
Hewlett-Packard Co. ............. 14,956 1,503,078
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
63
<PAGE> 65
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
COMPUTER SYSTEMS (Continued)
International Business Machines
Corp. .......................... 26,830 $ 3,467,778
Seagate Technology, Inc. (a)..... 3,288 84,255
Silicon Graphics, Inc. (a)....... 2,801 45,866
Sun Microsystems, Inc. (a)....... 11,400 785,175
Unisys Corp. (a)................. 4,015 156,334
------------
9,101,303
------------
CONGLOMERATES (0.1%)
Tenneco Inc. .................... 2,470 58,971
Textron Inc. .................... 2,232 183,722
------------
242,693
------------
CONTAINERS--METAL & GLASS (0.0%) (b)
Ball Corp. ...................... 434 18,336
Crown Cork & Seal Co., Inc. ..... 1,758 50,103
Owens-Illinois, Inc. (a)......... 2,349 76,783
------------
145,222
------------
CONTAINERS--PAPER (0.0%) (b)
Bemis Co., Inc. ................. 821 32,635
Temple-Inland Inc. .............. 811 55,351
------------
87,986
------------
COSMETICS/PERSONAL CARE (0.2%)
Alberto-Culver Co. Class B....... 815 21,699
Avon Products, Inc. ............. 3,839 213,065
Gillette Co. (The)............... 16,442 674,122
International Flavors &
Fragrances Inc. ................ 1,613 71,577
------------
980,463
------------
ELECTRIC POWER COMPANIES (0.6%)
Ameren Corp. .................... 2,005 76,942
American Electric Power Co.,
Inc. ........................... 2,842 106,753
Carolina Power & Light Co. ...... 2,239 95,857
Central & South West Corp. ...... 3,173 74,169
Cinergy Corp. ................... 2,388 76,416
CMS Energy Corp. ................ 1,729 72,402
Consolidated Edison, Inc. ....... 3,320 150,230
Constellation Energy Group....... 2,163 64,079
Dominion Resources, Inc. ........ 2,835 122,791
DTE Energy Co. .................. 2,146 85,840
Duke Energy Corp. ............... 5,370 291,994
Edison International............. 5,197 139,020
Entergy Corp. ................... 3,622 113,188
FirstEnergy Corp. ............... 3,420 106,020
Florida Progress Corp. .......... 1,474 60,895
FPL Group, Inc. ................. 2,802 153,059
GPU, Inc. ....................... 1,931 81,464
New Century Energies Inc. ....... 1,614 62,643
Niagara Mohawk Holdings Inc.
(a)............................. 2,758 44,300
Northern States Power Co. ....... 2,187 52,898
PacifiCorp....................... 4,366 80,225
PECO Energy Co. ................. 2,796 117,607
PG&E Corp. ...................... 5,668 184,210
PP&L Resources, Inc. ............ 2,283 70,202
Public Service Enterprise Group
Inc. ........................... 3,325 135,909
Reliant Energy, Inc. ............ 4,415 121,964
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
ELECTRIC POWER COMPANIES (Continued)
Southern Co. (The)............... 10,354 $ 274,381
Texas Utilities Co. ............. 4,185 172,631
Unicom Corp. .................... 3,246 125,174
------------
3,313,263
------------
ELECTRICAL EQUIPMENT (1.2%)
Cooper Industries, Inc. ......... 1,534 79,768
Emerson Electric Co. ............ 6,416 403,406
General Electric Co. ............ 48,268 5,454,284
Grainger (W.W.), Inc. ........... 1,511 81,311
Honeywell Inc. .................. 1,873 217,034
Raychem Corp. ................... 1,202 44,474
Solectron Corp. (a).............. 3,716 247,811
Thomas & Betts Corp. ............ 723 34,162
------------
6,562,250
------------
ELECTRONICS--DEFENSE (0.0%) (b)
EG&G, Inc. ...................... 638 22,729
------------
ELECTRONICS--INSTRUMENTATION (0.0%) (b)
PE Corp.-PE Biosystems Group..... 740 84,915
Tektronix, Inc. ................. 654 19,743
------------
104,658
------------
ELECTRONICS--SEMICONDUCTORS (1.0%)
Advanced Micro Devices, Inc.
(a)............................. 2,123 38,347
Applied Materials, Inc. (a)...... 5,485 405,204
Intel Corp. ..................... 48,930 2,911,335
KLA-Tencor Corp. (a)............. 1,238 80,315
LSI Logic Corp. (a).............. 2,134 98,431
Micron Technology, Inc. (a)...... 3,714 149,720
Motorola, Inc. .................. 8,910 844,223
National Semiconductor Corp.
(a)............................. 2,478 62,724
Texas Instruments Inc. .......... 5,773 837,085
------------
5,427,384
------------
ENGINEERING & CONSTRUCTION (0.0%) (b)
Fluor Corp. ..................... 1,081 43,781
Foster Wheeler Corp. ............ 567 8,009
------------
51,790
------------
ENTERTAINMENT (0.6%)
King World Productions, Inc.
(a)............................. 1,039 36,170
Seagram Co. Ltd. ................ 6,333 319,025
Time Warner Inc. ................ 17,586 1,266,192
Viacom Inc. Class B (a).......... 10,197 448,668
Walt Disney Co. (The)............ 30,414 937,131
------------
3,007,186
------------
FINANCIAL--MISCELLANEOUS (1.4%)
AFLAC Inc. ...................... 3,882 185,851
American Express Co. ............ 6,671 868,064
American General Corp. .......... 3,753 282,882
Associates First Capital Corp.
Class A......................... 10,740 475,916
Citigroup Inc. .................. 49,654 2,358,565
Fannie Mae....................... 15,136 1,034,924
Franklin Resources Inc. ......... 3,689 149,866
Freddie Mac...................... 10,286 596,588
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
64
<PAGE> 66
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
FINANCIAL--MISCELLANEOUS (Continued)
MBIA Inc. ....................... 1,394 $ 90,262
MBNA Corp. ...................... 11,847 362,814
Morgan Stanley Dean Witter &
Co. ............................ 8,534 874,735
SLM Holding Corp. ............... 2,510 114,989
Transamerica Corp. .............. 1,832 137,400
------------
7,532,856
------------
FOOD (0.5%)
Bestfoods........................ 4,085 202,208
Campbell Soup Co. ............... 6,477 290,655
ConAgra, Inc. ................... 7,207 191,886
General Mills, Inc. ............. 2,274 182,773
Heinz (H.J.) Co. ................ 5,327 267,016
Hershey Foods Corp. ............. 2,112 125,400
Kellogg Co. ..................... 5,950 196,350
Nabisco Group Holdings Corp. .... 4,798 93,861
Quaker Oats Co. (The)............ 1,979 131,356
Ralston-Ralston Purina Group..... 4,848 147,561
Sara Lee Corp. .................. 13,292 301,562
Unilever N.V. ................... 8,473 590,992
Wrigley (Wm.) Jr. Co. ........... 1,700 153,000
------------
2,874,620
------------
FOOD & HEALTH CARE DISTRIBUTORS (0.1%)
Cardinal Health, Inc. ........... 4,017 257,590
McKesson HBOC, Inc. ............. 4,112 132,098
SUPERVALU Inc. .................. 1,807 46,417
SYSCO Corp. ..................... 4,843 144,382
------------
580,487
------------
GOLD & PRECIOUS METALS MINING (0.0%) (b)
Barrick Gold Corp. .............. 5,753 111,464
Battle Mountain Gold Co. (a)..... 3,346 8,156
Homestake Mining Co. ............ 3,839 31,432
Newmont Mining Corp. ............ 2,508 49,847
Placer Dome Inc. ................ 4,779 56,452
------------
257,351
------------
HARDWARE & TOOLS (0.0%) (b)
Black & Decker Corp. (The)....... 1,317 83,136
Snap-on Inc. .................... 824 29,819
Stanley Works (The).............. 1,345 43,292
------------
156,247
------------
HEALTH CARE--DIVERSIFIED (1.0%)
Abbott Laboratories.............. 22,419 1,020,065
Allergan, Inc. .................. 940 104,340
American Home Products Corp. .... 19,409 1,116,018
Bristol-Myers Squibb Co. ........ 29,291 2,063,185
Johnson & Johnson................ 19,881 1,948,338
Mallinckrodt Inc. ............... 1,070 38,921
Warner-Lambert Co. .............. 12,582 872,876
------------
7,163,743
------------
HEALTH CARE--DRUGS (1.4%)
Lilly (Eli) & Co. ............... 16,214 1,161,328
Merck & Co., Inc. ............... 34,780 2,573,720
Pfizer Inc. ..................... 19,070 2,092,933
Pharmacia & Upjohn, Inc. ........ 7,502 426,207
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
HEALTH CARE--DRUGS (Continued)
Schering-Plough Corp. ........... 21,660 $ 1,147,980
Watson Pharmaceuticals, Inc.
(a)............................. 1,379 48,351
------------
7,450,519
------------
HEALTH CARE--HMOs (0.1%)
Aetna Inc. ...................... 2,167 193,811
Humana Inc. (a).................. 2,518 32,577
United Healthcare Corp. ......... 2,511 157,251
Wellpoint Health Networks Inc.
(a)............................. 1,044 88,610
------------
472,249
------------
HEALTH CARE--HOSPITAL MANAGEMENT (0.1%)
Columbia/HCA Healthcare Corp. ... 8,344 190,348
Tenet Healthcare Corp. (a)....... 4,564 84,719
------------
275,067
------------
HEALTH CARE--MEDICAL PRODUCTS (0.3%)
Bard (C.R.), Inc. ............... 736 35,190
Bausch & Lomb Inc. .............. 726 55,539
Baxter International Inc. ....... 4,301 260,748
Becton, Dickinson & Co. ......... 3,741 112,230
Biomet, Inc. .................... 1,669 66,343
Boston Scientific Corp. (a)...... 5,766 253,344
Guidant Corp. (a)................ 4,413 226,994
Medtronic, Inc. ................. 8,679 675,877
St. Jude Medical, Inc. (a)....... 1,198 42,679
------------
1,728,944
------------
HEALTH CARE--MISCELLANEOUS (0.1%)
ALZA Corp. (a)................... 1,506 76,618
Amgen Inc. (a)................... 7,484 455,589
HCR Manor Care, Inc. (a)......... 1,596 38,603
HEALTHSOUTH Corp. (a)............ 6,194 92,523
------------
663,333
------------
HEAVY DUTY TRUCKS & PARTS (0.1%)
Cummins Engine Co., Inc. ........ 575 32,847
Dana Corp. ...................... 2,442 112,485
Eaton Corp. ..................... 1,015 93,380
ITT Industries, Inc. ............ 1,250 47,656
Navistar International Corp.
(a)............................. 962 48,100
PACCAR Inc. ..................... 1,140 60,848
------------
395,316
------------
HOMEBUILDING (0.0%) (b)
Centex Corp. .................... 847 31,815
Kaufman & Broad Home Corp. ...... 734 18,258
Pulte Corp. ..................... 598 13,829
------------
63,902
------------
HOTEL/MOTEL (0.1%)
Carnival Corp. .................. 9,082 440,477
Harrah's Entertainment, Inc.
(a)............................. 1,859 40,898
Hilton Hotels Corp. ............. 3,792 53,799
Marriott International, Inc.
Class A......................... 3,640 136,045
------------
671,219
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
65
<PAGE> 67
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
HOUSEHOLD--FURNISHINGS & APPLIANCES (0.0%) (b)
Armstrong World Industries,
Inc. ........................... 567 $ 32,780
Maytag Corp. .................... 1,322 92,127
Whirlpool Corp. ................. 1,092 80,808
------------
205,715
------------
HOUSEHOLD PRODUCTS (0.5%)
Clorox Co. (The)................. 1,740 185,854
Colgate-Palmolive Co. ........... 4,273 421,959
Fort James Corp. ................ 3,271 123,889
Kimberly-Clark Corp. ............ 7,846 447,222
Procter & Gamble Co. (The)....... 19,659 1,754,566
------------
2,933,490
------------
HOUSEWARES (0.1%)
Fortune Brands, Inc. ............ 2,423 100,252
Newell Rubbermaid Inc. .......... 4,215 195,998
Tupperware Corp. ................ 837 21,344
------------
317,594
------------
INSURANCE BROKERS (0.1%)
Aon Corp. ....................... 3,777 155,801
Marsh & McLennan Cos., Inc. ..... 3,815 288,033
------------
443,834
------------
INSURANCE--LIFE (0.1%)
Conseco, Inc. ................... 4,765 145,035
Jefferson-Pilot Corp. ........... 1,565 103,583
Lincoln National Corp. .......... 2,963 155,002
Provident Cos., Inc. ............ 2,024 80,960
Torchmark Corp. ................. 1,920 65,520
UNUM Corp. ...................... 2,042 111,800
------------
661,900
------------
INSURANCE--MULTI-LINE (0.5%)
American International Group,
Inc. ........................... 18,155 2,125,270
CIGNA Corp. ..................... 3,041 270,649
Hartford Financial Services
Group, Inc. (The)............... 3,378 196,980
------------
2,592,899
------------
INSURANCE--PROPERTY & CASUALTY (0.2%)
Allstate Corp. (The)............. 11,936 428,204
Chubb Corp. (The)................ 2,497 173,542
Cincinnati Financial Corp........ 2,429 91,239
Loews Corp....................... 1,618 128,024
MGIC Investment Corp............. 1,672 78,375
Progressive Corp. (The).......... 1,120 162,400
SAFECO Corp...................... 2,127 93,854
St. Paul Cos., Inc. (The)........ 3,328 105,872
------------
1,261,510
------------
INVESTMENT BANK/BROKERAGE (0.3%)
Bear Stearns Cos., Inc. (The).... 1,731 80,924
Lehman Brothers Holdings Inc..... 1,774 110,432
Merrill Lynch & Co., Inc......... 5,474 437,578
Paine Webber Group Inc........... 2,162 101,074
Schwab (Charles) Corp. (The)..... 6,045 664,194
------------
1,394,202
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
LEISURE TIME (0.0%) (b)
Brunswick Corp................... 1,314 $ 36,628
Mirage Resorts, Inc. (a)......... 2,934 49,145
------------
85,773
------------
MACHINE TOOLS (0.0%) (b)
Milacron Inc..................... 589 10,897
------------
MACHINERY--DIVERSIFIED (0.1%)
Briggs & Stratton Corp........... 308 17,787
Case Corp........................ 1,073 51,638
Caterpillar Inc.................. 5,244 314,640
Deere & Co....................... 3,408 135,042
Ingersoll-Rand Co................ 2,407 155,552
NACCO Industries, Inc. Class A... 82 6,027
Thermo Electron Corp. (a)........ 2,355 47,247
Timken Co. (The)................. 885 17,258
------------
745,191
------------
MANUFACTURED HOUSING (0.0%) (b)
Fleetwood Enterprises, Inc....... 533 14,091
------------
MANUFACTURING--DIVERSIFIED (0.5%)
AlliedSignal Inc................. 8,172 514,836
Crane Co......................... 968 30,432
Danaher Corp..................... 1,943 112,937
Dover Corp....................... 3,131 119,761
Illinois Tool Works Inc.......... 3,726 305,532
Johnson Controls, Inc............ 1,230 85,254
Millipore Corp................... 663 26,893
Pall Corp........................ 1,874 41,579
Parker-Hannifin Corp............. 1,635 74,801
Sealed Air Corp. (a)............. 1,228 79,667
Tyco International Ltd........... 12,113 1,147,707
------------
2,539,399
------------
METALS--MINING (0.0%) (b)
ASARCO Inc....................... 635 11,946
Cyprus Amax Minerals Co.......... 1,345 20,427
Freeport-McMoRan Copper & Gold
Inc. Class B (a)................ 2,469 44,288
Inco Ltd. (a).................... 2,866 51,588
Phelps Dodge Corp................ 829 51,346
------------
179,595
------------
MISCELLANEOUS (0.4%)
AES Corp. (The) (a).............. 2,777 161,413
American Greetings Corp. Class
A............................... 1,083 32,625
Archer-Daniels-Midland Co........ 8,733 134,816
Corning Inc...................... 3,573 250,557
Harcourt General, Inc............ 977 50,377
Harris Corp...................... 1,157 45,340
Jostens, Inc..................... 589 12,406
Minnesota Mining & Manufacturing
Co.............................. 5,958 517,974
Nextel Communications, Inc.
Class A (a)..................... 4,385 220,072
Pioneer Hi-Bred International,
Inc............................. 3,509 136,632
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
66
<PAGE> 68
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
MISCELLANEOUS (Continued)
Sprint Corp. (PCS Group) (a)..... 6,539 $ 373,540
TRW, Inc......................... 1,798 98,665
------------
2,034,417
------------
NATURAL GAS DISTRIBUTORS & PIPELINES (0.2%)
Coastal Corp. (The).............. 3,167 126,680
Columbia Energy Group............ 1,176 73,721
Consolidated Natural Gas Co...... 1,375 83,531
Eastern Enterprises.............. 366 14,549
Enron Corp....................... 5,264 430,332
NICOR Inc........................ 695 26,453
ONEOK, Inc....................... 475 15,081
Peoples Energy Corp.............. 512 19,296
Sempra Energy.................... 3,553 80,387
Sonat, Inc....................... 1,604 53,133
Williams Cos., Inc. (The)........ 6,358 270,612
------------
1,193,775
------------
OFFICE EQUIPMENT & SUPPLIES (0.2%)
Pitney Bowes Inc................. 4,005 257,321
Xerox Corp....................... 9,732 574,796
------------
832,117
------------
OIL & GAS DRILLING (0.0%) (b)
Helmerich & Payne, Inc. ......... 735 17,502
Rowan Cos., Inc. (a)............. 1,367 25,204
------------
42,706
------------
OIL & GAS--EQUIPMENT & SERVICES (0.2%)
Baker Hughes Inc. ............... 4,791 160,499
Halliburton Co. ................. 6,462 292,406
McDermott International, Inc. ... 824 23,278
Schlumberger Ltd. ............... 8,095 515,550
------------
991,733
------------
OIL & GAS--EXPLORATION & PRODUCTION (0.1%)
Anadarko Petroleum Corp. ........ 1,811 66,667
Apache Corp. .................... 1,603 62,517
Burlington Resources Inc. ....... 2,595 112,234
Union Pacific Resources Group,
Inc. ........................... 3,746 61,107
Unocal Corp. .................... 3,528 139,797
------------
442,322
------------
OIL--INTEGRATED DOMESTIC (0.2%)
Amerada Hess Corp. .............. 1,365 81,218
Ashland Inc. .................... 1,059 42,492
Atlantic Richfield Co. .......... 4,847 405,027
Kerr-McGee Corp. ................ 1,248 62,634
Occidental Petroleum Corp. ...... 5,136 108,498
Phillips Petroleum Co. .......... 3,760 189,175
Sunoco Inc. ..................... 1,400 42,263
USX-Marathon Group............... 4,524 147,313
------------
1,078,620
------------
OIL--INTEGRATED INTERNATIONAL (1.3%)
Chevron Corp. ................... 9,709 924,175
Exxon Corp. ..................... 35,789 2,760,227
Mobil Corp. ..................... 11,579 1,146,321
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
OIL--INTEGRATED INTERNATIONAL (Continued)
Royal Dutch Petroleum Co. ADR
(e)............................. 31,614 $ 1,904,744
Texaco Inc. ..................... 7,873 492,063
------------
7,227,530
------------
PAPER & FOREST PRODUCTS (0.2%)
Boise Cascade Corp. ............. 808 34,744
Champion International Corp. .... 1,392 66,642
Georgia-Pacific Group............ 2,543 120,475
International Paper Co. ......... 6,022 304,111
Louisiana-Pacific Corp. ......... 1,554 36,908
Mead Corp. (The)................. 1,538 64,212
Potlatch Corp. .................. 449 19,728
Westvaco Corp. .................. 1,429 41,441
Weyerhaeuser Co. ................ 2,896 199,100
Willamette Industries, Inc. ..... 1,606 73,976
------------
961,337
------------
PERSONAL LOANS (0.2%)
Capital One Financial Corp. ..... 2,972 165,503
Countrywide Credit Industries,
Inc. ........................... 1,687 72,119
Household International, Inc. ... 7,051 334,041
Providian Financial Corp. ....... 2,108 197,098
------------
768,761
------------
PHOTOGRAPHY/IMAGING (0.1%)
Eastman Kodak Co. ............... 4,786 324,252
IKON Office Solutions, Inc. ..... 2,188 32,820
Polaroid Corp. .................. 696 19,227
------------
376,299
------------
POLLUTION CONTROL (0.1%)
Browning-Ferris Industries,
Inc. ........................... 2,344 100,792
Waste Management, Inc. .......... 9,033 485,524
------------
586,316
------------
PUBLISHING (0.0%) (b)
McGraw-Hill Cos., Inc. (The)..... 2,911 157,012
Meredith Corp. .................. 762 26,384
------------
183,396
------------
PUBLISHING--NEWSPAPER (0.1%)
Dow Jones & Co., Inc. ........... 1,371 72,749
Gannett Co., Inc. ............... 4,092 292,067
Knight-Ridder, Inc. ............. 1,189 65,321
New York Times Co. (The)
Class A......................... 2,638 97,111
Times Mirror Co. (The) Class A... 1,079 63,931
Tribune Co. ..................... 1,775 154,647
------------
745,826
------------
RAILROADS (0.2%)
Burlington Northern Santa Fe
Corp. .......................... 6,979 216,349
CSX Corp. ....................... 3,183 144,230
Kansas City Southern Industries,
Inc. ........................... 1,645 104,972
Norfolk Southern Corp. .......... 5,648 170,146
Union Pacific Corp. ............. 3,671 214,065
------------
849,762
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
67
<PAGE> 69
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
RESTAURANTS (0.2%)
Darden Restaurants, Inc. ........ 2,053 $ 44,781
McDonald's Corp. ................ 19,907 822,408
Tricon Global Restaurants, Inc.
(a)............................. 2,280 123,405
Wendy's International, Inc. ..... 1,942 54,983
------------
1,045,577
------------
RETAIL STORES--APPAREL (0.2%)
Gap, Inc. (The).................. 12,636 636,513
Limited, Inc. (The).............. 3,191 144,792
TJX Cos., Inc. (The)............. 4,764 158,701
------------
940,006
------------
RETAIL STORES--DEPARTMENT (0.2%)
Dillard's, Inc. Class A.......... 1,633 57,359
Federated Department Stores, Inc.
(a)............................. 3,080 163,048
Kohl's Corp. (a)................. 2,397 185,018
May Department Stores Co.
(The)........................... 4,950 202,331
Nordstrom, Inc. ................. 2,113 70,786
Penney (J.C.) Co., Inc. ......... 3,873 188,083
------------
866,625
------------
RETAIL STORES--DRUGS (0.1%)
Longs Drug Stores Corp. ......... 612 21,152
Rite Aid Corp. .................. 3,845 94,683
Walgreen Co. .................... 14,679 431,196
------------
547,031
------------
RETAIL STORES--FOOD (0.2%)
Albertson's, Inc. ............... 6,150 317,116
Great Atlantic & Pacific Tea Co.,
Inc. (The)...................... 601 20,321
Kroger Co. (The) (a)............. 12,178 340,223
Safeway Inc. (a)................. 7,337 363,182
Winn-Dixie Stores, Inc. ......... 2,166 80,007
------------
1,120,849
------------
RETAIL STORES--GENERAL MERCHANDISE (0.7%)
Dayton Hudson Corp. ............. 6,421 417,365
Kmart Corp. (a).................. 7,295 119,912
Sears, Roebuck & Co. ............ 5,650 251,778
Wal-Mart Stores, Inc. ........... 65,687 3,169,398
------------
3,958,453
------------
RETAIL STORES--SPECIALTY (0.6%)
AutoZone, Inc. (a)............... 2,183 65,763
Best Buy Co., Inc. (a)........... 2,100 141,750
Circuit City Stores-Circuit City
Group........................... 1,447 134,571
Consolidated Stores Corp. (a).... 1,627 43,929
Costco Cos., Inc. (a)............ 3,246 259,883
CVS Corp. ....................... 5,718 292,333
Dollar General Corp. ............ 3,326 96,454
Home Depot, Inc. (The)........... 21,892 1,410,666
Lowe's Cos., Inc. ............... 5,483 310,818
Office Depot, Inc. (a)........... 4,935 108,878
Pep Boys-Manny, Moe & Jack
(The)........................... 767 16,586
Staples Inc. (a)................. 6,876 212,726
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
RETAIL STORES--SPECIALTY (Continued)
Tandy Corp. ..................... 2,956 $ 144,475
Toys "R" Us, Inc. (a)............ 3,707 76,689
------------
3,315,521
------------
SHOES (0.1%)
NIKE, Inc. Class B............... 4,140 262,114
Reebok International Ltd. (a).... 825 15,366
------------
277,480
------------
SPECIALIZED SERVICES (0.2%)
Block (H&R), Inc. ............... 1,412 70,600
Cendant Corp. (a)................ 11,339 232,450
Dun & Bradstreet Corp. (The)..... 2,467 87,424
Ecolab Inc. ..................... 1,871 81,622
IMS Health Inc. ................. 4,711 147,219
Interpublic Group of Cos., Inc.
(The)........................... 1,960 169,785
Laidlaw Inc. .................... 4,909 36,204
National Service Industries,
Inc. ........................... 569 20,484
Omnicom Group Inc. .............. 2,659 212,720
Service Corp. International...... 4,038 77,732
------------
1,136,240
------------
SPECIALTY PRINTING (0.0%) (b)
Deluxe Corp. .................... 1,116 43,454
Donnelley (R.R.) & Sons Co. ..... 1,899 70,382
------------
113,836
------------
STEEL (0.0%) (b)
Allegheny Teledyne Inc. ......... 2,952 66,789
Bethlehem Steel Corp. (a)........ 1,963 15,091
Nucor Corp. ..................... 1,344 63,756
USX-U.S. Steel Group............. 1,349 36,423
Worthington Industries, Inc. .... 1,396 22,947
------------
205,006
------------
TELECOMMUNICATIONS--LONG DISTANCE (1.0%)
AT&T Corp. ...................... 46,969 2,621,457
MCI WorldCom, Inc. (a)........... 27,478 2,369,978
Sprint Corp. (FON Group)......... 12,759 673,835
------------
5,665,270
------------
TELEPHONE (1.4%)
ALLTEL Corp. .................... 4,091 292,507
Ameritech Corp. ................. 16,267 1,195,625
Bell Atlantic Corp. ............. 22,962 1,501,141
BellSouth Corp. ................. 27,923 1,308,891
CenturyTel, Inc. ................ 2,078 82,601
Frontier Corp. .................. 2,556 150,804
GTE Corp. ....................... 14,341 1,085,434
SBC Communications Inc. ......... 29,023 1,683,334
US West Inc. .................... 7,474 439,098
------------
7,739,435
------------
TEXTILES--APPAREL MANUFACTURERS (0.0%) (b)
Fruit of the Loom Ltd. (a)....... 1,033 10,072
Liz Claiborne, Inc. ............. 900 32,850
Russell Corp. ................... 554 10,803
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
68
<PAGE> 70
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
TEXTILES--APPAREL MANUFACTURERS (Continued)
Springs Industries, Inc. Class
A............................... 220 $ 9,598
V.F. Corp. ...................... 1,784 76,266
------------
139,589
------------
TOBACCO (0.3%)
Philip Morris Cos. Inc. ......... 35,613 1,431,197
UST Inc. ........................ 2,629 76,898
------------
1,508,095
------------
TOYS (0.0%) (b)
Hasbro, Inc. .................... 2,977 83,170
Mattel, Inc. .................... 6,183 163,463
------------
246,633
------------
TRANSPORTATION--MISCELLANEOUS (0.0%) (b)
FDX Corp. (a).................... 4,370 237,073
Ryder System, Inc. .............. 1,010 26,260
------------
263,333
------------
Total Common Stocks
(Cost $101,577,638)............. 165,686,334(g)
------------
<CAPTION>
SHORT-TERM
INVESTMENTS (44.2%)
PRINCIPAL
AMOUNT
<S> <C> <C>
-----------
COMMERCIAL PAPER (40.4%)
Aetna Services Inc.
5.08%, due 7/9/99 (c)........... $ 8,450,000 8,440,450
5.12%, due 8/2/99 (c)........... 25,000,000 24,886,093
Avnet Inc.
5.80%, due 7/1/99 (c)........... 16,400,000 16,400,000
Bancomer S.A.
5.08%, due 7/9/99 (c)........... 2,800,000 2,796,834
Cooperative Association of
Tractor Dealers Inc.
5.10%, due 7/27/99 (c).......... 2,000,000 1,992,625
Hitachi Credit America Corp.
5.15%, due 8/6/99 (c)........... 4,275,000 4,252,955
Homeside Lending Inc.
5.07%, due 8/2/99 (c)........... 25,000,000 24,887,206
Jefferson Smurfit Finance Corp.
