<PAGE> 1
ANNUAL REPORT
- -----------------------------------------------------------------------
MAINSTAY(R) INSTITUTIONAL FUNDS INC.
OCTOBER 31, 1999
------------------------------------------------------
Asset Manager Fund
------------------------------------------------------
EAFE Index Fund
------------------------------------------------------
Growth Equity Fund
------------------------------------------------------
Indexed Equity Fund
------------------------------------------------------
International Equity Fund
------------------------------------------------------
Value Equity Fund
------------------------------------------------------
Bond Fund
------------------------------------------------------
Indexed Bond Fund
------------------------------------------------------
International Bond Fund
------------------------------------------------------
Money Market Fund
------------------------------------------------------
Short-Term Bond Fund
- -----------------------------------------------------------------------
[MAINSTAY LOGO] MAINSTAY Investments
<PAGE> 2
<TABLE>
<CAPTION>
PERFORMANCE HIGHLIGHTS
TOTAL RETURNS*
INDIVIDUAL YEARS ENDED DECEMBER 31
TEN
MONTHS
ENDED
OCTOBER 31,
FUNDS 1992 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY FUNDS
Asset Manager 7.09% 8.79% -0.86% 26.81% 16.16% 26.69% 21.31% 5.58%
(Institutional Class)(+#)
Asset Manager (Service 7.09 8.79 -0.86 26.70 15.89 26.30 21.00 5.31
Class)(++#)
EAFE INDEX (INSTITUTIONAL -12.22 28.97 6.83 9.03 6.45 0.40 19.15 12.31
CLASS)(+)
EAFE INDEX (SERVICE -12.22 28.97 6.83 8.63 6.37 0.08 18.83 12.08
CLASS)(++)
Growth Equity 5.63 9.59 -2.23 37.88 21.62 24.73 40.50 9.96
(Institutional Class)(+)
Growth Equity (Service 5.63 9.59 -2.23 37.50 21.29 24.50 40.18 9.74
Class)(++)
INDEXED EQUITY 7.19 9.41 0.90 36.88 22.57 32.88 28.62 11.80
(INSTITUTIONAL CLASS)(+)
INDEXED EQUITY (SERVICE 7.19 9.41 0.90 36.70 22.21 32.60 28.24 11.60
CLASS)(++)
International Equity -5.37 25.03 8.36 7.17 12.09 5.44 22.41 11.23
(Institutional
Class)(sec.)
International Equity -5.37 25.03 8.36 6.86 11.59 4.88 22.20 10.96
(Service Class)(sec.)
VALUE EQUITY (INSTITUTIONAL 20.71 14.90 1.22 29.42 22.41 22.63 -8.10 7.91
CLASS)(+)
VALUE EQUITY (SERVICE 20.71 14.90 1.22 29.32 22.10 22.28 -8.30 7.65
CLASS)(++)
INCOME FUNDS
Bond (Institutional 6.39% 9.74% -3.31% 17.88% 2.80% 8.57% 7.93% -1.61%
Class)(+)
Bond (Service Class)(++) 6.39 9.74 -3.31 17.55 2.62 8.21 7.73 -1.92
INDEXED BOND (INSTITUTIONAL 7.09 9.64 -3.44 18.07 2.55 9.01 8.21 -1.56
CLASS)(+)
INDEXED BOND (SERVICE 7.09 9.64 -3.44 17.97 2.34 8.75 7.86 -1.65
CLASS)(++)
International Bond 7.68 14.56 3.11 18.46 14.32 2.62 12.53 -5.33
(Institutional
Class)(sec.)
International Bond (Service 7.68 14.56 3.11 18.26 14.08 2.27 12.30 -5.50
Class)(sec.)
MONEY MARKET (II) 3.66 2.89 3.88 5.63 5.11 5.27 5.25 3.96
(Institutional Class)(+)
MONEY MARKET (II) (Service 3.66 2.89 3.88 5.46 4.85 5.01 4.99 3.74
Class)(++)
MONEY MARKET (II) (Sweep 3.66 2.89 3.88 5.46 4.85 5.01 4.99 3.53
Shares Class)(++)
Short-Term Bond 5.94 5.67 0.11 10.27 4.81 6.13 6.37 2.12
(Institutional Class)(+)
Short-Term Bond (Service 5.94 5.67 0.11 10.07 4.46 5.98 5.98 1.91
Class)(++)
<CAPTION>
PERFORMANCE HIGHLIGHTS
SEC AVERAGE ANNUAL
TOTAL RETURNS
AS OF OCTOBER 31, 1999
SINCE
FUNDS 1 YEAR 5 YEARS INCEPTION
<S> <C> <C> <C>
EQUITY FUNDS
Asset Manager 12.13% 18.89% 14.29%
(Institutional Class)(+#)
Asset Manager (Service 11.73 18.62 14.14
Class)(++#)
EAFE INDEX (INSTITUTIONAL 22.68 8.25 8.62
CLASS)(+)
EAFE INDEX (SERVICE 22.38 7.98 8.46
CLASS)(++)
Growth Equity 32.29 25.63 22.72
(Institutional Class)(+)
Growth Equity (Service 32.01 25.33 22.56
Class)(++)
INDEXED EQUITY 25.63 25.68 19.76
(INSTITUTIONAL CLASS)(+)
INDEXED EQUITY (SERVICE 25.32 25.40 19.61
CLASS)(++)
International Equity 22.57 11.14 11.56
(Institutional
Class)(sec.)
International Equity 22.31 10.77 11.30
(Service Class)(sec.)
VALUE EQUITY (INSTITUTIONAL 6.39 13.16 15.94
CLASS)(+)
VALUE EQUITY (SERVICE 6.12 12.92 15.79
CLASS)(++)
INCOME FUNDS
Bond (Institutional -1.05% 7.00% 6.86%
Class)(+)
Bond (Service Class)(++) -1.27 6.73 6.71
INDEXED BOND (INSTITUTIONAL -0.78 7.17 7.07
CLASS)(+)
INDEXED BOND (SERVICE -0.93 6.97 6.95
CLASS)(++)
International Bond -3.46 7.81 8.59
(Institutional
Class)(sec.)
International Bond (Service -3.69 7.57 8.47
Class)(sec.)
MONEY MARKET (II) 4.81 5.22 4.70
(Institutional Class)(+)
MONEY MARKET (II) (Service 4.55 4.98 4.57
Class)(++)
MONEY MARKET (II) (Sweep 4.34 4.94 4.55
Shares Class)(++)
Short-Term Bond 2.51 5.85 5.91
(Institutional Class)(+)
Short-Term Bond (Service 2.23 5.59 5.77
Class)(++)
</TABLE>
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.
* 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 Funds'
commencement of operations on 1/1/95. MacKay Shields LLC,
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 5.28% and 5.15%, respectively, for
the Institutional Class; 5.02% and 4.90%, respectively, for
the Service Class; and 4.76% and 4.65%, respectively, for
the Sweep Shares Class; all as of 10/31/99. 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 5.20% and 5.07%, respectively,
for the Institutional Class; 4.94% and 4.82%, respectively,
for the Service Class; and 4.67% and 4.57%, 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.
<PAGE> 3
Table of Contents
Chairman's Letter 2
Portfolio Managements' Discussions and Analyses
and
Financial Statements
EQUITY FUNDS
Asset Manager Fund (formerly known as
Multi-Asset Fund) 3
EAFE Index Fund 20
Growth Equity Fund 38
Indexed Equity Fund 48
International Equity Fund 64
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 144
Note 4 Federal Income Tax 147
Note 5 Financial Investments 148
Note 6 Line of Credit 148
Note 7 Deposit with Broker 149
Note 8 Purchases and Sales of Securities 150
Note 9 Capital Share Transactions 150
Report of Independent Accountants 152
<PAGE> 4
CHAIRMAN'S LETTER
- --------------------------------------------------------------------------------
Report to Shareholders for the Period
January 1, 1999, through October 31, 1999.
The twentieth century has been a period of unprecedented change. From the dawn
of air travel and overseas radio, we've advanced to an age when computers, cell
phones, and satellites can instantly connect people anywhere around the globe.
During the past hundred years, scientists have discovered penicillin, eradicated
polio, unraveled the secrets of DNA, and sent men to the moon and back.
Financially, the world has also seen tremendous evolution and growth. From 1900
to the bull market of the 1990s, investors have weathered wars, depressions,
recessions, oil embargoes, runaway inflation, currency devaluations, and major
shifts in political power. Yet despite the market's ups and downs, investors
have continued to increase their commitment and exposure to the capital markets
and have looked to mutual funds as a primary vehicle for helping them meet their
financial objectives. As a result, mutual funds as a group have grown from small
beginnings in the mid-1920s to over $6 trillion in assets under management in
October 1999.(*)
MainStay Institutional Funds Inc. is proud to be part of America's financial
heritage and the growth of the mutual fund industry. As we look ahead to a new
millenium, we believe it's helpful to look back at how far we've come. During
the last few years, we've witnessed a clear upward trend in the value of the
broad equity market, with returns exceeding historical norms.(+) While many of
the positive demographic and economic trends contributing to this period of
unprecedented prosperity remain in place today, it is still wise to bear in mind
that this period has indeed been unusual. New challenges and opportunities are
to be expected in an ever-changing world, but are difficult to anticipate. As a
result, it is prudent to periodically reassess expectations and to review your
investment strategies to make sure they're consistent with your long-term goals.
At MainStay Institutional Funds, we're helping you steer your portfolio with a
steady hand by focusing on discipline and consistency of style. Each Fund's
portfolio manager continues to manage his or her portfolio according to
investment strategies developed through extensive research and backed by many
years of investment experience. Though popular trends may get a great deal of
short-term publicity, they do not sway the investment disciplines of MainStay's
portfolio managers. This helps give you the consistency needed to help you
pursue specific goals in a well-rounded investment program.
This annual report explains the events that affected your MainStay Institutional
Funds during the ten-month period ended October 31, 1999. Although we have
changed the reporting period from a calendar-year basis, the investment process
underlying each of our Funds remains the same. The portfolio manager
commentaries that follow can tell you more about the investment strategies and
performance of your individual Funds.
Sincerely,
/s/STEPHEN C. ROUSSIN
Stephen C. Roussin
November 1999
- --------------------------------------------------------------------------------
(*) Source: "Trends in Mutual Fund Investing, October 1999," Investment Company
Institute.
(+) Source: Stocks, Bonds, Bills, and Inflation(R) 1999 Yearbook, (C)1999
Ibbotson Associates, Inc. Based on copyrighted works by Ibbotson and
Sinquefield. All rights reserved. Used with permission.
2
<PAGE> 5
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Asset Manager Fund (formerly known as the Multi-Asset Fund)
- --------------------------------------------------------------------------------
The ten-month period ended October 31, 1999,(1) was a positive one for many
stock markets around the globe, but a difficult period for domestic bond
investors. The Federal Reserve Board, which had eased the targeted federal funds
rate three times in 1998, made two tightening moves during the reporting
period--one at the end of June and another in late August 1999. Each move raised
the targeted federal funds rate 25 basis points and had a negative impact on
bond prices. In the United States, cash investments outperformed bonds by a
substantial margin during the ten-month reporting period.
Despite the appearance of being overvalued, U.S. equities as measured by the S&P
500 Index,(2) continued their upward climb, returning 12.03% for the ten months
ended October 31, 1999. Most Asian markets benefited from a strong economic
recovery in Japan, with Japanese equities rising sharply and Hong Kong stocks
performing quite well over the ten-month reporting period. Although enthusiasm
over the euro quickly faded after its introduction in January 1999, several
European stock markets provided double-digit returns in U.S.-dollar terms during
the ten months ended October 31, 1999. The German stock market provided a
slightly negative return for the ten-month period, lagging well behind the
French and U.K. stock markets.
PERFORMANCE REVIEW
For the ten months ended October 31, 1999, the MainStay Institutional Asset
Manager Fund (formerly the Institutional Multi-Asset Fund) returned 5.58% for
Institutional Class shares and 5.31% for Service Class shares. Both share
classes outperformed the 5.24% return of the average Lipper(3) flexible
portfolio fund for the ten months ended October 31, 1999. During the second
calendar quarter of 1999, the Fund's asset allocation model indicated that U.S.
equities were overpriced based on historical valuation measures. The Fund
reduced its exposure to U.S. stocks, but they continued to roar ahead, so the
repositioning had a negative impact on performance.
Both of the Fund's share classes were rated four stars overall by Morningstar(4)
as of October 31, 1999. Both share classes were rated four stars out of 3,272
domestic equity funds for the three-year period then ended, and Institutional
Class shares were rated four stars out of 2,047 domestic equity funds for the
five-year period then ended.
STRONG AND WEAK SECTORS
The best-performing markets in which the Fund invested during the ten months
ended October 31, 1999, were Japan (+45.84%), Hong Kong (+29.72%), France
(+12.32%), and the United States (+11.64%), all in U.S.-dollar terms.(5) While
these overall results were positive, most markets showed considerable variations
over the reporting period.
The Fund's worst-performing asset class for the reporting period was domestic
bonds, which returned -0.37% as measured by the
- --------------------------------------------------------------------------------
(1) MainStay Institutional Funds recently changed its fiscal year end from
December 31 to October 31. The previous annual report provided information
through December 31, 1998. This report covers the ten-month fiscal period
from January 1, 1999, through October 31, 1999.
(2) "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.
(3) 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.
(4) Morningstar, Inc. is an independent fund performance monitor. Its ratings
reflect historic risk-adjusted performance, taking fees and sales charges
into account, and may change monthly. Its ratings of one (low) to five
(high) stars are based on a fund's three-, five-, and ten-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 funds in a
broad asset class receive five stars, the next 22.5% receive four stars, the
middle 35% receive three stars, the next 22.5% receive two stars, and the
bottom 10% receive one star. Funds (or share classes) are not rated until
they have three years of performance history.
(5) Foreign market returns are based on Morgan Stanley Capital International
(MSCI) national indices, which are unmanaged and are generally
representative of stocks in the respective countries. U.S. returns are based
on the S&P 500 Index. An investment cannot be made directly into an index.
3
<PAGE> 6
Salomon Smith Barney Broad Investment Grade (BIG) Bond Index.(6) Rising interest
rates and inflation concerns had a negative impact on bond returns. In addition,
as the global financial crisis of mid-1998 began to unwind, investors were no
longer willing to pay a premium for Treasury securities, which further eroded
bond performance. Another weak-performing asset class in which the Fund invested
was cash, which returned 3.97% for the ten-month reporting period as measured by
the Merrill Lynch 3-Month U.S. Treasury Bill Index.(7) Also, compared to other
stock markets represented in the Fund's portfolio, German stocks were the
weakest, returning -0.28% in U.S.-dollar terms during the ten months ended
October 31, 1999.