5.10%, due 7/2/99 (c)........... 5,000,000 4,999,291
Mattel Inc.
5.15%, due 7/22/99 (c).......... 24,300,000 24,226,905
Minebea CP Inc.
5.10%, due 7/22/99 (c).......... 25,000,000 24,925,541
5.20%, due 7/6/99 (c)........... 5,800,000 5,795,807
Mitsubishi International Corp.
5.85%, due 7/1/99 (c)........... 8,800,000 8,800,000
Oyster Creek Fuel Corp.
5.10%, due 7/16/99 (c).......... 9,000,000 8,980,853
5.45%, due 7/6/99 (c)........... 300,000 299,773
Republic Industries Funding Corp.
5.09%, due 8/2/99 (c)........... 12,000,000 11,945,637
5.12%, due 8/20/99 (c).......... 1,000,000 992,881
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
COMMERCIAL PAPER (Continued)
7-Eleven Inc.
5.10%, due 7/28/99 (c).......... $15,000,000 $ 14,942,560
Southland Corp.
5.12%, due 8/16/99 (c).......... 350,000 347,708
TMI-1 Fuel Corp.
5.10%, due 7/12/99 (c).......... 15,301,000 15,277,129
Toys "R" Us, Inc.
5.10%, due 7/15/99 (c).......... 6,100,000 6,087,888
Yorkshire Building Society
4.84%, due 7/19/99 (c).......... 11,150,000 11,122,864
------------
Total Commercial Paper
(Cost $222,401,000)............. 222,401,000
------------
U.S. GOVERNMENT (3.8%)
United States Treasury Bills
4.56%, due 9/16/99 (c).......... 14,500,000 14,358,000
4.56%, due 9/23/99 (c).......... 7,000,000 6,925,081
------------
Total U.S. Government
(Cost $21,283,081).............. 21,283,081
------------
Total Short-Term Investments
(Cost $243,684,081)............. 243,684,081
------------
Total Investments
(Cost $489,820,452) (h)......... 99.4% 547,645,095(i)
Cash and Other Assets, Less
Liabilities..................... 0.6 3,261,035
---------- ----------
Net Assets....................... 100.0% $550,906,130
========== ============
</TABLE>
<TABLE>
<CAPTION>
FUTURES CONTRACTS (0.3%)
<S> <C> <C>
UNREALIZED
CONTRACTS APPRECIATION/
LONG (DEPRECIATION)(j)
----------------------------
AUSTRALIA (0.1%)
Australian All Ordinaries
Index September 1999....... 334 $ 375,686
HONG KONG (0.0%) (b)
Hong Kong Hang Seng Index
July 1999.................. 123 (128,412)
UNITED KINGDOM (0.0%) (b)
Great Britian FTSE 100 Index
September 1999............. 261 80,020
UNITED STATES (0.2%)
Standard & Poor's 500
September 1999............. 38 512,620
United States Treasury Bond
September 1999 (30 Year)... 216 (10,785)
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
69
<PAGE> 71
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
FUTURES CONTRACTS (CONTINUED)
UNREALIZED
CONTRACTS APPRECIATION/
LONG (DEPRECIATION)(j)
----------------------------
<S> <C> <C>
UNITED STATES (Continued)
United States Treasury Note
September 1999 (5 Year).... 507 $ 338,054
September 1999 (10 Year)... 356 234,877
-----------
Total Futures Contracts
(Settlement Value
$186,316,201).............. $ 1,402,060
===========
</TABLE>
- ------------
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) Segregated as collateral for futures contracts.
(d) Yankee bond.
(e) ADR--American Depository Receipt.
(f) The combined market value of U.S. Government and Federal Agencies
Investments and settlement value of U.S. Treasury futures contracts
represents 33.5% of net assets.
(g) The combined market value of common stocks and settlement value of Standard
& Poor's 500 Index futures contracts represents 32.5% of net assets.
(h) The cost for Federal income tax purposes is $489,913,309.
(i) At June 30, 1999, net unrealized appreciation was $57,731,786, 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 $67,165,030 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $9,433,244.
(j) Represents the difference between the value of the contracts at the time
they were opened and the value at June 30, 1999.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
70
<PAGE> 72
MAINSTAY
INSTITUTIONAL FUNDS INC.
ASSET MANAGER FUND
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost 489,820,452)........ $547,645,095
Cash................................... 31,429
Receivables:
Investment securities sold........... 25,937,778
Dividends and interest............... 2,588,711
Fund shares sold..................... 80,122
Variation margin receivable on futures
contracts............................ 600,847
------------
Total assets..................... 576,883,982
------------
LIABILITIES:
Payables:
Investment securities purchased...... 25,472,287
MainStay Management.................. 290,171
Fund shares redeemed................. 62,269
Custodian............................ 47,469
Transfer agent....................... 28,838
Accrued expenses....................... 76,818
------------
Total liabilities................ 25,977,852
------------
Net assets............................. $550,906,130
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per
share) 1 billion shares authorized
Institutional Class.................. $ 32,328
Institutional Service Class.......... 1,698
Additional paid-in capital............. 410,468,675
Accumulated undistributed net
investment income.................... 9,064,674
Accumulated undistributed net realized
gain on investments.................. 72,804,017
Net unrealized appreciation on
investments.......................... 59,226,703
Net unrealized depreciation on foreign
currency transactions................ (691,965)
------------
Net assets............................. $550,906,130
============
Institutional Class
Net assets applicable to outstanding
shares............................... $523,492,077
============
Shares of capital stock outstanding.... 32,327,798
============
Net asset value per share
outstanding.......................... $ 16.19
============
Institutional Service Class
Net assets applicable to outstanding
shares............................... $ 27,414,053
============
Shares of capital stock outstanding.... 1,698,334
============
Net asset value per share
outstanding.......................... $ 16.14
============
<CAPTION>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)........................ $ 1,217,146
Interest............................. 9,782,967
------------
Total income..................... 11,000,113
------------
Expenses:
Management........................... 1,740,797
Transfer agent....................... 193,383
Custodian............................ 59,235
Professional......................... 34,999
Service.............................. 31,282
Shareholder communication............ 24,119
Registration......................... 17,625
Directors............................ 5,958
Miscellaneous........................ 16,782
------------
Total expenses................... 2,124,180
------------
Net investment income.................. 8,875,933
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gain from:
Security transactions................ 11,977,042
Futures transactions................. 8,297,896
Foreign currency transactions........ 56,427
------------
Net realized gain on investments and
foreign currency transactions........ 20,331,365
------------
Net change in unrealized appreciation
on investments:
Security transactions................ (1,239,006)
Futures transactions................. 1,829,544
Foreign currency transactions........ (1,182,040)
------------
Net unrealized loss on investments and
foreign currency transactions........ (591,502)
------------
Net realized and unrealized gain on
investments and foreign currency
transactions......................... 19,739,863
------------
Net increase in net assets resulting
from operations...................... $ 28,615,796
============
</TABLE>
- ------------
(a) Dividends recorded net of foreign withholding taxes of $24,694.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
71
<PAGE> 73
ASSET MANAGER FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999, (Unaudited) and the year ended December
31, 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income................................... $ 8,875,933 $ 12,613,417
Net realized gain on investments........................ 20,274,938 89,352,468
Net realized gain on foreign currency transactions...... 56,427 161,741
Net change in unrealized appreciation on investments.... 590,538 (11,474,027)
Net change in unrealized appreciation on foreign
currency transactions.................................. (1,182,040) 472,784
-------------- --------------
Net increase in net assets resulting from operations.... 28,615,796 91,126,383
-------------- --------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class................................... -- (12,168,160)
Institutional Service Class........................... -- (369,777)
From net realized gain on investments:
Institutional Class................................... -- (61,223,905)
Institutional Service Class........................... -- (2,048,254)
-------------- --------------
Total dividends and distributions to shareholders... -- (75,810,096)
-------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 30,147,703 62,917,440
Institutional Service Class........................... 11,044,618 6,958,317
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... -- 73,392,054
Institutional Service Class........................... -- 2,416,225
-------------- --------------
41,192,321 145,684,036
Cost of shares redeemed:
Institutional Class................................... (34,348,850) (65,656,399)
Institutional Service Class........................... (1,854,930) (2,755,471)
-------------- --------------
Increase in net assets derived from capital share
transactions......................................... 4,988,541 77,272,166
-------------- --------------
Net increase in net assets............................ 33,604,337 92,588,453
NET ASSETS:
Beginning of period....................................... 517,301,793 424,713,340
-------------- --------------
End of period............................................. $ 550,906,130 $ 517,301,793
============== ==============
Accumulated undistributed net investment income at end of
period.................................................. $ 9,064,674 $ 188,741
============== ==============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
72
<PAGE> 74
(THIS PAGE INTENTIONALLY LEFT BLANK)
73
<PAGE> 75
ASSET MANAGER FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999* DECEMBER 31, 1998
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period..................... $ 15.36 $ 15.33 $ 14.83 $ 14.81
---------- ---------- ---------- ----------
Net investment income...................................... 0.26 0.23 0.43 0.39
Net realized and unrealized gain (loss) on investments..... 0.60 0.61 2.70 2.69
Net realized and unrealized gain (loss) on foreign currency
transactions............................................. (0.03) (0.03) 0.02 0.02
---------- ---------- ---------- ----------
Total from investment operations........................... 0.83 0.81 3.15 3.10
---------- ---------- ---------- ----------
Less dividends and distributions:
From net investment income................................. -- -- (0.43) (0.39)
From net realized gain on investments...................... -- -- (2.19) (2.19)
In excess of net realized gain on investments.............. -- -- -- --
---------- ---------- ---------- ----------
Total dividends and distributions.......................... -- -- (2.62) (2.58)
---------- ---------- ---------- ----------
Net asset value at end of period........................... $ 16.19 $ 16.14 $ 15.36 $ 15.33
========== ========== ========== ==========
Total investment return.................................... 5.40%(b) 5.28%(b) 21.31% 21.00%
Ratios (to average net assets)/Supplemental Data:
Net investment income.................................... 3.33%+ 3.08%+ 2.64% 2.39%
Net expenses............................................. 0.78%+ 1.03%+ 0.80% 1.05%
Expenses (before reimbursement).......................... 0.78%+ 1.03%+ 0.80% 1.05%
Portfolio turnover rate.................................... 4% 4% 55% 55%
Net assets at end of period (in 000's)..................... $ 523,492 $ 27,414 $ 500,449 $ 16,853
</TABLE>
- ------------
* Unaudited.
+ Annualized.
(a) Less than one cent per share.
(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.
74
<PAGE> 76
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- ------------- -------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994
----------------------------- ----------------------------- ----------------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 13.19 $ 13.19 $ 11.79 $ 11.79 $ 10.67 $ 10.67 $ 11.67
---------- ---------- ---------- ---------- ---------- ---------- ----------
0.34 0.31 0.38 0.34 0.48 0.47 0.45
3.15 3.13 1.53 1.53 2.39 2.39 (0.55)
(0.00)(a) (0.00)(a) (0.00)(a) (0.00)(a) (0.01) (0.01) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
3.49 3.44 1.91 1.87 2.86 2.85 (0.10)
---------- ---------- ---------- ---------- ---------- ---------- ----------
(0.34) (0.31) (0.38) (0.34) (0.48) (0.47) (0.45)
(1.51) (1.51) (0.13) (0.13) (1.18) (1.18) (0.42)
-- -- -- -- (0.08) (0.08) (0.03)
---------- ---------- ---------- ---------- ---------- ---------- ----------
(1.85) (1.82) (0.51) (0.47) (1.74) (1.73) (0.90)
---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 14.83 $ 14.81 $ 13.19 $ 13.19 $ 11.79 $ 11.79 $ 10.67
========== ========== ========== ========== ========== ========== ==========
26.69% 26.30% 16.16% 15.89% 26.81% 26.70% (0.86%)
2.27% 2.02% 2.99% 2.74% 4.03% 3.78% 3.63%
0.76% 1.01% 0.70% 0.95% 0.70% 0.95% 0.70%
0.76% 1.01% 0.75% 1.00% 0.77% 1.02% 0.75%
19% 19% 103% 103% 261% 261% 128%
$ 414,824 $ 9,889 $ 323,790 $ 5,508 $ 273,351 $ 3,536 $ 229,079
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
75
<PAGE> 77
VALUE EQUITY FUND
- --------------------------------------------------------------------------------
During the first six months of 1999, continued strength in the U.S. economy and
a visible recovery in Asian markets underscored the earnings prospects for most
value sectors. Volatility continued, fueled by concerns about inflation, rising
interest rates, and whether large-capitalization stocks with record-high
valuations could appreciate further. As a result, value stocks--with record-low
valuations and improving fundamentals--outperformed the broad market during
periods of increased volatility. At the end of June, the Federal Reserve Board's
shift from a tightening bias to a neutral stance sent most sectors of the equity
markets higher.
RESULTS AHEAD OF THE MARKET
For the first half of 1999, the MainStay Institutional Value Equity Fund
returned 15.31% for Institutional Class shares and 15.14% for Service Class
shares. All share classes strongly outperformed the 10.93% return of the average
Lipper(1) growth & income fund for the six months ended June 30, 1999.
The MainStay Institutional Value Equity Fund was able to perform strongly as a
result of its overweighted positions in traditional value sectors, including
basic materials, energy, and consumer cyclicals--all of which showed impressive
advances as Asian markets recovered and commodity prices increased.
The following stocks led the Fund's performance. Adaptec, a manufacturer of
computer data-flow systems, benefited from expense reductions and asset
restructuring while demand for its products remained strong. Union Pacific
Resources, an oil and gas company, advanced with rising oil prices, but also
benefited from restructuring and debt reductions. Nippon Telegraph & Telephone
shares rose with the Japanese economic recovery, while management focused on
increasing shareholder value.
Other strong performers for the Fund included United Healthcare, which had
positive earnings momentum as it actively repurchased stock, and Mark IV
Industries, a leading industrial and auto parts company that sought to improve
revenues and returns by shedding capital-intensive divisions and focusing on its
core business. Georgia-Pacific also showed positive performance during the first
half of the year, with higher volume, robust pricing, and efficient operations
that helped lower costs.
Weak performers included Service Corp. International, a leading funeral services
company, which the Fund purchased after a sharp price decline. Despite
cost-cutting initiatives that should enhance future earnings, the stock did not
perform well during the reporting period. Shaw Industries, a floor covering
company that is leaving its retail business to focus on manufacturing, suffered
as the market adjusted to its new strategy. Philip Morris, which we believe
continues to trade at a significant discount to asset value, suffered from
continuing litigation concerns. Even so, we believe the outlook for the company
is improving.
SOLID STRATEGY, SHIFTING HOLDINGS
The MainStay Institutional Value Equity Fund remains overweighted in traditional
value sectors, with a commitment to securities that appear to be priced well
below their asset value or earnings potential and exhibit a catalyst or stimulus
for positive change.
In keeping with this core strategy, during the first half of 1999, the Fund
purchased shares of Seagate Technology, a data communications and management
company. Seagate has a clean balance sheet, strong earnings momentum, and is
using excess cash to aggressively repurchase shares. Another stock the Fund
purchased was Smurfit-Stone Container, a paper and packaging company that may
benefit from the Asian market turnaround. The company is reducing costs and
selling noncore assets and the stock has rebounded from its depressed
valuations, which had a positive impact on the Fund's performance.
- --------------------------------------------------------------------------------
(1) Lipper, 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.
76
<PAGE> 78
The Fund also had some significant sales during the first half of 1999. When
telephone service provider US West Inc. faced disappointing earnings, the Fund
sold the stock at a profit. We also sold Bank One Corp.'s stock at a profit when
it reached the Fund's target valuation. The Fund also benefited when LucasVarity
PLC was taken over by TRW, and we used the proceeds of the sale of LucasVarity
shares to purchase additional securities for the Fund.
LOOKING AHEAD
The Federal Reserve Board's decision to remain neutral on interest rates bodes
well for a summer stock market rally, but the pace of corporate earnings will
remain the key to assessing value. We believe the recent price corrections in
selective technology and financial stocks have opened some new research
opportunities and may lead to new investments in these industries. If the Asian
recovery continues, we may consider seeking more opportunities in the
commodity-driven areas of traditional value sectors. The Fund will continue to
seek maximum long-term total return from a combination of capital growth and
income.
Denis P. Laplaige
Richard A. Rosen
Portfolio Managers
MacKay Shields Financial Corporation
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
77
<PAGE> 79
- --------------------------------------------------------------------------------
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
VALUE EQUITY FUND VS
S&P 500 INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
VALUE EQUITY FUND S&P 500 INDEX
----------------- -------------
<S> <C> <C>
12/31/90 10000.00 10000.00
3/31/91 11550.00 11453.00
6/30/91 11830.00 11427.00
9/30/91 12870.00 12038.00
12/31/91 13660.00 13047.00
3/31/92 14695.00 12717.00
6/30/92 14637.00 12958.00
9/30/92 14847.00 13366.00
12/31/92 16489.00 14040.00
3/31/93 17465.00 14654.00
6/30/93 17670.00 14726.00
9/30/93 18680.00 15105.00
12/31/93 18945.00 15456.00
3/31/94 18976.00 14870.00
6/30/94 19068.00 14933.00
9/30/94 20015.00 15663.00
12/31/94 19177.00 15660.00
3/31/95 20866.00 17185.00
6/30/95 22191.00 18826.00
9/30/95 23632.00 20323.00
12/31/95 24819.00 21546.00
3/31/96 26401.00 22703.00
6/30/96 26728.00 23723.00
9/30/96 27605.00 24456.00
12/31/96 30380.00 26493.00
3/31/97 30208.00 27203.00
6/30/97 33749.00 31955.00
9/30/97 36525.00 34345.00
12/31/97 37255.00 35331.00
3/31/98 41149.00 40260.00
6/30/98 38689.00 41588.00
9/30/98 32040.00 37450.00
12/31/98 34238.00 45427.00
6/30/99 39478.00 51061.00
</TABLE>
THESE GRAPHS ASSUME A $10,000 INVESTMENT MADE ON 1/2/91.
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
VALUE EQUITY FUND VS
S&P 500 INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<S> <C> <C>
12/31/90 10000.00 10000.00
3/31/91 11550.00 11453.00
6/30/91 11830.00 11427.00
9/30/91 12870.00 12038.00
12/31/91 13660.00 13047.00
3/31/92 14695.00 12717.00
6/30/92 14637.00 12958.00
9/30/92 14847.00 13366.00
12/31/92 16489.00 14040.00
3/31/93 17465.00 14654.00
6/30/93 17670.00 14726.00
9/30/93 18680.00 15105.00
12/31/93 18945.00 15456.00
3/31/94 18976.00 14870.00
6/30/94 19068.00 14933.00
9/30/94 20015.00 15663.00
12/31/94 19177.00 15660.00
3/31/95 20883.00 17185.00
6/30/95 22207.00 18826.00
9/30/95 23632.00 20323.00
12/31/95 24799.00 21546.00
3/31/96 26363.00 22703.00
6/30/96 26672.00 23723.00
9/30/96 27532.00 24456.00
12/31/96 30279.00 26493.00
3/31/97 30088.00 27203.00
6/30/97 33584.00 31955.00
9/30/97 36335.00 34345.00
12/31/97 37024.00 35331.00
3/31/98 40874.00 40260.00
6/30/98 38406.00 41588.00
9/30/98 31771.00 37450.00
12/31/98 33951.00 45427.00
6/30/99 39090.00 51061.00
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF JUNE 30, 1999 AS OF JUNE 30, 1999
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
YEAR TO DATE ONE YEAR FIVE YEAR SINCE INCEPTION
- ------------------------------------------------------------------------------------------------------------------
Value Equity Fund Institutional Class 15.31% 2.04% 15.67% 17.53%
Value Equity Fund Service Class(+) 15.14% 1.78% 15.44% 17.39%
Average Lipper Growth & Income Fund 10.93% 14.49% 21.72% 17.93%
S&P 500 Index 12.39% 22.77% 27.87% 21.53%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
36.60 20.71 14.90 1.22 29.42 22.41 22.63 -8.1
<CAPTION>
1999 AS
OF
6/30/99
-------
<S> <C>
15.31
</TABLE>
- --------------------------------------------------------------------------------
* 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 gain distributions and
dividends, and, for the Service Class shares, include the service fee of .25%
on an annualized basis of the average daily net asset value of the Service
Class shares.
+ 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 12/31/94. Performance figures for these two
Classes after this date will vary based on differences in their expense
structures.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO CURRENT MARKET
VOLATILITY, PERFORMANCE MAY BE LESS THAN SHOWN. 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 and the Service Class shares are sold with no
sales charge or contingent deferred sales charge. The Service Class shares,
first offered 1/1/95, are subject to an annual shareholder service fee of
.25%.
78
<PAGE> 80
MAINSTAY
INSTITUTIONAL FUNDS INC.
VALUE EQUITY FUND
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
COMMON STOCKS (96.8%)+
SHARES VALUE
-----------------------
<S> <C> <C>
ALUMINUM (1.7%)
Reynolds Metals Co. ............. 234,800 $ 13,853,200
------------
AUTO PARTS & EQUIPMENT (1.4%)
Mark IV Industries, Inc. ........ 561,500 11,861,687
------------
BANKS (4.1%)
Bank of America Corp. ........... 242,120 17,750,423
Washington Mutual, Inc. ......... 448,300 15,858,612
------------
33,609,035
------------
BUILDING MATERIALS (1.1%)
Sherwin-Williams Co. (The)....... 312,200 8,663,550
------------
CHEMICALS (1.4%)
IMC Global Inc. ................. 621,260 10,949,708
Lyondell Chemical Co. ........... 40,500 835,312
------------
11,785,020
------------
COMPUTER SYSTEMS (1.3%)
Seagate Technology, Inc. (a)..... 426,100 10,918,812
------------
COMPUTERS--NETWORKING (2.2%)
Adaptec Inc. (a)................. 498,900 17,617,406
------------
CONTAINERS--METAL & GLASS (1.6%)
Owens-Illinois Inc. (a).......... 410,300 13,411,681
------------
CONTAINERS--PAPER (2.8%)
Smurfit-Stone Container Corp.
(a)............................. 714,900 14,700,131
Temple-Inland Inc. .............. 120,200 8,203,650
------------
22,903,781
------------
ELECTRIC POWER COMPANIES (7.5%)
DTE Energy Co. .................. 276,200 11,048,000
Energy East Corp. ............... 364,000 9,464,000
Illinova Corp. .................. 456,800 12,447,800
Niagara Mohawk Holdings, Inc.
(a)............................. 749,500 12,038,844
Texas Utilities Co. ............. 400,000 16,500,000
------------
61,498,644
------------
ELECTRICAL EQUIPMENT (1.5%)
Honeywell Inc. .................. 103,000 11,935,125
------------
ENGINEERING & CONSTRUCTION (1.6%)
Fluor Corp. ..................... 325,100 13,166,550
------------
FINANCIAL--MISCELLANEOUS (4.8%)
Citigroup Inc. .................. 357,900 17,000,250
Equitable Cos., Inc. (The)....... 210,100 14,076,700
SLM Holding Corp. ............... 170,000 7,788,125
------------
38,865,075
------------
FOOD (1.0%)
ConAgra, Inc. ................... 308,100 8,203,162
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-----------------------
<S> <C> <C>
HEALTH CARE--HMOs (3.0%)
United HealthCare Corp. ......... 397,200 $ 24,874,650
------------
HEAVY DUTY TRUCKS & PARTS (0.9%)
Dana Corp. ...................... 165,100 7,604,919
------------
HOTEL/MOTEL (2.1%)
Harrah's Entertainment, Inc.
(a)............................. 764,600 16,821,200
------------
INSURANCE (9.2%)
Allstate Corp. (The)............. 514,442 18,455,607
Chubb Corp. ..................... 207,800 14,442,100
CIGNA Corp. ..................... 185,000 16,465,000
Conseco, Inc. ................... 363,100 11,051,856
MGIC Investment Corp. ........... 311,400 14,596,875
------------
75,011,438
------------
LEISURE TIME (0.4%)
Callaway Golf Co. ............... 200,900 2,938,163
------------
MACHINERY--DIVERSIFIED (2.6%)
American Standard Cos. Inc.
(a)............................. 451,600 21,394,550
------------
NATURAL GAS DISTRIBUTORS & PIPELINES (4.6%)
Coastal Corp. (The).............. 476,200 19,048,000
Consolidated Natural Gas Co. .... 139,600 8,480,700
El Paso Energy Corp. ............ 286,500 10,081,219
------------
37,609,919
------------
OIL & GAS SERVICES (16.2%)
Kerr-McGee Corp. ................ 331,483 16,636,303
Noble Affiliates, Inc. .......... 510,600 14,392,538
Ocean Energy, Inc. (a)........... 1,228,700 11,826,237
Santa Fe Synder Corp. (a)........ 887,300 6,765,663
Texaco Inc. ..................... 260,800 16,300,000
Tosco Corp. ..................... 639,000 16,574,063
Union Pacific Resources Group
Inc. ........................... 1,327,800 21,659,737
Unocal Corp. .................... 431,800 17,110,075
Valero Energy Corp. ............. 531,600 11,396,175
------------
132,660,791
------------
PAPER & FOREST PRODUCTS (3.1%)
Bowater Inc. .................... 105,300 4,975,425
Georgia-Pacific Corp. ........... 237,400 11,246,825
International Paper Co. ......... 174,400 8,807,200
------------
25,029,450
------------
POLLUTION CONTROL (1.8%)
Browning-Ferris Industries
Inc. ........................... 347,600 14,946,800
------------
RETAIL (4.9%)
Federated Department Stores, Inc.
(a)............................. 336,300 17,802,881
Kmart Corp. (a).................. 665,100 10,932,581
Payless ShoeSource, Inc. (a)..... 127,000 6,794,500
Saks Inc. (a).................... 162,200 4,683,525
------------
40,213,487
------------
</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> 81
VALUE EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
SPECIALIZED SERVICES (1.4%)
Service Corp. International...... 614,000 $ 11,819,500
------------
STEEL (2.3%)
UCAR International Inc. (a)...... 283,400 7,155,850
USX Corp. ....................... 416,400 11,242,800
------------
18,398,650
------------
TELECOMMUNICATIONS--LONG DISTANCE (1.7%)
AT&T Corp. ...................... 255,000 14,232,188
------------
TELEPHONE (2.0%)
Nippon Telegraph & Telephone
Corp. ADR (b)(c)................ 257,200 16,107,150
------------
TEXTILES--APPAREL MANUFACTURERS (1.5%)
Liz Claiborne, Inc. ............. 344,100 12,559,650
------------
TEXTILES--HOME FURNISHINGS (0.9%)
Shaw Industries, Inc. (a)........ 449,000 7,408,500
------------
TOBACCO (3.1%)
Philip Morris Cos. Inc. ......... 584,600 23,493,613
R.J. Reynolds Tobacco Holdings,
Inc. (a)........................ 52,900 1,666,350
------------
25,159,963
------------
TOYS (1.1%)
Mattel, Inc. .................... 350,200 9,258,413
------------
Total Common Stocks
(Cost $701,283,282)............. 792,342,109
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------
SHORT-TERM
INVESTMENTS (2.9%)
<S> <C> <C>
COMMERCIAL PAPER (2.9%)
KFW International Finance
5.70%, due 07/01/99............. $14,125,000 $ 14,125,000
Salomon Smith Barney Holdings
Inc.
5.00%, due 07/21/99............. 10,000,000 9,972,168
------------
Total Short-Term Investments
(Cost $24,097,168).............. 24,097,168
------------
Total Investments
(Cost $725,380,450) (d)......... 99.7% 816,439,277(e)
Cash and Other Assets,
Less Liabilities................ 0.3 2,441,603
---------- ------------
Net Assets....................... 100.0% $818,880,880
========== ============
</TABLE>
- ------------
(a) Non-income producing security.
(b) ADR--American Depository Receipt.
(c) Segregated as collateral for foreign currency forward contract.
(d) The cost for Federal income tax purposes is $726,465,017.
(e) At June 30, 1999, net unrealized appreciation was $89,974,260, 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 $129,764,671 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $39,790,411.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
80
<PAGE> 82
MAINSTAY
INSTITUTIONAL FUNDS INC.
VALUE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $725,380,450)..... $ 816,439,277
Cash............................... 3,914
Receivables:
Investment securities sold......... 18,565,438
Dividends.......................... 1,697,191
Fund shares sold................... 65,776
Unrealized appreciation on foreign
currency forward contract.......... 65,725
--------------
Total assets................... 836,837,321
--------------
LIABILITIES:
Payables:
Investment securities purchased.... 17,017,856
MainStay Management................ 573,008
Fund shares redeemed............... 183,881
Transfer agent..................... 45,463
Custodian.......................... 27,267
Accrued expenses..................... 108,966
--------------
Total liabilities.............. 17,956,441
--------------
Net assets........................... $ 818,880,880
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per
share) 1 billion shares authorized
Institutional Class................ $ 59,702
Institutional Service Class........ 697
Additional paid-in capital........... 752,563,167
Accumulated undistributed net
investment income.................. 3,827,584
Accumulated net realized loss on
investments........................ (28,694,822)
Net unrealized appreciation on
investments........................ 91,058,827
Net unrealized appreciation on
foreign currency forward
contract........................... 65,725
--------------
Net assets........................... $ 818,880,880
==============
Institutional Class
Net assets applicable to outstanding
shares............................. $ 809,442,648
==============
Shares of capital stock
outstanding........................ 59,701,702
==============
Net asset value per share
outstanding........................ $ 13.56
==============
Institutional Service Class
Net assets applicable to outstanding
shares............................. $ 9,438,232
==============
Shares of capital stock
outstanding........................ 697,141
==============
Net asset value per share
outstanding........................ $ 13.54
==============
<CAPTION>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<S> <C>
INVESTMENT INCOME:
Income:
Dividends.......................... $ 7,125,951
Interest........................... 519,544
--------------
Total income................... 7,645,495
--------------
Expenses:
Management......................... 3,350,546
Transfer agent..................... 300,574
Professional....................... 44,473
Custodian.......................... 38,170
Shareholder communication.......... 36,057
Registration....................... 17,879
Service............................ 11,320
Directors.......................... 9,033
Miscellaneous...................... 17,015
--------------
Total expenses................. 3,825,067
--------------
Net investment income................ 3,820,428
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
FORWARD CONTRACT TRANSACTIONS:
Net realized gain (loss) from:
Security transactions.............. (20,710,738)
Foreign currency forward contract
transactions..................... 604,480
--------------
Net realized loss on investments and
foreign currency forward contract
transactions....................... (20,106,258)
--------------
Net change in unrealized depreciation
on investments:
Security transactions.............. 126,061,573
Foreign currency forward
contract......................... 268,604
--------------
Net unrealized gain on investments
and foreign currency forward
contract........................... 126,330,177
--------------
Net realized and unrealized gain on
investments........................ 106,223,919
--------------
Net increase in net assets resulting
from operations.................... $ 110,044,347
==============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
81
<PAGE> 83
VALUE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited) and the year ended December
31, 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 3,820,428 $ 9,720,362
Net realized gain (loss) on investments................. (20,710,738) 129,651,994
Net realized gain on foreign currency forward
contract............................................... 604,480 --
Net change in unrealized appreciation (depreciation) on
investments............................................ 126,061,573 (210,699,021)
Net change in unrealized depreciation on foreign
currency forward contract.............................. 268,604 (202,879)
-------------- --------------
Net increase (decrease) in net assets resulting from
operations............................................. 110,044,347 (71,529,544)
-------------- --------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class................................... -- (9,628,522)
Institutional Service Class........................... -- (90,474)
From net realized gain on investments:
Institutional Class................................... -- (153,210,452)
Institutional Service Class........................... -- (1,867,811)
Distribution in excess of net realized gain on
Investments:
Institutional Class................................... -- (8,485,501)
Institutional Service Class........................... -- (103,063)
-------------- --------------
Total dividends and distributions to shareholders... -- (173,385,823)
-------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 34,254,834 85,177,154
Institutional Service Class........................... 596,131 1,986,558
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... -- 171,050,165
Institutional Service Class........................... -- 2,062,197
-------------- --------------
34,850,965 260,276,074
Cost of shares redeemed:
Institutional Class................................... (134,588,575) (197,456,599)
Institutional Service Class........................... (2,158,534) (2,401,236)
-------------- --------------
Increase (decrease) in net assets derived from capital
share transactions................................... (101,896,144) 60,418,239
-------------- --------------
Net increase (decrease) in net assets................. 8,148,203 (184,497,128)
NET ASSETS:
Beginning of period....................................... 810,732,677 995,229,805
-------------- --------------
End of period............................................. $ 818,880,880 $ 810,732,677
============== ==============
Accumulated undistributed net investment income at end of
period.................................................. $ 3,827,584 $ 7,156
============== ==============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
82
<PAGE> 84
(THIS PAGE INTENTIONALLY LEFT BLANK)
83
<PAGE> 85
VALUE EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999* DECEMBER 31, 1998
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period..................... $ 11.76 $ 11.76 $ 16.36 $ 16.35
---------- ---------- ---------- ----------
Net investment income...................................... 0.06 0.03 0.18 0.14
Net realized and unrealized gain (loss) on investments..... 1.74 1.75 (1.58) (1.57)
---------- ---------- ---------- ----------
Total from investment operations........................... 1.80 1.78 (1.40) (1.43)
---------- ---------- ---------- ----------
Less dividends and distributions:
From net investment income................................. -- -- (0.18) (0.14)
From net realized gain on investments...................... -- -- (2.90) (2.90)
In excess of net realized gain on investments.............. -- -- (0.12) (0.12)
---------- ---------- ---------- ----------
Total dividends and distributions.......................... -- -- (3.20) (3.16)
---------- ---------- ---------- ----------
Net asset value at end of period........................... $ 13.56 $ 13.54 $ 11.76 $ 11.76
========== ========== ========== ==========
Total investment return.................................... 15.31%(a) 15.14%(a) (8.10%) (8.30%)
Ratios (to average net assets)/Supplemental Data:
Net investment income.................................... 0.97%+ 0.72%+ 1.04% 0.79%
Net expenses............................................. 0.97%+ 1.22%+ 0.98% 1.23%
Portfolio turnover rate.................................... 31% 31% 76% 76%
Net assets at end of period (in 000's)..................... $ 809,443 $ 9,438 $ 800,993 $ 9,740
</TABLE>
- ------------
* Unaudited.
+ Annualized.
(a) 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> 86
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- ------------- -------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994
----------------------------- ----------------------------- ----------------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 15.87 $ 15.85 $ 14.43 $ 14.43 $ 11.58 $ 11.58 $ 12.40
---------- ---------- ---------- ---------- ---------- ---------- ----------
0.23 0.16 0.25 0.23 0.21 0.20 0.17
3.31 3.32 2.98 2.96 3.20 3.20 (0.02)
---------- ---------- ---------- ---------- ---------- ---------- ----------
3.54 3.48 3.23 3.19 3.41 3.40 0.15
---------- ---------- ---------- ---------- ---------- ---------- ----------
(0.23) (0.16) (0.25) (0.23) (0.21) (0.20) (0.17)
(2.82) (2.82) (1.54) (1.54) (0.35) (0.35) (0.80)
-- -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
(3.05) (2.98) (1.79) (1.77) (0.56) (0.55) (0.97)
---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 16.36 $ 16.35 $ 15.87 $ 15.85 $ 14.43 $ 14.43 $ 11.58
========== ========== ========== ========== ========== ========== ==========
22.63% 22.28% 22.41% 22.10% 29.42% 29.32% 1.22%
1.30% 1.05% 1.70% 1.45% 1.64% 1.39% 1.50%
0.93% 1.18% 0.92% 1.17% 0.93% 1.18% 0.92%
66% 66% 50% 50% 51% 51% 43%
$ 984,220 $ 11,010 $ 821,725 $ 14,752 $ 603,749 $ 3,213 $ 396,537
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
85
<PAGE> 87
BOND FUND
- --------------------------------------------------------------------------------
The bond market saw a reversal of trends between the last half of 1998 and the
first half of 1999. In 1998, the Federal Reserve Board and worldwide central
banks lowered interest rates to bring the global financial crisis under control.
As the new year began, market participants realized that the Federal Reserve
Board's easing policy would not continue. Many investors believed that another
world crisis was no longer imminent and long- term interest rates rose
approximately 0.50% in the first quarter and another 0.50% in the second
quarter.
During the first half of the year, the strength of the U.S. economy took center
stage. The consumer-led boom was fueled by large tax refunds, the wealth created
by a surging stock market, and excess cash from refinancing mortgages. Overseas,
growth seemed to begin to pick up during the first quarter, as the rally in
foreign stock markets signaled an expected expansion of worldwide growth. To
begin to slow the U.S. economy, the Federal Reserve Board increased the targeted
federal funds rate 0.25% on June 30, 1999.
FUND PERFORMANCE
During the first six months of 1999, the MainStay Institutional Bond Fund
returned -2.22% for Institutional Class shares and -2.43% for Service Class
shares. This performance trailed the -1.82% return of the average Lipper(1)
intermediate U.S. government fund.
PORTFOLIO STRATEGY
During the first quarter, the average maturity of the Fund's portfolio was in
line with the bond market's average maturity--approximately seven years--or
slightly shorter. Early in the second quarter, we positioned the Fund very
defensively by shortening duration, which helped performance as long-bond yields
rose to 6%. This strategy had a positive impact on the Fund's performance for
the first half of the year.
The agency market continued its quest to be the heir apparent to the diminishing
Treasury market. Liquidity and size continued to expand among agency securities,
leading to an actively traded agency market. Agency yield spreads widened
relative to Treasury securities during the second quarter. When we believed the
supply-induced widening had stabilized, we added several agency security
positions to the portfolio during the reporting period.
MORTGAGED-BACKED AND ASSET-BACKED SECURITIES
During the first quarter of 1999, residential and commercial mortgage-backed
bonds and asset-backed securities all performed well, contributing positively to
the Fund's relative performance as yield spreads between mortgage-backed and
Treasury securities tightened. As interest rates increased in the second
quarter, however, mortgage-backed securities tended to have longer maturities
and less-favorable risk profiles.
To help manage this concern, the Fund favored securities that were backed by
commercial mortgages and were in the highest rating category. We believe these
securities offer investors higher yields and strong credit characteristics and
should provide attractive returns going forward. We continued to add
asset-backed securities to the Fund's portfolio in the second quarter, as yield
spreads between asset-backed securities and Treasuries continued to approach
their widest levels in a year.
CORPORATE BONDS
Through April 1999, corporate bonds showed relatively strong performance. The
Federal Reserve's May announcement of a bias toward raising interest rates,
however, had a definite negative effect. Higher interest rates mean higher
borrowing costs, making it more difficult for corporations to meet their
earnings projections. Bond prices declined as the differences in yields between
corporate bonds and Treasury securities became increasingly wide. Given the
traditional
- --------------------------------------------------------------------------------
(1) Lipper, 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.
86
<PAGE> 88
third-quarter weakness of corporate bonds, at the end of June, the Fund was
underweighted in the sector, with a cautiously balanced mix of defensive and
cyclical bonds, as well as liquid and older issues.
LOOKING FORWARD
Rising interest rates, fewer mortgage-refinancing opportunities, and a reduced
flow of individual tax refunds may begin to cool the expanding economy in the
coming months, bringing about the effect the Federal Reserve Board is seeking.
We continue to see value in liquidity and have positioned the Fund in very
actively traded securities.
Whatever the economy and the markets may bring, the Fund will continue to seek
to maximize total return, consistent with liquidity, low risk to principal, and
investment in debt securities.
Edward J. Munshower
Christopher Harms
Portfolio Managers
MacKay Shields Financial Corporation
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
87
<PAGE> 89
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL BOND FUND VS LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND INDEX INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
LEHMAN BROTHERS GOV'T/CORP BOND
BOND FUND INDEX
--------- -------------------------------
<S> <C> <C>
12/31/90 10000.00 10000.00
3/31/91 10240.00 10270.00
6/30/91 10350.00 10425.00
9/30/91 10960.00 11025.00
12/31/91 11400.00 11613.00
3/31/92 11264.00 11439.00
6/30/92 11647.00 11902.00
9/30/92 12063.00 12484.00
12/31/92 12128.00 12494.00
3/31/93 12627.00 13075.00
6/30/93 12961.00 13468.00
9/30/93 13342.00 13913.00
12/31/93 13310.00 13873.00
3/31/94 12949.00 13439.00
6/30/94 12776.00 13272.00
9/30/94 12829.00 13338.00
12/31/94 12869.00 13388.00
3/31/95 13460.00 14055.00
6/30/95 14267.00 14967.00
9/30/95 14527.00 15253.00
12/31/95 15170.00 15963.00
3/31/96 14800.00 15590.00
6/30/96 14893.00 15663.00
9/30/96 15124.00 15939.00
12/31/96 15595.00 16426.00
3/31/97 15497.00 16285.00
6/30/97 16038.00 16878.00
9/30/97 16546.00 17469.00
12/31/97 16931.00 18029.00
3/31/98 17175.00 18303.00
6/30/98 17576.00 18783.00
9/30/98 18308.00 19713.00
12/31/98 18273.00 19738.00
6/30/99 17867.00 19287.00
</TABLE>
THESE GRAPHS ASSUME A $10,000 INVESTMENT MADE ON 1/2/91.
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL BOND FUND VS LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND INDEX SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<S> <C> <C>
12/31/90 10000.00 10000.00
3/31/91 10240.00 10270.00
6/30/91 10350.00 10425.00
9/30/91 10960.00 11025.00
12/31/91 11400.00 11613.00
3/31/92 11264.00 11439.00
6/30/92 11647.00 11902.00
9/30/92 12063.00 12484.00
12/31/92 12128.00 12494.00
3/31/93 12627.00 13075.00
6/30/93 12961.00 13468.00
9/30/93 13342.00 13913.00
12/31/93 13310.00 13873.00
3/31/94 12949.00 13439.00
6/30/94 12776.00 13272.00
9/30/94 12829.00 13338.00
12/31/94 12869.00 13388.00
3/31/95 13446.00 14055.00
6/30/95 14253.00 14967.00
9/30/95 14512.00 15253.00
12/31/95 15128.00 15963.00
3/31/96 14759.00 15590.00
6/30/96 14836.00 15663.00
9/30/96 15052.00 15939.00
12/31/96 15525.00 16426.00
3/31/97 15394.00 16285.00
6/30/97 15934.00 16878.00
9/30/97 16425.00 17469.00
12/31/97 16799.00 18029.00
3/31/98 17025.00 18303.00
6/30/98 17424.00 18783.00
9/30/98 18136.00 19713.00
12/31/98 18099.00 19738.00
6/30/99 17659.00 19287.00
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN* AS OF
PERFORMANCE AS OF JUNE 30, 1999 JUNE 30, 1999
- --------------------------------------------------------------------------------------------------------------
YEAR TO DATE ONE YEAR FIVE YEAR SINCE INCEPTION
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bond Fund Institutional Class -2.22% 1.66% 6.94% 7.07%
Bond Fund Service Class(+) -2.43% 1.35% 6.69% 6.92%
Average Lipper Intermediate U.S.
Government Fund -1.82% 2.30% 6.38% 6.56%
Lehman Brothers Gov't/Corporate Bond Index -2.28% 2.70% 7.76% 8.03%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
14.00 6.39 9.74 -3.31 17.88 2.80 8.57 7.93
<CAPTION>
1999 AS
OF
6/30/99
-------
<S> <C>
-2.22
</TABLE>
- --------------------------------------------------------------------------------
* 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 gain distributions and
dividends, and, for the Service Class shares, include the service fee of .25%
on an annualized basis of the average daily net asset value of the Service
Class shares.
+ 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 12/31/94. Performance figures for these two
Classes after this date will vary based on differences in their expense
structures.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO CURRENT MARKET
VOLATILITY, PERFORMANCE MAY BE LESS THAN SHOWN. 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 and the Service Class shares are sold with no
sales charge or contingent deferred sales charge. The Service Class shares,
first offered 1/1/95, are subject to an annual shareholder service fee of
.25%.
88
<PAGE> 90
MAINSTAY
INSTITUTIONAL FUNDS INC.
BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
LONG-TERM INVESTMENTS (98.2%)+
ASSET-BACKED
SECURITIES (11.1%)
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
AIRPLANE LEASES (2.6%)
Aircraft Finance Trust
Series 1999-1A Class C
8.00%, due 5/15/24 (a)......... $ 1,325,000 $ 1,255,199
Aircraft Lease Portfolio
Securitization Ltd.
Series 1996-1 Class CX
6.35%, due 6/15/06 (b)......... 1,881,234 1,880,105
Airplanes Pass-Through Trust
Series 1 Class C
8.15%, due 3/15/19............. 1,705,563 1,678,717
------------
4,814,021
------------
AUTO LEASES (3.4%)
Premier Auto Trust
Series 1998-4 Class A3
5.69%, due 6/8/02.............. 2,235,000 2,225,881
Series 1999-1 Class A3
5.69%, due 11/15/02............ 1,705,000 1,698,044
Toyota Auto Lease Trust
Series 1998-B Class A1
5.35%, due 7/25/02............. 2,215,000 2,194,777
------------
6,118,702
------------
CREDIT CARD RECEIVABLES (2.0%)
Chase Credit Card Master Trust
Series 1997-2 Class A
6.30%, due 4/15/03............. 1,910,000 1,919,072
Citibank Credit Card Master
Trust I
Series 1999-1 Class A
5.50%, due 2/15/06............. 1,745,000 1,680,854
------------
3,599,926
------------
EQUIPMENT LOANS (2.3%)
Case Equipment Loan Trust
Series 1999-A
5.77%, due 8/15/05............. 1,650,000 1,623,023
Ikon Receivables LLC
Series 1999-1 Class A3
5.99%, due 5/15/05............. 2,005,000 1,996,699
Newcourt Equipment Trust
Securities
Series 1998-1 Class A3
5.24%, due 12/20/02 (b)........ 670,000 662,134
------------
4,281,856
------------
FINANCE (0.8%)
Green Tree Financial Corp.
Series 1999-4 Class A4
6.64%, due 5/1/31.............. 1,495,000 1,500,233
------------
Total Asset-Backed Securities
(Cost $20,643,479)............. 20,314,738
------------
</TABLE>
<TABLE>
<CAPTION>
CORPORATE BONDS (23.9%)
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
AUTO PARTS & EQUIPMENT (1.9%)
Goodrich (BF) Co.
6.60%, due 5/15/09............. $ 1,845,000 $ 1,776,348
Pennzoil-Quaker State Company
7.375%, due 4/1/29............. 1,850,000 1,747,047
------------
3,523,395
------------
BANKS (1.7%)
Banc One Corp.
7.60%, due 5/1/07.............. 2,110,000 2,183,723
Bankamerica Corp.
6.625%, due 6/15/04............ 870,000 871,227
------------
3,054,950
------------
CABLE (1.4%)
Cox Communications, Inc.
6.80%, due 8/1/28.............. 2,815,000 2,540,228
------------
COMMUNICATIONS--EQUIPMENT (1.0%)
Lucent Technologies Inc.
5.50% due 11/15/08............. 1,925,000 1,773,580
------------
CONSUMER FINANCIAL SERVICES (0.8%)
Fremont General Corp.
7.70%, due 3/17/04............. 1,460,000 1,443,400
------------
ELECTRIC UTILITIES (1.1%)
National Rural Utilities Corp.
6.20%, due 2/1/08.............. 2,165,000 2,085,545
------------
FINANCIAL SERVICES (1.1%)
Salomon, Smith Barney Holdings
Inc.
6.25%, due 5/15/03............. 695,000 685,590
Sears Roebuck Acceptance Corp.
Medium-Term Note
Series IV
6.36%, due 12/4/01............. 1,360,000 1,359,306
------------
2,044,896
------------
FOOD, BEVERAGE & TOBACCO (1.6%)
Coca-Cola Enterprises Inc.
6.95%, due 11/15/26............ 2,205,000 2,101,365
Seagram, Joseph E. & Sons Inc.
5.79%, due 4/15/01............. 880,000 871,429
------------
2,972,794
------------
HEAVY DUTY TRUCKS (0.5%)
Dana Corp.
7.00%, due 3/1/29.............. 1,020,000 941,419
------------
INDUSTRIAL (0.6%)
Vastar Resources, Inc.
6.50%, due 4/1/09.............. 1,040,000 1,007,833
------------
</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.
89
<PAGE> 91
BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
CORPORATE BONDS(CONTINUED)
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
INSURANCE (0.9%)
Conseco, Inc.
6.40%, due 6/15/01............. $ 1,680,000 $ 1,647,542
------------
INVESTMENT BANK/BROKERAGE (2.8%)
Donaldson, Lufkin & Jenrette
Inc.
5.875%, due 4/1/02............. 2,175,000 2,142,679
Goldman Sachs Group, Inc.
6.65%, due 5/15/09............. 2,505,000 2,425,717
Lehman Brothers Holdings, Inc.
6.625%, due 2/5/06............. 480,000 460,109
------------
5,028,505
------------
MEDIA (0.8%)
Turner Broadcasting System, Inc.
8.375%, due 7/1/13............. 1,328,000 1,431,225
------------
OIL -- INTEGRATED INTERNATIONAL (0.8%)
Conoco, Inc.
6.95%, due 4/15/29............. 1,525,000 1,429,687
------------
REAL ESTATE INVESTMENT MORTGAGE (0.9%)
Mack-Cali Realty L.P.
7.00%, due 3/15/04............. 1,630,000 1,608,060
------------
TELECOMMUNICATION SERVICES (0.9%)
Sprint Capital Corp.
6.875%, due 11/15/28........... 1,840,000 1,681,300
------------
TOBACCO (1.6%)
RJ Reynolds Tobacco Holdings,
Inc.
7.750%, due 5/15/06 (a)........ 3,075,000 2,951,785
------------
TRANSPORTATION (3.5%)
Atlas Air, Inc.
Series 1999-1C
8.77%, due 1/2/11.............. 2,325,000 2,292,869
Federal Express Corp.
Series 1998-1A
6.72%, due 1/15/22............. 2,494,262 2,404,493
Northwest Airlines Corp.
Series 1999-1B
7.36%, due 2/1/20.............. 1,810,000 1,743,030
------------
6,440,392
------------
Total Corporate Bonds
(Cost $45,218,205)............. 43,606,536
------------
MORTGAGE-BACKED SECURITIES (7.1%)
COMMERCIAL MORTGAGE LOANS
(COLLATERALIZED MORTGAGE OBLIGATION) (7.1%)
Asset Securitization Corp.
Series 1997-MD7 Class A1B
7.41%, due 1/13/30............. 3,685,000 3,769,976
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
COMMERCIAL MORTGAGE LOANS
(COLLATERALIZED MORTGAGE
OBLIGATIONS) (Continued)
DLJ Commercial Mortgage Corp.
Series 1999-CG2 Class A1A
6.88%, due 7/10/08............. $ 1,675,000 $ 1,695,770
LB Commercial Conduit
Mortgage Trust
Series 1998-C4 Class A1B
6.21%, due 10/15/35............ 1,595,000 1,519,939
Series 1999-C1 Class A2
6.78%, due 10/15/30............ 1,615,000 1,596,654
Merrill Lynch Mortgage
Investors, Inc.
Series 1995-C2 Class A1
7.1752%, due 6/15/21 (b)....... 1,128,538 1,134,260
Nationslink Funding Corp.
Series 1999-1 Class A2
6.316%, due 1/20/31............ 2,170,000 2,083,070
SASCO Floating Rate
Commercial Mortgage Trust
Series 1998-C3A Class A1
5.6425%, due 6/25/15 (a)(b).... 1,133,579 1,133,579
------------
Total Mortgage-Backed Securities
(Cost $13,091,705)............. 12,933,248
------------
U.S. GOVERNMENT &
FEDERAL AGENCIES (53.7%)
FEDERAL NATIONAL MORTGAGE ASSOCIATION (11.1%)
5.125%, due 2/13/04............ 9,735,000 9,327,688
5.625%, due 3/15/01............ 6,435,000 6,430,817
6.375%, due 6/15/09 (c)........ 4,545,000 4,523,320
------------
20,281,825
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (MORTGAGE
PASS-THROUGH SECURITY) (1.6%)
8.00%, due 11/25/28............ 2,858,308 2,945,858
------------
UNITED STATES TREASURY BONDS (11.8%)
5.250%, due 11/15/28 (c)....... 5,470,000 4,848,663
6.125%, due 11/15/27........... 135,000 134,093
7.625%, due 2/15/25............ 880,000 1,037,986
8.875%, due 8/15/17............ 7,484,000 9,560,810
9.25%, due 2/15/16 (c)......... 4,635,000 6,037,087
------------
21,618,639
------------
UNITED STATES TREASURY NOTES (29.2%)
5.375%, due 6/30/03 (c)........ 8,205,000 8,106,294
5.50%, due 5/15/09 (c)......... 11,725,000 11,453,801
5.625%, due 11/30/00........... 4,830,000 4,842,848
6.25%, due 2/28/02-2/15/03..... 24,405,000 24,800,522
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
90
<PAGE> 92
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
U.S. GOVERNMENT &
FEDERAL AGENCIES (CONTINUED)
<S> <C> <C>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
UNITED STATES TREASURY NOTES (Continued)
6.625%, due 5/15/07............ $ 1,225,000 $ 1,275,727
6.875%, due 5/15/06............ 2,665,000 2,805,739
------------
53,284,931
------------
Total U.S. Government &
Federal Agencies
(Cost $100,399,040)............ 98,131,253
------------
YANKEE BONDS (2.4%)
ELECTRIC UTILITIES (0.7%)
United Utilities PLC
6.45%, due 4/01/08............. 1,425,000 1,341,381
------------
MULTI-INDUSTRIAL (0.9%)
Tyco International Group S.A.
7.00%, due 6/15/28............. 1,655,000 1,542,956
------------
SPECIALIZED SERVICES (0.8%)
WPP Finance (USA) Corp.
6.625%, due 7/15/05............ 1,615,000 1,532,393
------------
Total Yankee Bonds
(Cost $4,759,574).............. 4,416,730
------------
Total Long-Term Investments
(Cost $184,112,003)............ 179,402,505
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
SHORT-TERM
INVESTMENT (0.5%)
<S> <C> <C>
COMMERCIAL PAPER (0.5%)
KFW International Finance Inc.
5.70%, due 7/1/99.............. $ 895,000 $ 895,000
------------
Total Short-Term Investment
(Cost $895,000)................ 895,000
------------
Total Investments
(Cost $185,007,003) (d)........ 98.7% 180,297,505(e)
Cash and Other Assets,
Less Liabilities............... 1.3 2,397,821
----------- ------------
Net Assets...................... 100.0% $182,695,326
=========== ============
</TABLE>
- ------------
(a) May be sold to institutional investors only.
(b) Floating rate. Rate shown is the rate in effect at June 30, 1999.
(c) Represents securities out on loan or a portion of which is out on loan. (See
Note 2N)
(d) The cost stated also represents the aggregate cost for Federal income tax
purposes.
(e) At June 30, 1999 net unrealized depreciation was $4,709,498, 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 $64,237 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $4,773,735.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
91
<PAGE> 93
BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $185,007,003)....... $180,297,505
Cash................................... 4,775
Collateral held for securities loaned
at value (Note 2N)................... 49,096,138
Receivables:
Investment securities sold........... 4,474,711
Interest............................. 2,758,193
Fund shares sold..................... 187,381
------------
Total assets..................... 236,818,703
------------
LIABILITIES:
Securities lending collateral, at value
(Note 2N)............................ 49,096,138
Payables:
Investment securities purchased...... 4,866,118
MainStay Management.................. 94,698
Custodian............................ 15,659
Fund shares redeemed................. 4,888
Transfer agent....................... 2,308
Accrued expenses....................... 43,568
------------
Total liabilities................ 54,123,377
------------
Net assets............................. $182,695,326
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per
share)
1 billion shares authorized
Institutional Class.................. $ 18,423
Institutional Service Class.......... 438
Additional paid-in capital............. 193,077,378
Accumulated undistributed net
investment income.................... 5,111,373
Accumulated net realized loss on
investments.......................... (10,802,788)
Net unrealized depreciation on
investments.......................... (4,709,498)
------------
Net assets............................. $182,695,326
============
Institutional Class
Net assets applicable to outstanding
shares............................... $178,469,483
============
Shares of capital stock outstanding.... 18,422,790
============
Net asset value per share
outstanding.......................... $ 9.69
============
Institutional Service Class
Net assets applicable to outstanding
shares............................... $ 4,225,843
============
Shares of capital stock outstanding.... 438,395
============
Net asset value per share
outstanding.......................... $ 9.64
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................. $ 5,812,631
------------
Expenses:
Management........................... 697,173
Custodian............................ 29,105
Professional......................... 21,163
Transfer agent....................... 14,887
Registration......................... 10,077
Miscellaneous........................ 7,994
Shareholder communication............ 7,797
Service.............................. 5,695
Directors............................ 2,124
------------
Total expenses before
reimbursement.................. 796,015
Expense reimbursement from Manager... (93,147)
------------
Net expenses..................... 702,868
------------
Net investment income.................. 5,109,763
------------
REALIZED AND UNREALIZED LOSS ON
INVESTMENTS:
Net realized loss on investments....... (3,529,438)
Net change in unrealized appreciation
on investments....................... (5,942,833)
------------
Net realized and unrealized loss on
investments.......................... (9,472,271)
------------
Net decrease in net assets resulting
from operations...................... $ (4,362,508)
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
92
<PAGE> 94
MAINSTAY
INSTITUTIONAL FUNDS INC.
BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited) and the year ended December
31, 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 5,109,763 $ 10,198,132
Net realized gain (loss) on investments................. (3,529,438) 5,448,970
Net change in unrealized appreciation on investments.... (5,942,833) (1,510,793)
-------------- --------------
Net increase (decrease) in net assets resulting from
operations............................................. (4,362,508) 14,136,309
-------------- --------------
Dividends to shareholders:
From net investment income:
Institutional Class................................... -- (9,963,260)
Institutional Service Class........................... -- (233,262)
-------------- --------------
Total dividends to shareholders..................... -- (10,196,522)
-------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 9,195,147 27,884,675
Institutional Service Class........................... 4,061,241 4,359,791
Net asset value of shares issued to shareholders in
reinvestment of dividends:
Institutional Class................................... -- 9,817,383
Institutional Service Class........................... -- 181,161
-------------- --------------
13,256,388 42,243,010
Cost of shares redeemed:
Institutional Class................................... (8,897,963) (43,075,789)
Institutional Service Class........................... (3,992,381) (1,791,909)
-------------- --------------
Increase (decrease) in net assets derived from capital
share transactions................................... 366,044 (2,624,688)
-------------- --------------
Net increase (decrease) in net assets................. (3,996,464) 1,315,099
NET ASSETS:
Beginning of period....................................... 186,691,790 185,376,691
-------------- --------------
End of period............................................. $ 182,695,326 $ 186,691,790
============== ==============
Accumulated undistributed net investment income at end of
period.................................................. $ 5,111,373 $ 1,610
============== ==============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
93
<PAGE> 95
BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999* DECEMBER 31, 1998
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period..................... $ 9.91 $ 9.88 $ 9.71 $ 9.68
---------- ---------- ---------- ----------
Net investment income...................................... 0.27 0.25 0.57 0.54
Net realized and unrealized gain (loss) on investments..... (0.49) (0.49) 0.20 0.20
---------- ---------- ---------- ----------
Total from investment operations........................... (0.22) (0.24) 0.77 0.74
---------- ---------- ---------- ----------
Less dividends from net investment income.................. -- -- (0.57) (0.54)
---------- ---------- ---------- ----------
Net asset value at end of period........................... $ 9.69 $ 9.64 $ 9.91 $ 9.88
========== ========== ========== ==========
Total investment return.................................... (2.22%)(a) (2.43%)(a) 7.93% 7.73%
Ratios (to average net assets)/Supplemental Data:
Net investment income.................................... 5.50%+ 5.25%+ 5.57% 5.32%
Net expenses............................................. 0.75%+ 1.00%+ 0.75% 1.00%
Expenses (before reimbursement).......................... 0.85%+ 1.10%+ 0.86% 1.11%
Portfolio turnover rate.................................... 145% 145% 335% 335%
Net assets at end of period (in 000's)..................... $ 178,469 $ 4,226 $ 182,402 $ 4,290
</TABLE>
- ------------
* Unaudited.
+ Annualized.
(a) 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.
94
<PAGE> 96
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- ------------- -------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994
----------------------------- ----------------------------- ----------------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 9.51 $ 9.49 $ 9.85 $ 9.83 $ 8.93 $ 8.93 $ 9.98
---------- ---------- ---------- ---------- ---------- ---------- ----------
0.61 0.59 0.62 0.60 0.68 0.67 0.72
0.20 0.19 (0.34) (0.34) 0.92 0.90 (1.05)
---------- ---------- ---------- ---------- ---------- ---------- ----------
0.81 0.78 0.28 0.26 1.60 1.57 (0.33)
---------- ---------- ---------- ---------- ---------- ---------- ----------
(0.61) (0.59) (0.62) (0.60) (0.68) (0.67) (0.72)
---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 9.71 $ 9.68 $ 9.51 $ 9.49 $ 9.85 $ 9.83 $ 8.93
========== ========== ========== ========== ========== ========== ==========
8.57%. 8.21% 2.80% 2.62% 17.88% 17.55% (3.31%)
6.21% 5.96% 6.10% 5.85% 6.62% 6.37% 7.13%
0.75%. 1.00% 0.75% 1.00% 0.75% 1.00% 0.75%
0.85% 1.10% 0.86% 1.11% 0.86% 1.11% 0.82%
338% 338% 398% 398% 470% 470% 478%
$ 183,846 $ 1,531 $ 177,009 $ 1,597 $ 193,518 $ 749 $ 202,970
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
95
<PAGE> 97
INDEXED BOND FUND
- --------------------------------------------------------------------------------
After a strong showing in 1998, the U.S. bond markets generally provided weak
performance during the first half of 1999, with the yield on the 10-year
Treasury rising from 4.65% on December 31, 1998, to 5.92% on June 30, 1999. The
general increase in bond yields and interest rates lowered bond prices,
producing a negative return for the Salomon Smith Barney Broad Investment Grade
(BIG) Bond Index(1) for the six-month period. Despite conflicting signals over
whether inflation would reappear, the Federal Reserve Board moved to raise the
targeted federal funds rate by 0.25% to 5.00% at the end of June.
This move was the culmination of pressures that began early in the year, as
recovery in Asian markets suggested a possible tightening by the Federal Reserve
Board. Meanwhile, the U.S. economy continued to fire on all cylinders. During
the first quarter of 1999, the 10-year Treasury note yield rose 0.58% from its
year-end 1998 level. The 2-year Treasury and 5-year Treasury were higher by
0.44% and 0.56%, respectively, and the 30-year Treasury rose by 0.53%.
During the second quarter, the U.S. bond markets continued to post weak returns,
impacted by continued strength in the U.S. economy, rising oil prices, strong
consumer spending, low unemployment, and a high April figure for the Consumer
Price Index. As a result, the U.S. Treasury market suffered a substantial
pullback, as investors began to plan for an eventual tightening by the Federal
Reserve Board. Lower-rated bonds also suffered yield increases with yield
spreads between corporate bonds and Treasury securities widening from 0.10% to
0.30%.
While the inflation report for May suggested that the April figure may have been
an anomaly, the Federal Reserve Board's move to tighten monetary policy on June
30, 1999, was intended to make sure the economy does not get derailed by rising
wages and prices.
CATEGORY-TRACKING PERFORMANCE
For the six-month period ended June 30, 1999, the MainStay Institutional Indexed
Bond Fund returned -2.38% for Institutional Class shares and -2.47% for Service
Class shares. Both share classes closely tracked the average Lipper(2) general
U.S. government fund, which returned -2.67% for the same period.
The Fund seeks to track the BIG Bond Index, which returned -1.38% for the six
months ended June 30, 1999. Since the Fund incurs fees and expenses that are not
included in the BIG Bond Index, however, some underperformance should be
expected. The Fund also has to account for the timing and amount of new
investments and redemptions, which the BIG Bond Index does not.
In terms of other characteristics, the Fund tracked the BIG Bond Index rather
closely. For example, as of June 30, 1999:
- - the yield to maturity of the Fund was 6.66% versus 6.43% for the BIG Bond
Index,
- - the effective duration for the Fund was 4.78 years versus 4.88 years for the
Index, and
- - the average coupon for the Fund was 6.49% versus 6.73% for the Index.
MORTGAGE-LED INDEX
Overall, on a duration-adjusted basis, both mortgage-backed securities and
corporate bonds outperformed Treasuries for the first half of the year, with
mortgages being the best-performing sector of the BIG Bond Index. The
underperformance of Treasuries reflected both a change in the Federal Reserve
Board's outlook on interest rates and the unwinding of the general flight-to-
quality that had followed the economic setbacks in Asia, Russia, and Brazil in
1998.
Increased liquidity and enthusiasm for corporate credit quality, coupled with
strength in the U.S. economy, helped corporate bonds outperform
- --------------------------------------------------------------------------------
(1) The Salomon Smith Barney Broad Investment Grade (BIG) Bond Index is an
unmanaged index that is considered representative of the U.S. bond market.
An investment cannot be made directly into an index.
(2) Lipper, 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.
96
<PAGE> 98
Treasuries, but the corporate sector suffered as concern about sustained
profitability and rather heavy supply weighed down its performance, particularly
in the utility and industrial subsectors. Mortgage-backed securities benefited
from strong performance among securities with higher coupons.
LOOKING AHEAD
Despite the Federal Reserve Board's neutral stance at the end of June 1999, we
believe most analysts see a risk of further interest-rate increases on the
horizon. At this point, however, the bond markets are generally not pricing
bonds for any further rate hikes and many investors appear to be in a "wait and
see" mode. All eyes will be focused on economic releases in the third quarter of
1999, as investors look for signs of continued growth or possible inflation. If
there are no unpleasant surprises, we expect interest rates to remain near
current levels.
Regardless of what happens to interest rates or bond prices, we will continue to
seek to provide investment results that correspond to the total-return
performance of fixed-income securities in the aggregate, as represented by the
Salomon Smith Barney Broad Investment Grade Bond Index.
Jefferson C. Boyce
Portfolio Manager
Monitor Capital Advisors, Inc.
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
97
<PAGE> 99
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
INDEXED BOND FUND VS
SALOMON SMITH BARNEY BIG BOND INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<S> <C> <C>
12/31/90 10000.00 10000.00
3/31/91 10220.00 10263.00
6/30/91 10380.00 10448.00
9/30/91 10930.00 11043.00
12/31/91 11470.00 11599.00
3/31/92 11334.00 11464.00
6/30/92 11756.00 11930.00
9/30/92 12262.00 12444.00
12/31/92 12283.00 12477.00
3/31/93 12788.00 12998.00
6/30/93 13128.00 13358.00
9/30/93 13491.00 13710.00
12/31/93 13467.00 13716.00
3/31/94 13066.00 13330.00
6/30/94 12908.00 13201.00
9/30/94 12956.00 13272.00
12/31/94 13003.00 13326.00
3/31/95 13637.00 14000.00
6/30/95 14451.00 14857.00
9/30/95 14723.00 15137.00
12/31/95 15354.00 15794.00
3/31/96 15032.00 15518.00
6/30/96 15074.00 15594.00
9/30/96 15312.00 15886.00
12/31/96 15745.00 16365.00
3/31/97 15640.00 16280.00
6/30/97 16179.00 16866.00
9/30/97 16718.00 17426.00
12/31/97 17164.00 17940.00
3/31/98 17420.00 18229.00
6/30/98 17803.00 18650.00
9/30/98 18522.00 19424.00
12/31/98 18573.00 19504.00
6/30/99 18131.00 19234.00
</TABLE>
THESE GRAPHS ASSUME A $10,000 INVESTMENT MADE ON 1/2/91.
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
INDEXED BOND FUND VS
SALOMON SMITH BARNEY BIG BOND INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<S> <C> <C>
12/31/90 10000.00 10000.00
3/31/91 10220.00 10263.00
6/30/91 10380.00 10448.00
9/30/91 10930.00 11043.00
12/31/91 11470.00 11599.00
3/31/92 11334.00 11464.00
6/30/92 11756.00 11930.00
9/30/92 12262.00 12444.00
12/31/92 12283.00 12477.00
3/31/93 12788.00 12998.00
6/30/93 13128.00 13358.00
9/30/93 13491.00 13710.00
12/31/93 13467.00 13716.00
3/31/94 13066.00 13330.00
6/30/94 12908.00 13201.00
9/30/94 12956.00 13272.00
12/31/94 13003.00 13326.00
3/31/95 13663.00 14000.00
6/30/95 14477.00 14857.00
9/30/95 14723.00 15137.00
12/31/95 15341.00 15794.00
3/31/96 15020.00 15518.00
6/30/96 15047.00 15594.00
9/30/96 15285.00 15886.00
12/31/96 15699.00 16365.00
3/31/97 15580.00 16280.00
6/30/97 16117.00 16866.00
9/30/97 16639.00 17426.00
12/31/97 17073.00 17940.00
3/31/98 17311.00 18229.00
6/30/98 17677.00 18650.00
9/30/98 18392.00 19424.00
12/31/98 18414.00 19504.00
6/30/99 17959.00 19234.00
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF JUNE 30, 1999 AS OF JUNE 30, 1999
- ----------------------------------------------------------------------------------------------------------------
YEAR TO DATE ONE YEAR FIVE YEAR SINCE INCEPTION
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Indexed Bond Fund Institutional Class -2.38% 1.84% 7.03% 7.25%
Indexed Bond Fund Service Class(+) -2.47% 1.60% 6.83% 7.13%
Average Lipper General U.S. Government Fund -2.67% 1.48% 6.62% 6.78%
Salomon Smith Barney BIG Bond Index -1.38% 3.12% 7.82% 8.00%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
14.70 7.09 9.64 -3.44 18.07 2.55 9.01 8.21
<CAPTION>
1999 AS
OF
6/30/99
--------
<S> <C>
-2.38
</TABLE>
- --------------------------------------------------------------------------------
* 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 gain distributions and
dividends, and, for the Service Class shares, include the service fee of .25%
on an annualized basis of the average daily net asset value of the Service
Class shares.
+ 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 12/31/94. Performance figures for these two
Classes after this date will vary based on differences in their expense
structures.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO CURRENT MARKET
VOLATILITY, PERFORMANCE MAY BE LESS THAN SHOWN. 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 and the Service Class shares are sold with no
sales charge or contingent deferred sales charge. The Service Class shares,
first offered 1/1/95, are subject to an annual shareholder service fee of
.25%.
98
<PAGE> 100
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
LONG-TERM INVESTMENTS (97.9%)+
CORPORATE BONDS (19.4%)
PRINCIPAL
AMOUNT VALUE
----------------------
<S> <C> <C>
AUTOMOTIVE RENTALS (0.5%)
Hertz Corp.
7.00%, due 7/15/03............... $ 700,000 $ 703,500
------------
AUTO LEASING (0.7%)
Ryder System Inc.
9.875%, due 5/15/17.............. 1,000,000 1,131,250
------------
BANKS (0.6%)
First Union Corp.
8.77%, due 11/15/04.............. 1,000,000 1,010,000
------------
BROADCAST/MEDIA (2.7%)
Cox Communications, Inc.
6.50%, due 11/15/02.............. 1,200,000 1,191,000
Viacom Inc.
8.25%, due 8/1/22................ 3,000,000 3,026,250
------------
4,217,250
------------
CHEMICALS (0.5%)
DuPont (E.I.) de Nemours & Co.
8.125%, due 3/15/04.............. 800,000 855,000
------------
COMPUTERS & OFFICE EQUIPMENT (0.7%)
Xerox Corp.
5.91%, due 4/1/37................ 1,250,000 1,129,687
------------
ENTERTAINMENT (0.4%)
Walt Disney Co. (The)
6.75%, due 3/30/06............... 600,000 602,250
------------
FINANCE (3.2%)
American Express Credit Corp.
8.70%, due 6/15/10............... 2,000,000 1,997,500
Commercial Credit Co.
8.70%, due 6/15/10............... 450,000 503,438
KFW International Finance Inc.
9.125%, due 5/15/01.............. 500,000 525,625
Morgan Stanley Group Inc.
7.50%, due 2/1/24................ 1,000,000 960,000
Private Export Funding Corp.
8.35%, due 1/31/01............... 1,000,000 1,036,250
------------
5,022,813
------------
FOOD, BEVERAGE & TOBACCO (0.4%)
Coca-Cola Enterprises, Inc.
8.50%, due 2/1/22................ 500,000 562,500
------------
INSURANCE (1.9%)
Aetna Services Inc.
7.625%, due 8/15/26.............. 3,000,000 2,936,250
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------------------
<S> <C> <C>
MACHINERY (0.4%)
Caterpillar, Inc.
9.00%, due 4/15/06............... $ 500,000 $ 558,750
------------
OIL & GAS (0.3%)
Texaco Capital Inc.
9.75%, due 3/15/20............... 350,000 443,625
------------
PAPER & FOREST PRODUCTS (0.4%)
Scott Paper Co.
7.00%, due 8/15/23............... 650,000 619,938
------------
RETAIL--GENERAL MERCHANDISE (1.1%)
Limited, Inc.
7.50%, due 3/15/23............... 1,900,000 1,695,750
------------
SPECIAL PURPOSE ENTITY (0.7%)
Duke Capital Corp.
6.25%, due 7/15/05............... 1,200,000 1,165,500
------------
STEEL (0.7%)
USX Corp.
7.20%, due 2/15/04............... 1,100,000 1,098,625
------------
TELECOMMUNICATIONS SERVICES (2.4%)
AT&T Corp.
8.625%, due 12/1/31.............. 2,500,000 2,662,500
Sprint Corp.
9.50%, due 4/1/03................ 1,000,000 1,096,250
------------
3,758,750
------------
TELEPHONE INTEGRATED (0.6%)
SBC Communications Inc.
7.375%, due 7/15/43.............. 1,000,000 982,500
------------
UTILITIES--ELECTRIC (1.2%)
Pennsylvania Power & Light Co.
7.30%, due 3/1/24................ 1,000,000 960,000
Texas Utility Electric Co.
8.25%, due 4/1/04................ 800,000 851,000
------------
1,811,000
------------
Total Corporate Bonds
(Cost $31,008,031)............... 30,304,938
------------
INTERNATIONAL
CORPORATE BONDS (3.4%)
BANKS (3.4%)
ABN Amro Bank, NV
Chicago Branch
7.55%, due 6/28/06............... 800,000 817,000
Bayerische Landesbank
Girozentrale
New York Branch
6.20%, due 2/9/06................ 2,900,000 2,773,125
</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.
99
<PAGE> 101
INDEXED BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
INTERNATIONAL
CORPORATE BONDS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
----------------------
<S> <C> <C>
BANKS (Continued)
International Bank for
Reconstruction & Development
(zero coupon), due 3/11/31....... $4,000,000 $ 480,000
7.125%, due 9/27/99.............. 1,200,000 1,204,500
------------
Total International Corporate
Bonds
(Cost $5,376,583)................ 5,274,625
------------
U.S. GOVERNMENT &
FEDERAL AGENCIES (72.4%)
FEDERAL HOME LOAN BANK
(MEDIUM TERM NOTE) (1.0%)
8.00%, due 9/11/01............... 1,400,000 1,459,500
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (0.7%)
6.45%, due 4/29/09............... 1,100,000 1,064,954
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (MORTGAGE PASS-THROUGH
SECURITIES) (8.2%)
6.00%, due 9/1/02-6/1/25......... 2,708,775 2,597,058
6.50%, due 10/1/01-3/1/27........ 6,148,001 6,042,609
7.00%, due 8/1/03-12/1/27........ 2,423,654 2,408,323
7.50%, due 9/1/11-3/1/27......... 1,358,009 1,376,031
8.00%, due 7/1/26................ 384,528 394,499
------------
12,818,520
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (0.6%)
(zero coupon), due 7/5/14........ 2,500,000 943,225
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (MEDIUM TERM NOTE)
(0.3%)
5.83%, due 12/10/99.............. 500,000 501,060
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (MORTGAGE PASS-THROUGH
SECURITIES) (17.3%)
5.50%, due 3/1/05................ 1,180,851 1,126,237
6.00%, due 5/1/29................ 6,094,457 5,724,950
6.50%, due 7/1/03-2/1/28......... 10,106,459 9,800,972
7.00%, due 5/1/11-11/1/26........ 3,619,774 3,605,715
7.50%, due 11/1/26-1/1/28........ 1,395,232 1,409,616
8.00%, due 7/1/07-4/1/27......... 3,849,939 3,948,704
9.50%, due 3/1/16-9/1/19......... 1,303,208 1,390,353
------------
27,006,547
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION I (MORTGAGE
PASS-THROUGH SECURITIES) (6.6%)
6.00%, due 10/15/28-12/15/28..... 4,006,886 3,747,680
6.50%, due 2/15/29-3/15/29....... 1,500,149 1,443,893
7.00%, due 3/15/07-12/15/27...... 2,377,272 2,361,610
7.50%, due 8/15/08-11/15/26...... 1,820,240 1,845,014
8.00%, due 6/15/26-9/15/27....... 344,224 353,580
8.50%, due 7/15/26-11/15/26...... 425,414 445,089
------------
10,196,866
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------------------
<S> <C> <C>
TENNESSEE VALLEY AUTHORITY (0.7%)
Power Board 1994 Series A
7.85%, due 6/15/44............... $1,000,000 $ 1,046,250
------------
UNITED STATES TREASURY BONDS (12.3%)
7.125%, due 2/15/23.............. 600,000 664,728
7.25%, due 5/15/16............... 1,500,000 1,648,950
7.50%, due 11/15/16-11/15/24..... 1,200,000 1,365,444
7.625%, due 11/15/22-2/15/25..... 800,000 938,084
8.00%, due 11/15/21.............. 1,000,000 1,203,090
8.125%, due 8/15/19-5/15/21...... 1,300,000 1,573,505
8.50%, due 2/15/20............... 400,000 500,516
8.75%, due 5/15/17-8/15/20....... 1,500,000 1,913,750
8.875%, due 2/15/19.............. 600,000 772,182
9.375%, due 2/15/06.............. 530,000 626,195
9.875%, due 11/15/15............. 600,000 818,202
10.375%, due 11/15/12............ 500,000 635,490
11.25%, due 2/15/15.............. 400,000 598,400
11.75%, due 2/15/01.............. 1,700,000 1,864,645
11.875%, due 11/15/03............ 500,000 613,055
12.75%, due 11/15/10............. 400,000 538,392
13.125%, due 5/15/01............. 1,000,000 1,133,740
13.375%, due 8/15/01............. 1,200,000 1,384,224
14.25%, due 2/15/02.............. 300,000 361,734
------------
19,154,326
------------
UNITED STATES TREASURY NOTES (23.0%)
4.75%, due 11/15/08.............. 5,000,000 4,587,050
5.25%, due 5/15/24............... 5,000,000 4,916,501
5.625%, due 12/31/02............. 400,000 398,560
5.75%, due 10/31/00-8/15/03...... 2,200,000 2,198,728
6.125%, due 9/30/00-8/15/07...... 2,100,000 2,120,749
6.25%, due 4/30/01-2/15/03....... 9,200,000 9,324,747
6.375%, due 1/15/00-8/15/02
(a)............................ 3,200,000 3,235,718
6.50%, due 10/15/06.............. 1,200,000 1,238,388
6.75%, due 4/30/00............... 700,000 708,421
6.875%, due 3/31/00.............. 1,600,000 1,619,712
7.50%, due 10/31/99-2/15/05...... 3,750,000 3,929,910
7.75%, due 2/15/01............... 500,000 517,595
8.50%, due 2/15/00............... 1,100,000 1,122,715
------------
35,918,794
------------
UNITED STATES TREASURY NOTES (1.7%)
(Secured Stripped Bonds)
(zero coupon), due 2/15/01....... 1,000,000 915,640
(zero coupon), due 2/15/05....... 2,500,000 1,802,625
------------
2,718,265
------------
Total U.S. Government &
Federal Agencies
(Cost $112,955,827).............. 112,828,307(b)
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
100
<PAGE> 102
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
YANKEE BONDS (2.7%)
PRINCIPAL
AMOUNT VALUE
----------------------
<S> <C> <C>
BANKS (1.2%)
Australia & New Zealand
Banking Group, Ltd.
7.55%, due 9/15/06............... $ 700,000 $ 708,750
Inter-American Development Bank
6.80%, due 10/15/25.............. 1,200,000 1,191,000
------------
1,899,750
------------
CONSUMER FINANCIAL SERVICES (0.4%)
Japan Financial Corp.
8.70%, due 7/30/01............... 600,000 628,500
------------
FOREIGN GOVERNMENT (0.7%)
Ontario Hydro
7.45%, due 3/31/13............... 500,000 523,750
Quebec (Province of)
7.50%, due 7/15/23............... 600,000 612,750
------------
1,136,500
------------
UTILITIES--TELEPHONE (0.4%)
Nortel Networks Corp.
8.75%, due 6/12/01............... 500,000 523,750
------------
Total Yankee Bonds
(Cost $4,173,930)................ 4,188,500
------------
Total Long-Term Investments
(Cost $153,514,371).............. 152,596,370
------------
<CAPTION>
SHORT-TERM INVESTMENTS (0.8%)
PRINCIPAL
AMOUNT VALUE
----------------------
<S> <C> <C>
U.S. GOVERNMENT (0.8%)
United States Treasury Bills
4.56%, due 9/16/99 (a)........... 200,000 198,041
4.56%, due 9/23/99 (a)........... 1,100,000 1,088,164
------------
Total Short-Term Investments
(Cost $1,286,205)................ 1,286,205
------------
Total Investments
(Cost $154,800,576) (c).......... 98.7% 153,882,575(d)
Cash and Other Assets,
Less Liabilities................. 1.3 2,023,682
--------- ------------
Net Assets........................ 100.0% $155,906,257
========= ============
</TABLE>
<TABLE>
<CAPTION>
FUTURES CONTRACTS (0.0%)(e)
CONTRACTS UNREALIZED
LONG APPRECIATION(f)
----------------------------
<S> <C> <C>
United States Treasury Note
September 1999 (5 Year).... 7 $ 5,289
United States Treasury Note
September 1999 (10 Year)... 3 3,611
United States Treasury Bond
September 1999 (30 Year)... 2 2,292
--------
Total Futures Contracts
(Settlement Value
$1,480,661)................ $ 11,192
========
</TABLE>
- ------------
(a) Segregated or partially segregated as collateral for futures contracts.
(b) 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 74.1% of net assets.
(c) The cost stated also represents the aggregate cost for Federal income tax
purposes.
(d) At June 30, 1999, net unrealized depreciation was $918,001, 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 $2,159,583 and aggregate unrealized depreciation
for all investments on which there was an excess of cost over market value
of $3,077,584.
(e) Less than one tenth of a percent.
(f) Represents the difference between the value of the contracts at the time
they were opened and the value at June 30, 1999.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
101
<PAGE> 103
INDEXED BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $154,800,576)....... $153,882,575
Cash................................... 23,406
Receivables:
Interest............................. 2,089,675
Investment securities sold........... 1,384,487
Fund shares sold..................... 2,764
Variation margin on futures
contracts............................ 9,469
------------
Total assets..................... 157,392,376
------------
LIABILITIES:
Payables:
Investment securities purchased...... 1,190,484
Fund shares redeemed................. 177,150
MainStay Management.................. 47,972
Custodian............................ 11,511
Transfer agent....................... 2,188
Accrued expenses....................... 56,814
------------
Total liabilities................ 1,486,119
------------
Net assets............................. $155,906,257
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per
share)
1 billion shares authorized
Institutional Class.................. $ 14,248
Institutional Service Class.......... 364
Additional paid-in capital............. 154,846,362
Accumulated undistributed net
investment income.................... 5,168,358
Accumulated net realized loss on
investments.......................... (3,216,266)
Net unrealized depreciation on
investments.......................... (906,809)
------------
Net assets............................. $155,906,257
============
Institutional Class
Net assets applicable to outstanding
shares............................... $152,029,065
============
Shares of capital stock outstanding.... 14,247,829
============
Net asset value per share
outstanding.......................... $ 10.67
============
Institutional Service Class
Net assets applicable to outstanding
shares............................... $ 3,877,192
============
Shares of capital stock outstanding.... 363,877
============
Net asset value per share
outstanding.......................... $ 10.65
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................. $ 5,575,674
------------
Expenses:
Management........................... 402,555
Professional......................... 20,104
Custodian............................ 19,173
Registration......................... 15,317
Transfer agent....................... 14,304
Pricing Service...................... 10,364
Shareholder communication............ 6,724
Service.............................. 4,761
Directors............................ 1,842
Miscellaneous........................ 6,636
------------
Total expenses before
reimbursement.................. 501,780
Expense reimbursement from Manager... (94,464)
------------
Net expenses..................... 407,316
------------
Net investment income.................. 5,168,358
------------
REALIZED AND UNREALIZED
LOSS ON INVESTMENTS:
Net realized loss from:
Security transactions................ (1,165,366)
Futures transactions................. (415,216)
------------
Net realized loss on investments....... (1,580,582)
------------
Net change in unrealized appreciation
on investments:
Security transactions................ (7,457,382)
Futures transactions................. 24,945
------------
Net unrealized loss on investments..... (7,432,437)
------------
Net realized and unrealized loss on
investments.......................... (9,013,019)
------------
Net decrease in net assets resulting
from operations...................... $ (3,844,661)
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
102
<PAGE> 104
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited) and the year ended December
31, 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 5,168,358 $ 9,484,561
Net realized loss on investments........................ (1,580,582) (67,058)
Net change in unrealized appreciation on investments.... (7,432,437) 2,292,755
-------------- --------------
Net increase (decrease) in net assets resulting from
operations............................................. (3,844,661) 11,710,258
-------------- --------------
Dividends to shareholders:
From net investment income:
Institutional Class................................... -- (9,236,677)
Institutional Service Class........................... -- (219,665)
-------------- --------------
Total dividends to shareholders..................... -- (9,456,342)
-------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 20,950,111 61,976,290
Institutional Service Class........................... 687,331 1,367,196
Net asset value of shares issued to shareholders in
reinvestment of dividends:
Institutional Class................................... -- 9,210,122
Institutional Service Class........................... -- 219,629
-------------- --------------
21,637,442 72,773,237
Cost of shares redeemed:
Institutional Class................................... (21,415,501) (35,070,585)
Institutional Service Class........................... (595,794) (768,339)
-------------- --------------
Increase (decrease) in net assets derived from capital
share transactions................................... (373,853) 36,934,313
-------------- --------------
Net increase (decrease) in net assets................. (4,218,514) 39,188,229
NET ASSETS:
Beginning of period....................................... 160,124,771 120,936,542
-------------- --------------
End of period............................................. $ 155,906,257 $ 160,124,771
============== ==============
Accumulated undistributed net investment income at end of
period.................................................. $ 5,168,358 $ --
============== ==============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
103
<PAGE> 105
INDEXED BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999* DECEMBER 31, 1998
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period.................... $ 10.93 $ 10.92 $ 10.74 $ 10.74
---------- ---------- ---------- ----------
Net investment income..................................... 0.35 0.34 0.69 0.66
Net realized and unrealized gain (loss) on investments.... (0.61) (0.61) 0.19 0.18
---------- ---------- ---------- ----------
Total from investment operations.......................... (0.26) (0.27) 0.88 0.84
---------- ---------- ---------- ----------
Less dividends and distributions:
From net investment income................................ -- -- (0.69) (0.66)
From net realized gain on investments..................... -- -- -- --
---------- ---------- ---------- ----------
Total dividends and distributions......................... -- -- (0.69) (0.66)
---------- ---------- ---------- ----------
Net asset value at end of period.......................... $ 10.67 $ 10.65 $ 10.93 $ 10.92
========== ========== ========== ==========
Total investment return................................... (2.38%)(a) (2.47%)(a) 8.21% 7.86%
Ratios (to average net assets)/Supplemental Data:
Net investment income................................... 6.43%+ 6.18%+ 6.37% 6.12%
Net expenses............................................ 0.50%+ 0.75%+ 0.50% 0.75%
Expenses (before reimbursement)......................... 0.62%+ 0.87%+ 0.65% 0.90%
Portfolio turnover rate................................... 25% 25% 14% 14%
Net assets at end of period (in 000's).................... $ 152,029 $ 3,877 $ 156,244 $ 3,881
</TABLE>
- ------------
* Unaudited.