LOOKING AHEAD
The MainStay Institutional Asset Manager Fund remains in a defensive mode with
respect to U.S. equities, which continue to appear overvalued by historical
measures. As of October 31, 1999, the Fund's asset allocation model portrayed
other asset classes as offering more attractive risk/reward profiles. We
anticipate that investors will remain cautious as they try to assess possible
moves by the Federal Reserve and react to uncertainty surrounding Y2K. It is our
opinion that volatility may increase as investors continue to "bargain hunt" for
the balance of 1999.
Whatever happens in the global economy and specific markets, 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
common stocks, fixed-income securities, and money-market investments.
JEFFERSON C. BOYCE
JONATHAN B. SWANEY
Portfolio Managers
Monitor Capital Advisors LLC
- --------------------------------------------------------------------------------
(6) 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.
(7) The Merrill Lynch 3-Month U.S. Treasury Bill Index is comprised of a single
issue purchased at the beginning of the month and held for a full month. The
issue selected at each month-end rebalancing is the outstanding Treasury
bill that matures closest to, but not beyond three months from the
rebalancing date. An investment cannot be made directly into an index.
Past performance is no guarantee of future results.
4
<PAGE> 7
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
ASSET MANAGER FUND VS
AVERAGE LIPPER FLEXIBLE PORTFOLIO FUND
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
INDEX ASSET MANAGER
----- -------------
<S> <C> <C>
1/2/91 $ 250,000 $ 250,000
03/31/91 278,300 264,000
06/30/91 278,857 266,250
09/30/91 292,744 278,250
12/31/91 313,558 294,750
03/31/92 313,840 290,187
06/30/92 314,311 297,803
09/30/92 324,746 308,307
12/31/92 338,970 315,660
03/31/93 352,698 327,443
06/30/93 358,024 331,103
09/30/93 370,161 338,705
12/31/93 375,676 343,407
03/31/94 364,744 332,814
06/30/94 361,096 332,225
09/30/94 371,243 339,582
12/31/94 367,754 340,450
03/31/95 389,966 361,509
06/30/95 418,940 384,482
09/30/95 442,233 409,051
12/31/95 459,083 431,737
03/31/96 472,580 450,779
06/30/96 484,489 466,891
09/30/96 495,680 469,821
12/31/96 521,059 501,515
03/31/97 520,121 514,823
06/30/97 575,046 585,544
09/30/97 613,919 624,327
12/31/97 617,234 635,368
03/31/98 669,946 702,632
06/30/98 678,052 722,768
09/30/98 624,825 680,782
12/31/98 702,866 770,743
03/31/99 711,090 794,327
06/30/99 746,360 812,391
09/30/99 719,043 787,302
10/31/99 738,673 813,780
</TABLE>
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
ASSET MANAGER FUND VS
AVERAGE LIPPER FLEXIBLE PORTFOLIO FUND
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
INDEX ASSET MANAGER
----- -------------
<S> <C> <C>
1/2/91 $ 250,000 $ 250,000
03/31/91 278,300 264,000
06/30/91 278,857 266,250
09/30/91 292,744 278,250
12/31/91 313,558 294,750
03/31/92 313,840 290,187
06/30/92 314,311 297,803
09/30/92 324,746 308,307
12/31/92 338,970 315,660
03/31/93 352,698 327,443
06/30/93 358,024 331,103
09/30/93 370,161 338,705
12/31/93 375,676 343,407
03/31/94 364,744 332,814
06/30/94 361,096 332,225
09/30/94 371,243 339,582
12/31/94 367,754 340,450
03/31/95 389,966 361,828
06/30/95 418,940 384,482
09/30/95 442,233 408,732
12/31/95 459,083 431,341
03/31/96 472,580 450,000
06/30/96 484,489 465,732
09/30/96 495,680 468,293
12/31/96 521,059 499,882
03/31/97 520,121 512,768
06/30/97 575,046 582,880
09/30/97 613,919 620,779
12/31/97 617,234 631,366
03/31/98 669,946 697,871
06/30/98 678,052 717,055
09/30/98 624,825 675,276
12/31/98 702,866 763,942
03/31/99 711,090 786,865
06/30/99 746,360 804,307
09/30/99 719,043 778,892
10/31/99 738,673 804,507
</TABLE>
<TABLE>
<CAPTION>
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF OCTOBER 31, 1999 AS OF OCTOBER 31, 1999
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year to date
One year Five years Since inception
- -----------------------------------------------------------------------------------------------------------------
Asset Manager Fund Institutional Class(++) 5.58% 12.13% 18.89% 14.29%
Asset Manager Fund Service Class(+++) 5.31 11.73 18.62 14.14
Average Lipper flexible portfolio fund 5.24 13.54 15.17 13.70
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
YEAR END DECEMBER 31
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
10/31
----------
<S> <C>
5.58
</TABLE>
- --------------------------------------------------------------------------------
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%.
* 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.
++ Effective 5/1/99, the Institutional Multi-Asset Fund was renamed the
Institutional Asset Manager Fund.
5
<PAGE> 8
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS
October 31, 1999
- ------------
<TABLE>
<CAPTION>
LONG-TERM BONDS (24.7%)+
CORPORATE BONDS (10.0%)
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 $ 1,008,750
------------
BANKS--MONEY CENTER (0.6%)
First Union Corp.
8.77%, due 11/15/04........... 1,000,000 1,001,250
International Bank for
Reconstruction & Development
(zero coupon), due 2/15/15
(d)........................... 5,197,000 1,792,965
Morgan (J.P.) & Co., Inc.
8.50%, due 8/15/03............ 500,000 525,000
------------
3,319,215
------------
BANKS--REGIONAL (0.5%)
National Bank of Canada Series
B
8.125%, due 8/15/04 (d)....... 2,850,000 2,949,750
------------
BEVERAGES--ALCOHOLIC (0.4%)
Bass North America Inc.
6.625%, due 3/1/03............ 2,250,000 2,227,500
------------
BROADCAST/MEDIA (0.2%)
Cox Communications Inc.
6.50%, due 11/15/02........... 1,000,000 985,000
------------
CHEMICALS (0.1%)
Rhone-Poulenc S.A.
7.75%, due 1/15/02 (d)........ 350,000 355,687
------------
COMMUNICATIONS--EQUIPMENT
MANUFACTURERS (0.6%)
Nortel Networks Corp.
6.875%, due 10/1/02 (d)....... 3,000,000 3,003,750
------------
CONTAINERS--METAL & GLASS (0.9%)
Crown Cork & Seal Finance PLC
7.00%, due 12/15/06 (d)....... 5,000,000 4,812,500
------------
ELECTRIC POWER COMPANIES (1.4%)
Arkansas Power & Light Co.
6.00%, due 10/1/03............ 3,000,000 2,850,000
Citizens Utilities Co.
7.45%, due 1/15/04............ 1,000,000 1,018,750
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............ 2,500,000 2,456,250
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-------------------------
<S> <C> <C>
ELECTRIC POWER COMPANIES (CONTINUED)
Philadelphia Electric Co.
5.625%, due 11/1/01........... $ 1,000,000 $ 977,500
------------
7,814,375
------------
FINANCIAL--MISCELLANEOUS (0.5%)
Ambac Financial Group Inc.
9.375%, due 8/1/11............ 1,000,000 1,180,000
Ford Motor Credit Co.
7.00%, due 9/25/01............ 1,600,000 1,610,000
------------
2,790,000
------------
INSURANCE--PROPERTY & CASUALTY (1.4%)
American Re Corp. Series B
7.45%, due 12/15/26........... 7,920,000 7,830,900
------------
INVESTMENT BANK/BROKERAGE (0.2%)
Bear Stearns Cos., Inc. (The)
6.625%, due 1/15/04........... 500,000 488,125
Paine Webber Group, Inc.
7.75%, due 9/1/02............. 400,000 405,500
------------
893,625
------------
OIL & GAS--EQUIPMENT & SERVICES (0.2%)
Petroleum Geo-Services ASA
6.625%, due 3/30/08 (d)....... 1,000,000 930,000
------------
OIL--INTEGRATED DOMESTIC (0.1%)
Occidental Petroleum Corp.
10.125%, due 11/15/01......... 500,000 528,125
------------
OIL--INTEGRATED INTERNATIONAL (1.5%)
Imperial Oil Ltd.
8.30%, due 8/20/01 (d)........ 6,000,000 6,187,500
Societe Nationale Elf Aquitaine
8.00%, due 10/15/01 (d)....... 2,000,000 2,060,000
------------
8,247,500
------------
PAPER & FOREST PRODUCTS (0.1%)
Georgia-Pacific Corp.
9.125%, due 7/1/22............ 500,000 524,375
------------
TELEPHONE (1.1%)
GTE South Inc. Series C
6.00%, due 2/15/08............ 1,300,000 1,211,005
New York Telephone Co.
6.125%, due 1/15/10........... 5,000,000 4,648,280
------------
5,859,285
------------
Total Corporate Bonds
(Cost $59,419,903)............ 54,080,337
------------
</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> 9
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
U.S. GOVERNMENT &
FEDERAL AGENCIES (14.7%)
PRINCIPAL
AMOUNT VALUE
-------------------------
<S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION (MORTGAGE
PASS-THROUGH SECURITIES) (0.1%)
7.75%, due 10/1/07............ $ 370,819 $ 378,929
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION GOLD (MORTGAGE
PASS-THROUGH SECURITIES) (2.3%)
6.00%, due 1/1/26-1/1/28...... 976,173 910,584
6.50%, due 2/1/27-10/1/29..... 10,000,664 9,588,134
7.00%, due 3/1/26-10/1/26..... 624,402 613,274
7.50%, due 7/1/11-9/1/11...... 449,965 455,590
8.00%, due 10/1/11-11/1/11.... 435,976 446,736
------------
12,014,318
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (1.9%)
6.50%, due 11/1/03-7/1/29..... 8,554,423 8,211,560
7.00%, due 10/1/03-6/1/26..... 835,181 824,927
7.50%, due 7/1/11-10/1/11..... 378,045 382,532
8.00%, due 7/1/09-11/1/11..... 686,195 703,131
8.50%, due 6/1/26-10/1/26..... 126,967 131,451
9.00%, due 6/1/26-9/1/26...... 324,385 339,387
------------
10,592,988
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION I (MORTGAGE
PASS-THROUGH SECURITIES) (1.2%)
6.50%, due 2/15/29-8/15/29.... 5,000,224 4,776,765
7.00%, due 7/15/11-10/15/11... 725,331 724,875
7.50%, due 3/15/26-6/15/26.... 572,726 574,158
8.00%, due 8/15/26-10/15/26... 447,546 457,334
8.50%, due 11/15/26........... 173,597 180,540
9.00%, due 4/15/25-11/15/26... 222,805 234,224
------------
6,947,896
------------
RESOLUTION FUNDING CORPORATION (0.2%)
(zero coupon), due 10/15/10... 2,600,000 1,258,998
------------
UNITED STATES TREASURY BONDS (1.9%)
5.25%, due 2/15/29............ 5,150,000 4,451,506
6.125%, due 11/15/27.......... 1,500,000 1,450,080
6.25%, due 8/15/23............ 1,000,000 977,460
8.125%, due 5/15/21........... 1,000,000 1,184,970
10.625%, due 8/15/15.......... 1,000,000 1,403,860
11.875%, due 11/15/03......... 700,000 841,176
------------
10,309,052
------------
UNITED STATES TREASURY NOTES (7.1%)
4.75%, due 11/15/08........... 10,000,000 9,040,100
5.625%, due 12/31/02.......... 8,500,000 8,427,835
5.75%, due 8/15/03............ 2,300,000 2,281,278
6.00%, due 8/15/04............ 4,400,000 4,410,296
6.875%, due 3/31/00........... 9,000,000 9,056,790
7.00%, due 7/15/06............ 2,100,000 2,191,749
7.50%, due 11/15/01-5/15/02... 2,000,000 2,068,720
7.875%, due 11/15/99.......... 1,000,000 1,001,090
------------
38,477,858
------------
</TABLE>
<TABLE>
VALUE
------------
<S> <C> <C>
Total U.S. Government & Federal
Agencies
(Cost $80,537,149)............ $ 79,980,039(f)
------------
Total Long-Term Bonds
(Cost $139,957,052)........... 134,060,376
------------
<CAPTION>
COMMON STOCKS (30.6%)
SHARES
-----------
<S> <C> <C>
AEROSPACE/DEFENSE (0.3%)
Boeing Co. (The)............... 14,168 652,614
General Dynamics Corp.......... 2,936 162,765
Goodrich (B.F.) Co. (The)...... 1,623 38,445
Lockheed Martin Corp........... 5,808 116,160
Northrop Grumman Corp.......... 1,051 57,674
Raytheon Co. Class B........... 5,079 147,926
Rockwell International Corp.... 2,846 137,853
United Technologies Corp....... 7,093 429,125
------------
1,742,562
------------
AIRLINES (0.1%)
AMR Corp. (a).................. 2,263 143,701
Delta Air Lines, Inc........... 2,024 110,181
Southwest Airlines Co.......... 7,471 125,606
US Airways Group, Inc. (a)..... 1,126 31,528
------------
411,016
------------
ALUMINUM (0.1%)
Alcan Aluminum Ltd............. 3,301 108,727
Alcoa Inc...................... 5,447 330,905
Reynolds Metals Co............. 940 56,811
------------
496,443
------------
AUTO PARTS & EQUIPMENT (0.1%)
Cooper Tire & Rubber Co........ 1,088 18,292
Delphi Automotive Systems
Corp.......................... 8,278 136,070
Genuine Parts Co............... 2,609 67,997
Goodyear Tire & Rubber Co.
(The)......................... 2,254 93,118
------------
315,477
------------
AUTOMOBILES (0.3%)
Ford Motor Co.................. 17,907 982,647
General Motors Corp............ 9,639 677,140
------------
1,659,787
------------
BANKS--MAJOR REGIONAL (1.3%)
AmSouth Bancorp................ 5,742 147,856
Bank of New York Co., Inc.
(The)......................... 10,768 450,910
Bank One Corp.................. 17,444 655,240
BB&T Corp...................... 4,618 167,980
Comerica Inc................... 2,353 139,856
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
7
<PAGE> 10
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
BANKS--MAJOR REGIONAL (CONTINUED)
Fifth Third Bancorp............ 3,916 $ 289,050
Firstar Corp................... 14,642 430,109
Fleet Boston Corp.............. 13,671 596,397
Huntington Bancshares Inc...... 3,447 102,117
KeyCorp........................ 6,580 183,829
Mellon Financial Corp.......... 7,729 285,490
National City Corp............. 9,326 275,117
Northern Trust Corp............ 1,684 162,611
PNC Bank Corp.................. 4,482 267,239
Regions Financial Corp......... 3,328 100,048
Republic New York Corp......... 1,586 100,215
SouthTrust Corp................ 2,413 96,520
State Street Corp.............. 2,342 178,285
Summit Bancorp................. 2,582 89,402
SunTrust Banks, Inc............ 4,707 344,494
Synovus Financial Corp......... 3,979 85,300
Union Planters Corp............ 2,099 93,406
U.S. Bancorp................... 10,754 398,570
Wachovia Corp.................. 3,116 268,755
Wells Fargo Co................. 24,385 1,167,432
------------
7,076,228
------------
BANKS--MONEY CENTER (0.7%)
Bank of America Corp........... 25,395 1,634,803
Chase Manhattan Corp. (The).... 12,253 1,070,606
First Union Corp............... 14,311 610,901
Morgan (J.P.) & Co., Inc....... 2,639 345,379
------------
3,661,689
------------
BANKS--SAVINGS & LOANS (0.1%)
Golden West Financial Corp..... 829 92,641
Washington Mutual, Inc......... 8,545 307,086
------------
399,727
------------
BEVERAGES--ALCOHOLIC (0.1%)
Anheuser-Busch Cos., Inc....... 6,913 496,440
Brown-Forman Corp. Class B..... 1,064 71,820
Coors (Adolph) Co. Class B..... 533 29,582
------------
597,842
------------
BEVERAGES--SOFT DRINKS (0.6%)
Coca-Cola Co. (The)............ 36,381 2,146,479
Coca-Cola Enterprises Inc...... 6,293 160,865
PepsiCo, Inc................... 21,470 744,741
------------
3,052,085
------------
BROADCAST/MEDIA (0.4%)
CBS Corp. (a).................. 10,475 511,311
Clear Channel Communications,
Inc. (a)...................... 4,783 384,434
Comcast Corp. Special Class
A............................. 10,959 461,648
MediaOne Group Inc. (a)........ 9,074 644,821
------------
2,002,214
------------
BUILDING MATERIALS (0.1%)
Masco Corp..................... 6,492 198,006
Owens Corning.................. 850 17,425
</TABLE>
<TABLE>
SHARES VALUE
-------------------------
<CAPTION>
<S> <C> <C>
BUILDING MATERIALS (CONTINUED)
Sherwin-Williams Co. (The)..... 2,587 $ 57,884
Vulcan Materials Co............ 1,500 61,969
------------
335,284
------------
CHEMICALS (0.4%)
Air Products & Chemicals,
Inc........................... 3,375 92,813
Dow Chemical Co. (The)......... 3,342 395,191
Du Pont (E.I.) De Nemours &
Co............................ 15,364 990,018
Eastman Chemical Co............ 1,230 47,432
Hercules Inc................... 1,439 34,626
Monsanto Co.................... 9,221 355,008
Praxair, Inc................... 2,368 110,704
Rohm & Haas Co................. 3,127 119,608
Union Carbide Corp............. 1,950 118,950
------------
2,264,350
------------
CHEMICALS--DIVERSIFIED (0.1%)
Avery Dennison Corp............ 1,752 109,500
Engelhard Corp................. 1,849 32,589
FMC Corp. (a).................. 478 19,448
PPG Industries, Inc............ 2,605 157,928
------------
319,465
------------
CHEMICALS--SPECIALTY (0.0%)(b)
Grace (W.R.) & Co. (a)......... 1,054 15,744
Great Lakes Chemical Corp...... 870 30,885
Sigma-Aldrich Corp............. 1,456 41,496
------------
88,125
------------
COMMUNICATIONS--EQUIPMENT
MANUFACTURERS (1.7%)
ADC Telecommunications, Inc.
(a)........................... 2,200 104,913
Andrew Corp. (a)............... 1,218 15,682
Cabletron Systems, Inc. (a).... 2,751 45,563
Cisco Systems, Inc. (a)........ 47,954 3,548,596
Comverse Technology, Inc. (a).. 1,000 113,500
General Instrument Corp. (a)... 2,590 139,374
Lucent Technologies Inc........ 45,108 2,898,189
Network Appliance, Inc. (a).... 1,034 76,516
Nortel Networks Corp........... 19,664 1,217,939
QUALCOMM, Inc. (a)............. 2,400 534,600
Scientific-Atlanta, Inc........ 1,118 64,006
Tellabs, Inc. (a).............. 5,812 367,609
3Com Corp. (a)................. 5,255 152,395
------------
9,278,882
------------
COMPUTER SOFTWARE & SERVICES (2.4%)
Adobe Systems Inc.............. 1,770 123,789
America Online Inc. (a)........ 16,287 2,112,220
Autodesk, Inc.................. 836 15,675
Automatic Data Processing,
Inc........................... 9,103 438,651
BMC Software, Inc. (a)......... 3,466 222,473
Ceridian Corp. (a)............. 2,112 46,332
Computer Associates
International, Inc............ 7,907 446,746
Computer Sciences Corp. (a).... 2,386 163,888
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
8
<PAGE> 11
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
COMPUTER SOFTWARE & SERVICES
(CONTINUED)
Compuware Corp. (a)............ 5,450 $ 151,578
Electronic Data Systems
Corp.......................... 7,272 425,412
Equifax Inc.................... 2,099 56,673
First Data Corp................ 6,363 290,710
Microsoft Corp. (a)............ 75,259 6,966,161
Novell, Inc. (a)............... 4,988 100,072
Oracle Corp. (a)............... 21,251 1,010,751
Parametric Technology Corp.
(a)........................... 3,948 75,259
Paychex, Inc................... 3,649 143,679
PeopleSoft, Inc. (a)........... 3,552 53,280
Shared Medical Systems Corp.... 416 15,704
------------
12,859,053
------------
COMPUTER SYSTEMS (1.6%)
Apple Computer, Inc. (a)....... 2,300 184,288
Compaq Computer Corp........... 25,127 477,413
Dell Computer Corp. (a)........ 37,484 1,504,045
EMC Corp. (a).................. 14,978 1,093,394
Gateway Inc. (a)............... 4,660 307,851
Hewlett-Packard Co............. 14,456 1,070,647
International Business Machines
Corp.......................... 26,630 2,619,726
Lexmark International Group,
Inc. (a)...................... 1,900 148,319
Seagate Technology, Inc. (a)... 3,288 96,791
Silicon Graphics, Inc. (a)..... 2,801 21,708
Sun Microsystems, Inc. (a)..... 11,400 1,206,262
Unisys Corp. (a)............... 4,515 109,489
------------
8,839,933
------------
CONGLOMERATES (0.0%)(b)
Tenneco Inc.................... 2,470 39,520
Textron Inc.................... 2,232 172,283
------------
211,803
------------
CONTAINERS--METAL & GLASS
(0.0%)(b)
Ball Corp...................... 434 17,496
Crown Cork & Seal Co., Inc..... 1,758 42,082
Owens-Illinois, Inc. (a)....... 2,349 56,229
------------
115,807
------------
CONTAINERS--PAPER (0.0%)(b)
Bemis Co., Inc................. 821 28,684
Temple-Inland Inc.............. 811 47,139
------------
75,823
------------
COSMETICS/PERSONAL CARE (0.2%)
Alberto-Culver Co. Class B..... 815 19,203
Avon Products, Inc............. 3,839 123,808
Gillette Co. (The)............. 15,842 573,282
International Flavors &
Fragrances Inc................ 1,613 61,697
------------
777,990
------------
ELECTRIC POWER COMPANIES (0.6%)
Ameren Corp.................... 2,005 75,814
American Electric Power Co.,
Inc........................... 2,842 98,049
</TABLE>
<TABLE>
SHARES VALUE
-------------------------
<CAPTION>
<S> <C> <C>
ELECTRIC POWER COMPANIES
(CONTINUED)
Carolina Power & Light Co...... 2,339 $ 80,696
Central & South West Corp...... 3,173 70,401
Cinergy Corp................... 2,388 67,461
CMS Energy Corp................ 1,729 63,757
Consolidated Edison, Inc....... 3,320 126,783
Constellation Energy Group..... 2,163 66,377
Dominion Resources, Inc........ 2,835 136,434
DTE Energy Co.................. 2,146 71,220
Duke Energy Corp............... 5,370 303,405
Edison International........... 5,197 153,961
Entergy Corp................... 3,622 108,434
FirstEnergy Corp............... 3,420 89,134
Florida Progress Corp.......... 1,474 67,528
FPL Group, Inc................. 2,802 140,976
GPU, Inc....................... 1,931 65,533
New Century Energies Inc....... 1,614 52,556
Niagara Mohawk Holdings Inc.
(a)........................... 2,758 43,783
Northern States Power Co....... 2,187 47,020
PacifiCorp..................... 4,366 90,049
PECO Energy Co................. 2,796 106,772
PG&E Corp...................... 5,668 130,010
Pinnacle West Capital Corp..... 1,300 47,937
PP&L Resources, Inc............ 2,283 61,784
Public Service Enterprise Group
Inc........................... 3,325 131,545
Reliant Energy, Inc............ 4,415 120,309
Southern Co. (The)............. 10,354 275,028
Texas Utilities Co............. 4,185 162,169
Unicom Corp.................... 3,246 124,362
------------
3,179,287
------------
ELECTRICAL EQUIPMENT (1.4%)
Cooper Industries, Inc......... 1,534 66,058
Emerson Electric Co............ 6,416 385,361
General Electric Co. (c)....... 48,468 6,570,443
Grainger (W.W.), Inc........... 1,511 64,029
Honeywell Inc.................. 1,873 197,484
Solectron Corp. (a)............ 4,016 302,204
Thomas & Betts Corp............ 723 32,445
------------
7,618,024
------------
ELECTRONICS--DEFENSE (0.0%)(b)
PerkinElmer, Inc............... 638 26,038
------------
ELECTRONICS--INSTRUMENTATION
(0.0%)(b)
PE Corp.-PE Biosystems Group... 1,480 96,015
Tektronix, Inc................. 654 22,073
------------
118,088
------------
ELECTRONICS--SEMICONDUCTORS (1.3%)
Adaptec, Inc. (a).............. 1,500 67,500
Advanced Micro Devices, Inc.
(a)........................... 2,123 42,062
Analog Devices, Inc. (a)....... 2,500 132,813
Applied Materials, Inc. (a).... 5,485 492,622
Intel Corp..................... 48,830 3,781,273
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
9
<PAGE> 12
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
ELECTRONICS--SEMICONDUCTORS
(CONTINUED)
KLA-Tencor Corp. (a)........... 1,238 $ 98,034
LSI Logic Corp. (a)............ 2,134 113,502
Micron Technology, Inc. (a).... 3,714 264,855
Motorola, Inc.................. 8,910 868,168
National Semiconductor Corp.
(a)........................... 2,478 74,185
Texas Instruments Inc.......... 11,546 1,036,253
------------
6,971,267
------------
ENGINEERING & CONSTRUCTION
(0.0%)(b)
Fluor Corp..................... 1,081 43,105
Foster Wheeler Corp............ 567 6,379
------------
49,484
------------
ENTERTAINMENT (0.6%)
King World Productions, Inc.
(a)........................... 1,039 40,261
Seagram Co. Ltd. (The)......... 6,333 312,692
Time Warner Inc................ 19,086 1,330,056
Viacom Inc. Class B (a)........ 10,197 456,316
Walt Disney Co. (The).......... 30,414 802,169
------------
2,941,494
------------
FINANCIAL--MISCELLANEOUS (1.5%)
AFLAC Inc...................... 3,882 198,467
American Express Co............ 6,571 1,011,934
American General Corp.......... 3,753 278,426
Associates First Capital Corp.
Class A....................... 10,740 392,010
Citigroup Inc.................. 49,854 2,698,348
Fannie Mae..................... 15,136 1,070,872
Franklin Resources Inc......... 3,689 129,115
Freddie Mac.................... 10,286 556,087
MBIA Inc....................... 1,394 79,545
MBNA Corp...................... 11,847 327,273
Morgan Stanley Dean Witter &
Co............................ 8,534 941,407
Price (T. Rowe) Associates,
Inc........................... 1,900 67,450
SLM Holding Corp............... 2,510 122,833
------------
7,873,767
------------
FOOD (0.5%)
Bestfoods...................... 4,085 239,994
Campbell Soup Co............... 6,477 291,465
ConAgra, Inc................... 7,207 187,832
General Mills, Inc............. 2,274 198,264
Heinz (H.J.) Co................ 5,327 254,364
Hershey Foods Corp............. 2,112 106,656
Kellogg Co..................... 5,950 236,884
Nabisco Group Holdings Corp.... 4,798 61,474
Quaker Oats Co. (The).......... 1,979 138,530
Ralston-Ralston Purina Group... 4,848 152,409
Sara Lee Corp.................. 13,292 359,715
Unilever N.V................... 8,473 565,043
Wrigley (Wm.) Jr. Co........... 1,700 135,894
------------
2,928,524
------------
</TABLE>
<TABLE>
SHARES VALUE
-------------------------
<CAPTION>
<S> <C> <C>
FOOD & HEALTH CARE DISTRIBUTORS (0.1%)
Cardinal Health, Inc........... 4,017 $ 173,233
McKesson HBOC, Inc............. 4,112 82,497
SUPERVALU Inc.................. 1,807 37,947
SYSCO Corp..................... 4,843 186,153
------------
479,830
------------
GOLD & PRECIOUS METALS MINING (0.0%)
Barrick Gold Corp.............. 5,753 105,352
Homestake Mining Co............ 3,839 32,152
Newmont Mining Corp............ 2,508 55,019
Placer Dome Inc................ 4,779 57,945
------------
250,468
------------
HARDWARE & TOOLS (0.0%)(b)
Black & Decker Corp. (The)..... 1,317 56,631
Snap-on Inc.................... 824 25,029
Stanley Works (The)............ 1,345 37,324
------------
118,984
------------
HEALTH CARE--DIVERSIFIED (1.4%)
Abbott Laboratories............ 22,419 905,167
Allergan, Inc.................. 940 100,933
American Home Products Corp.... 19,409 1,014,120
Bristol-Myers Squibb Co........ 29,291 2,249,915
Johnson & Johnson.............. 19,881 2,082,535
Mallinckrodt Inc............... 1,070 36,313
Warner-Lambert Co.............. 12,582 1,004,201
------------
7,393,184
------------
HEALTH CARE--DRUGS (1.4%)
Lilly (Eli) & Co............... 16,114 1,109,852
Merck & Co., Inc............... 34,480 2,743,315
Pfizer Inc..................... 57,010 2,251,895
Pharmacia & Upjohn, Inc........ 7,502 404,639
Schering-Plough Corp........... 21,660 1,072,170
Watson Pharmaceuticals, Inc.
(a)........................... 1,379 43,783
------------
7,625,654
------------
HEALTH CARE--HMOS (0.1%)
Aetna Inc...................... 2,167 108,892
Humana Inc. (a)................ 2,518 17,311
United Healthcare Corp......... 2,511 129,787
Wellpoint Health Networks Inc.