+ Annualized.
(a) 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.
104
<PAGE> 106
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- ------------- -------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994
----------------------------- ----------------------------- ----------------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 10.52 $ 10.52 $ 10.99 $ 10.99 $ 10.06 $ 10.06 $ 11.08
---------- ---------- ---------- ---------- ---------- ---------- ----------
0.73 0.70 0.76 0.74 0.82 0.81 0.65
0.22 0.22 (0.48) (0.48) 1.00 1.00 (1.03)
---------- ---------- ---------- ---------- ---------- ---------- ----------
0.95 0.92 0.28 0.26 1.82 1.81 (0.38)
---------- ---------- ---------- ---------- ---------- ---------- ----------
(0.73) (0.70) (0.75) (0.73) (0.82) (0.81) (0.64)
-- -- -- -- (0.07) (0.07) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
(0.73) (0.70) (0.75) (0.73) (0.89) (0.88) (0.64)
---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 10.74 $ 10.74 $ 10.52 $ 10.52 $ 10.99 $ 10.99 $ 10.06
========== ========== ========== ========== ========== ========== ==========
9.01%. 8.75% 2.55% 2.34% 18.07% 17.97% (3.44%)
6.60% 6.35% 6.21% 5.96% 6.38% 6.13% 6.13%
0.50%. 0.75% 0.50% 0.75% 0.50% 0.75% 0.50%
0.65% 0.90% 0.65% 0.90% 0.63% 0.88% 0.61%
32% 32% 312% 312% 284% 284% 274%
$ 117,922 $ 3,015 $ 109,482 $ 2,764 $ 163,219 $ 471 $ 169,404
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
105
<PAGE> 107
INTERNATIONAL BOND FUND
- --------------------------------------------------------------------------------
During the first half of 1999, international bond markets were influenced by a
wide variety of forces. The Brazilian real's devaluation in January and signs of
a Japanese market recovery signaled the end of a two-year global economic
crisis. Commodity prices for oil, natural gas, lumber, and copper rose, which
was positive for stocks but negative for bonds, as inflationary concerns
resurfaced.
The European Central Bank eased interest rates by a half of a percent during the
first half of the year from 3% to 2.5% to reduce economic malaise. Although the
end of the war in Kosovo had a positive impact, the eleven European members of
North Atlantic Treaty Organization (NATO) expressed concern over the cost of
reconstruction. In the U.S., the Federal Reserve Board's May announcement of a
bias toward raising interest rates was followed by a move to raise rates at the
end of June. Meanwhile, the U.S. dollar charged ahead versus other currencies,
as Japan struggled to get its economic footing and European growth lagged behind
expectations.
FACING A CHALLENGING MARKET ENVIRONMENT
For the six months ended June 30, 1999, the MainStay Institutional International
Bond Fund returned -9.19% for Institutional Class shares and -9.22% for Service
Class shares. Both share classes underperformed the -6.14% return of the average
Lipper(1) international income fund for the first half of 1999. The Fund also
lagged the Salomon Smith Barney Non-U.S. Dollar World Government Bond Index,(2)
which returned -9.11% during the same period.
The Fund underperformed largely due to its underweighted position in Japanese
government bonds, which rose 2.5% in local-currency terms during the first half
of the year, and due to the strength of the U.S. dollar versus foreign
currencies.
STRATEGIC DECISIONS
The Fund maintained a close-to-neutral duration(3) throughout the first half of
the year. It held long-duration bonds in Europe and short-duration bonds in
Japan and dollar-bloc countries Australia and Canada. As European bonds rallied
following the European Central Bank rate cut, however, we reduced the Fund's
long European duration to neutral. While duration decisions had a mixed impact
on Fund performance, on average the result was positive. The Fund's duration
strategy in Europe helped during the first quarter, and holding shorter-duration
bonds in dollar-bloc countries has been successful throughout the first half of
1999.
Excessive supply in the Japanese government bond market presented opportunities
to add these securities to the Fund's portfolio, and the Fund increased its
position in Japanese government bonds from 0% to 18% of net assets by the end of
June. Despite their low nominal yields, Japanese government bonds were the
Fund's best performers in the first half of the year. Unfortunately, the Fund
remains underweighted in Japan relative to its benchmark, which detracted from
the Fund's relative performance. On the other hand, remaining underweighted in
the Japanese yen during the first half of 1999 added significantly to the Fund's
performance.
In Europe, the Fund tried to capitalize on markets that needed to ease monetary
policy. As a result, it was overweighted in the U.K. and occasionally held
positions in Norwegian bonds. While Norway was among the best-performing markets
in the first quarter, U.K. bonds were laggards throughout the first half of
1999, despite easing by the Bank of England. The Fund
- --------------------------------------------------------------------------------
(1) Lipper, 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.
(2) The Salomon Smith Barney Non-U.S. Dollar World Government Bond Index is an
unmanaged index generally considered to be representative of the world bond
market. An investment cannot be made directly into an index.
(3) Duration is a measure of price sensitivity, which adjusts for the time value
of the payments investors will receive and which takes into account both
interest and principal payments. Duration is a better gauge of interest-rate
sensitivity than average maturity alone.
(4) Euroland refers to the countries participating in European Monetary Union, a
system that allows several European nations to operate with a common
currency.
106
<PAGE> 108
was underweighted in the three- to seven-year portion of the Euroland(4) yield
curve, which detracted from performance when this sector outperformed both
shorter- and longer-term bonds.
The Fund also dramatically reduced its exposure to nongovernment bonds. Issues
such as Depfa Pfandbriefe eurobonds and European Investment Bank sterling bonds
were liquidated when their spreads contracted to historical norms. Since the
bonds were originally purchased at much wider spreads, the impact of the sales
was positive. We also used the recovery in emerging market debt to sell certain
of the Fund's nongovernment bond positions at prices well above their earlier
lows. This had a positive impact on the Fund's performance.
LOOKING AHEAD
Going forward, we are cautiously defensive. We will continue to focus on Japan,
using its growth as a measure of the health of the global economy, the direction
of monetary policy, and the speed at which policy decisions may be implemented.
We believe that the U.S. dollar is becoming increasingly vulnerable as the
economies of Europe and Japan continue to strengthen.
Whatever the markets may bring, the Fund will continue seeking to provide total
return by investing primarily in a portfolio of non-U.S. (primarily government)
debt securities.
Joseph Portera
Portfolio Manager
MacKay Shields Financial Corporation
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
107
<PAGE> 109
- --------------------------------------------------------------------------------
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
INTERNATIONAL BOND FUND VS
SALOMON SMITH BARNEY NON-US DOLLAR WORLD GOV'T BOND INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
SALOMON SMITH BARNEY NON-U.S.
INTERNATIONAL BOND FUND DOLLAR WORLD GOVT BOND INDEX
----------------------- -----------------------------
<S> <C> <C>
1/31/90 10000.00 10000.00
3/31/91 10318.00 11174.00
6/30/91 9969.00 11092.00
9/30/91 10831.00 12275.00
12/31/91 11868.00 13561.00
3/31/92 11420.00 12905.00
6/30/92 12478.00 14117.00
9/30/92 13133.00 15160.00
12/31/92 12779.00 14208.00
3/31/93 13608.00 15053.00
6/30/93 14045.00 15491.00
9/30/93 14381.00 16326.00
12/31/93 14640.00 16357.00
3/31/94 14701.00 16675.00
6/30/94 14785.00 16958.00
9/30/94 15048.00 17238.00
12/31/94 15094.00 17336.00
3/31/95 16287.00 19840.00
6/30/95 16800.00 20810.00
9/30/95 17011.00 20304.00
12/31/95 17881.00 20726.00
3/31/96 18185.00 20376.00
6/30/96 18778.00 20458.00
9/30/96 19611.00 21125.00
12/31/96 20441.00 21572.00
3/31/97 19889.00 20326.00
6/30/97 20589.00 20901.00
9/30/97 21160.00 20945.00
12/31/97 20978.00 20654.00
3/31/98 21228.00 20738.00
6/30/98 21666.00 21085.00
9/30/98 23044.00 23111.00
12/31/98 23606.00 24329.00
6/30/99 21437.00 22112.00
</TABLE>
THE GRAPHS ASSUME A $10,000 INVESTMENT MADE ON 1/31/90.(+)
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
INTERNATIONAL BOND FUND VS
SALOMON SMITH BARNEY NON-US DOLLAR WORLD GOV'T BOND INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
SERVICE CLASS SHARES SB NON-US$ WD GV BD INDX
-------------------- ------------------------
<S> <C> <C>
1/31/90 10000.00 10000.00
3/31/91 10318.00 11174.00
6/30/91 9969.00 11092.00
9/30/91 10831.00 12275.00
12/31/91 11868.00 13561.00
3/31/92 11420.00 12905.00
6/30/92 12478.00 14117.00
9/30/92 13133.00 15160.00
12/31/92 12779.00 14208.00
3/31/93 13608.00 15053.00
6/30/93 14045.00 15491.00
9/30/93 14381.00 16326.00
12/31/93 14640.00 16357.00
3/31/94 14701.00 16675.00
6/30/94 14785.00 16958.00
9/30/94 15048.00 17238.00
12/31/94 15094.00 17336.00
3/31/95 16287.00 19840.00
6/30/95 16800.00 20810.00
9/30/95 16996.00 20304.00
12/31/95 17850.00 20726.00
3/31/96 18155.00 20376.00
6/30/96 18716.00 20458.00
9/30/96 19549.00 21125.00
12/31/96 20363.00 21572.00
3/31/97 19793.00 20326.00
6/30/97 20473.00 20901.00
9/30/97 21025.00 20945.00
12/31/97 20825.00 20654.00
3/31/98 21074.00 20738.00
6/30/98 21490.00 21085.00
9/30/98 22863.00 23111.00
12/31/98 23386.00 24329.00
6/30/99 21230.00 22112.00
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF JUNE 30, 1999 AS OF JUNE 30, 1999
- ------------------------------------------------------------------------------------------------------------------------
YEAR TO DATE ONE YEAR FIVE YEAR SINCE INCEPTION
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
International Bond Fund Institutional Class(+) -9.19% -1.06% 7.71% 8.44%
International Bond Fund Service Class(+) -9.22% -1.21% 7.50% 8.32%
Average Lipper International Income Fund -6.14% 2.48% 6.06% 6.64%
Salomon Smith Barney Non-U.S. Dollar World -9.11% 4.87% 5.45% 8.80%
Gov't Bond Index
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
18.73 7.68 14.56 3.11 18.46 14.32 2.62 12.53
<CAPTION>
1999 AS
OF
6/30/99
--------
<S> <C>
-9.19
</TABLE>
- --------------------------------------------------------------------------------
* 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 gain distributions and
dividends, and, for the Service Class Shares, include the service fee of .25%
on an annualized basis of the average daily net asset value of the Service
Class shares.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO CURRENT MARKET
VOLATILITY, PERFORMANCE MAY BE LESS THAN SHOWN. 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 and the Service Class shares are sold with no
sales charge or contingent deferred sales charge. The Service Class shares,
first offered 1/1/95, 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.
+ The inception date of the International Bond Fund's predecessor separate
account is 1/31/90 ("Separate Account"). Performance figures, and, in the case
of the graphs reflecting the investment of $10,000, investment results include
the historical performance of the Separate Account for the period prior to the
International Bond Fund's commencement of operations on 1/1/95. MacKay Shields
Financial Corporation, the International Bond Fund's subadvisor, served as
investment advisor to the Separate Account, and the investment objective,
policies, restrictions, guidelines, and management style of the Separate
Account were substantially similar to those of the International Bond Fund.
Performance figures and investment results for the period prior to 1/1/95 have
been calculated using the Separate Account's expense structure, which
generally was higher than the expense structure of the International Bond
Fund. The Separate Account was not registered under the Investment Company Act
of 1940 ("1940 Act") and therefore was not subject to certain investment
restrictions imposed under the 1940 Act. If the Separate Account had been
registered under the 1940 Act, the Separate Account's performance and
investment results may have been adversely affected.
108
<PAGE> 110
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
June 30,1999 (Unaudited)
<TABLE>
<CAPTION>
LONG-TERM BONDS (94.1%)+
CORPORATE BONDS (8.5%)
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
GERMANY (3.1%)
Bayerische VBK New York
4.50%, due 6/24/02............. E 536,345 $ 565,517
Kredit Fuer Wiederaufbau
5.00%, due 1/4/09.............. 1,180,000 1,244,917
-----------
1,810,434
-----------
SWEDEN (1.2%)
Banque Nationale de Paris
Medium-Term Notes
Series E
11.00%, due 11/4/99............ SK 6,050,000 727,476
-----------
UNITED KINGDOM (3.4%)
European Investment Bank
6.25%, due 12/7/08............. L 717,000 1,166,154
International Bank for
Reconstruction & Development
Medium-Term Notes
Series E
7.125%, due 7/30/07............ 474,000 803,574
-----------
1,969,728
-----------
UNITED STATES (0.8%)
Conproca S.A.
12.00%, due 6/16/10 (b)........ $ 470,000 441,800
-----------
Total Corporate Bonds
(Cost $5,408,686).............. 4,949,438
-----------
GOVERNMENTS &
FEDERAL AGENCIES (85.6%)
AUSTRALIA (5.0%)
Australian Government
Series 611
5.75%, due 6/15/11............. A$ 2,929,000 1,860,190
Federal National Mortgage
Association
Series EMTN
6.375%, due 8/15/07............ 1,625,000 1,058,212
-----------
2,918,402
-----------
BELGIUM (4.5%)
Kingdom of Belgium
Series 10
8.75%, due 6/25/02............. E 2,197,000 2,589,544
-----------
CANADA (5.4%)
Canadian Government
Series WH31
6.00%, due 6/1/08.............. C$ 1,761,000 1,234,401
Series VR22
7.50%, due 3/1/01.............. 2,700,000 1,891,952
-----------
3,126,353
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
DENMARK (1.4%)
Kingdom of Denmark
7.00%, due 12/15/04............ DK 5,051,000 $ 790,235
-----------
FINLAND (3.0%)
Finnish Government
Series RG
10.00%, due 9/15/01............ E 1,492,000 1,752,825
-----------
FRANCE (4.0%)
France Obligations Assimilables
du Tresor
4.00%, due 4/25/09............. 1,358,000 1,338,883
5.50%, due 4/25/29............. 968,000 1,005,486
-----------
2,344,369
-----------
GERMANY (14.0%)
Bundesobligation
Series 127
4.50%, due 5/19/03 (c)......... 2,880,000 3,046,180
Republic of Deutschland
Series 98
5.25%, due 1/4/08.............. 1,924,000 2,081,051
5.625%, due 1/4/28............. 987,000 1,049,244
Series 96
6.00%, due 1/5/06.............. 1,720,000 1,947,317
-----------
8,123,792
-----------
ITALY (10.4%)
Buoni Poliennali del Tesoro
5.00%, due 5/1/08.............. 1,075,000 1,128,160
6.50%, due 11/1/27............. 1,045,000 1,214,039
8.25%, due 7/1/01.............. 1,456,000 1,641,219
8.50%, due 1/1/04.............. 1,711,000 2,083,939
-----------
6,067,357
-----------
JAPAN (18.3%)
Japanese Government
Series 42
2.60%, due 3/20/19............. Y 136,100,000 1,091,590
Series 168
3.40%, due 3/22/04............. 663,700,000 6,060,298
Series 174
4.60%, due 9/20/04............. 359,000,000 3,472,216
-----------
10,624,104
-----------
NETHERLANDS (4.2%)
Netherlands Government
3.75%, due 7/15/09............. E 2,560,000 2,443,439
-----------
SPAIN (4.7%)
Bonos Y Obligacion del Estado
4.25%, due 7/30/04............. 1,586,000 1,664,576
5.15%, due 7/30/09............. 1,000,000 1,058,217
-----------
2,722,793
-----------
</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.
109
<PAGE> 111
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30,1999 (Unaudited)
<TABLE>
<CAPTION>
GOVERNMENTS &
FEDERAL AGENCIES (CONTINUED)
PRINCIPAL
AMOUNT VALUE
------------------------
<S> <C> <C>
SWEDEN (0.9%)
Swedish Government
Series 1040
6.50%, due 5/5/08.............. SK 4,100,000 $ 532,516
-----------
UNITED KINGDOM (9.8%)
Federal National Mortgage
Association
Series EMTN
6.875%, due 6/7/02............. L 1,938,000 3,129,755
United Kingdom Treasury Bonds
7.25%, due 12/7/07............. 672,000 1,197,503
9.00%, due 10/13/08............ 680,000 1,362,144
-----------
5,689,402
-----------
Total Governments &
Federal Agencies
(Cost $52,298,395)............. 49,725,131
-----------
Total Long-Term Bonds
(Cost $57,707,081)............. 54,674,569
-----------
<CAPTION>
OPTIONS (0.1%)
NOTIONAL
AMOUNT
-------------
<S> <C> <C>
UNITED STATES (0.1%)
U.S. Dollar Call/Euro Put
Strike price E 1.024
Expire 8/31/99 (a)............. 2,900,000 32,367
-----------
Total Options
(Cost $31,755)................. 32,367
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------------------
SHORT-TERM INVESTMENTS (5.7%)
COMMERCIAL PAPER (5.7%)
<S> <C> <C>
UNITED STATES (5.7%)
Ford Motor Credit Corp.
5.65%, due 7/1/99.............. $ 2,625,000 $ 2,625,000
KFW International Finance Inc.
5.70%, due 7/1/99.............. 725,000 725,000
-----------
Total Short-Term Investments
(Cost $3,350,000).............. 3,350,000
-----------
Total Investments
(Cost $61,088,836) (d)......... 99.9% 58,056,936(e)
Cash and Other Assets,
Less Liabilities............... 0.1 69,526
------------- -----------
Net Assets...................... 100.0% $58,126,462
============= ===========
</TABLE>
- ------------
(a) Non- income producing security.
(b) May be sold to institutional investors only.
(c) Partially segregated as collateral for foreign currency forward contracts.
(d) The cost for Federal income tax purposes is $61,096,289.
(e) At June 30, 1999 net unrealized depreciation for securities was $3,039,353,
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 $80,735, and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $3,120,088.
(f) The following abbreviations are used in the above portfolio:
A$ --Australian Dollar
C$ --Canadian Dollar
DK--Danish Krone
E --Euro
Y --Japanese Yen
L --Pound Sterling
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.
110
<PAGE> 112
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $61,088,836)...... $ 58,056,936
Cash denominated in foreign
currencies (identified cost
$2,160,093)........................ 2,152,106
Cash................................. 121,876
Receivables:
Investment securities sold......... 8,637,783
Interest........................... 923,289
Unrealized appreciation on foreign
currency forward contracts......... 295,708
Unamortized organization expense..... 383
--------------
Total assets................... 70,188,081
--------------
LIABILITIES:
Payables:
Investment securities purchased.... 11,562,337
MainStay Management................ 30,370
Custodian.......................... 8,261
Fund shares redeemed............... 2,500
Transfer agent..................... 2,022
Accrued expenses..................... 36,694
Unrealized depreciation on foreign
currency forward contracts......... 419,435
--------------
Total liabilities.............. 12,061,619
--------------
Net assets........................... $ 58,126,462
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per
share)
1 billion shares authorized
Institutional Class................ $ 6,037
Institutional Service Class........ 22
Additional paid-in capital........... 61,777,016
Accumulated undistributed net
investment income.................. 1,488,204
Accumulated undistributed net
realized gain on investments....... 408,377
Accumulated net realized loss on
foreign currency transaction....... (2,371,959)
Net unrealized depreciation on
investments........................ (3,031,900)
Net unrealized depreciation on
translation of other assets and
liabilities in foreign currencies
and foreign currency forward
contracts.......................... (149,335)
--------------
Net assets........................... $ 58,126,462
==============
Institutional Class
Net assets applicable to outstanding
shares............................. $ 57,919,994
==============
Shares of capital stock
outstanding........................ 6,036,681
==============
Net asset value per share
outstanding........................ $ 9.59
==============
Institutional Service Class
Net assets applicable to outstanding
shares............................. $ 206,468
==============
Shares of capital stock
outstanding........................ 21,622
==============
Net asset value per share
outstanding........................ $ 9.55
==============
<CAPTION>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<S> <C>
INVESTMENT INCOME:
Income:
Interest (a)....................... $ 1,533,342
--------------
Total income................... 1,533,342
--------------
Expenses:
Management......................... 235,862
Professional....................... 21,211
Transfer agent..................... 13,130
Registration....................... 11,865
Custodian.......................... 8,731
Shareholder communication.......... 2,707
Directors.......................... 723
Amortization of organization
expense.......................... 376
Service............................ 276
Miscellaneous...................... 9,007
--------------
Total expenses before
reimbursement................ 303,888
Expense reimbursement from
Manager.......................... (23,528)
--------------
Net expenses................... 280,360
--------------
Net investment income................ 1,252,982
--------------
REALIZED AND UNREALIZED LOSS ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized loss from:
Security transactions.............. (348,415)
Option transactions................ (18,172)
Foreign currency transactions...... (2,371,959)
--------------
Net realized loss on investments and
foreign currency transactions...... (2,738,546)
--------------
Net change in unrealized appreciation
on investments:
Security transactions.............. (3,829,849)
Translation of other assets and
liabilities in foreign currencies
and foreign currency forward
contracts........................ (319,269)
--------------
Net unrealized loss on investments
and foreign currency
transactions....................... (4,149,118)
--------------
Net realized and unrealized loss on
investments and foreign currency
transactions....................... (6,887,664)
--------------
Net decrease in net assets resulting
from operations.................... $ (5,634,682)
==============
</TABLE>
- ------------
(a) Interest recorded net of foreign withholding taxes of $2,171.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
111
<PAGE> 113
INTERNATIONAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited) and the year ended December
31, 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 1,252,982 $ 3,089,685
Net realized gain (loss) on investments................. (348,415) 1,420,414
Net realized loss on option transactions................ (18,172) (52,912)
Net realized gain (loss) on foreign currency
transactions........................................... (2,371,959) 597,311
Net change in unrealized appreciation (depreciation) on
investments............................................ (3,829,849) 1,431,603
Net change in unrealized appreciation on translation of
other assets and liabilities in foreign currencies and
foreign currency forward contracts..................... (319,269) 149,867
-------------- --------------
Net increase (decrease) in net assets resulting from
operations............................................. (5,634,682) 6,635,968
-------------- --------------
Dividends and distributions to shareholders:
From net investment income and net realized gain on
foreign currency transactions:
Institutional Class................................... -- (3,476,092)
Institutional Service Class........................... -- (12,646)
From net realized gain on investments:
Institutional Class................................... -- (645,156)
Institutional Service Class........................... -- (2,456)
-------------- --------------
Total dividends and distributions to shareholders... -- (4,136,350)
-------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 3,012,730 11,263,450
Institutional Service Class........................... 845 21,938
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... -- 4,116,548
Institutional Service Class........................... -- 14,879
-------------- --------------
3,013,575 15,416,815
Cost of shares redeemed:
Institutional Class................................... (2,027,998) (3,932,796)
Institutional Service Class........................... (7,036) (49,589)
-------------- --------------
Increase in net assets derived from capital share
transactions......................................... 978,541 11,434,430
-------------- --------------
Net increase (decrease) in net assets................. (4,656,141) 13,934,048
NET ASSETS:
Beginning of period....................................... 62,782,603 48,848,555
-------------- --------------
End of period............................................. $ 58,126,462 $ 62,782,603
============== ==============
Accumulated undistributed net investment income at end of
period.................................................. $ 1,488,204 $ 235,222
============== ==============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
112
<PAGE> 114
(THIS PAGE INTENTIONALLY LEFT BLANK)
113
<PAGE> 115
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 ENDED YEAR ENDED
JUNE 30, 1999* DECEMBER 31, 1998
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period..................... $ 10.56 $ 10.52 $ 10.05 $ 10.01
---------- ---------- ---------- ----------
Net investment income...................................... 0.21 0.21 0.56 0.53
Net realized and unrealized gain (loss) on investments..... (0.72) (0.72) 0.71 0.71
Net realized and unrealized gain (loss) on foreign currency
transactions............................................. (0.46) (0.46) (0.01) (0.01)
---------- ---------- ---------- ----------
Total from investment operations........................... (0.97) (0.97) 1.26 1.23
---------- ---------- ---------- ----------
Less dividends and distributions:
From net investment income and net realized gain on foreign
currency transactions.................................... -- -- (0.63) (0.60)
From net realized gain on investments...................... -- -- (0.12) (0.12)
---------- ---------- ---------- ----------
Total dividends and distributions.......................... -- -- (0.75) (0.72)
---------- ---------- ---------- ----------
Net asset value at end of period........................... $ 9.59 $ 9.55 $ 10.56 $ 10.52
========== ========== ========== ==========
Total investment return.................................... (9.19%)(b) (9.22%)(b) 12.53% 12.30%
Ratios (to average net assets)/Supplemental Data:
Net investment income.................................... 4.25%+ 4.00%+ 5.61% 5.36%
Net expenses............................................. 0.95%+ 1.20%+ 0.95% 1.20%
Expenses (before reimbursement).......................... 1.03%+ 1.28%+ 1.08% 1.33%
Portfolio turnover rate.................................... 184% 184% 299% 299%
Net assets at end of period (in 000's)..................... $ 57,920 $ 206 $ 62,549 $ 234
</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> 116
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- -------------
YEAR ENDED DECEMBER 31 JANUARY 1, 1995(a)
------------------------------------------------------------- THROUGH
1997 1996 DECEMBER 31, 1995
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 11.10 $ 11.07 $ 11.16 $ 11.14 $ 10.00 $ 10.00
---------- ---------- ---------- ---------- ---------- ----------
1.01 0.98 1.21 1.19 0.70 0.70
(1.11) (1.13) 0.11 0.11 1.12 1.10
0.40 0.41 0.27 0.26 0.02 0.02
---------- ---------- ---------- ---------- ---------- ----------
0.30 0.26 1.59 1.56 1.84 1.82
---------- ---------- ---------- ---------- ---------- ----------
(0.99) (0.96) (1.37) (1.35) (0.55) (0.55)
(0.36) (0.36) (0.28) (0.28) (0.13) (0.13)
---------- ---------- ---------- ---------- ---------- ----------
(1.35) (1.32) (1.65) (1.63) (0.68) (0.68)
---------- ---------- ---------- ---------- ---------- ----------
$ 10.05 $ 10.01 $ 11.10 $ 11.07 $ 11.16 $ 11.14
========== ========== ========== ========== ========== ==========
2.62% 2.27% 14.32% 14.08% 18.46% 18.26%
5.86% 5.61% 6.02% 5.77% 6.61% 6.36%
0.95% 1.20% 0.95% 1.20% 0.95% 1.20%
1.10% 1.35% 1.08% 1.33% 1.03% 1.28%
186% 186% 57% 57% 92% 92%
$ 48,613 $ 235 $ 51,980 $ 225 $ 44,388 $ 6
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
115
<PAGE> 117
MONEY MARKET FUND
- --------------------------------------------------------------------------------
Much of the first half of 1999 reflected an aftershock from the global financial
crisis that had dominated the money markets throughout 1998. As Asian markets
recovered, strong domestic economic growth, healthy retail sales, and low
unemployment provided the backdrop for U.S. investors. The Federal Reserve Board
continued to monitor these economic indicators and in May, announced a bias
toward raising interest rates. These factors combined to push yields on
short-term money-market securities higher. Over the reporting period, the
money-market yield curve steepened.