(a)........................... 1,044 60,552
------------
316,542
------------
HEALTH CARE--HOSPITAL MANAGEMENT (0.1%)
Columbia/HCA Healthcare
Corp.......................... 8,344 201,299
Tenet Healthcare Corp. (a)..... 4,564 88,713
------------
290,012
------------
HEALTH CARE--MEDICAL PRODUCTS (0.3%)
Bard (C.R.), Inc............... 736 39,698
Bausch & Lomb Inc.............. 726 39,204
Baxter International Inc....... 4,301 279,027
Becton, Dickinson & Co......... 3,741 94,928
Biomet, Inc.................... 1,669 50,279
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
10
<PAGE> 13
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
HEALTH CARE--MEDICAL PRODUCTS (CONTINUED)
Boston Scientific Corp. (a).... 5,766 $ 116,041
Guidant Corp. (a).............. 4,413 217,892
Medtronic, Inc................. 17,358 601,021
St. Jude Medical, Inc. (a)..... 1,198 32,795
------------
1,470,885
------------
HEALTH CARE--MISCELLANEOUS (0.1%)
ALZA Corp. (a)................. 1,506 64,476
Amgen Inc. (a)................. 7,484 596,849
HEALTHSOUTH Corp. (a).......... 6,194 35,615
Manor Care, Inc. (a)........... 1,596 25,137
------------
722,077
------------
HEAVY DUTY TRUCKS & PARTS (0.1%)
Cummins Engine Co., Inc........ 575 29,145
Dana Corp...................... 2,442 72,192
Eaton Corp..................... 1,015 76,379
ITT Industries, Inc............ 1,250 42,734
Navistar International Corp.
(a)........................... 962 40,103
PACCAR Inc..................... 1,140 53,723
------------
314,276
------------
HOMEBUILDING (0.0%) (b)
Centex Corp.................... 847 22,710
Kaufman & Broad Home Corp...... 734 14,726
Pulte Corp..................... 598 12,035
------------
49,471
------------
HOTEL/MOTEL (0.1%)
Carnival Corp.................. 9,082 404,149
Harrah's Entertainment, Inc.
(a)........................... 1,859 53,795
Hilton Hotels Corp............. 3,792 35,076
Marriott International, Inc.
Class A....................... 3,640 122,622
------------
615,642
------------
HOUSEHOLD--FURNISHINGS & APPLIANCES (0.0%) (b)
Armstrong World Industries,
Inc........................... 567 21,192
Leggett & Platt, Inc........... 3,000 66,562
Maytag Corp.................... 1,322 52,963
Whirlpool Corp................. 1,092 76,099
------------
216,816
------------
HOUSEHOLD PRODUCTS (0.6%)
Clorox Co. (The)............... 3,480 142,463
Colgate-Palmolive Co........... 8,546 517,033
Fort James Corp................ 3,271 86,068
Kimberly-Clark Corp............ 7,846 495,279
Procter & Gamble Co. (The)..... 19,659 2,061,738
------------
3,302,581
------------
HOUSEWARES (0.1%)
Fortune Brands, Inc............ 2,423 85,865
Newell Rubbermaid Inc.......... 4,215 145,944
Tupperware Corp................ 837 16,583
------------
248,392
------------
</TABLE>
<TABLE>
SHARES VALUE
-------------------------
<CAPTION>
<S> <C> <C>
INSURANCE BROKERS (0.1%)
Aon Corp....................... 3,777 $ 134,084
Marsh & McLennan Cos., Inc..... 3,815 301,623
------------
435,707
------------
INSURANCE--LIFE (0.1%)
Conseco, Inc................... 4,765 115,849
Jefferson-Pilot Corp........... 1,565 117,473
Lincoln National Corp.......... 2,963 136,668
Torchmark Corp................. 1,920 59,880
UNUMProvident Corp............. 3,519 115,907
------------
545,777
------------
INSURANCE--MULTI-LINE (0.5%)
American International Group,
Inc........................... 22,693 2,335,961
CIGNA Corp..................... 3,041 227,315
Hartford Financial Services
Group, Inc. (The)............. 3,378 175,023
------------
2,738,299
------------
INSURANCE--PROPERTY & CASUALTY (0.2%)
Allstate Corp. (The)........... 11,936 343,160
Chubb Corp. (The).............. 2,597 142,510
Cincinnati Financial Corp...... 2,429 86,989
Loews Corp..................... 1,618 114,676
MGIC Investment Corp........... 1,672 99,902
Progressive Corp. (The)........ 1,120 103,670
SAFECO Corp.................... 2,127 58,492
St. Paul Cos., Inc. (The)...... 3,328 106,496
------------
1,055,895
------------
INVESTMENT BANK/BROKERAGE (0.2%)
Bear Stearns Cos., Inc.
(The)......................... 1,731 73,784
Lehman Brothers Holdings Inc... 1,774 130,722
Merrill Lynch & Co., Inc....... 5,474 429,709
Paine Webber Group Inc......... 2,162 88,101
Schwab (Charles) Corp. (The)... 12,090 470,754
------------
1,193,070
------------
LEISURE TIME (0.0%) (b)
Brunswick Corp................. 1,314 29,729
Mirage Resorts, Inc. (a)....... 2,934 42,726
------------
72,455
------------
MACHINE TOOLS (0.0%) (b)
Milacron Inc................... 589 9,682
------------
MACHINERY--DIVERSIFIED (0.1%)
Briggs & Stratton Corp......... 308 17,999
Case Corp...................... 1,073 56,869
Caterpillar Inc................ 5,244 289,731
Deere & Co..................... 3,408 123,540
Ingersoll-Rand Co.............. 2,407 125,766
Thermo Electron Corp. (a)...... 2,355 31,792
Timken Co. (The)............... 885 15,875
------------
661,572
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
11
<PAGE> 14
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
MANUFACTURED HOUSING (0.0%)(b)
Fleetwood Enterprises, Inc..... 533 $ 11,626
------------
MANUFACTURING--DIVERSIFIED (0.4%)
AlliedSignal Inc............... 8,172 465,293
Crane Co....................... 968 19,784
Danaher Corp................... 1,943 93,871
Dover Corp..................... 3,131 133,263
Illinois Tool Works Inc........ 3,726 272,930
Johnson Controls, Inc.......... 1,230 74,723
Millipore Corp................. 663 21,133
Pall Corp...................... 1,874 41,111
Parker-Hannifin Corp........... 1,635 74,903
Sealed Air Corp. (a)........... 1,228 68,000
Tyco International Ltd......... 24,782 989,731
------------
2,254,742
------------
METALS--MINING (0.0%)(b)
Freeport-McMoRan Copper & Gold
Inc. Class B (a).............. 2,469 41,201
Inco Ltd. (a).................. 2,866 58,037
Phelps Dodge Corp.............. 1,129 63,647
------------
162,885
------------
MISCELLANEOUS (0.4%)
AES Corp. (The) (a)............ 3,077 173,658
American Greetings Corp. Class
A............................. 1,083 28,023
Archer-Daniels-Midland Co...... 9,169 112,893
Corning Inc.................... 3,573 280,927
Harris Corp.................... 1,157 25,960
Jostens, Inc................... 589 12,443
Minnesota Mining &
Manufacturing Co.............. 5,958 566,382
Nextel Communications, Inc.
Class A (a)................... 4,885 421,026
Sprint Corp. (PCS Group) (a)... 6,539 542,328
TRW, Inc....................... 1,798 77,089
------------
2,240,729
------------
NATURAL GAS DISTRIBUTORS
& PIPELINES (0.2%)
Coastal Corp. (The)............ 3,167 133,410
Columbia Energy Group.......... 1,176 76,440
Consolidated Natural Gas Co.... 1,375 88,000
Eastern Enterprises............ 366 18,712
El Paso Energy Corp............ 3,404 139,564
Enron Corp..................... 10,528 420,462
NICOR Inc...................... 695 26,931
ONEOK, Inc..................... 475 13,864
Peoples Energy Corp............ 512 19,456
Sempra Energy.................. 3,553 72,614
Williams Cos., Inc. (The)...... 6,358 238,425
------------
1,247,878
------------
OFFICE EQUIPMENT & SUPPLIES (0.1%)
Pitney Bowes Inc............... 4,005 182,478
Xerox Corp..................... 9,732 272,496
------------
454,974
------------
</TABLE>
<TABLE>
SHARES VALUE
-------------------------
<CAPTION>
<S> <C> <C>
OIL & GAS DRILLING (0.0%)(b)
Helmerich & Payne, Inc......... 735 $ 17,502
Rowan Cos., Inc. (a)........... 1,367 21,274
------------
38,776
------------
OIL & GAS--EQUIPMENT & SERVICES (0.2%)
Baker Hughes Inc............... 4,791 133,849
Halliburton Co................. 6,462 243,537
McDermott International, Inc... 824 14,935
Schlumberger Ltd............... 8,095 490,253
------------
882,574
------------
OIL & GAS--EXPLORATION & PRODUCTION (0.1%)
Anadarko Petroleum Corp........ 1,811 55,801
Apache Corp.................... 1,603 62,517
Burlington Resources Inc....... 2,595 90,501
Union Pacific Resources Group,
Inc........................... 3,746 54,317
Unocal Corp.................... 3,528 121,716
------------
384,852
------------
OIL--INTEGRATED DOMESTIC (0.3%)
Amerada Hess Corp.............. 1,365 78,317
Ashland Inc.................... 1,059 34,947
Atlantic Richfield Co.......... 4,847 451,680
Conoco Inc. Class B............ 9,270 251,449
Kerr-McGee Corp................ 1,248 67,080
Occidental Petroleum Corp...... 5,136 117,165
Phillips Petroleum Co.......... 3,760 174,840
Sunoco Inc..................... 1,400 33,775
Tosco Corp..................... 2,200 55,687
USX-Marathon Group............. 4,524 131,761
------------
1,396,701
------------
OIL--INTEGRATED INTERNATIONAL (1.3%)
Chevron Corp................... 9,709 886,553
Exxon Corp..................... 35,789 2,650,623
Mobil Corp..................... 11,579 1,117,373
Royal Dutch Petroleum Co. ADR
(e)........................... 31,614 1,894,864
Texaco Inc..................... 8,173 501,618
------------
7,051,031
------------
PAPER & FOREST PRODUCTS (0.2%)
Boise Cascade Corp............. 808 28,785
Champion International Corp.... 1,392 80,475
Georgia-Pacific Group.......... 2,543 100,925
International Paper Co......... 6,022 316,908
Louisiana-Pacific Corp......... 1,554 19,716
Mead Corp. (The)............... 1,538 55,368
Potlatch Corp.................. 449 18,942
Westvaco Corp.................. 1,429 42,423
Weyerhaeuser Co................ 2,896 172,855
Willamette Industries, Inc..... 1,606 66,749
------------
903,146
------------
PERSONAL LOANS (0.1%)
Capital One Financial Corp..... 2,972 157,516
Countrywide Credit Industries,
Inc........................... 1,687 57,253
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
12
<PAGE> 15
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
PERSONAL LOANS (CONTINUED)
Household International,
Inc............................ 7,051 $ 314,651
Providian Financial Corp....... 2,108 229,772
------------
759,192
------------
PHOTOGRAPHY/IMAGING (0.1%)
Eastman Kodak Co............... 4,686 323,041
IKON Office Solutions, Inc..... 2,188 15,043
Polaroid Corp.................. 696 15,529
------------
353,613
------------
POLLUTION CONTROL (0.0%)(b)
Allied Waste Industries, Inc.
(a)........................... 2,800 29,400
Waste Management, Inc.......... 9,033 165,981
------------
195,381
------------
PUBLISHING (0.0%)(b)
Harcourt General Inc........... 977 37,623
McGraw-Hill Cos., Inc. (The)... 2,911 173,568
Meredith Corp.................. 762 27,194
------------
238,385
------------
PUBLISHING--NEWSPAPER (0.2%)
Dow Jones & Co., Inc........... 1,371 84,317
Gannett Co., Inc............... 4,092 315,595
Knight-Ridder, Inc............. 1,189 75,502
New York Times Co. (The) Class
A............................. 2,638 106,179
Times Mirror Co. (The) Class
A............................. 879 63,398
Tribune Co..................... 3,550 213,000
------------
857,991
------------
RAILROADS (0.1%)
Burlington Northern Santa Fe
Corp.......................... 6,979 222,456
CSX Corp....................... 3,183 130,503
Kansas City Southern
Industries, Inc............... 1,645 78,035
Norfolk Southern Corp.......... 5,648 138,023
Union Pacific Corp............. 3,671 204,658
------------
773,675
------------
RESTAURANTS (0.2%)
Darden Restaurants, Inc........ 2,053 39,135
McDonald's Corp................ 19,907 821,164
Tricon Global Restaurants, Inc.
(a)........................... 2,280 91,628
Wendy's International, Inc..... 1,942 46,365
------------
998,292
------------
RETAIL STORES--APPAREL (0.1%)
Gap, Inc. (The)................ 12,635 469,074
Limited, Inc. (The)............ 3,191 131,230
TJX Cos., Inc. (The)........... 4,764 129,224
------------
729,528
------------
RETAIL STORES--DEPARTMENT (0.1%)
Dillard's, Inc. Class A........ 1,633 30,823
Federated Department Stores,
Inc. (a)...................... 3,080 131,478
</TABLE>
<TABLE>
SHARES VALUE
-------------------------
<CAPTION>
<S> <C> <C>
RETAIL STORES--DEPARTMENT (CONTINUED)
Kohl's Corp. (a)............... 2,397 $ 179,326
May Department Stores Co.
(The)......................... 4,950 171,703
Nordstrom, Inc................. 2,113 52,693
Penney (J.C.) Co., Inc......... 3,873 98,277
------------
664,300
------------
RETAIL STORES--DRUGS (0.1%)
Longs Drug Stores Corp......... 612 16,677
Rite Aid Corp.................. 3,845 33,644
Walgreen Co.................... 14,679 369,727
------------
420,048
------------
RETAIL STORES--FOOD (0.2%)
Albertson's, Inc............... 6,150 223,322
Great Atlantic & Pacific Tea
Co., Inc. (The)............... 601 17,166
Kroger Co. (The) (a)........... 12,178 253,455
Safeway Inc. (a)............... 7,337 259,088
Winn-Dixie Stores, Inc......... 2,166 58,617
------------
811,648
------------
RETAIL STORES--GENERAL MERCHANDISE (0.8%)
Dayton Hudson Corp............. 6,421 414,957
Kmart Corp. (a)................ 7,295 73,406
Sears, Roebuck & Co............ 5,650 159,259
Wal-Mart Stores, Inc........... 65,587 3,746,657
------------
4,394,279
------------
RETAIL STORES--SPECIALTY (0.6%)
AutoZone, Inc. (a)............. 2,183 57,986
Bed Bath and Beyond Inc. (a)... 2,000 66,625
Best Buy Co. Inc. (a).......... 3,000 166,688
Circuit City Stores-Circuit
City Group.................... 2,894 123,538
Consolidated Stores Corp.