Finally, concerns that a strong economy would rekindle inflation led to a widely
anticipated move by the Federal Reserve Board, which raised the targeted federal
funds rate by 0.25% to 5.00% when it met on June 30, 1999. While there is still
little evidence of inflation, the move to tighten monetary policy was intended
to keep rising wages and prices from derailing the economy. The Federal Reserve
Board's action at the end of June reversed its earlier policy of easing interest
rates, which had resulted in a series of interest-rate cuts in the second half
of 1998.
PERFORMANCE OVERVIEW
The MainStay Institutional Money Market Fund returned 2.29% for Institutional
Class Shares, 2.16% for Service Class shares, and 2.04% for Sweep Shares Class
shares. All share classes underperformed the average Lipper(1) institutional
money market fund, which returned 2.31% for the six months ended June 30, 1999.
During February, March, and April, the Fund purchased corporate bonds with
one-year maturities. Because the money-market yield curve had steepened to 0.30%
by that point, the Fund benefited from these purchases, but the benefits would
have been greater had we delayed the transactions. The prices of corporate bonds
fell even further in the second quarter of the year as investor concerns over
tighter monetary policy caused the yield curve to steepen by an additional
0.30%.
STRATEGIC DAYS-TO-MATURITY POSITIONING
During the reporting period, our decisions regarding the portfolio's days to
maturity had a positive impact on performance. The Fund's average days to
maturity was slightly longer than that of the benchmark, ranging from 51 days to
78 days during the first half of the year. Securities with a longer time to
maturity offered higher yields than those with shorter maturities for most of
the six months, especially after the yield curve began to steepen. Thus, the
Fund's days-to-maturity positioning proved to be a prudent strategy during the
reporting period.
The Fund also continued to find value in the less-liquid sectors of the market,
such as floaters, short corporate bonds, and asset-backed commercial paper,
which performed well. Significant purchases during the first half of the year
included a Heller Equipment asset-backed security, a Comerica floating-rate
security, and a Wells Fargo medium-term note.
We believe that the Fund's overweighted position in commercial paper of domestic
blue-chip issuers provided the Fund with ample liquidity. In addition, while the
portfolio was advantageously underweighted in U.S. Treasuries and government
agency securities, which underperformed during the reporting period, these
securities also provided the portfolio with some liquidity. There were no major
shifts in sector allocation or major security sales during the semiannual
period.
- --------------------------------------------------------------------------------
(1) Lipper, 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.
116
<PAGE> 118
LOOKING AHEAD
The Federal Reserve Board's tightening at the end of June signaled a dramatic
shift in its monetary policy. Clearly, the degree of tightening and the timing
of the Federal Reserve's next moves, if any, will be key to money-market
performance during the second half of 1999. The Federal Reserve itself has
suggested that its outlook on interest rates has changed from a bias toward
higher rates to a neutral stance. Of course, given the tight labor market and
other economic and price data, the policy makers also said they must "be
especially alert." Thus, we would not be surprised to see the Federal Reserve
Board move to increase interest rates further in the coming months.
Given this outlook, we also intend to "be especially alert," monitoring both
yield and quality spreads between U.S. government agency securities, U.S.
Treasuries, and their alternatives, making adjustments to the portfolio
accordingly. Naturally, we will also seek to take advantage of any attractive
issue-specific value opportunities should they arise. Whatever happens, the Fund
will seek to provide a high level of current income while preserving capital and
maintaining liquidity.
David Clement
Portfolio Manager
New York Life Insurance Company
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
117
<PAGE> 119
- --------------------------------------------------------------------------------
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
MONEY MARKET FUND VS
AVERAGE LIPPER INSTITUTIONAL MONEY MARKET FUND
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
AVERAGE LIPPER INSTITUTIONAL MONEY
MONEY MARKET FUND MARKET FUND
----------------- ----------------------------------
<S> <C> <C>
12/31/90 10000 10000
3/31/91 10162 10168
6/30/91 10313 10318
9/30/91 10461 10465
12/31/91 10595 10599
3/31/92 10707 10708
6/30/92 10808 10809
9/30/92 10899 10898
12/31/92 10983 10982
3/31/93 11063 11063
6/30/93 11140 11141
9/30/93 11220 11221
12/31/93 11303 11303
3/31/94 11383 11387
6/30/94 11479 11487
9/30/94 11600 11608
12/31/94 11738 11751
3/31/95 11903 11913
6/30/95 12071 12083
9/30/95 12234 12251
12/31/95 12399 12419
3/31/96 12556 12577
6/30/96 12732 12732
9/30/96 12870 12894
12/31/96 13032 13058
3/31/97 13193 13220
6/30/97 13363 13392
9/30/97 13540 13570
12/31/97 13720 13752
3/31/98 13897 13932
6/30/98 14076 14114
9/30/98 14260 14302
12/31/98 14439 14481
6/30/99 14770 14816
</TABLE>
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
MONEY MARKET FUND VS
AVERAGE LIPPER INSTITUTIONAL MONEY MARKET FUND
SWEEP SHARES CLASS SHARES
[Sweep Shares Class Shares Graph]
<TABLE>
<CAPTION>
AVERAGE LIPPER INSTITUTIONAL MONEY
MONEY MARKET FUND MARKET FUND
----------------- ----------------------------------
<S> <C> <C>
12/31/90 10000.00 10000.00
3/31/91 10162.00 10168.00
6/30/91 10313.00 10318.00
9/30/91 10461.00 10465.00
12/31/91 10595.00 10599.00
3/31/92 10707.00 10708.00
6/30/92 10808.00 10809.00
9/30/92 10899.00 10898.00
12/31/92 10983.00 10982.00
3/31/93 11063.00 11063.00
6/30/93 11140.00 11141.00
9/30/93 11220.00 11221.00
12/31/93 11300.00 11303.00
3/31/94 11383.00 11387.00
6/30/94 11479.00 11487.00
9/30/94 11600.00 11608.00
12/31/94 11738.00 11751.00
3/31/95 11903.00 11913.00
6/30/95 12066.00 12083.00
9/30/95 12222.00 12251.00
12/31/95 12379.00 12419.00
3/31/96 12528.00 12577.00
6/30/96 12674.00 12732.00
9/30/96 12826.00 12894.00
12/31/96 12979.00 13058.00
3/31/97 13131.00 13220.00
6/30/97 13292.00 13392.00
9/30/97 13460.00 13570.00
12/31/97 13630.00 13752.00
3/31/98 13798.00 13932.00
6/30/98 13967.00 14114.00
9/30/98 14141.00 14302.00
12/31/98 14311.00 14481.00
6/30/99 14602.00 14816.00
</TABLE>
THESE GRAPHS ASSUME A $10,000 INVESTMENT MADE ON 1/2/91.
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
MONEY MARKET FUND VS
AVERAGE LIPPER INSTITUTIONAL MONEY MARKET FUND
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<S> <C> <C>
12/31/90 10000.00 10000.00
3/31/91 10162.00 10168.00
6/30/91 10313.00 10318.00
9/30/91 10461.00 10465.00
12/31/91 10595.00 10599.00
3/31/92 10707.00 10708.00
6/30/92 10808.00 10809.00
9/30/92 10899.00 10898.00
12/31/92 10983.00 10982.00
3/31/93 11063.00 11063.00
6/30/93 11140.00 11141.00
9/30/93 11220.00 11221.00
12/31/93 11303.00 11303.00
3/31/94 11383.00 11387.00
6/30/94 11479.00 11487.00
9/30/94 11600.00 11608.00
12/31/94 11738.00 11751.00
3/31/95 11903.00 11913.00
6/30/95 12066.00 12083.00
9/30/95 12222.00 12251.00
12/31/95 12379.00 12419.00
3/31/96 12528.00 12577.00
6/30/96 12732.00 12732.00
9/30/96 12826.00 12894.00
12/31/96 12979.00 13058.00
3/31/97 13131.00 13220.00
6/30/97 13292.00 13392.00
9/30/97 13460.00 13570.00
12/31/97 13630.00 13752.00
3/31/98 13798.00 13932.00
6/30/98 13967.00 14114.00
9/30/98 14141.00 14302.00
12/31/98 14309.00 14481.00
6/30/99 14619.00 14816.00
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF JUNE 30, 1999 AS OF JUNE 30, 1999
- ----------------------------------------------------------------------------------------------------------------
YEAR TO DATE ONE YEAR FIVE YEAR SINCE INCEPTION
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market Fund Institutional Class(+) 2.29% 4.93% 5.17% 4.69%
Money Market Fund Service Class(+) 2.16% 4.67% 4.96% 4.57%
Money Market Fund Sweep Shares Class(+) 2.04% 4.55% 4.93% 4.55%
Average Lipper Institutional Money Market Fund 2.31% 4.97% 5.28% 4.87%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5.95 3.66 2.89 3.88 5.63 5.11 5.27 5.25
<CAPTION>
1999 AS
OF
6/30/99
--------
<S> <C>
2.29
</TABLE>
- --------------------------------------------------------------------------------
* 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 gain distributions and
dividends, and, for the Service Class and Sweep Shares Class shares, include
the service fee of .25% on an annualized basis of the average daily net asset
values of the Service Class and Sweep Shares Class shares. In addition, Sweep
Shares Class shares are sold with an annual 12b-1 fee of .25%.
+ Performance figures for the Sweep Shares Class, first offered to the public on
12/8/98, include the historical performance of the Service Class from the
Service Class's inception (1/1/95) up to 12/7/98. 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 12/31/94. Performance figures for these Classes after these dates will vary
based on differences in their expense structures.
The Money Market Fund had an effective 7-day yield with a current 7-day yield
of 5.27% and 5.14%, respectively, for the Institutional Class; 5.01% and
4.89%, respectively, for the Service Class; and 4.74% and 4.64%, respectively,
for the Sweep Shares Class, all as of 6/30/99. These yields reflect certain
expense limitations. Had these expenses not been limited, the effective 7-day
yield and the current 7-day yield would have been 5.16% and 5.03%,
respectively, for the Institutional Class; 4.90% and 4.78%, respectively, for
the Service Class; and 4.63% and 4.53%, respectively, for the Sweep Shares
Class. These expense limitations are voluntary and may be terminated or
revised at any time.
Investments in the Money Market Fund are not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
the Fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Fund.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO CURRENT MARKET
VOLATILITY, PERFORMANCE MAY BE LESS THAN SHOWN. 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, the Service Class, and the Sweep Shares Class shares
are sold with no sales charge or contingent deferred sales charge. The Service
Class and Sweep Shares Class shares, first offered 1/1/95 and 12/8/98,
respectively, are subject to an annual shareholder service fee of .25%. In
addition, Sweep Shares Class shares are sold with an annual 12b-1 fee of .25%.
118
<PAGE> 120
MAINSTAY
INSTITUTIONAL FUNDS INC.
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS (100.1%)+
PRINCIPAL AMORTIZED
AMOUNT COST
-----------------------
<S> <C> <C>
ASSET-BACKED SECURITIES (3.2%)
Asset-Backed Securities
Investment Trust, Series 1999-E
Class N
4.98%, due 8/15/99 (a)(b)(c).... $ 7,900,000 $ 7,900,000
Heller Equipment Asset Receivable
Trust, Series 1999-1 Class A1
4.95%, due 5/13/00 (c).......... 3,981,065 3,981,065
------------
11,881,065
------------
BANK NOTES (7.3%)
Comerica Bank (Detroit, Michigan)
4.88%, due 2/2/00 (b)(c)........ 5,000,000 4,999,129
4.90%, due 7/19/99 (b)(c)....... 5,000,000 4,999,854
First National Bank Commerce
6.50%, due 1/14/00 (c).......... 4,150,000 4,181,096
First Union National Bank
5.06%, due 11/23/99 (b)(c)...... 3,000,000 3,000,000
Key Bank North America
5.08%, due 9/15/99 (b)(c)....... 5,000,000 4,999,165
PNC Bank North America
5.04%, due 2/16/00 (c).......... 5,000,000 4,998,785
------------
27,178,029
------------
CERTIFICATE OF DEPOSIT (1.3%)
PNC Bank North America
5.02%, due 7/27/99 (b)(c)....... 5,000,000 4,999,733
------------
COMMERCIAL PAPER (73.7%)
Asset Portfolio Funding
4.90%, due 9/1/99 (a)........... 10,000,000 9,915,611
Baker Hughes Inc.
5.75%, due 7/1/99 (a)........... 15,000,000 15,000,000
Blue Ridge Asset Funding
4.88%, due 8/4/99 (a)........... 10,000,000 9,953,911
4.97%, due 8/30/99 (a).......... 4,500,000 4,462,725
Coca-Cola Enterprises Inc.
4.85%, due 7/12/99 (a).......... 10,000,000 9,985,181
Columbus Southern Power
5.35%, due 7/2/99............... 8,750,000 8,748,700
5.45%, due 7/19/99.............. 5,000,000 4,986,375
5.50%, due 7/9/99............... 4,100,000 4,094,989
Cooperative Association of
Tractor Dealers Inc.
4.77%, due 7/26/99.............. 5,000,000 4,983,437
DaimlerChrysler North America
Holdings
4.86%, due 8/16/99 (c).......... 10,000,000 10,000,000
Eaton Corp.
4.88%, due 7/23/99 (a).......... 5,352,000 5,336,039
5.00%, due 10/18/99 (a)......... 10,000,000 9,848,611
Emerson Electric Co.
5.85%, due 7/1/99............... 8,146,000 8,146,000
Enterprise Funding Corp.
4.95%, due 8/27/99 (a).......... 7,776,000 7,715,056
Finova Capital Corp.
4.87%, due 9/24/99.............. 6,000,000 5,931,008
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
-----------------------
<S> <C> <C>
COMMERCIAL PAPER (Continued)
General Electric Capital Corp.
4.80%, due 9/17/99.............. $ 6,000,000 $ 5,937,600
4.86%, due 8/2/99 (c)........... 9,040,000 9,040,000
General Motors Acceptance Corp.
5.07%, due 9/7/99............... 5,000,000 4,952,117
5.07%, due 10/25/99............. 10,000,000 9,836,633
Jefferson Smurfit Finance Corp.
4.95%, due 8/17/99.............. 6,000,000 5,961,225
Massachusetts College of Pharmacy
&
Allied Health Sciences
4.97%, due 8/9/99............... 10,000,000 9,946,158
Merita North America Inc.
4.82%, due 8/10/99.............. 10,000,000 9,946,444
Morgan (J.P.) & Co. Inc.
4.80%, due 10/12/99............. 10,000,000 9,862,667
5.00%, due 11/1/99.............. 8,000,000 7,863,333
National Rural Utilities
Cooperative
Finance Corp.
4.85%, due 9/8/99............... 10,000,000 9,907,042
5.08%, due 9/28/99.............. 9,800,000 9,676,923
Paccar Financial Corp.
5.05%, due 9/22/99.............. 8,000,000 7,906,856
Park Avenue Receivables Corp.
4.93%, due 7/7/99 (a)........... 10,000,000 9,991,783
5.30%, due 9/2/99 (a)........... 5,000,000 4,953,625
Salomon Smith Barney Holdings
Inc.
4.81%, due 7/6/99............... 10,000,000 9,993,319
Sears Roebuck Acceptance Corp.
5.09%, due 10/4/99.............. 10,000,000 9,865,681
Variable Funding Capital Corp.
4.93%, due 7/20/99 (a).......... 8,553,000 8,530,746
Wood Street Funding Corp.
4.94%, due 7/16/99 (a).......... 10,000,000 9,979,708
------------
273,259,503
------------
CORPORATE BONDS (1.2%)
Morgan Stanley, Dean Witter,
Discover & Co.
6.25%, due 3/15/00 (c).......... 2,500,000 2,517,500
Wal-Mart Stores
6.13%, due 10/1/99 (c).......... 1,960,000 1,965,440
------------
4,482,940
------------
MEDIUM-TERM NOTES (8.5%)
African Development Bank
6.75%, due 7/30/99 (c).......... 5,000,000 5,007,029
Countrywide Funding Corp., Series
B
6.08%, due 7/14/99 (c).......... 5,050,000 5,051,863
Ford Motor Credit Co.
5.83%, due 2/28/00 (c).......... 6,550,000 6,580,712
General Motors Acceptance Corp.
5.45%, due 2/22/00 (c).......... 3,700,000 3,708,183
Morgan Stanley, Dean Witter,
Discover & Co., Series C
5.04%, due 2/11/00 (b)(c)....... 2,000,000 2,000,417
5.89%, due 3/20/00 (c).......... 2,000,000 2,008,570
</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.
119
<PAGE> 121
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS (CONTINUED)
PRINCIPAL AMORTIZED
AMOUNT COST
-----------------------
<S> <C> <C>
MEDIUM-TERM NOTES (Continued)
Virginia Electric & Power Co.,
Series F
6.35%, due 7/2/99 (c)........... $ 2,000,000 $ 2,000,032
Wells Fargo Co., Series J
5.23%, due 4/10/00 (c).......... 5,000,000 4,999,022
------------
31,355,828
------------
U.S. GOVERNMENT & FEDERAL AGENCIES (4.9%)
Govco Inc.
4.88%, due 8/23/99 (a).......... 7,960,000 7,902,812
Private Export Funding Corp.
4.93%, due 7/1/99............... 10,000,000 10,000,000
United States Treasury Bill
4.47%, due 8/19/99.............. 200,000 198,783
------------
18,101,595
------------
Total Short-Term Investments
(Amortized Cost $371,258,693)
(d)............................. 100.1% 371,258,693
Liabilities in Excess of
Cash and Other Assets........... (0.1) (460,172)
----------- ------------
Net Assets....................... 100.0% $370,798,521
=========== ============
</TABLE>
- ------------
(a) May be sold to institutional investors only.
(b) Floating rate. Rate shown is the rate in effect at June 30, 1999.
(c) Coupon interest bearing security.
(d) The cost stated also represents the aggregate cost for Federal income tax
purposes.
The table below sets forth the diversification of Money Market Fund investments
by industry.
INDUSTRY
DIVERSIFICATION
<TABLE>
<CAPTION>
AMORTIZED
COST PERCENT+
------------------------
<S> <C> <C>
Auto Finance................ $ 25,077,645 6.8%
Auto Manufacturing.......... 10,000,000 2.7
Banks....................... 69,856,258 18.8
Beverages................... 9,985,181 2.7
Brokerage................... 16,519,806 4.5
Conglomerates............... 14,977,600 4.0
Diversified Financial
Services.................. 5,931,008 1.6
Diversified Manufacturing... 15,184,650 4.1
Education................... 9,946,158 2.7
Electrical Equipment........ 8,146,000 2.2
Finance..................... 9,032,927 2.4
Forest Products & Paper..... 5,961,225 1.6
Insurance................... 4,983,438 1.3
Oil Services................ 15,000,000 4.1
Retail...................... 11,831,120 3.2
Special Purpose Finance..... 73,403,165 19.8
Truckers.................... 7,906,856 2.1
U.S. Government & Federal
Agencies.................. 18,101,595 4.9
Utilities................... 19,583,965 5.3
Utilities-Electric.......... 19,830,096 5.3
----------- -------
371,258,693 100.1
Liabilities in Excess of
Cash and Other Assets..... (460,172) (0.1)
----------- -------
Net Assets.................. $370,798,521 100.0%
=========== =======
</TABLE>
- ------------
+ Percentages indicated are based on Portfolio net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
120
<PAGE> 122
MAINSTAY
INSTITUTIONAL FUNDS INC.
MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $371,258,693)....... $371,258,693
Cash................................... 2,141
Interest receivable.................... 1,221,006
Other assets........................... 11,942
------------
Total assets..................... 372,493,782
------------
LIABILITIES:
Payables:
MainStay Management.................. 124,227
Custodian............................ 9,172
Transfer agent....................... 2,417
Accrued expenses....................... 157,153
Dividend payable....................... 1,402,292
------------
Total liabilities................ 1,695,261
------------
Net assets............................. $370,798,521
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per
share)
12 billion shares authorized
Institutional Class.................. $ 230,125
Institutional Service Class.......... 5,449
Sweep Shares Class................... 135,246
Additional paid-in capital............. 370,449,607
Accumulated net realized loss on
investments.......................... (21,906)
------------
Net assets............................. $370,798,521
============
Institutional Class
Net assets applicable to outstanding
shares............................... $230,103,535
============
Shares of capital stock outstanding.... 230,125,442
============
Net asset value per share
outstanding.......................... $ 1.00
============
Institutional Service Class
Net assets applicable to outstanding
shares............................... $ 5,448,898
============
Shares of capital stock outstanding.... 5,448,898
============
Net asset value per share
outstanding.......................... $ 1.00
============
Sweep Shares Class
Net assets applicable to outstanding
shares............................... $135,246,088
============
Shares of capital stock outstanding.... 135,246,088
============
Net asset value per share
outstanding.......................... $ 1.00
============
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................. $ 8,186,340
------------
Expenses:
Management........................... 807,632
Distribution - Sweep Shares Class.... 134,456
Service - Sweep Shares Class......... 134,456
Service - Institutional Service
Class.............................. 22,367
Shareholder communication............ 62,751
Professional......................... 31,420
Transfer agent....................... 24,722
Registration......................... 22,629
Custodian............................ 13,330
Directors............................ 3,494
Pricing Service...................... 1,270
Miscellaneous........................ 20,109
------------
Total expenses before
reimbursement.................. 1,278,636
Expense reimbursement from Manager... (179,724)
------------
Net expenses..................... 1,098,912
------------
Net investment income.................. 7,087,428
------------
REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments....... 5,349
------------
Net increase in net assets resulting
from operations...................... $ 7,092,777
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
121
<PAGE> 123
MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited) and the year ended December
31, 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income................................... $ 7,087,428 $ 14,014,435
Net realized gain (loss) on investments................. 5,349 (22,863)
-------------- --------------
Net increase in net assets resulting from operations.... 7,092,777 13,991,572
-------------- --------------
Dividends to shareholders:
From net investment income:
Institutional Class................................... (4,508,136) (10,021,538)
Institutional Service Class........................... (403,178) (3,989,833)
Sweep Shares Class.................................... (2,176,114) (3,064)
-------------- --------------
Total dividends to shareholders..................... (7,087,428) (14,014,435)
-------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 343,914,632 267,338,520
Institutional Service Class........................... 9,786,504 92,388,730
Sweep Shares Class.................................... 185,398,925 7,085,440
Net asset value of shares issued to shareholders in
reinvestment of dividends:
Institutional Class................................... 4,316,891 10,079,609
Institutional Service Class........................... 757,379 3,866,077
Sweep Shares Class.................................... 1,715,458 --
-------------- --------------
545,889,789 380,758,376
Cost of shares redeemed:
Institutional Class................................... (312,471,091) (273,376,385)
Institutional Service Class........................... (108,859,634) (56,718,408)
Sweep Shares Class.................................... (58,824,926) (128,810)
-------------- --------------
Increase in net assets derived from capital share
transactions......................................... 65,734,138 50,534,773
-------------- --------------
Net increase in net assets............................ 65,739,487 50,511,910
NET ASSETS:
Beginning of period....................................... 305,059,034 254,547,124
-------------- --------------
End of period............................................. $ 370,798,521 $ 305,059,034
============== ==============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
122
<PAGE> 124
(THIS PAGE INTENTIONALLY LEFT BLANK)
123
<PAGE> 125
MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE SWEEP SHARES INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------ ------------- -------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999* DECEMBER 31, 1998
-------------------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Net investment income....................... 0.02 0.02 0.02 0.05 0.05
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
From net investment income.................. (0.02) (0.02) (0.02) (0.05) (0.05)
From net realized gain on investments....... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions........... (0.02) (0.02) (0.02) (0.05) (0.05)
---------- ---------- ---------- ---------- ----------
Net asset value at end of period............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total investment return..................... 2.29%(b) 2.16%(b) 2.04%(b) 5.25% 4.99%
Ratios (to average net assets)/Supplemental
Data:
Net investment income..................... 4.57%+ 4.32%+ 4.07%+ 5.12% 4.87%
Net expenses.............................. 0.50%+ 0.75%+ 1.00%+ 0.50% 0.75%
Expenses (before reimbursement)........... 0.61%+ 0.86%+ 1.11%+ 0.63% 0.88%
Net assets at end of period (in 000's)...... $ 230,104 $ 5,449 $ 135,246 $ 194,338 $ 103,765
</TABLE>
- ------------
* Unaudited.
** Sweep Shares Class first offered on December 8, 1998.
+ Annualized.
(a) Less than one cent per share.
(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.
124
<PAGE> 126
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
SWEEP SHARES INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS
------------------ ------------- ------------- ------------- ------------- -------------
DECEMBER 8, 1998** YEAR ENDED DECEMBER 31
THROUGH -----------------------------------------------------------------------------
DECEMBER 31, 1998 1997 1996 1995
------------------ ----------------------------- ----------------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- -------- -------- -------- --------
0.00(a) 0.05 0.05 0.05 0.05 0.05
---------- -------- -------- -------- -------- --------
(0.00)(a) (0.05) (0.05) (0.05) (0.05) (0.05)
-- (0.00)(a) (0.00)(a) -- -- --
---------- -------- -------- -------- -------- --------
(0.00)(a) (0.05) (0.05) (0.05) (0.05) (0.05)
---------- -------- -------- -------- -------- --------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ======== ======== ========
0.31%(b) 5.27% 5.01% 5.11% 4.85% 5.63%
4.62%+ 5.18% 4.93% 5.00% 4.75% 5.48%
1.00%+ 0.50% 0.75% 0.50% 0.75% 0.50%
1.13%+ 0.61% 0.86% 0.67% 0.92% 0.73%
$ 6,957 $190,319 $ 64,228 $110,760 $ 34,664 $ 67,869
<CAPTION>
INSTITUTIONAL
SERVICE INSTITUTIONAL
CLASS CLASS
------------- -------------
YEAR ENDED DECEMBER 31
-----------------------------
1995 1994
------------- -------------
<S> <C> <C>
$ 1.00 $ 1.00
-------- --------
0.05 0.04
-------- --------
(0.05) (0.04)
-- --
-------- --------
(0.05) (0.04)
-------- --------
$ 1.00 $ 1.00
======== ========
5.46% 3.88%
5.23% 3.89%
0.75% 0.50%
0.98% 0.68%
$ 2,784 $ 65,106
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
125
<PAGE> 127
SHORT-TERM BOND FUND
- --------------------------------------------------------------------------------
In early 1999, investors expected the Federal Reserve Board to continue lowering
interest rates in response to global economic concerns. As Asian stock markets
rebounded, however, expectations shifted and interest rates began to rise. In
May, the Federal Reserve Board announced a bias toward raising interest rates,
and at the end of June it raised the targeted federal funds rate a quarter of a
percent. In anticipation, the market had raised long-term interest rates a half
a percent in the first quarter of 1999 and another half percent in the second
quarter of the year. While rising rates resulted in negative total returns for
long-term bond investors, fortunately, short-term investors were able to capture
increasing yields as their investments matured.
FUND PERFORMANCE
During the first six months of 1999, the MainStay Institutional Short-Term Bond
Fund returned 0.85% for Institutional Class shares and 0.74% for Service Class
shares. Although both share classes underperformed the 1.02% return
of the average Lipper(1) short U.S. government fund, Institutional Class shares
outperformed and Service Class shares underperformed half of
their peers.
HIGH-QUALITY SECURITIES
Throughout the first half of 1999, the Fund continued to focus on high-quality
securities, with over 82% of its assets invested in securities guaranteed by the
U.S. government or its agencies. Shares of the Fund are not guaranteed and
prices will fluctuate with market conditions. The rating of most of the
securities in the Fund's investment portfolio is above AAA. The rating is based
solely on the creditworthiness of the securities in the portfolio and is not
meant to represent the stability or safety of the Fund.
SHIFTING ALLOCATIONS
We reduced the Fund's commitment to Treasury securities from 73% of net assets
at the end of 1998 to 59% of net assets as of June 30, 1999. At the same time,
we increased the Fund's holdings among agency securities from 17% to
approximately 24% as strong new issuance increased liquidity in the agency
market. Although yield spreads between agencies and Treasuries widened
marginally, we believe that this was due to the increase in supply and that
spreads have begun to stabilize.