(a)........................... 1,627 29,794
Costco Wholesale Corp. (a)..... 3,246 260,694
CVS Corp....................... 5,718 248,376
Dollar General Corp............ 3,326 87,723
Home Depot, Inc. (The)......... 21,892 1,652,846
Lowe's Cos., Inc............... 5,483 301,565
Office Depot, Inc. (a)......... 5,535 68,842
Pep Boys-Manny, Moe & Jack
(The)......................... 767 9,588
Staples Inc. (a)............... 6,876 152,561
Tandy Corp..................... 2,956 186,043
Toys "R" Us, Inc. (a).......... 3,707 52,361
------------
3,465,230
------------
SHOES (0.0%)(b)
NIKE, Inc. Class B............. 4,140 233,651
Reebok International Ltd.
(a)........................... 825 8,095
------------
241,746
------------
SPECIALIZED SERVICES (0.2%)
Block (H&R), Inc............... 1,412 60,098
Cendant Corp. (a).............. 10,539 173,894
Dun & Bradstreet Corp. (The)... 2,467 72,468
Ecolab Inc..................... 1,871 63,263
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
13
<PAGE> 16
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
SPECIALIZED SERVICES (CONTINUED)
IMS Health Inc................. 4,711 $ 136,619
Interpublic Group of Cos., Inc.
(The)......................... 3,920 159,250
Laidlaw Inc.................... 4,909 30,068
National Service Industries,
Inc........................... 569 18,350
Omnicom Group Inc.............. 2,659 233,992
Service Corp. International.... 4,038 38,613
------------
986,615
------------
SPECIALTY PRINTING (0.0%)(b)
Deluxe Corp.................... 1,116 31,527
Donnelley (R.R.) & Sons Co..... 1,899 46,051
------------
77,578
------------
STEEL (0.0%)(b)
Allegheny Teledyne Inc......... 2,952 44,833
Bethlehem Steel Corp. (a)...... 1,963 13,618
Nucor Corp..................... 1,344 69,720
USX-U.S. Steel Group........... 1,349 34,484
Worthington Industries, Inc.... 1,396 23,209
------------
185,864
------------
TELECOMMUNICATIONS--
LONG DISTANCE (1.0%)
AT&T Corp...................... 47,269 2,209,826
Global Crossing Ltd. (a)....... 11,339 392,613
MCI WorldCom, Inc. (a)......... 27,578 2,366,537
Sprint Corp. (FON Group)....... 12,759 948,153
------------
5,917,129
------------
TELEPHONE (1.3%)
ALLTEL Corp.................... 4,491 373,876
Bell Atlantic Corp............. 22,962 1,491,095
BellSouth Corp................. 27,723 1,247,535
CenturyTel, Inc................ 2,078 84,029
GTE Corp....................... 14,441 1,083,075
SBC Communications Inc......... 50,430 2,568,778
US West Inc.................... 7,474 456,381
------------
7,304,769
------------
TEXTILES--APPAREL
MANUFACTURERS (0.0%)(b)
Liz Claiborne, Inc............. 900 36,000
Russell Corp................... 554 8,414
Springs Industries, Inc. Class
A............................. 220 8,759
V.F. Corp...................... 1,784 53,631
------------
106,804
------------
TOBACCO (0.2%)
Philip Morris Cos. Inc......... 35,113 884,409
UST Inc........................ 2,629 72,790
------------
957,199
------------
TOYS (0.0%)(b)
Hasbro, Inc.................... 2,977 61,401
Mattel, Inc.................... 6,183 82,698
------------
144,099
------------
TRANSPORTATION--
MISCELLANEOUS (0.0%)(b)
FDX Corp. (a).................. 4,370 188,183
</TABLE>
<TABLE>
SHARES VALUE
-------------------------
<CAPTION>
<S> <C> <C>
TRANSPORTATION--MISCELLANEOUS (CONTINUED)
Ryder System, Inc.............. 1,010 $ 21,589
------------
209,772
------------
Total Common Stocks
(Cost $103,577,608)........... 166,237,880(g)
------------
<CAPTION>
SHORT-TERM
INVESTMENTS (44.0%)
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
COMMERCIAL PAPER (39.9%)
Allergan Inc.
5.40%, due 11/18/99 (c)....... $ 5,200,000 5,186,712
5.41%, due 11/2/99 (c)........ 6,000,000 5,999,095
Allmerica Financial Corp.
5.35%, due 11/2/99 (c)........ 3,500,000 3,499,476
Bay State Gas Co.
5.41%, due 12/2/99 (c)........ 25,600,000 25,480,659
Boral Ltd.
5.42%, due 11/2/99 (c)........ 10,400,000 10,398,434
Consolidated Natural Gas Co.
5.38%, due 11/1/99 (c)........ 6,000,000 6,000,000
Cooperative Association of
Tractor Dealers Inc.
5.36%, due 11/2/99 (c)........ 1,500,000 1,499,775
5.40%, due 12/7/99 (c)........ 2,000,000 1,989,168
5.40%, due 12/17/99 (c)....... 1,500,000 1,489,644
Fayette Funding L.P.
5.38%, due 11/22/99 (c)....... 10,800,000 10,766,055
Fuji Photo Film Finance USA
Inc.
5.36%, due 12/14/99 (c)....... 6,300,000 6,259,588
Hasbro Inc.
5.40%, due 11/12/99 (c)....... 10,600,000 10,582,410
Hitachi Credit America Corp.
5.38%, due 11/2/99 (c)........ 1,300,000 1,299,804
5.45%, due 11/18/99 (c)....... 19,800,000 19,748,888
JMG Funding L.P.
5.40%, due 11/1/99 (c)........ 1,186,000 1,186,000
Michigan Consolidated Gas Co.
5.40%, due 11/3/99 (c)........ 5,500,000 5,498,347
5.41%, due 11/3/99 (c)........ 1,683,000 1,682,494
5.45%, due 11/5/99 (c)........ 6,900,000 6,895,813
5.47%, due 11/9/99 (c)........ 10,000,000 9,987,807
Mitsubishi International Corp.
5.41%, due 11/10/99 (c)....... 5,800,000 5,792,114
5.43%, due 11/4/99 (c)........ 4,000,000 3,998,183
National Fuel Gas Co.
5.40%, due 12/9/99 (c)........ 10,000,000 9,942,954
Republic Industries Funding
Corp.
5.42%, due 12/1/99 (c)........ 14,800,000 14,732,982
Riverside Funding Inc.
5.40%, due 11/24/99 (c)....... 1,300,000 1,295,512
SAFECO Credit Co.
5.40%, due 11/30/99 (c)....... 8,975,000 8,935,847
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
14
<PAGE> 17
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS (CONTINUED)
<CAPTION> PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
COMMERCIAL PAPER (CONTINUED)
Textron Financial Corp.
5.38%, due 11/18/99 (c)....... $ 7,300,000 $ 7,281,443
5.40%, due 11/18/99 (c)....... 3,100,000 3,092,078
5.40%, due 11/19/99 (c)....... 2,500,000 2,493,238
Toys "R" Us, Inc.
5.48%, due 11/15/99 (c)....... 19,000,000 18,959,360
5.50%, due 11/24/99 (c)....... 3,200,000 3,188,743
5.50%, due 11/29/99 (c)....... 1,300,000 1,294,429
------------
Total Commercial Paper
(Cost $216,457,052)........... 216,457,052
------------
U.S. GOVERNMENT (4.1%)
United States Treasury Bills
4.70%, due 1/20/00 (c)........ 15,500,000 15,337,090
4.74%, due 1/27/00 (c)........ 7,000,000 6,919,635
------------
Total U.S. Government
(Cost $22,256,725)............ 22,256,725
------------
Total Short-Term Investments
(Cost $238,713,777)........... 238,713,777
------------
Total Investments
(Cost $482,248,437) (h)....... 99.3% 539,012,033(i)
Cash and Other Assets, Less
Liabilities................... 0.7 3,934,691
----------- -----------
Net Assets..................... 100.0% $542,946,724
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
FUTURES CONTRACTS (0.1%)
UNREALIZED
CONTRACTS APPRECIATION/
LONG (DEPRECIATION)(j)
-----------------------------
<S> <C> <C>
AUSTRALIA (-0.1%)
Australian All Ordinaries
Index December 1999........ 335 $ (727,460)
FRANCE (0.1%)
French CAC 40 Index
December 1999.............. 312 632,202
GERMANY (0.0%)(b)
German DAX Index
December 1999.............. 36 110,473
</TABLE>
<TABLE>
UNREALIZED
CONTRACTS APPRECIATION/
LONG (DEPRECIATION)(j)
----------------------------
<CAPTION>
<S> <C> <C>
HONG KONG (0.0%)(b)
Hong Kong Hang Seng Index
November 1999.............. 126 $ 38,342
UNITED KINGDOM (0.0%)(b)
Great Britain FTSE 100 Index
December 1999.............. 129 95,444
UNITED STATES (0.1%)
Standard & Poor's 500 Index
December 1999.............. 168 31,920
United States Treasury Bond
December 1999 (30 Year).... 64 94,735
United States Treasury Note
December 1999 (5 Year)..... 292 121,143
December 1999 (10 Year).... 101 81,740
-----------
Total Futures Contracts
(Settlement Value
$168,483,504) (f)(g)....... $ 478,539
===========
</TABLE>
- ------------
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) Partially 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 23.9% of net assets.
(g) The combined market value of common stocks and settlement value of Standard
& Poor's 500 Index futures contracts represents 41.3% of net assets.
(h) The cost for Federal income tax purposes is $482,383,436.
(i) At October 31, 1999, net unrealized appreciation was $56,628,597, 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 $68,756,090 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $12,127,493.
(j) Represents the difference between the value of the contracts at the time
they were opened and the value at October 31, 1999.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
15
<PAGE> 18
ASSET MANAGER FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $482,248,437)............................. $539,012,033
Cash............................................. 76,203
Deposit with broker for futures contracts (Note
7)............................................. 8,904
Receivables:
Variation margin on futures contracts.......... 2,386,201
Dividends and interest......................... 2,195,478
Investment securities sold..................... 191,303
Fund shares sold............................... 48,214
------------
Total assets............................... 543,918,336
------------
LIABILITIES:
Payables:
Investment securities purchased................ 292,064
MainStay Management............................ 291,068
Fund shares redeemed........................... 157,801
Custodian...................................... 42,954
Transfer agent................................. 32,116
Accrued expenses................................. 155,609
------------
Total liabilities.......................... 971,612
------------
Net assets....................................... $542,946,724
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class............................ $ 35,279
Institutional Service Class.................... 2,006
Additional paid-in capital....................... 454,829,762
Accumulated undistributed net investment
income......................................... 15,190,768
Accumulated undistributed net realized gain on
investments.................................... 16,140,333
Net unrealized appreciation on investments and
futures contracts.............................. 57,242,135
Net unrealized depreciation on foreign currency
transactions................................... (493,559)
------------
Net assets....................................... $542,946,724
============
Institutional Class
Net assets applicable to outstanding shares...... $513,859,843
============
Shares of capital stock outstanding.............. 35,279,391
============
Net asset value per share outstanding............ $ 14.57
============
Institutional Service Class
Net assets applicable to outstanding shares...... $ 29,086,881
============
Shares of capital stock outstanding.............. 2,005,612
============
Net asset value per share outstanding............ $ 14.50
============
</TABLE>
STATEMENT OF OPERATIONS
For the period January 1, 1999 through October 31, 1999* and the year ended
December 31, 1998
<TABLE>
<CAPTION>
1999* 1998
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends (a).................... $ 1,869,673 $ 3,887,894
Interest......................... 17,506,135 12,574,074
------------ ------------
Total income................. 19,375,808 16,461,968
------------ ------------
Expenses:
Management....................... 2,927,643 3,114,621
Interest......................... 561,035 --
Transfer agent................... 327,355 315,311
Custodian........................ 87,496 133,244
Professional..................... 65,522 78,376
Service.......................... 55,263 37,268
Shareholder communication........ 42,321 75,744
Registration..................... 31,878 50,166
Directors........................ 9,837 11,568
Miscellaneous.................... 30,532 32,253
------------ ------------
Total expenses............... 4,138,882 3,848,551
------------ ------------
Net investment income.............. 15,236,926 12,613,417
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) from:
Security transactions............ 9,686,707 69,525,094
Futures transactions............. 6,557,411 19,827,374
Foreign currency transactions.... (38,075) 161,741
------------ ------------
Net realized gain on investments
and foreign currency
transactions..................... 16,206,043 89,514,209
------------ ------------
Net change in unrealized
appreciation on investments:
Security transactions............ (2,300,053) (8,756,501)
Futures transactions............. 906,023 (2,717,526)
Foreign currency transactions.... (983,634) 472,784
------------ ------------
Net unrealized loss on investments
and foreign currency
transactions..................... (2,377,664) (11,001,243)
------------ ------------
Net realized and unrealized gain on
investments and foreign currency
transactions..................... 13,828,379 78,512,966
------------ ------------
Net increase in net assets
resulting from operations........ $ 29,065,305 $ 91,126,383
============ ============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
(a) Dividends recorded net of foreign withholding taxes of $28,464 and $24,979
for 1999 and 1998 respectively.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
16
<PAGE> 19
MAINSTAY
INSTITUTIONAL FUNDS INC.
ASSET MANAGER FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period January 1, 1999 through October 31, 1999* and the years ended
December 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
1999* 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income................................... $ 15,236,926 $ 12,613,417 $ 8,734,708
Net realized gain on investments and futures
contracts............................................. 16,244,118 89,352,468 45,016,603
Net realized gain (loss) on foreign currency
transactions.......................................... (38,075) 161,741 (32,358)
Net change in unrealized appreciation on investments and
futures contracts..................................... (1,394,030) (11,474,027) 35,097,668
Net change in unrealized appreciation on foreign
currency transactions................................. (983,634) 472,784 17,446
-------------- -------------- --------------
Net increase in net assets resulting from operations.... 29,065,305 91,126,383 88,834,067
-------------- -------------- --------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class................................... (183,826) (12,168,160) (8,423,272)
Institutional Service Class........................... (5,609) (369,777) (182,014)
From net realized gain on investments:
Institutional Class................................... (49,743,906) (61,223,905) (37,506,931)
Institutional Service Class........................... (2,839,920) (2,048,254) (890,648)
-------------- -------------- --------------
Total dividends and distributions to shareholders... (52,773,261) (75,810,096) (47,002,865)
-------------- -------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 43,269,895 62,917,440 45,388,650
Institutional Service Class........................... 15,707,216 6,958,317 4,026,989
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... 49,927,732 73,392,054 45,930,203
Institutional Service Class........................... 2,845,529 2,416,225 1,072,662
-------------- -------------- --------------
111,750,372 145,684,036 96,418,504
Cost of shares redeemed:
Institutional Class................................... (57,515,045) (65,656,399) (41,612,145)
Institutional Service Class........................... (4,882,440) (2,755,471) (1,221,935)
-------------- -------------- --------------
Increase in net assets derived from capital share
transactions........................................ 49,352,887 77,272,166 53,584,424
-------------- -------------- --------------
Net increase in net assets............................ 25,644,931 92,588,453 95,415,626
NET ASSETS:
Beginning of period....................................... 517,301,793 424,713,340 329,297,714
-------------- -------------- --------------
End of period............................................. $ 542,946,724 $ 517,301,793 $ 424,713,340
============== ============== ==============
Accumulated undistributed net investment income at end of
period.................................................. $ 15,190,768 $ 188,741 $ 37,010
============== ============== ==============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
17
<PAGE> 20
ASSET MANAGER FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
JANUARY 1, 1999
THROUGH YEAR ENDED
OCTOBER 31, 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.................................. 0.41 0.39 0.43 0.39
Net realized and unrealized gain (loss) on
investments.......................................... 0.41 0.38 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....................... 0.79 0.74 3.15 3.10
-------- -------- -------- --------
Less dividends and distributions:
From net investment income............................. (0.01) (0.00)(a) (0.43) (0.39)
From net realized gain on investments.................. (1.57) (1.57) (2.19) (2.19)
In excess of net realized gain on investments.......... -- -- -- --
-------- -------- -------- --------
Total dividends and distributions...................... (1.58) (1.57) (2.62) (2.58)
-------- -------- -------- --------
Net asset value at end of period....................... $ 14.57 $ 14.50 $ 15.36 $ 15.33
======== ======== ======== ========
Total investment return................................ 5.58%(b) 5.31%(b) 21.31% 21.00%
Ratios (to average net assets)/Supplemental Data:
Net investment income................................ 3.40%+ 3.15%+ 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................................ 18% 18% 55% 55%
Net assets at end of period (in 000's)................. $513,860 $ 29,087 $500,449 $ 16,853
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
+ Annualized.