To enhance the Fund's yield opportunities, we also increased the Fund's
commitment to asset-backed securities rated AAA from 3% of net assets at the
beginning of the year to 12% at the end of June.
CHALLENGES FOR CORPORATE SECURITIES
Through April 1999, corporate debt securities showed relatively strong
performance. The Federal Reserve's announcement in May of a bias toward raising
interest rates, however, had a definite negative effect. Higher interest rates
mean higher borrowing costs, making it more difficult for corporations to meet
their earnings projections. Fortunately, the Fund had only 4% of its assets
allocated to corporate debt securities at the beginning of the year, which we
reduced to 3% at the end of June.
LOOKING FORWARD
Rising interest rates, fewer mortgage-refinancing opportunities, and a reduced
flow of individual tax refunds may begin to cool the expanding economy, bringing
about the effect the Federal Reserve Board is seeking. Regardless of the pace of
the economy or direction of interest rates, the Fund will continue to stress
quality and liquidity in its investments, avoiding the use of high-risk
securities in search of higher returns.
Looking ahead, the Fund will continue to seek to maximize total return,
consistent with liquidity, preservation of capital, and investment in short-
term debt securities.
Edward J. Munshower
Christopher Harms
Portfolio Managers
MacKay Shields Financial Corporation
- --------------------------------------------------------------------------------
(1) Lipper, 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.
Past performance is no guarantee of future results.
126
<PAGE> 128
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
SHORT-TERM BOND FUND VS
SALOMON SMITH BARNEY 1-3 YEAR TREASURY INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
SALOMON SMITH BARNEY 1-3 YEAR
SHORT-TERM BOND FUND TREASURY INDEX
-------------------- -----------------------------
<S> <C> <C>
12/31/90 10000.00 10000.00
3/31/91 10220.00 10220.00
6/30/91 10420.00 10419.00
9/30/91 10760.00 10768.00
12/31/91 11130.00 11166.00
3/31/92 11140.00 11180.00
6/30/92 11455.00 11501.00
9/30/92 11749.00 11844.00
12/31/92 11791.00 11870.00
3/31/93 12079.00 12124.00
6/30/93 12214.00 12261.00
9/30/93 12383.00 12434.00
12/31/93 12459.00 12510.00
3/31/94 12374.00 12447.00
6/30/94 12374.00 12453.00
9/30/94 12495.00 12573.00
12/31/94 12473.00 12577.00
3/31/95 12885.00 12989.00
6/30/95 13258.00 13397.00
9/30/95 13444.00 13591.00
12/31/95 13754.00 13927.00
3/31/96 13797.00 13985.00
6/30/96 13939.00 14131.00
9/30/96 14152.00 14365.00
12/31/96 14415.00 14636.00
3/31/97 14506.00 14735.00
6/30/97 14810.00 15055.00
9/30/97 15069.00 15350.00
12/31/97 15299.00 15608.00
3/31/98 15511.00 15834.00
6/30/98 15723.00 16078.00
9/30/98 16163.00 16573.00
12/31/98 16273.00 16699.00
6/30/99 16411.00 16897.00
</TABLE>
THE GRAPHS ASSUME A $10,000 INVESTMENT MADE ON 1/2/91.
Source: Lipper, Inc
$10,000 INVESTED IN MAINSTAY INSTITUTIONAL
SHORT-TERM BOND FUND VS
SALOMON SMITH BARNEY 1-3 YEAR TREASURY INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
SALOMON SMITH BARNEY 1-3 YEAR
SHORT-TERM BOND FUND TREASURY INDEX
-------------------- -----------------------------
<S> <C> <C>
12/31/90 10000.00 10000.00
3/31/91 10220.00 10220.00
6/30/91 10420.00 10419.00
9/30/91 10760.00 10768.00
12/31/91 11130.00 11166.00
3/31/92 11140.00 11180.00
6/30/92 11455.00 11501.00
9/30/92 11749.00 11844.00
12/31/92 11791.00 11870.00
3/31/93 12079.00 12124.00
6/30/93 12214.00 12261.00
9/30/93 12383.00 12434.00
12/31/93 12459.00 12510.00
3/31/94 12374.00 12447.00
6/30/94 12374.00 12453.00
9/30/94 12495.00 12573.00
12/31/94 12473.00 12577.00
3/31/95 12885.00 12989.00
6/30/95 13245.00 13397.00
9/30/95 13418.00 13591.00
12/31/95 13728.00 13927.00
3/31/96 13756.00 13985.00
6/30/96 13884.00 14131.00
9/30/96 14083.00 14365.00
12/31/96 14340.00 14636.00
3/31/97 14415.00 14735.00
6/30/97 14719.00 15055.00
9/30/97 14976.00 15350.00
12/31/97 15198.00 15608.00
3/31/98 15392.00 15834.00
6/30/98 15587.00 16078.00
9/30/98 16008.00 16573.00
12/31/98 16107.00 16699.00
6/30/99 16226.00 16897.00
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF JUNE 30, 1999 AS OF JUNE 30, 1999
- ----------------------------------------------------------------------------------------------------------------
YEAR TO DATE ONE YEAR FIVE YEAR SINCE INCEPTION
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Short-Term Bond Fund Institutional Class 0.85% 4.38% 5.81% 6.00%
Short-Term Bond Fund Service Class(+) 0.74% 4.11% 5.57% 5.86%
Average Lipper Short U.S. Government Fund 1.02% 4.16% 5.53% 5.62%
Salomon Smith Barney 1-3 Year Treasury Index 1.18% 5.08% 6.28% 6.36%
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
Year End Total Return %
<S> <C>
1991 11.30
1992 5.94
1993 5.67
1994 0.11
1995 10.27
1996 4.81
1997 6.13
1998 6.37
1999 AS OF 6/30/99 0.85
</TABLE>
- --------------------------------------------------------------------------------
* 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 gain distributions and
dividends, and, for the Service Class shares, include the service fee of .25%
on an annualized basis of the average daily net asset values of the Service
Class shares.
+ 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 12/31/94. Performance figures for these two
Classes after this date will vary based on differences in their expense
structures.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO CURRENT MARKET
VOLATILITY, PERFORMANCE MAY BE LESS THAN SHOWN. 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 and the Service Class shares are sold with no
sales charge or contingent deferred sales charge. The Service Class shares,
first offered 1/1/95, are subject to an annual shareholder service fee of
.25%.
127
<PAGE> 129
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
LONG-TERM INVESTMENTS (97.3%)+
ASSET-BACKED SECURITIES (11.6%)
PRINCIPAL
AMOUNT VALUE
---------------------
<S> <C> <C>
AUTO LEASES (2.7%)
Premier Auto Trust
Series 1999-1 Class A3
5.69%, due 11/8/02................ $1,390,000 $ 1,384,329
-----------
CONSUMER LOANS (1.5%)
Green Tree Financial Corp.
Series 1999-4 Class A4
6.64%, due 5/1/31................. 775,000 777,713
-----------
EQUIPMENT LOANS (4.2%)
Case Equipment Loan Trust
Series 1999-A Class A4
5.77%, due 8/15/05................ 1,110,000 1,091,851
Ikon Receivables LLC
Series 1999-1 Class A3
5.99%, due 5/15/05................ 1,065,000 1,060,591
-----------
2,152,442
-----------
LEISURE TIME (2.1%)
Harley-Davidson Eaglemark
Motorcycle Trust
Series 1999-1 Class A2
5.52%, due 2/15/05................ 1,120,000 1,098,328
-----------
RECREATIONAL VEHICLES (1.1%)
Fleetwood Credit Corp.
Grantor Trust
Series 1996-A Class A
6.75%, due 10/17/11............... 547,507 550,923
-----------
Total Asset-Backed Securities
(Cost $6,005,973)................. 5,963,735
-----------
CORPORATE BONDS (3.3%)
FOOD, BEVERAGE & TOBACCO (1.1%)
Seagram, Joseph E. & Sons Inc.
5.79%, due 4/15/01................ 575,000 569,399
-----------
INVESTMENT BANK/BROKERAGE (2.2%)
Donaldson, Lufkin & Jenrette Inc.
5.875%, due 4/1/02................ 1,120,000 1,103,357
-----------
Total Corporate Bonds
(Cost $1,691,661)................. 1,672,756
-----------
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT &
FEDERAL AGENCIES (82.4%)
PRINCIPAL
AMOUNT VALUE
---------------------
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION (22.3%)
5.375%, due 3/15/02............... 3,900,000 3,852,069
5.625%, due 3/15/01............... 7,600,000 7,595,060
-----------
11,447,129
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION I
(MORTGAGE PASS-THROUGH SECURITY) (1.4%)
8.00%, due 11/15/28............... 704,680 726,264
-----------
UNITED STATES TREASURY NOTES (58.7%)
5.625%, due 11/30/00 (a).......... $2,350,000 $ 2,356,251
5.75%, due 10/31/00 (a)........... 8,450,000 8,488,870
6.25%, due 8/31/00-1/31/02 (a).... 4,110,000 4,151,027
6.375%, due 3/31/01............... 1,210,000 1,227,388
6.50%, due 8/31/01 (a)............ 4,755,000 4,844,156
6.625%, due 3/31/02............... 305,000 312,576
6.75%, due 4/30/00 (a)............ 5,320,000 5,384,000
7.50%, due 11/15/01 (a)........... 3,305,000 3,442,885
-----------
30,207,153
-----------
Total U.S. Government &
Federal Agencies
(Cost $42,987,165)................ 42,380,546
-----------
Total Long-Term Investments
(Cost $50,684,799)................ 50,017,037
-----------
SHORT-TERM INVESTMENT (1.6%)
COMMERCIAL PAPER (1.6%)
KFW International Finance Inc.
5.70%, due 7/1/99................. 800,000
-----------
Total Short-Term Investment
(Cost $800,000)................... 800,000
-----------
Total Investments
(Cost $51,484,799) (b)............ 98.9% 50,817,037(c)
Cash and Other Assets,
Less Liabilities.................. 1.1 591,061
--------- ---------
Net Assets......................... 100.0% $51,408,098
========= ===========
</TABLE>
- ------------
(a) Represents securities out on loan or a portion of which is out on loan.
(See Note 2N)
(b) The cost for Federal income tax purpose is $51,494,981.
(c) At June 30, 1999 gross unrealized depreciation was $677,944, 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 $10,863 and aggregated gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $688,807.
- ------------
+ 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.
128
<PAGE> 130
MAINSTAY
INSTITUTIONAL FUNDS INC.
SHORT-TERM BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
As of June 30, 1999 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value
(identified cost $51,484,799)......... $50,817,037
Cash.................................... 3,485
Collateral held for securities loaned at
value (Note 2N)....................... 14,547,978
Receivables:
Investment securities sold............ 1,170,000
Interest.............................. 641,644
Fund shares sold...................... 406,547
-----------
Total assets...................... 67,586,691
-----------
LIABILITIES:
Securities lending collateral, at value
(Note 2N)............................. 14,547,978
Payables:
Investment securities purchased....... 1,574,679
MainStay Management................... 15,214
Custodian............................. 4,633
Fund shares redeemed.................. 2,613
Transfer agent........................ 2,234
Accrued expenses........................ 31,242
-----------
Total liabilities................. 16,178,593
-----------
Net assets.............................. $51,408,098
===========
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per
share)
1 billion shares authorized
Institutional Class................... $ 5,291
Institutional Service Class........... 114
Additional paid-in capital.............. 57,771,011
Accumulated undistributed net investment
income................................ 1,483,444
Accumulated net realized loss on
investments........................... (7,184,000)
Net unrealized depreciation on
investments........................... (667,762)
-----------
Net assets.............................. $51,408,098
===========
Institutional Class
Net assets applicable to outstanding
shares................................ $50,323,347
===========
Shares of capital stock outstanding..... 5,290,804
===========
Net asset value per share outstanding... $ 9.51
===========
Institutional Service Class
Net assets applicable to outstanding
shares................................ $ 1,084,751
===========
Shares of capital stock outstanding..... 114,391
===========
Net asset value per share outstanding... $ 9.48
===========
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 (Unaudited)
<S> <C>
INVESTMENT INCOME:
Income:
Interest............................. $ 1,647,157
------------
Expenses:
Management........................... 162,257
Professional......................... 16,470
Transfer agent....................... 14,322
Registration......................... 13,704
Custodian............................ 4,864
Shareholder communication............ 2,033
Service.............................. 1,457
Pricing Service...................... 1,216
Directors............................ 564
Miscellaneous........................ 6,056
------------
Total expenses before
reimbursement.................. 222,943
Expense reimbursement from Manager... (59,230)
------------
Net expenses..................... 163,713
------------
Net investment income.................. 1,483,444
------------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS:
Net realized loss on investments....... (93,952)
Net change in unrealized appreciation
on investments....................... (885,681)
------------
Net realized and unrealized loss on
investments.......................... (979,633)
------------
Net increase in net assets resulting
from operations...................... $ 503,811
============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
129
<PAGE> 131
SHORT-TERM BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended June 30, 1999 (Unaudited) and the year ended December
31, 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 1,483,444 $ 2,578,509
Net realized gain (loss) on investments................. (93,952) 26,879
Net change in unrealized appreciation on investments.... (885,681) 84,111
-------------- --------------
Net increase in net assets resulting from operations.... 503,811 2,689,499
-------------- --------------
Dividends to shareholders:
From net investment income:
Institutional Class................................... -- (2,516,800)
Institutional Service Class........................... -- (67,925)
-------------- --------------
Total dividends to shareholders..................... -- (2,584,725)
-------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 23,201,192 17,781,967
Institutional Service Class........................... 288,792 791,418
Net asset value of shares issued to shareholders in
reinvestment of dividends:
Institutional Class................................... -- 2,516,797
Institutional Service Class........................... -- 67,923
-------------- --------------
23,489,984 21,158,105
Cost of shares redeemed:
Institutional Class................................... (15,591,566) (24,848,447)
Institutional Service Class........................... (486,999) (1,081,302)
-------------- --------------
Increase (decrease) in net assets derived from capital
share transactions................................... 7,411,419 (4,771,644)
-------------- --------------
Net increase (decrease) in net assets................. 7,915,230 (4,666,870)
NET ASSETS:
Beginning of period....................................... 43,492,868 48,159,738
-------------- --------------
End of period............................................. $ 51,408,098 $ 43,492,868
============== ==============
Accumulated undistributed net investment income at end of
period.................................................. $ 1,483,444 $ --
============== ==============
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
130
<PAGE> 132
(THIS PAGE INTENTIONALLY LEFT BLANK)
131
<PAGE> 133
SHORT-TERM BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999* DECEMBER 31, 1998
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period..................... $ 9.43 $ 9.41 $ 9.39 $ 9.38
---------- ---------- ---------- ----------
Net investment income...................................... 0.28 0.27 0.56 0.53
Net realized and unrealized gain (loss) on investments..... (0.20) (0.20) 0.04 0.03
---------- ---------- ---------- ----------
Total from investment operations........................... 0.08 0.07 0.60 0.56
---------- ---------- ---------- ----------
Less dividends from net investment income.................. -- -- (0.56) (0.53)
---------- ---------- ---------- ----------
Net asset value at end of period........................... $ 9.51 $ 9.48 $ 9.43 $ 9.41
========== ========== ========== ==========
Total investment return.................................... 0.85%(a) 0.74%(a) 6.37% 5.98%
Ratios (to average net assets)/Supplemental Data:
Net investment income.................................... 5.49%+ 5.24%+ 5.95% 5.70%
Net expenses............................................. 0.60%+ 0.85%+ 0.60% 0.85%
Expenses (before reimbursement).......................... 0.82%+ 1.07%+ 0.89% 1.14%
Portfolio turnover rate.................................... 63% 63% 125% 125%
Net assets at end of period (in 000's)..................... $ 50,323 $ 1,085 $ 42,219 $ 1,273
</TABLE>
- ------------
* Unaudited.
+ Annualized.
(a) 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.
132
<PAGE> 134
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- ------------- -------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994
----------------------------- ----------------------------- ----------------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 9.48 $ 9.46 $ 9.68 $ 9.67 $ 9.37 $ 9.37 $ 10.33
-------- -------- -------- -------- -------- -------- --------
0.67 0.64 0.66 0.64 0.65 0.64 0.97
(0.09) (0.08) (0.20) (0.21) 0.31 0.30 (0.96)
-------- -------- -------- -------- -------- -------- --------
0.58 0.56 0.46 0.43 0.96 0.94 0.01
-------- -------- -------- -------- -------- -------- --------
(0.67) (0.64) (0.66) (0.64) (0.65) (0.64) (0.97)
-------- -------- -------- -------- -------- -------- --------
$ 9.39 $ 9.38 $ 9.48 $ 9.46 $ 9.68 $ 9.67 $ 9.37
======== ======== ======== ======== ======== ======== ========
6.13% 5.98% 4.81% 4.46% 10.27% 10.07% 0.11%
6.24% 5.99% 5.85% 5.60% 6.38% 6.13% 5.90%
0.60% 0.85% 0.60% 0.85% 0.60% 0.85% 0.60%
0.82% 1.07% 0.79% 1.04% 0.82% 1.07% 0.72%
153% 153% 195% 195% 171% 171% 269%
$ 46,674 $ 1,485 $ 57,805 $ 1,316 $ 50,902 $ 1,128 $ 62,340
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
133
<PAGE> 135
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, 1999 the Company has eleven separate investment portfolios: EAFE Index
Fund, Growth Equity Fund, Indexed Equity Fund, International Equity Fund, Asset
Manager Fund (formerly known as the 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. In addition, the Money
Market Fund offers a third class of shares, the Money Market Fund Sweep Shares
Class. The Company has adopted a Shareholder Services Plan with respect to the
Institutional Service Class of each Fund and a Shareholder Services Plan for the
Money Market Fund Sweep Shares Class. 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 for that class at an annual rate of 0.25% of the average daily net
assets of the outstanding Institutional Service Class shares ("Shareholder
Service Fee"). The distribution of Institutional Service Class shares commenced
on January 1, 1995.
The Money Market Fund Sweep Shares Class bears a shareholder service fee at
an annual rate of 0.25% of the average daily net assets of the outstanding Money
Market Fund Sweep Shares under the Shareholder Services Plan for that Class. The
Money Market Fund Sweep Shares Class also bears the payment of fees at an annual
rate of 0.25% of the average daily net assets of the outstanding Sweep Shares
for services in support of distribution activities under a distribution plan
pursuant to Rule 12b-1 under the Investment Company Act ("Distribution Plan").
The distribution of the Money Market Fund Sweep Shares Class commenced on
December 8, 1998.
The investment objectives for each of the Funds 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 Index (the "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 S&P 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 Asset Manager 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 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 Smith Barney 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.
134
<PAGE> 136
MAINSTAY
INSTITUTIONAL FUNDS INC.
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.
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.
- --------------------------------------------------------------------------------
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, except for the Money Market Fund, which is calculated at noon every
day the Exchange is open. The net asset value per share of each Class of shares
is determined by taking the current market value of total assets attributable to
that Class, except for the Money Market Fund, which is based on the amortized
cost method of valuation, subtracting the liabilities attributable to that
Class, and dividing the result by the outstanding shares of that Class.
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
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 subadvisor if such prices are deemed to be representative of market
values at the regular close of business of the Exchange; (e) by appraising debt
securities at prices supplied by a pricing agent selected by a Fund's
subadvisor, whose prices reflect broker/dealer supplied valuations and
electronic data processing techniques if those prices are deemed by a Fund's
subadvisor to be representative of market values at the regular close of
business of the Exchange; (f) by appraising options and futures contracts at the
last sale price on the market where 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 subadvisor to be
representative of market values, but excluding money market instruments with a
remaining maturity of 60 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 Company's Board of Directors.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost if their term to maturity at purchase was 60 days or
less, or by amortizing the difference between market value on the 61st day prior
to maturity and value on maturity date if their original term to maturity at
purchase exceeded 60 days.
Events affecting the values of portfolio securities that occur between the
time their prices are determined and the close of the Exchange will not be
reflected in the Funds' calculation of net asset values unless a Fund's
subadvisor deems that the particular event would materially affect such Fund's
net asset value, in which case an adjustment will be made.
135
<PAGE> 137
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
(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.
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 and distributions 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, as a dividend, substantially all of their net investment income and net
realized gains no less frequently than once a year. Income dividends and capital
gain distributions are determined in accordance with Federal tax regulations,
which may differ from generally accepted accounting principles. These "book/tax
differences" are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their Federal tax basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for Federal tax purposes are reported
as dividends in excess of net investment income or distributions in excess of
net realized capital gains.
(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 accreted 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. Premiums on
securities purchased are not amortized for any Fund except the Money Market Fund
which amortizes the premium on the constant yield method over the life of the
respective securities.
(F)
ORGANIZATION COSTS. Organization costs incurred for the International Bond Fund
and the International Equity Fund are being amortized over a maximum period of
60 months beginning January 1, 1995, the date such Funds commenced operations.
In the event that any of the initial shares purchased by affiliates of New York
Life Insurance Company ("New York Life"), 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 direct allocations of expenses can be made.
The investment income and expenses (other than expenses incurred under the
Shareholder Services Plans and the Distribution 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.
136
<PAGE> 138
MAINSTAY
INSTITUTIONAL FUNDS INC.
(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. The International Bond Fund
isolates the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of long-term debt securities sold
during the period. However, gains and losses from certain foreign currency
transactions are treated as ordinary income for Federal income tax purposes.
Net realized gain (loss) on foreign currency transactions represents net
gains and losses on forward currency transactions, net currency gains and losses
realized as a result of differences between the amounts of security sale
proceeds or purchase cost, dividends, interest and withholding taxes as recorded
on the Fund's books, and the U.S. dollar equivalent amount actually received or
paid. Net currency gains or losses from valuing such foreign currency
denominated assets and liabilities at period-end exchange rates are reflected in
unrealized foreign exchange gains or losses.
EAFE INDEX FUND
Foreign cash held at June 30, 1999:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
- ----------------------------------------- ---------- ----------
<S> <C> <C> <C> <C>
Pound Sterling L 11,000 $ 16,833 $ 17,339
========== ==========
</TABLE>
INTERNATIONAL EQUITY FUND
Foreign cash held at June 30, 1999:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
- ----------------------------------------- ---------- ----------
<S> <C> <C> <C> <C>
Australian Dollar A$ 1,068,325 $ 702,850 $ 707,125
Canadian Dollar C$ 34 23 23
Euro E 1,038,420 1,071,107 1,070,923
Hong Kong Dollar HK 64,665 8,339 8,334
Japanese Yen Y 1,270,962 10,487 10,501
New Zealand Dollar N$ 1,149,138 612,286 608,928
Pound Sterling L 92,800 149,187 146,280
Swedish Krona SK 152,677 18,327 17,958
Swiss Franc CF 105,946 69,726 68,150
---------- ----------
$2,642,332 $2,638,222
========== ==========
</TABLE>
INTERNATIONAL BOND FUND
Foreign cash held at June 30, 1999:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
- ----------------------------------------- ---------- ----------
<S> <C> <C> <C> <C>
Danish Krone DK 14 $ 2 $ 2
Euro E 935,433 970,054 964,712
Pound Sterling L 753,282 1,190,037 1,187,392
---------- ----------
$2,160,093 $2,152,106
========== ==========
</TABLE>
(J)
FOREIGN CURRENCY FORWARD CONTRACTS. A foreign currency forward contract is an
agreement to buy or sell currencies of different countries on a specified future
date at a specified rate. During the period the forward contract is open,
changes in
137
<PAGE> 139
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
the value of the contract are recognized as unrealized gains or losses by
"marking to market" such contract on a daily basis to reflect the market value
of the contract at the end of each day's trading. When the forward contract is
closed, the Fund records a realized gain or loss equal to the difference between
the proceeds from (or cost of) the closing transaction and the Fund's basis in
the contract. Foreign currency forward contracts are used for hedging purposes.
(see Note 5).
INTERNATIONAL EQUITY FUND
Foreign currency forward contracts open at June 30, 1999:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT AMOUNT CONTRACT AMOUNT APPRECIATION/
SOLD PURCHASED (DEPRECIATION)
------------------ ------------------ --------------
<S> <C> <C> <C> <C> <C>
FOREIGN CURRENCY SALE CONTRACTS
- --------------------------------
Australian Dollar vs. U.S. Dollar, expiring
8/18/99............................................ A$ 5,333,500 $ 3,386,654 $(145,465)
Canadian Dollar vs. U.S. Dollar, expiring 8/26/99.... C$ 13,166,000 $ 9,030,488 127,985
Euro vs. Swedish Krona, expiring 8/30/99............. E 1,294,466 SK 11,631,000 32,018
Euro vs. U.S. Dollar, expiring 8/31/99............... E 11,280,000 $ 12,238,800 550,529
New Zealand Dollar vs. U.S. Dollar, expiring
8/16/99............................................ N$ 3,365,000 $ 1,823,914 39,185
Pound Sterling vs. Euro, expiring 8/11/99............ L 4,229,550 E 6,500,000 55,910
</TABLE>
<TABLE>
<CAPTION>
CONTRACT AMOUNT CONTRACT AMOUNT
PURCHASED SOLD
------------------ ------------------
<S> <C> <C> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
- ------------------------------
Canadian Dollar vs. U.S. Dollar, expiring 8/26/99.... C$ 13,106,000 $ 8,795,973 65,959
Euro vs. U.S. Dollar, expiring 8/31/99............... E 9,760,000 $ 10,450,958 (337,702)
Pound Sterling vs. U.S. Dollar, expiring 8/26/99..... L 3,150,000 $ 5,168,772 (201,493)
---------
Net unrealized appreciation on foreign currency
forward contracts.................................. $ 186,926
=========
</TABLE>
INTERNATIONAL BOND FUND
Foreign currency forward contracts open at June 30, 1999:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT AMOUNT CONTRACT AMOUNT APPRECIATION/
SOLD PURCHASED (DEPRECIATION)
------------------ ------------------ --------------
<S> <C> <C> <C> <C> <C>
FOREIGN CURRENCY SALE CONTRACTS
- -------------------------------
Australian Dollar vs. U.S. Dollar, expiring
8/18/99............................................ A$ 9,477,000 $ 2,221,122 $ (81,527)
Canadian Dollar vs. U.S. Dollar, expiring 8/18/99.... C$ 587,000 $ 402,330 5,462
Canadian Dollar vs. U.S. Dollar, expiring 8/26/99.... C$ 4,512,000 $ 3,094,756 43,861
Danish Krone vs. Euro, expiring 8/23/99.............. DK 8,050,000 E 1,081,422 (3,373)
Euro vs. Danish Krone, expiring 8/23/99.............. E 1,450,833 DK 10,800,000 4,545
Euro vs. Swedish Krona, expiring 8/30/99............. E 1,330,047 SK 11,900,000 26,912
Euro vs. U.S. Dollar, expiring 8/31/99............... E 2,161,000 $ 2,326,279 87,063
Japanese Yen vs. U.S. Dollar, expiring 8/16/99....... Y 99,746,000 $ 830,608 808
Pound Sterling vs. Euro, expiring 8/11/99............ L 1,821,960 E 2,800,000 24,084
Pound Sterling vs. U.S. Dollar, expiring 8/26/99..... L 1,818,000 $ 2,955,630 88,801
Swedish Krona vs. Euro, expiring 8/30/99............. SK 17,050,000 E 1,892,720 (51,962)
</TABLE>
<TABLE>
<CAPTION>
CONTRACT AMOUNT CONTRACT AMOUNT
PURCHASED SOLD
------------------ ------------------
<S> <C> <C> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
- ------------------------------
Canadian Dollar vs. U.S. Dollar, expiring 8/26/99.... C$ 3,886,000 $ 2,619,661 7,950
Euro vs. U.S. Dollar, expiring 8/16/99............... E 1,105,019 $ 1,179,000 (35,325)
Euro vs. U.S. Dollar, expiring 8/31/99............... E 5,140,000 $ 5,527,328 (201,289)
Japanese Yen vs. U.S. Dollar, expiring 8/16/199...... Y 530,428,875 $ 4,450,000 (37,294)
---------
Net unrealized depreciation on foreign currency
forward contracts.................................. $(121,284)
=========
</TABLE>
138
<PAGE> 140
MAINSTAY
INSTITUTIONAL FUNDS INC.