(a) Less than one cent per share.
(b) Total return is not annualized.
(c) Institutional Service Class commenced January 1, 1995.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
18
<PAGE> 21
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS(c) 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.
19
<PAGE> 22
EAFE Index Fund
- --------------------------------------------------------------------------------
In the wake of an earlier global financial crisis, the ten months ended October
31, 1999,(1) was generally a positive period for the MainStay Institutional EAFE
Index Fund. Many Asian stock markets staged substantial recoveries during this
period, led by economic improvements in Japan that helped strengthen the
yen--and economic stimulus packages that helped improve stock performance
throughout the Asian region.
European stock performance was not as strong. Enthusiasm over the introduction
of the euro in January 1999 was short-lived, as slowing growth rates, increasing
competition, and a strengthening dollar hurt many European stock markets during
the ten months ended October 31, 1999. While some European markets recorded
outstanding returns, others were among the weakest in the Morgan Stanley Capital
International Europe, Australia, and Far East Index(2) for the ten-month
reporting period. Rising interest rates in the United States may have had a
negative impact on European markets, leaving investors uncertain about potential
spillover effects.
PERFORMANCE REVIEW
For the ten months ended October 31, 1999, the MainStay Institutional EAFE Index
Fund returned 12.31% for Institutional Class shares and 12.08% for Service Class
shares. Both share classes underperformed the 15.93% return of the average
Lipper(3) international fund over the same period. Both share classes also
underperformed the Fund's benchmark, the EAFE Index, which returned 12.60% in
U.S. dollars for the ten months ended October 31, 1999. A small amount of
underperformance is to be expected since the Fund faces real-world expenses that
a hypothetical index investment does not.
The Fund is designed to track the total-return performance of the EAFE Index by
holding a subset of the benchmark's securities. The baskets of securities in
which the Fund invests are weighted to closely mirror the overall weight, risk,
and return profiles of each country in the EAFE Index. The Fund does not seek to
emphasize any region, country, or industry except as reflected in the EAFE
Index.
BEST- AND WORST-PERFORMING COUNTRIES
The top-performing countries in the EAFE Index for the ten-month period were
Singapore (+67.71%), Finland (+60.01%), Japan (+45.84%), and Sweden (+37.01%),
all in U.S.-dollar terms. Singapore benefited from a $10.5 billion government
stimulus package that included corporate tax cuts, reductions in customs duties,
and cheaper energy costs. Finland's advance was fueled by Nokia, its leading
corporation, which rose 90.29% in U.S.-dollar terms for the ten-month reporting
period on stronger-than-expected earnings. Japan benefited from a strong yen,
corporate restructurings, and past economic stimulus packages taking root in the
marketplace. With a 27.91% weight in the MainStay Institutional EAFE Index Fund
as of October 31, 1999, Japan had the greatest impact of any country on the
Fund's portfolio. The Swedish economy was bolstered by a better-than-expected
trade surplus, measured in Swedish kronor, of SEK 13.4 billion versus the
anticipated amount of SEK 11.0 billion.
The worst-performing markets in the EAFE Index for the ten-month reporting
period were Portugal (-18.21%), Belgium (-17.35%), Ireland (-15.20%), and Italy
(-14.92%), all in U.S.-dollar terms. European Monetary Union hurt the smaller
less-liquid markets in the EAFE Index by providing an easily accessible
alternative market for its investors. Increased competition and slowing growth
rates also hampered the smaller European markets by putting pressure on returns.
- --------------------------------------------------------------------------------
(1) MainStay Institutional Funds recently changed its fiscal year end from
December 31 to October 31. The previous annual report provided information
through December 31, 1998. This report covers the ten-month fiscal period
from January 1, 1999, through October 31, 1999.
(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) 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.
20
<PAGE> 23
INDEX SHIFTS AND MARKET SENSITIVITIES
Since the EAFE Index is capitalization weighted, markets with strong performance
will increase their capitalization and their weighting in the EAFE Index. With
the outstanding performance of Japanese stocks during the reporting period,
Japan has exerted greater influence on the EAFE Index than in previous reporting
periods.
We believe that emphasis on corporate earnings, improving export prospects, and
restructuring efforts in Europe and Asia should continue to provide a positive
backdrop for the EAFE Index as a whole. Global interest rates, however, may
continue to exert a strong influence on market performance. If inflation heats
up causing interest rates to rise, we believe the impact on international stocks
would be negative. While we have seen higher energy costs and some other signs
of inflation, monetary policy in the U.S. and globally has been relatively
proactive, as central banks have taken active steps to help keep inflation in
check.
Whatever happens in the global economy, 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 Morgan Stanley Capital International Europe, Australia, and
Far East Index.
JEFFERSON C. BOYCE
STEPHEN B. KILLIAN
Portfolio Managers
Monitor Capital Advisors LLC
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
21
<PAGE> 24
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
EAFE INDEX FUND VS MSCI EAFE INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
MSCI EAFE INDEX EAFE INDEX FUND
------------------ ------------------
<S> <C> <C>
1/2/91 $ 250,000 $ 250,000
03/31/91 268,575 265,750
06/30/91 253,911 254,500
09/30/91 275,671 273,250
12/31/91 280,302 275,250
03/31/92 247,030 241,615
06/30/92 252,243 246,649
09/30/92 256,052 250,676
12/31/92 246,168 241,615
03/31/93 275,684 267,024
06/30/93 303,417 290,883
09/30/93 323,534 310,682
12/31/93 326,316 311,610
03/31/94 337,737 321,453
06/30/94 354,996 338,549
09/30/94 355,351 338,031
12/31/94 351,726 332,886
03/31/95 358,268 338,157
06/30/95 360,884 338,684
09/30/95 375,932 351,072
12/31/95 391,158 362,938
03/31/96 402,462 374,714
06/30/96 408,821 381,138
09/30/96 408,290 380,870
12/31/96 414,781 386,330
03/31/97 408,269 379,983
06/30/97 461,263 428,826
09/30/97 458,034 425,238
12/31/97 422,170 387,876
03/31/98 484,271 440,905
06/30/98 489,404 447,724
09/30/98 419,860 385,603
12/31/98 506,603 462,137
03/31/99 513,645 470,749
06/30/99 526,691 484,281
09/30/99 549,813 501,093
As of 10/31/99 570,431 519,048
</TABLE>
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
EAFE INDEX FUND vs MSCI EAFE INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
MSCI EAFE INDEX EFAE INDEX FUND
------------------ ------------------
<S> <C> <C>
1/2/91 $ 250,000 $ 250,000
03/31/91 268,575 265,750
06/30/91 253,911 254,500
09/30/91 275,671 273,250
12/31/91 280,302 275,250
03/31/92 247,030 241,615
06/30/92 252,243 246,649
09/30/92 256,052 250,676
12/31/92 246,168 241,615
03/31/93 275,684 267,024
06/30/93 303,417 290,883
09/30/93 323,534 310,682
12/31/93 326,316 311,610
03/31/94 337,737 321,453
06/30/94 354,996 338,549
09/30/94 355,351 338,031
12/31/94 351,726 332,886
03/31/95 358,268 338,421
06/30/95 360,884 338,684
09/30/95 375,932 350,281
12/31/95 391,158 361,620
03/31/96 402,462 373,665
06/30/96 408,821 379,554
09/30/96 408,290 378,751
12/31/96 414,781 384,641
03/31/97 408,269 377,758
06/30/97 461,263 426,217
09/30/97 458,034 422,362
12/31/97 422,170 384,936
03/31/98 484,271 437,393
06/30/98 489,404 443,808
09/30/98 419,860 382,294
12/31/98 506,603 457,403
03/31/99 513,645 465,964
06/30/99 526,691 479,009
09/30/99 549,813 495,316
AS OF 10/31/99 570,431 512,668
</TABLE>
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF OCTOBER 31, 1999 AS OF OCTOBER 31, 1999
- --------------------------------------------------------------------------------------------------------
YEAR TO DATE ONE YEAR FIVE YEARS SINCE INCEPTION
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EAFE Index Fund Institutional Class 12.31% 22.68% 8.25% 8.62%
EAFE Index Fund Service Class(+) 12.08 22.38 7.98 8.46
Average Lipper international fund 15.93 25.53 9.50 10.90
MSCI EAFE Index 12.60 23.03 9.21 9.79
</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>
TOTAL RETURN %* 10.10% -12.22% 28.97% 6.83% 9.03% 6.45% 0.40% 19.15%
1999
--------
<S> <C>
12.31%
</TABLE>
- --------------------------------------------------------------------------------
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.
* 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.
22
<PAGE> 25
MAINSTAY
INSTITUTIONAL FUNDS INC.
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS
October 31, 1999
- ------------
<TABLE>
<CAPTION>
COMMON STOCKS (95.7%)+
SHARES VALUE
-----------------------
<S> <C> <C>
AUSTRALIA (2.2%)
AMP, Ltd. (insurance).......... 15,056 $ 153,005
Boral, Ltd. (building materials
& components)................. 15,897 23,909
Brambles Industries, Ltd.
(business & public
services)..................... 3,133 88,053
Broken Hill Proprietary Co.,
Ltd. (energy sources)......... 16,889 174,442
Coles Myer, Ltd.
(merchandising)............... 14,858 73,858
Lend Lease Corp., Ltd. (real
estate)....................... 7,023 80,756
National Australia Bank, Ltd.
(banking)..................... 11,323 174,631
News Corp., Ltd. (The)
(broadcasting & publishing)... 19,650 142,010
Pacific Dunlop, Ltd. (multi-
industry)..................... 19,118 26,926
Pioneer International, Ltd.
(building materials &
components)................... 11,538 25,221
Rio Tinto, Ltd. (metals-
nonferrous)................... 4,034 64,804
Smith (Howard), Ltd. (multi-
industry)..................... 2,670 19,133
Star City Holdings, Ltd.
(leisure & tourism)........... 8,018 7,547
Telstra Corp., Ltd.
(telecommunications).......... 45,208 229,826
Westpac Banking Corp., Ltd.
(banking)..................... 19,507 125,089
WMC, Ltd. (metals-nonferrous).. 15,938 68,359
-----------
1,477,569
-----------
AUSTRIA (0.2%)
Bank Austria AG (banking)...... 1,579 78,454
Flughafen Wien AG (business &
public services).............. 293 10,108
Generali Holding Vienna AG
(insurance)................... 107 17,401
-----------
105,963
-----------
BELGIUM (1.0%)
Electrabel, S.A. (utilities-
electrical & gas)............. 451 148,662
Fortis AG (insurance).......... 6,905 232,978
Fortis AG CVG (insurance)...... 700 3,760
Fortis AG Strips (insurance)... 6,300 66
KBC Bancassurance Holding N.V.
(banking)..................... 3,355 172,796
Petrofina, S.A. (energy
source)....................... 1 373
Tractebel, S.A. (utilities-
electrical & gas)............. 667 116,521
-----------
675,156
-----------
</TABLE>
<TABLE>
SHARES VALUE
-----------------------
<CAPTION>
<S> <C> <C>
DENMARK (0.9%)
Dampskibsselskabet AF 1912
Class B (transportation-
shipping)..................... 15 $ 151,655
Dampskibsselskabet Svendborg AS
Class B (transportation-
shipping)..................... 10 144,938
Den Danske Bank Group
(banking)..................... 689 78,428
FLS Industries AS Class B
(machinery & engineering)..... 435 11,687
Novo Nordisk AS Class B (health
& personal care).............. 965 115,713
Tele Danmark AS Class B
(telecommunications).......... 2,300 139,522
-----------
641,943
-----------
FINLAND (2.1%)
Kesko Oyj (wholesale &
international trade).......... 1,300 14,785
Kone Oyj Corp. Class B
(machinery & engineering)..... 174 25,331
Metra Oyj Class B (multi-
industry)..................... 539 10,198
Nokia Oyj Class A (electrical &
electronics).................. 11,824 1,352,319
Pohjola Group Insurance Corp.
Class B (insurance)........... 329 17,636
-----------
1,420,269
-----------
FRANCE (8.7%)
Air Liquide, S.A.
(chemicals)................... 1,139 175,391
Accor, S.A. (leisure &
tourism)...................... 505 113,593
Alcatel, S.A. (electrical &
electronics).................. 1,456 227,266
AXA, S.A. (insurance).......... 2,387 336,455
Banque Nationale de Paris
(banking)..................... 1,428 125,332
Cap Gemini, S.A. (business &
public services).............. 791 119,725
Carrefour, S.A.
(merchandising)............... 1,745 322,815
Casino Guichard Perrachon
(merchandising)............... 1,045 118,628
Compagnie de Saint Gobain, S.A.
(building materials &
components)................... 843 146,203
Compagnie Fianciere Paribas,
S.A. (banking)................ 1,620 168,576
Compagnie Generale de
Geophysique, S.A. (energy
equipment & services) (a)..... 71 3,694
Elf Aquitaine, S.A. (energy
sources)...................... 2,122 312,262
France Telecom, S.A.
(telecommunications).......... 7,747 747,926
Groupe Danone, S.A. (food &
household products)........... 432 110,114
</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> 26
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
FRANCE (CONTINUED)
Lafarge, S.A. (building
materials & components)........ 1,237 $ 118,970
L'Oreal, S.A. (health &
personal care)................ 375 250,097
LVMH (Louis Vuitton Moet
Hennessy), S.A. (recreation &
other consumer goods)......... 780 235,300
Michelin (CGDE), S.A. Class B
(industrial components)....... 2,173 94,560
Pinault-Printemps-Redoute, S.A.