VALUE EQUITY FUND
Foreign currency forward contracts open at June 30, 1999:
<TABLE>
<CAPTION>
CONTRACT AMOUNT CONTRACT AMOUNT UNREALIZED
SOLD PURCHASED APPRECIATION
-------------------- -------------------- ------------
<S> <C> <C> <C> <C> <C>
FOREIGN CURRENCY SALE CONTRACTS
- -------------------------------
Japanese Yen vs. U.S. Dollar, expiring 9/16/99... Y 1,084,000,000 $ 9,126,884 $ 65,725
---------
Net unrealized appreciation on foreign currency
forward contracts.............................. $ 65,725
=========
</TABLE>
(K)
PURCHASED AND WRITTEN OPTIONS. The Fund may write covered call and put options
on its portfolio securities or foreign currencies. Premiums are received and are
recorded as liabilities. The liabilities are subsequently adjusted to reflect
the current value of the options written. Premiums received from writing options
which expire are treated as realized gains. Premiums received from writing
options which are exercised or are cancelled in closing purchase transactions
are added to the proceeds or netted against the amount paid on the transaction
to determine the realized gain or loss. By writing a covered call option, a Fund
foregoes in exchange for the premium the opportunity for capital appreciation
above the exercise price should the market price of the underlying security or
foreign currency increase. By writing a covered put option, a Fund, in exchange
for the premium, accepts the risk of a decline in the market value of the
underlying security or foreign currency below the exercise price.
The Fund may purchase call and put options on its portfolio securities or
foreign currencies. The Fund may purchase call options to protect against an
increase in the price of the security or foreign currency it anticipates
purchasing. The Fund may purchase put options on its securities or foreign
currencies to protect against a decline in the value of the security or foreign
currency or to close out covered written put positions. Risks may arise from an
imperfect correlation between the change in market value of the securities or
foreign currencies held by the Fund and the prices of options relating to the
securities or foreign currencies purchased or sold by the Fund and from the
possible lack of a liquid secondary market for an option. The maximum exposure
to loss for any purchased option is limited to the premium initially paid for
the option.
(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 and
price, 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 are 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 ("MBS") from its portfolio to a
counterparty from whom it simultaneously agrees to buy a similar security on a
delayed delivery basis. The MDR transactions of a Fund are classified as
purchase and sale transactions. The securities sold in connection with the MDRs
are removed from the portfolio and a realized gain or loss is recognized. The
securities the Funds have agreed to acquire are included at market value in the
portfolio of investments and liabilities for such purchase commitments are
included as payables for investments purchased. The Fund maintains a segregated
account with its custodian containing securities from its portfolio having a
value not less than the repurchase price, including accrued interest. MDR
transactions involve certain risks, including the risk that the MBS returned to
the Fund at the end of the roll, while substantially similar, could be inferior
to what was initially sold to the counterparty.
139
<PAGE> 141
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
(N)
SECURITIES LENDING. Each Fund may lend its securities to broker-dealers and
financial institutions. The loans are secured by collateral (cash or securities)
at least equal at all times to the market value of the securities loaned. The
Fund may bear the risk of delay in recovery of, or loss of rights in, the
securities loaned should the borrower of the securities experience financial
difficulty. The Fund receives compensation for lending its securities in the
form of fees or it retains a portion of interest on the investment of any cash
received as collateral. The Fund also continues to receive interest and
dividends on the securities loaned and any gain or loss in the market price of
the securities loaned that may occur during the term of the loan will be for the
account of the Fund.
At June 30, 1999, the Bond Fund and Short-Term Bond Fund had portfolio
securities with a fair market value of $47,592,153 and $14,188,400,
respectively, on loan to broker-dealers and government securities dealers.
Cash collateral received by the Bond Fund and Short-Term Bond Fund are
invested in investment grade commercial paper, or other securities in accordance
with the Funds' Securities Lending Procedures. Such investments are included as
an asset and a corresponding liability in the Statement of Assets and
Liabilities. While these Funds invest cash collateral in investment grade
securities or other "high quality" investment vehicles, the Funds bear the risk
that liability for the collateral may exceed the value of the investment.
Net income earned on securities lending amounted to $50,460 and $8,250, net
of broker fees and rebates, for the Bond Fund and Short-Term Bond Fund
respectively, for the six months ended June 30, 1999 and is included as interest
income on the Statement of Operations.
BOND FUND
Investments made with cash collateral at June 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
SHORT-TERM COMMERCIAL PAPER
Atlantis One Funding Corp.
5.104%, due 7/1/99........................................ $8,849,000 $ 8,841,478
Bayer Hypo-Und Vereinsbank AG
5.851%, due 7/1/99........................................ 5,600,000 5,599,090
CIT Group Home Equity Loan Trust Inc.
5.24%, due 7/15/99........................................ 1,264,738 1,266,121
Park Avenue Receivable Corp.
5.376%, due 7/7/99........................................ 9,000,000 8,990,603
Textron Financial Corp.
5.255%, due 11/24/99...................................... 8,000,000 7,998,846
-----------
32,696,138
-----------
REPURCHASE AGREEMENTS
Goldman Sachs & Co.
6.14%, due 12/31/99
(Collateralized by
$1,050,000 Unova Inc.
6.875%, due 3/15/05 Market Value $1,001,438
$2,198,000 Joseph E. Seagram & Sons
8.857%, due 9/15/11 Market Value $2,380,103
$1,876,000 Owens Corning
7.00%, due 3/15/09 Market Value $1,744,680
$500,000 Owens Corning
7.50%, due 5/1/05 Market Value $491,040
$2,140,000 Kroger Co.
6.375%, due 3/1/08 Market Value $1,998,225
$550,000 The Costal Corp.
10.25%, due 10/15/04 Market Value $626,797
$1,820,000 Calenergy Co. Inc.
8.48%, due 9/15/28 Market Value $1,916,424)............. 8,000,000 8,000,000
</TABLE>
140
<PAGE> 142
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
REPURCHASE AGREEMENTS (Continued)
Prudential Securities Inc.
6.10%, due 12/31/99
(Collateralized by
$1,200,00 U.S. West Capital Funding Inc.
6.25%, due 7/15/05 Market Value $1,144,494
$1,251,918 U.S. Treasury Security Stripped Interest Payment
8.875%, due 8/15/17 Market Value $387,866
$727,347 U.S. Treasury Security Stripped Interest Payment
9.875%, due 11/15/12 Market Value $310,257
$192,245 U.S. Treasury Bond
10.375%, due 11/15/12 Market Value $242,859
$857,143 Telecom De Puerto Rico
6.65%, due 5/15/06 Market Value $835,714
$340,408 Joseph E. Seagram & Sons
6.25%, due 12/15/01 Market Value $336,579
$1,346,939 Residential Asset Securities Corporation
7.15%, due 7/25/30 Market Value $1,346,939
$489,796 Pulte Corp.
8.375%, due 8/15/04 Market Value $492,245
$563,265 Oxy USA Inc.
7.00%, due 4/15/11 Market Value $501,177
$293,878 News America Holdings Inc.
8.50%, due 2/15/05 Market Value $308,204
$879,575 The Money Store Business Loan Backed Trust
5.3975%, due 6/15/13 Market Value $879,575
$832,653 Hydro-Quebec Capitech Inc.
8.00%, due 2/1/13 Market Value $882,567
$13,959 Financial Corp. FICO Strip
(zero coupon), due 2/8/04 Market Value $10,421
$188,082 Federal National Mortgage Association
5.125%, due 2/13/04 Market Value $178,868
$489,796 Federal Home Loan Bank
5.52%, due 4/5/02 Market Value $480,722
$122,449 Federal Home Loan Bank
5.73%, due 5/29/01 Market Value $121,889)............... $8,400,000 $ 8,400,000
-----------
16,400,000
-----------
$49,096,138
===========
</TABLE>
141
<PAGE> 143
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
SHORT-TERM BOND FUND
Investments made with cash collateral at June 30, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
SHORT-TERM COMMERCIAL PAPER
Cincinnati Bell Inc.
5.901%, due 7/1/99........................................ $1,660,000 $ 1,659,728
Countrywide Home Loans Inc.
4.985%, due 10/27/99...................................... 2,500,000 2,503,350
Grand Metropolitan Finance Inc.
4.99%, due 7/22/99........................................ 2,500,000 2,485,189
Textron Financial Corp.
5.255%, due 11/24/99...................................... 2,000,000 1,999,711
Triangular Funding Corp.
5.04%, due 10/15/99....................................... 2,000,000 2,000,000
-----------
10,647,978
-----------
REPURCHASE AGREEMENTS
Goldman Sachs & Co.
6.14%, due 12/31/99
(Collateralized by
$1,500,000 Regency Corp.
7.125%, due 7/15/05 Market Value $1,414,991
$1,000,000 Lockheed Martin Corp.
7.20%, due 5/1/36 Market Value $981,430
$1,829,999 Export Import Bank
6.375%, due 2/15/06 Market Value $1,672,162)............ 2,000,000 2,000,000
Prudential Securities Inc.
6.10%, due 12/31/99
(Collateralized by
$271,429 U.S. West Capital Funding Inc.
6.25%, due 7/15/05 Market Value $258,874
$283,172 U.S. Treasury Security Stripped Interest Payment
8.875%, due 8/15/17 Market Value $87,732
$164,519 U.S. Treasury Security Stripped Interest Payment
9.875%, due 11/15/12 Market Value $70,177
$43,484 U.S. Treasury Bond
10.375%, due 11/15/12 Market Value $54,932
$193,878 Telecom De Puerto Rico
6.65%, due 5/15/06 Market Value $189,031
$76,997 Joseph E. Seagram & Sons
6.25%, due 12/15/01 Market Value $76,131
$304,665 Residential Asset Securities Corporation
7.15%, due 7/25/30 Market Value $304,665
$110,787 Pulte Corp.
8.375%, due 8/15/04 Market Value $111,341
$127,405 Oxy USA Inc.
7.00%, due 4/15/11 Market Value $113,361
$66,472 News America Holdings Inc.
8.50%, due 2/15/05 Market Value $69,713
$198,952 The Money Store Business Loan Backed Trust
5.3975%, due 6/15/13 Market Value $198,952
$188,338 Hydro-Quebec Capitech Inc.
8.00%, due 2/1/13 Market Value $199,628
$3,157 Financial Corp. FICO Strip
(zero coupon), due 2/8/04 Market Value $2,357
$42,542 Federal National Mortgage Association
5.125%, due 2/13/04 Market Value $40,458
$110,787 Federal Home Loan Bank
5.52%, due 4/5/02 Market Value $108,735
$27,697 Federal Home Loan Bank
5.73%, due 5/29/01 Market Value $27,570)................ 1,900,000 1,900,000
-----------
3,900,000
-----------
$14,547,978
===========
</TABLE>
142
<PAGE> 144
MAINSTAY
INSTITUTIONAL FUNDS INC.
- --------------------------------------------------------------------------------
NOTE 3-- Fees and Related Party Policies:
- --------------------------------------------------------------------------------
(A)
MANAGER, SUBADVISORS, AND SUB-ADMINISTRATOR. MainStay Management, Inc. (the
"Manager"), an indirect wholly-owned subsidiary of New York Life Insurance
Company ("New York Life"), serves as manager and provides management services to
the Company under a Management Agreement. MacKay Shields Financial Corporation
("MacKay Shields"), a registered investment adviser and an indirect wholly-owned
subsidiary of New York Life, serves as subadvisor to the Growth Equity Fund,
International Equity Fund, Value Equity Fund, Bond Fund, International Bond Fund
and the Short-Term Bond Fund under a Sub-Advisory Agreement with the Manager.
New York Life serves as subadvisor to the Money Market Fund under a Sub-Advisory
Agreement with the Manager. Monitor Capital Advisors, Inc. ("Monitor Capital"),
a registered investment adviser and an indirect wholly-owned subsidiary of New
York Life, serves as subadvisor to the EAFE Index Fund, Indexed Equity Fund,
Asset Manager Fund and Indexed Bond Fund under a Sub-Advisory Agreement with the
Manager. The Manager has delegated certain of its administrative
responsibilities to New York Life pursuant to a Sub-Administration Agreement
between the Manager and New York Life. Under the Sub-Administration Agreement,
among other things, New York Life responds to shareholder inquiries and prepares
shareholder reports.
The Company, on behalf of each Fund, pays the Manager a monthly fee for the
services performed and facilities furnished at an annual rate of average daily
net assets of that Fund as follows:
<TABLE>
<S> <C>
EAFE Index Fund................ .95%
Growth Equity Fund............. .85%
Indexed Equity Fund............ .50%
International Equity Fund...... .85%
Asset Manager Fund............. .65%
Value Equity Fund.............. .85%
Bond Fund...................... .75%
Indexed Bond Fund.............. .50%
International Bond Fund........ .80%
Money Market Fund.............. .50%
Short-Term Bond Fund........... .60%
</TABLE>
Pursuant to the terms of the Sub-Advisory Agreements between the Manager and
each of the above referenced subadvisors, the Manager pays each Fund's
respective subadvisor a monthly fee at an annual rate of average daily net
assets of that Fund as follows:
<TABLE>
<S> <C>
EAFE Index Fund................ .15%
Growth Equity Fund............. .25%
Indexed Equity Fund............ .10%
International Equity Fund...... .35%
Asset Manager Fund............. .15%
Value Equity Fund.............. .25%
Bond Fund...................... .20%
Indexed Bond Fund.............. .10%
International Bond Fund........ .30%
Money Market Fund.............. .10%
Short-Term Bond Fund........... .15%
</TABLE>
Pursuant to the terms of the Sub-Administration Agreement between the
Manager and New York Life, the Manager pays New York Life a monthly fee at an
annual rate of average daily net assets of each Fund as follows:
<TABLE>
<S> <C>
EAFE Index Fund................ .80%
Growth Equity Fund............. .60%
Indexed Equity Fund............ .40%
International Equity Fund...... .50%
Asset Manager Fund............. .50%
Value Equity Fund.............. .60%
Bond Fund...................... .55%
Indexed Bond Fund.............. .40%
International Bond Fund........ .50%
Money Market Fund.............. .40%
Short-Term Bond Fund........... .45%
</TABLE>
The Manager voluntarily agreed to assume a portion of the Fund's operating
expenses for the six months ended June 30, 1999, for the following Funds to the
extent the total expenses (excluding service fees and distribution fees) on an
annualized basis exceeded the indicated percentages:
<TABLE>
<S> <C>
EAFE Index Fund................ .94%
Indexed Equity Fund............ .30%
Bond Fund...................... .75%
Indexed Bond Fund.............. .50%
International Bond Fund........ .95%
Money Market Fund.............. .50%
Short-Term Bond Fund........... .60%
</TABLE>
143
<PAGE> 145
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
In connection with the voluntary expense limitations, the Manager assumed
the following expenses for the six months ended June 30, 1999:
<TABLE>
<S> <C>
EAFE Index Fund............ $ 117,623
Indexed Equity Fund........ 1,948,676**
Bond Fund.................. 93,147
Indexed Bond Fund.......... 94,464
International Bond Fund.... 23,528
Money Market Fund.......... 179,724
Short-Term Bond Fund....... 59,230
</TABLE>
- ------------
** For the Indexed Equity Fund the Manager assumed $1,556,518, Monitor Capital
the subadvisor assumed $392,158.
The Growth Equity Fund, International Equity Fund, Asset Manager Fund and
the Value Equity Fund do not have a voluntary expense limitation.
These voluntary expense limitations will remain in effect through December
31, 1999, after which they may be terminated or revised at anytime.
(B)
SERVICE AND DISTRIBUTION FEES. In accordance with the Shareholder Services Plan
for the Institutional Service Class shares and the Shareholder Services Plan for
the Money Market Fund Sweep Shares Class, 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 and
to Money Market Fund Sweep Shares Class shareholders, respectively. 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 and the Money
Market Sweep Shares Class of the Money Market Fund.
The Company, with respect to the Money Market Fund Sweep Shares Class, has
adopted a Distribution Plan in accordance with the provisions of Rule 12b-1
under the Investment Company Act of 1940. Pursuant to the Distribution Plan,
NYLIFE Securities Inc., NYLIFE Distributors Inc., or any other broker-dealer or
other financial institution is entitled to receive a monthly service fee from
the Money Market Fund at an annual rate of 0.25% of the average daily net assets
of the Fund's Money Market Fund Sweep Shares Class for services in support of
distribution activities.
(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)
TRANSFER, DIVIDEND DISBURSING AND SHAREHOLDER SERVICING AGENT. MainStay
Shareholder Services Inc. ("MSS"), an indirect wholly-owned subsidiary of New
York Life, is the Fund's transfer, dividend disbursing and shareholder servicing
agent. MSS has entered into an agreement with Boston Financial Data Services
("BFDS"), by which BFDS will perform certain of the services for which MSS is
responsible. Transfer agent expenses accrued for the six months ended June 30,
1999 were as follows:
<TABLE>
<S> <C>
EAFE Index Fund.............. 13,724
Growth Equity Fund........... 237,319
Indexed Equity Fund.......... 25,800
International Equity Fund.... 13,634
Asset Manager Fund........... 193,383
Value Equity Fund............ 300,574
Bond Fund.................... 14,887
Indexed Bond Fund............ 14,304
International Bond Fund...... 13,130
Money Market Fund............ 24,722
Short-Term Bond Fund......... 14,322
</TABLE>
(E)
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 Committee meeting attended
plus reimbursement for travel and out-of-pocket expenses.
144
<PAGE> 146
MAINSTAY
INSTITUTIONAL FUNDS INC.
(F)
CAPITAL. The Funds have been advised that at June 30, 1999 affiliates of New
York Life owned a significant number of shares of the Funds with the following
market values:
<TABLE>
<S> <C>
EAFE Index Fund.......... $ 43,655,604
Growth Equity Fund....... 905,575,821
Indexed Equity Fund...... 1,293,426,028
International Equity
Fund................... 109,411,589
Asset Manager Fund....... 380,594,785
Value Equity Fund........ 692,923,660
Bond Fund................ 150,936,075
Indexed Bond Fund........ 118,378,579
International Bond
Fund................... 47,098,894
Money Market Fund........ 146,666,590
Short-Term Bond Fund..... 9,789,110
</TABLE>
From time to time, the Funds may have a concentration of several shareholders
holding a significant percentage of shares outstanding. Investment activities of
these shareholders could have a material impact on the Fund.
(G)
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, 1999, these fees were as follows:
<TABLE>
<S> <C>
EAFE Index Fund............... $ 1,742
Growth Equity Fund............ 26,376
Indexed Equity Fund........... 39,797
International Equity Fund..... 3,664
Asset Manager Fund............ 13,789
Value Equity Fund............. 20,197
Bond Fund..................... 4,858
Indexed Bond Fund............. 4,199
International Bond Fund....... 1,572
Money Market Fund............. 29,978
Short-Term Bond Fund.......... 1,311
</TABLE>
- --------------------------------------------------------------------------------
NOTE 4-- Federal Income Tax:
- --------------------------------------------------------------------------------
At December 31, 1998, for Federal income tax purposes, capital loss
carryforwards, as shown in the table below, were 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 after October 31, 1998 as if they arose on January 1, 1999.
<TABLE>
<CAPTION>
CAPITAL LOSS CAPITAL LOSS
AVAILABLE THROUGH AMOUNT (000'S) DEFERRED (000'S)
----------------- -------------- ----------------
<S> <C> <C> <C>
International Equity Fund............... 2006 $ 672 $2,687*
======= ======
Value Equity Fund....................... $ 0 $7,506
======= ======
Bond Fund............................... 2002 $ 5,088
2004 1,625
-------
$ 6,713 $ 102
======= ======
Indexed Bond Fund....................... 2004 $ 1,439
2005 44
2006 111
-------
$ 1,594 $ 55
======= ======
Money Market Fund....................... 2006 $ 27
=======
Short-Term Bond Fund.................... 2001 $ 114
2002 4,478
2003 1,770
2004 485
2005 173
-------
$ 7,020 $ 60
======= ======
</TABLE>
The Bond Fund and the Short-Term Bond Fund utilized $5,775,935 and $49,492,
respectively, of capital loss carryforwards during the year ended December 31,
1998.
* International Equity Fund capital loss deferral includes post October 1, 1998
foreign currency exchange loss deferral of $272,790.
145
<PAGE> 147
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 5-- Financial Investments:
- --------------------------------------------------------------------------------
The EAFE Index Fund's, International Equity Fund's, Asset Manager Fund's,
International Bond Fund's and Value Equity Fund's use of foreign currency
exchange contracts, involves, to varying degrees, elements of market risk in
excess of the amount recognized in the statement of assets and liabilities. The
contract amount reflects 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 foreign currency exchange 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 Asset Manager Fund's use of foreign currency
forward exchange contracts are intended to minimize the risk of loss to the Fund
from adverse changes in the relationship between the U.S. dollar and foreign
currencies. The International Equity Fund, Value 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, or
to increase the Funds' investment returns in the case of the International
Equity Fund and the International Bond Fund.
The EAFE Index Fund's, Indexed Equity Fund's, Asset Manager 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 invest in stock index futures
contracts to maintain cash reserves while remaining fully invested, to
facilitate trading, or to reduce transaction costs. The Asset Manager 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.
- --------------------------------------------------------------------------------
NOTE 6-- Line of Credit:
- --------------------------------------------------------------------------------
The Funds, with the exception of the Money Market Fund, maintain a line of
credit of $375,000,000 with The Bank of New York in order to secure a source of
funds for temporary purposes to meet unanticipated or excessive shareholder
redemption requests. The Funds pay a commitment fee, at an annual rate of .065%
of the average commitment amount, regardless of usage. Such commitment fees are
allocated amongst the Funds based upon net assets and other factors. Interest on
any revolving credit loan is charged based upon the Federal Funds Advances rate.
There were no borrowings on the line of credit at June 30, 1999.
146
<PAGE> 148
(THIS PAGE INTENTIONALLY LEFT BLANK)
147
<PAGE> 149
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
- --------------------------------------------------------------------------------
NOTE 7--Purchases and Sales of Securities (in 000's):
- --------------------------------------------------------------------------------
During the six months ended June 30, 1999, purchases and sales of securities,
other than securities subject to repurchase transactions and short-term
securities, were as follows:
<TABLE>
<CAPTION>
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 12,399 7,506 185,987 190,834 50,935 93,495 34,331 37,887
-----------------------------------------------------------------------------------------
Total $ 12,399 $ 7,506 $185,987 $190,834 $ 50,935 $ 93,495 $ 34,331 $ 37,887
=========================================================================================
</TABLE>
- --------------------------------------------------------------------------------
NOTE 8--Capital Share Transactions (in 000's):
- --------------------------------------------------------------------------------
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
EAFE Index Growth Equity
Fund Fund
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- -------------
Six months ended Year ended Six months ended
June 30, 1999 1998 June 30, 1999
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 3,760 5 2,636 8 4,683 63
Shares issued in
reinvestment of
dividends and
distributions -- -- 442 3 -- --
---------------------------------------------------------------------------------------------
3,760 5 3,078 11 4,683 63
Shares redeemed (3,148) (3) (2,690) (10) (4,968) (68)
---------------------------------------------------------------------------------------------
Net increase (decrease) 612 2 388 1 (285) (5)
=============================================================================================
<CAPTION>
Growth Equity
Fund
Institutional Institutional
Class Service Class
------------- -------------
Year ended
1998
-----------------------------
<S> <C> <C>
Shares sold 4,734 119
Shares issued in
reinvestment of
dividends and
distributions 1,838 28
-----------------------------
6,572 147
Shares redeemed (4,977) (93)
-----------------------------
Net increase (decrease) 1,595 54
=============================
</TABLE>
<TABLE>
<CAPTION>
Asset Manager Value Equity
Fund Fund
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- -------------
Six months ended Year ended Six months ended
June 30, 1999 1998 June 30, 1999
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,908 716 3,875 443 2,873 47
Shares issued in
reinvestment of
dividends and
distributions -- -- 4,797 158 -- --
---------------------------------------------------------------------------------------------
1,908 716 8,672 601 2,873 47
Shares redeemed (2,169) (117) (4,061) (169) (11,265) (178)
---------------------------------------------------------------------------------------------
Net increase (decrease) (261) 599 4,611 432 (8,392) (131)
=============================================================================================
<CAPTION>
Value Equity
Fund
Institutional Institutional
Class Service Class
------------- -------------
Year ended
1998
-----------------------------
<S> <C> <C>
Shares sold 5,203 125
Shares issued in
reinvestment of
dividends and
distributions 14,874 179
-----------------------------
20,077 304
Shares redeemed (12,155) (150)
-----------------------------
Net increase (decrease) 7,922 154
=============================
</TABLE>
<TABLE>
<CAPTION>
International Bond Money Market
Fund Fund
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- -------------
Six months ended Year ended Six months ended
June 30, 1999 1998 June 30, 1999
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 306 -- 1,062 2 343,914 9,787
Shares issued in
reinvestment of
dividends and
distributions -- -- 392 2 4,317 757
---------------------------------------------------------------------------------------------
306 -- 1,454 4 348,231 10,544
Shares redeemed (194) (1) (369) (5) (312,471) (108,860)
---------------------------------------------------------------------------------------------
Net increase (decrease) 112 (1) 1,085 (1) 35,760 (98,316)
=============================================================================================
<CAPTION>
Money Market
Fund
Institutional
Sweep Shares Class
-------------------
Six months ended
June 30, 1999
-------------------
<S> <C>
Shares sold 185,399
Shares issued in
reinvestment of
dividends and
distributions 1,715
-------------------
187,114
Shares redeemed (58,825)
-------------------
Net increase (decrease) 128,289
===================
</TABLE>
- ------------
* Sweep Shares Class first offered on December 8, 1998.
148
<PAGE> 150
MAINSTAY
INSTITUTIONAL FUNDS INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Asset Manager Value Equity Bond Indexed Bond International Bond
Fund Fund Fund Fund Fund
Purchases Sales Purchases Sales Purchases Sales Purchases Sales Purchases Sales
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 81 $ 48,527 $ -- $ -- $188,900 $188,001 $ 62,135 $ 25,786 $ -- $ --
12,866 39,885 236,385 347,993 79,089 73,399 9,444 13,311 102,497 97,293
- --------------------------------------------------------------------------------------------------------------------
$ 12,947 $ 88,412 $236,385 $347,993 $267,989 $261,400 $ 71,579 $ 39,097 $102,497 $ 97,293
====================================================================================================================
<CAPTION>
Short-Term Bond
Fund
Purchases Sales
- -------------------------
<S> <C> <C>
$ 30,395 $ 29,000
8,708 4,395
- -------------------------
$ 39,103 $ 33,395
=========================
</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, 1999 1998 June 30, 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3,963 503 11,881 806 975 8 3,583 4
-- -- 1,778 41 -- -- 343 2
- ---------------------------------------------------------------------------------------------------------------------------------
3,963 503 13,659 847 975 8 3,926 6
(5,187) (182) (5,280) (264) (1,342) (13) (3,477) (10)
- ---------------------------------------------------------------------------------------------------------------------------------
(1,224) 321 8,379 583 (367) (5) 449 (4)
=================================================================================================================================
</TABLE>
<TABLE>
<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, 1999 1998 June 30, 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
936 413 2,773 435 1,935 64 5,611 123
-- -- 998 19 -- -- 847 20
- ---------------------------------------------------------------------------------------------------------------------------------
936 413 3,771 454 1,935 64 6,458 143
(910) (409) (4,316) (178) (1,987) (55) (3,138) (69)
- ---------------------------------------------------------------------------------------------------------------------------------
26 4 (545) 276 (52) 9 3,320 74
=================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Money Market Short-Term Bond
Fund (Continued) Fund
Institutional Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Sweep Shares Class* Class Service Class Class Service Class
------------- ---------------- ------------------- ------------- ------------- ------------- -------------
Year ended Six months ended Year ended
1998 June 30, 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
267,338 92,389 7,086 2,460 31 1,826 81
10,080 3,866 -- -- -- 268 7
- --------------------------------------------------------------------------------------------------------------------------
277,418 96,255 7,086 2,460 31 2,094 88
(273,376) (56,718) (129) (1,648) (52) (2,584) (111)
- --------------------------------------------------------------------------------------------------------------------------
4,042 39,536 6,957 812 (21) (490) (23)
==========================================================================================================================
</TABLE>
149
<PAGE> 151
OFFICERS AND DIRECTORS*
Stephen C. Roussin
Chairman 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
Marc J. Brookman
Executive Vice President
Richard Zuccaro
Tax Vice President
Anthony W. Polis
Treasurer
Sara L. Badler
Secretary
MANAGER
MainStay Management, Inc.
SUBADVISORS
New York Life Insurance
Company
MacKay Shields Financial
Corporation
Monitor Capital Advisors, Inc.
DISTRIBUTOR
NYLIFE Distributors Inc.
TRANSFER AGENT
MainStay Shareholder Services
Inc.
CUSTODIAN
The Bank of New York
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers 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.
*As of June 30, 1999.
<PAGE> 152
[LOGO] MAINSTAY INVESTMENTS
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
MainStay Institutional Funds Inc. prospectus. This report does not offer for
sale or solicit orders to buy any securities.
Subadvisors:
New York Life Insurance Company
MacKay Shields Financial Corporation
Monitor Capital Advisors, Inc.
Distributed by NYLIFE Distributors Inc., member NASD, 300 Interpace Parkway,
Building A, 2nd Floor, Parsippany, NJ 07054
NYLIFE Distributors Inc. is an indirect wholly owned
subsidiary of New York Life Insurance Company.