(merchandising)............... 869 165,601
Promodes, S.A.
(merchandising)............... 203 217,642
PSA Peugeot, S.A.
(automobiles)................. 628 120,467
Rhone-Poulenc, S.A. (health &
personal care)................ 2,653 148,353
Sanofi Synthelabo, S.A. (health
& personal care).............. 5,980 263,681
Schneider, S.A. (electrical &
electronics).................. 1,718 118,280
Societe Generale, S.A. Class A
(banking)..................... 840 182,766
Suez Lyonnaise des Eaux, S.A.
(business & public
services)..................... 1,412 227,819
Suez Lyonnaise des Eaux,
S.A.Strip VVPR (business &
public services).............. 204 2
Tota Fina, S.A. Class B (energy
sources)...................... 2,641 356,712
Tota Fina, S.A. Strip (energy
sources)...................... 1,692 18
Valeo, S.A. (industrial
components)................... 1,153 82,774
Vivendi, S.A. (business &
public services).............. 3,906 295,810
-----------
5,906,832
-----------
GERMANY (7.9%)
Adidas-Salomon AG (recreation &
other consumer goods)......... 650 47,005
AGIV AG (multi-industry)....... 904 18,149
Allianz AG Registered
(insurance)................... 1,506 458,268
AMB Aachener & Muenchener
Beteiligungs AG (insurance)... 550 46,249
BASF AG (chemicals)............ 5,584 250,916
Bayer AG (chemicals)........... 6,417 262,378
Bayerische Hypo-und Vereinsbank
AG (banking).................. 3,149 206,540
Beiersdorf AG (health &
personal care)................ 1,196 80,456
DaimlerChrysler AG
(automobiles)................. 1,185 92,171
Deutsche Bank AG (banking)..... 4,150 297,494
Deutsche Lufthansa AG
Registered (transportation-
airlines)..................... 5,300 111,417
Deutsche Telekom AG
(telecommunications).......... 20,400 937,039
</TABLE>
<TABLE>
SHARES VALUE
-----------------------
<CAPTION>
<S> <C> <C>
GERMANY (CONTINUED)
Dresdner Bank AG (banking)..... 3,850 $ 197,279
Heidelberger Zement AG
(building materials &
components)................... 665 52,424
Hochtief AG (construction &
housing)...................... 986 40,523
Linde AG (machinery &
engineering).................. 1,000 52,345
Linde AG Rights (machinery &
engineering).................. 1,000 3,164
Mannesmann AG
(telecommunications).......... 3,150 494,992
Merck KGaA (health & personal
care)......................... 2,100 72,400
Metro AG (merchandising)....... 2,350 126,222
Muenchener
Ruckversicherungs-Gesellschaf
AG Registered (insurance)..... 1,308 299,716
Preussag AG (multi-industry)... 2,350 127,210
RWE AG (utilities-electrical &
gas).......................... 3,339 134,419
SAP AG (business & public
services)..................... 500 185,625
Schering AG (health & personal
care)......................... 950 112,936
Siemens AG (electrical &
electronics).................. 358 32,117
Strabag AG (construction &
housing) (a).................. 216 10,671
Thyssen AG (metals-steel)...... 5,700 134,804
Veba AG (utilities-electrical &
gas).......................... 3,529 190,660
Viag AG (utilities-electrical &
gas).......................... 7,644 141,008
Volkswagen AG (automobiles).... 2,950 174,263
-----------
5,390,860
-----------
HONG KONG (2.2%)
Cable & Wireless HKT, Ltd.
(telecommunications).......... 104,458 238,641
Cathay Pacific Airways, Ltd.
(transportation-airlines)..... 40,409 82,175
Cheung Kong (Holdings), Ltd.
(real estate)................. 18,000 163,330
Chinese Estates Holdings, Ltd.
(real estate)................. 68,854 9,926
CLP Holdings, Ltd. (utilities-
electrical & gas)............. 17,932 82,164
Hang Lung Development Co., Ltd
(real estate)................. 18,946 20,240
Hang Seng Bank, Ltd.
(banking)..................... 14,830 161,288
Hong Kong & China Gas Co., Ltd.
(utilities-electrical & gas).. 41,502 55,019
Hopewell Holdings, Ltd. (multi-
industry)..................... 18,706 11,857
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
24
<PAGE> 27
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
HONG KONG (CONTINUED)
Hutchinson Whampoa, Ltd.
(multi-industry)............... 30,381 $ 305,002
Miramar Hotel & Investment,
Ltd. (real estate)............ 31,028 32,348
New World Development Co., Ltd.
(real estate)................. 29,772 56,329
Shangri-La Asia, Ltd. (leisure
& tourism).................... 25,464 27,694
Sun Hung Kai Properties, Ltd.
(real estate)................. 20,000 161,529
Swire Pacific, Ltd. Class A
(multi-industry).............. 21,885 108,446
-----------
1,515,988
-----------
IRELAND (0.1%)
Allied Irish Banks PLC
(banking)..................... 2,600 32,521
Irish Life & Permanent PLC
(insurance)................... 4,199 42,812
-----------
75,333
-----------
ITALY (3.7%)
Assicurazioni Generali S.p.A.
(insurance)................... 7,400 237,234
Banca Commerciale Italiana
S.p.A. (banking).............. 17,720 106,538
Bulgari S.p.A. (recreation &
other consumer goods)......... 5,548 39,071
Cementir S.p.A. (building
materials & components)....... 4,510 6,305
Edison S.p.A.
(utilities-electrical &
gas).......................... 9,000 74,639
ENI S.p.A. (energy sources).... 64,148 374,890
Fiat S.p.A. (automobiles)...... 2,356 74,540
Istituto Nazionale delle
Assicurazioni S.p.A.
(insurance)................... 46,198 140,093
Magneti Marelli S.p.A.
(industrial components)....... 8,000 28,086
Mediaset S.p.A. (broadcasting &
publishing)................... 16,500 164,587
Mediobanca S.p.A. (banking).... 5,223 53,691
Montedison S.p.A. (multi-
industry)..................... 39,442 70,271
Olivetti S.p.A.
(telecommunications) (a)...... 47,500 92,366
Pirelli S.p.A. (industrial
components)................... 26,468 60,649
San Paolo-IMI S.p.A.
(banking)..................... 11,135 144,194
Snia S.p.A. (multi-industry)... 9,873 10,284
Telecom Italia S.p.A.
(telecommunications).......... 31,420 271,141
Telecom Italia Mobile S.p.A.
(telecommunications).......... 57,996 362,102
Unicredito Italiano S.p.A.
(banking)..................... 37,119 173,621
Unione Immobiliare S.p.A. (real
estate)....................... 59,698 30,684
-----------
2,514,986
-----------
</TABLE>
<TABLE>
SHARES VALUE
-----------------------
<CAPTION>
<S> <C> <C>
JAPAN (27.9%)
Acom Co., Ltd. (financial
services)..................... 1,400 $ 152,929
Ajinomoto Co., Inc. (food &
household products)........... 6,567 73,559
Arabian Oil Co., Ltd. (energy
sources)...................... 1,387 22,261
Asahi Bank, Ltd. (banking)..... 21,986 195,080
Asahi Breweries, Ltd.
(beverages & tobacco)......... 7,098 100,863
Asahi Chemical Industry Co.,
Ltd. (chemicals).............. 20,649 124,651
Asahi Glass Co., Ltd.
(miscellaneous-materials &
commodities).................. 17,000 135,039
Ashikaga Bank, Ltd. (banking).. 3,043 6,794
Bank of Tokyo-Mitsubishi, Ltd.
(banking) (c)................. 33,375 552,613
Bank of Yokohama, Ltd.
(banking)..................... 11,000 61,660
Bridgestone Corp. (industrial
components)................... 6,935 190,715
Brother Industries, Ltd.
(appliances & household
durables)..................... 6,601 17,710
Canon, Inc. (data processing &
reproduction)................. 8,288 234,276
Chiba Bank, Ltd. (banking)..... 11,600 63,356
Chiyoda Corp. (machinery &
engineering) (a).............. 6,000 13,741
Chugai Pharmaceutical Co., Ltd.
(health & personal care)...... 2,974 35,336
Citizen Watch Co., Ltd.
(recreation & other consumer
goods)........................ 3,678 25,974
Dai Nippon Printing Co., Ltd.
(business & public
services)..................... 9,133 166,361
Daiei, Inc. (merchandising)
(a)........................... 11,467 39,336
Daikin Industries, Ltd.
(machinery & engineering)..... 4,000 44,077
Dainippon Ink & Chemical, Inc.
(chemicals)................... 11,203 42,939
Daiwa House Industry Co., Ltd.
(construction & housing)...... 6,667 60,945
Daiwa Securities Group Inc.
(financial services).......... 11,287 120,373
Denso Corp. (industrial
components) (c)............... 8,331 178,016
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
25
<PAGE> 28
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
JAPAN (CONTINUED)
East Japan Railway Co.
(transportation-road & rail)... 41 $ 251,039
Ebara Corp. (machinery &
engineering).................. 3,660 43,627
Eisai Co., Ltd. (health &
personal care)................ 3,677 100,943
Fanuc, Ltd. (electronic
components & instruments)..... 2,723 211,343
Fuji Bank, Ltd. (banking)
(c)........................... 26,432 362,178
Fuji Photo Film, Ltd.
(recreation & other consumer
goods) (c).................... 5,394 173,146
Fujitsu, Ltd. (data processing
& reproduction)............... 15,107 454,532
Furukawa Electric Co., Ltd.
(industrial components)........ 11,558 84,169
Gunma Bank, Ltd. (banking)..... 6,766 50,698
Hitachi, Ltd. (electrical &
electronics) (c).............. 27,857 300,825
Hitachi Zosen Corp. (machinery
& engineering)................ 19,634 16,368
Hokuriku Bank, Ltd. (banking)
(a)........................... 15,952 38,213
Honda Motor Co., Ltd.
(automobiles) (c)............. 8,345 351,832
Industrial Bank of Japan, Ltd.
(The) (banking)............... 18,283 247,015
Ito-Yokado Co., Ltd.
(merchandising)............... 3,375 269,709
Japan Airlines Co., Ltd.
(transportation-airlines)..... 21,138 70,890
Japan Energy Corp. (energy
sources)...................... 15,637 18,130
Japan Steel Works, Ltd.
(machinery & engineering)
(a)........................... 5,176 5,803
Joyo Bank, Ltd. (banking)...... 13,550 66,216
Jusco Co., Ltd.
(merchandising)............... 4,000 93,137
Kajima Corp. (construction &
housing)...................... 12,910 45,399
Kamigumi Co., Ltd. (business &
public services).............. 3,456 20,366
Kansai Electric Power Co., Inc.
(utilities-electrical &
gas).......................... 5,528 103,237
Kao Corp. (food & household
products)..................... 6,000 182,825
Kawasaki Heavy Industries, Ltd.
(machinery & engineering)..... 19,050 26,103
Kawasaki Steel Corp. (metals-
steel) (a).................... 39,815 90,036
Keihin Electric Express Railway
(transportation-road &
rail)......................... 3,000 11,268
Kinki Nippon Railway Co., Ltd.
(transportation-road &
rail)......................... 22,124 102,392
Kirin Brewery Co., Ltd.
(beverages & tobacco)......... 12,154 139,053
Komatsu, Ltd. (machinery &
engineering).................. 12,162 70,621
</TABLE>
<TABLE>
SHARES VALUE
-----------------------
<CAPTION>
<S> <C> <C>
JAPAN (CONTINUED)
Kubota Corp. (machinery &
engineering).................. 17,806 $ 70,806
Kumagai Gumi Co., Ltd.
(construction & housing) (a).. 9,812 9,214
Kyocera Corp. (electronic
components & instruments)..... 2,190 209,846
Kyowa Hakko Kogyo (health &
personal care)................ 4,234 30,346
Makita Corp. (electrical &
electronics).................. 2,448 23,480
Marubeni Corp. (wholesale &
international trade).......... 20,723 65,924
Marui Co., Ltd.
(merchandising)............... 5,378 101,518
Matsushita Electric Industrial
Co., Ltd. (appliances &
household durables)........... 14,247 299,650
Mitsubishi Chemical Corp.
(chemicals)................... 25,833 117,083
Mitsubishi Corp. (wholesale &
international trade).......... 12,531 90,054
Mitsubishi Electric Corp.
(electrical & electronics).... 25,000 138,220
Mitsubishi Estate Co., Ltd.
(real estate)................. 12,191 122,071
Mitsubishi Heavy Industries,
Ltd. (machinery &
engineering).................. 35,059 137,398
Mitsubishi Trust & Banking
Corp. (banking)............... 11,031 148,296
Mitsui & Co., Ltd. (wholesale &
international trade).......... 14,822 109,501
Mitsui Fudosan Co., Ltd. (real
estate)....................... 11,129 83,071
Mitsui Marine & Fire Insurance
Co., Ltd. (insurance).......... 8,359 55,346
Mitsui O.S.K. Lines, Ltd.
(transportation-shipping)..... 12,266 26,680
Mitsui Trust & Banking Co.,
Ltd. (banking)................ 21,000 65,196
Mitsukoshi, Ltd.
(merchandising) (a)........... 6,758 37,623
Murata Manufacturing Co., Ltd.
(electronic components &
instruments).................. 2,000 256,798
NEC Corp. (electrical &
electronics).................. 14,416 291,463
NGK Insulators, Ltd.
(industrial components)....... 4,800 45,488
Niigata Engineering Co., Ltd.
(machinery & engineering)
(a)........................... 11,000 9,802
Nikon Corp. (electronic
components & instruments)..... 5,407 128,488
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
26
<PAGE> 29
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
JAPAN (CONTINUED)
Nippon Express Co., Ltd.
(transportation-road & rail)... 14,446 $ 102,155
Nippon Fire & Marine Insurance,
Ltd. (insurance).............. 9,686 38,331
Nippon Light Metal Co., Ltd.
(metals-nonferrous)........... 7,577 11,181
Nippon Meat Packers, Inc. (food
& household products)......... 3,357 41,592
Nippon Mitsubishi Oil Corp.
(energy sources).............. 20,136 88,754
Nippon Steel Corp. (metals-
steel)........................ 59,313 150,609
Nippon Telegraph & Telephone
Corp. (telecommunications).... 93 1,425,802
Nissan Motor Co., Ltd.
(automobiles)................. 25,121 150,443
Nisshinbo Industries, Inc.
(textile & apparel)........... 3,363 17,981
Nissin Food Products Co., Ltd.
(food & household products).... 1,384 39,652
NKK Corp. (metals-steel)....... 35,919 29,599
Nomura Securities Co., Ltd.
(financial services).......... 13,955 230,127
Obayashi Corp. (construction &
housing)...................... 10,799 64,672
Oji Paper Co., Ltd. (forest
products & paper)............. 14,490 102,050
Olympus Optical Co., Ltd.
(electronic components &
instruments).................. 4,000 54,042
Orient Corp. (financial
services)..................... 4,483 20,018
Osaka Gas Co. (utilities-
electrical & gas)............. 23,126 77,336
Penta-Ocean Construction Co.,
Ltd. (construction &
housing)...................... 10,000 16,673
Pioneer Electronic Corp.
(appliances & household
durables)..................... 2,078 37,055
Rohm Co., Ltd. (electronic
components & instruments)..... 1,000 224,219
Sakura Bank, Ltd. (banking).... 30,834 264,724
Sankyo Co., Ltd. (health &
personal care)................ 4,654 132,446
Sanrio Co., Ltd. (recreation &
other consumer goods)......... 861 45,376
Sanyo Electric Co., Ltd.
(appliances & household
durables)..................... 23,684 113,470
Sapporo Breweries, Ltd.
(beverages & tobacco)......... 5,692 22,089
Sato Kogyo Co., Ltd.
(construction & housing)...... 12,000 7,704
Secom Co., Ltd. (business &
public services).............. 2,000 214,253
Sekisui House, Ltd.
(construction & housing)...... 10,000 108,181
Sharp Corp. (appliances &
household durables)........... 9,279 147,593
</TABLE>
<TABLE>
SHARES VALUE
-----------------------
<CAPTION>
<S> <C> <C>
JAPAN (CONTINUED)
Shimizu Corp. (construction &
housing)...................... 11,055 $ 39,617
Shin-Etsu Chemical Co., Ltd.
(chemicals)................... 4,830 199,009
Shionogi & Co., Ltd. (health &
personal care)................ 5,396 49,585
Shiseido Co., Ltd. (health &
personal care)................ 5,739 87,436
Shizuoka Bank, Ltd. (banking).. 9,494 107,346
SMC Corp. (machinery &
engineering).................. 900 151,693
Softbank Corp. (banking)....... 700 290,430
Sony Corp. (appliances &
household durables)........... 2,941 458,218
Sumitomo Bank, Ltd. (banking)
(c)........................... 22,242 357,620
Sumitomo Chemical Co., Ltd.
(chemicals)................... 19,403 124,380
Sumitomo Corp. (wholesale &
international trade).......... 11,864 86,625
Sumitomo Electric Industries
(industrial components)....... 9,982 134,002
Sumitomo Marine & Fire
Insurance Co., Ltd.
(insurance)................... 8,126 62,680
Sumitomo Metal Industries, Ltd.
(metals-steel) (a)............ 50,343 49,203
Sumitomo Metal Mining Co.
(metals-nonferrous) (a)....... 11,298 34,101
Taiheiyo Cement Corp. (building
materials & components)....... 12,783 27,927
Taisei Corp. (construction &
housing)...................... 13,713 28,908
Taisho Pharmaceutical Co., Ltd.
(health & personal care)...... 4,066 169,088
Taiyo Yuden Co., Ltd.
(electronic components &
instruments).................. 2,127 76,021
Takashimaya Co., Ltd.
(merchandising)............... 4,574 40,979
Takeda Chemical Industries,
Ltd. (health & personal
care)......................... 7,318 420,025
Teikoku Oil Co., Ltd. (energy
sources)...................... 6,646 25,218
Tobu Railway Co., Ltd.
(transportation-road & rail)... 12,000 37,600
Tohoku Electric Power Co., Inc.
(utilities-electrical &
gas).......................... 6,968 108,697
Tokai Bank, Ltd. (banking)..... 16,989 148,138
Tokio Marine & Fire Insurance
Co., Ltd. (insurance)......... 11,540 150,937
Tokyo Electric Power Co., Inc.
(utilities-electrical &
gas).......................... 8,451 188,678
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
27
<PAGE> 30
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
JAPAN (CONTINUED)
Tokyo Electron, Ltd.
(electronic components &
instruments)................... 2,192 $ 181,892
Tokyo Gas Co. (utilities-
electrical & gas)............. 36,091 85,418
Tokyo Steel Manufacturing Co.,
Ltd. (metals-steel)........... 2,194 8,430
Tokyu Corp. (transportation-
road & rail).................. 15,451 42,195
Toppan Printing Co., Ltd.
(business & public
services)..................... 9,076 111,230
Toray Industries, Inc.
(chemicals).................... 20,000 110,193
Tostem Corp. (building
materials & components)....... 2,935 65,668
Toto, Ltd. (building materials
& components)................. 5,467 41,593
Toyo Seikan Kaisha, Ltd.
(miscellaneous-materials &
commodities).................. 3,445 74,933
Toyoda Automatic Loom Works,
Ltd. (machinery &
engineering).................. 4,000 77,806
Toyota Motor Corp.
(automobiles) (c)............. 28,152 973,806
Ube Industries, Ltd.
(miscellaneous-materials &
commodities).................. 11,768 34,054
Uny Co., Ltd.
(merchandising)............... 2,346 30,347
Yamaha Corp. (recreation &
other consumer goods)......... 4,188 28,091
Yamanouchi Pharmaceutical Co.,
Ltd. (health & personal
care)......................... 4,000 181,291
-----------
19,012,314
-----------
MALAYSIA (0.1%)
Malaysia International Shipping
Corp. Berhad Foreign
Registered (transportation-
shipping) (e)................. 14,236 21,354
Malaysian Airline System Berhad
(transportation-airlines)
(e)........................... 856 806
Metroplex Berhad (real estate)
(e)........................... 434 119
Sime Darby Berhad (multi-
industry) (e)................. 464 554
Technology Resources Industries
Berhad (telecommunications)
(e)........................... 18,409 10,222
-----------
33,055
-----------
NETHERLANDS (5.5%)
ABN AMRO Holding N.V.
(banking)..................... 10,306 249,044
Aegon N.V. (insurance)......... 4,979 459,235
Akzo Nobel N.V. (chemicals).... 3,484 149,924
Elsevier N.V. (broadcasting &
publishing)................... 9,310 88,366
</TABLE>
<TABLE>
SHARES VALUE
-----------------------
<CAPTION>
<S> <C> <C>
NETHERLANDS (CONTINUED)
Heineken N.V. (beverages &
tobacco)...................... 4,292 $ 218,755
ING Groep N.V. (financial
services)..................... 7,014 413,447
Koninklijke Ahold N.V.
(merchandising)............... 6,297 193,269
Koninklijke KPN N.V.
(telecommunications).......... 4,600 235,904
Koninklijke Nedlloyd Groep N.V.
(transportation-road &
rail)......................... 319 8,902
Koninklijke Pakhoed N.V.
(energy equipment & service).. 921 25,702
Koninklijke (Royal) Philips
Electronics N.V. (appliances &
household durables)........... 2,784 285,312
Royal Dutch Petroleum Co.
(energy sources).............. 16,480 984,421
TNT Post Group N.V. (business &
public services).............. 4,812 122,402
Unilever CVA N.V. (food &
household products)........... 4,366 289,115
-----------
3,723,798
-----------
NEW ZEALAND (0.2%)
Carter Holt Harvey Ltd. (forest
products & paper)............. 21,197 26,825
Fletcher Challenge Energy
(energy souces)............... 2,375 5,470
Fletcher Challenge Forests
(forest products & paper)..... 20,290 8,319
Telecom Corp. of New Zealand
Ltd. (telecommunications)..... 24,470 98,351
-----------
138,965
-----------
NORWAY (0.3%)
Christiania Bank Og Kreditkasse
(banking)..................... 7,653 37,267
Elkem ASA Class A (metals-
nonferrous)................... 733 12,661
Norsk Hydro ASA (energy
sources)...................... 3,159 126,044
Orkla ASA Class A (multi-
industry)..................... 2,000 27,917
-----------
203,889
-----------
PORTUGAL (0.5%)
Banco Comercial Portugues, S.A.
Registered (banking).......... 2,749 77,380
Banco Espirito Santo, S.A.
Registered (banking).......... 1,200 31,180
Cimpor-Cementos de Portugal,
SGPS, S.A. (building materials
& components)................. 1,200 19,891
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
28
<PAGE> 31
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
PORTUGAL (CONTINUED)
Electricidade de Portugal, S.A.
(utilities-electrical & gas)... 8,374 $ 130,093
Portugal Telecom, S.A.
Registered
(telecommunications).......... 2,450 109,189
-----------
367,733
-----------
SINGAPORE (0.7%)
City Developments, Ltd. (real
estate)....................... 9,348 48,319
Development Bank of Singapore,
Ltd. Foreign Registered
(banking)..................... 7,224 81,627
Sembcorp Industries Ltd.
(multi-industry).............. 29,512 37,249
Singapore Airlines, Ltd.
Foreign Registered
(transportation-airlines)..... 7,273 76,935
Singapore Telecommunications,
Ltd. (telecommunications)..... 76,258 144,834
United Overseas Bank, Ltd.
Foreign Registered (banking).. 9,898 74,958
-----------
463,922
-----------
SPAIN (2.9%)
Argentaria, Caja Postal y Banco
Hipotecario de Espana, S.A.
Registered (banking).......... 6,846 151,833
Autopistas Concesionaria
Espanola, S.A. (business &
public services).............. 2,800 30,167
Banco Bilbao Vizcaya, S.A.
Registered (banking).......... 18,253 245,195
Banco Santander Central
Hispano, S.A. (banking)....... 30,300 314,344
Empresa Nacional de Celulosas,
S.A. (forest products &
paper)........................ 296 5,538
Endesa, S.A.
(utilities-electrical &
gas).......................... 9,753 195,085
Gas Natural SDG, S.A.
(utilities-electrical &
gas).......................... 4,638 102,375
Iberdrola, S.A. (utilities-
electrical & gas)............. 10,181 148,320
Repsol, S.A. (energy
sources)...................... 12,559 258,736
Tabacalera, S.A. (beverages &
tobacco)...................... 2,572 42,309
Telefonica, S.A.
(telecommunications) (a)...... 30,042 493,869
-----------
1,987,771
-----------
SWEDEN (2.4%)
ABB AB (electrical &
electronics) (f).............. 6,380 88,286
Drott AB Series B (real
estate)....................... 1,000 9,590
Electrolux AB Series B
(appliances & household
durables)..................... 5,100 101,527
</TABLE>
<TABLE>
SHARES VALUE
-----------------------
<CAPTION>
<S> <C> <C>
SWEDEN (CONTINUED)
ForeningsSparbanken AB
(banking)..................... 6,100 $ 97,000
Hennes & Mauritz AB Series B
(merchandising)............... 7,200 190,965
Mandmus AB (real estate)....... 130 686
NetCom AB Series B
(telecommunications) (a)...... 1,500 62,180
Skandia Forsakrings AB
(insurance)................... 5,300 117,732
Skanska AB Series B
(construction & housing)...... 1,600 58,460
Svenska Cellulosa AB Series B
(forest products & paper)..... 2,750 74,106
Svenska Handelsbanken Series A
(banking)..................... 6,300 87,179
Swedish Match AB (beverages &
tobacco)...................... 5,983 21,860
Telefonaktiebolaget LM Ericsson
Series B (electrical &
electronics).................. 14,884 617,895
Volvo AB Series B
(automobiles)................. 4,225 108,982
-----------
1,636,448
-----------
SWITZERLAND (6.5%)
ABB AG Bearer (electrical &
elelctronics)................. 80 128,634
Adecco, S.A. (business & public
services)..................... 200 121,284
Alusuisse Lonza Group AG
Registered (multi-industry)... 90 54,932
Credit Suisse Group Registered
(banking)..................... 2,170 417,280
Holderbank Financiere Glarus AG
Bearer (building materials &
components)................... 70 86,231
Holderbank Financiere Glarus AG
Registered (building materials
& components)................. 150 49,616
Jelmoli Holdings, Ltd. Bearer
(merchandising)............... 10 11,479
Lonza AG Rights (multi-
industry)..................... 90 52,569
Nestle S.A. Registered (food &
household products)........... 295 569,206
Novartis AG Registered (health
& personal care).............. 540 808,033
Roche Holdings AG Bearer
(health & personal care)...... 14 244,405
Roche Holdings AG Genusscheine
(health & personal care)...... 56 672,573
Schindler Holding AG
Participating Certificates
(machinery & engineering)..... 10 15,948
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
29
<PAGE> 32
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
SWITZERLAND (CONTINUED)
Schindler Holding AG Registered
(machinery & engineering)...... 10 $ 15,357
Societe Generale de
Surveillance Holding S.A.
Bearer (business & public
services) (a)................. 15 16,342
Societe Generale de
Surveillance Holding S.A.
Registered (business & public
services)..................... 70 19,065
Sulzer AG Registered (machinery
& engineering)................ 50 35,112
Swatch Group AG Registered
(machinery & engineering)..... 200 32,815
Schweizerische
Rueckversicherungs
Gesellschaft Registered
(insurance)................... 145 300,715
Swisscom AG
(telecommunications).......... 670 204,250
UBS AG Registered (banking).... 1,610 468,619
Zurich Allied AG Registered
(insurance)................... 200 113,277
-----------
4,437,742
-----------
UNITED KINGDOM (19.2%)
Abbey National PLC (banking)... 10,900 212,842
Allied Zurich PLC
(insurance)................... 14,018 169,066
Associated British Foods PLC
(food & household products)... 11,053 68,966
AstraZeneca Group PLC (health &
personal care)................ 12,708 573,864
BAA PLC (business & public
services)..................... 13,374 97,986
Barclays PLC (banking)......... 11,028 337,126
Bass PLC (leisure & tourism)... 11,114 121,914
BG PLC (utilities-electrical &
gas).......................... 29,391 162,889
Boots Co. PLC (merchandising).. 9,473 97,152
BP Amoco PLC (energy sources).. 139,742 1,354,035
British Aerospace PLC
(aerospace & military
technology)................... 16,995 99,139
British Airways PLC
(transportation-airlines)..... 12,500 64,970
British American Tobacco PLC
(beverages & tobacco)......... 20,093 132,872
British Sky Broadcasting Group
PLC (broadcasting &
publishing)................... 16,647 178,511
British Telecommunications PLC
(telecommunications).......... 48,765 883,006
Cable & Wireless PLC
(telecommunications).......... 20,589 240,208
Cadbury Schwepps PLC (beverages
& tobacco).................... 23,406 153,148
Carillion PLC (construction &
housing)...................... 1,451 3,013
</TABLE>
<TABLE>
SHARES VALUE
-----------------------
<CAPTION>
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Centrica PLC (energy
sources)...................... 38,336 $ 111,186
CGU PLC (insurance)............ 9,582 139,386
Coats Viyella PLC (textiles &
apparel)...................... 9,814 7,649
Corus Group PLC (metal-steel).. 42,984 81,818
De La Rue PLC (business &
public services).............. 1,910 9,645
Diageo PLC (beverages &
tobacco)...................... 25,516 257,496
Elementis PLC (chemicals)...... 11,290 19,082
General Electric Co. PLC
(electrical & electronics).... 26,716 289,991
GKN PLC (machinery &
engineering).................. 8,928 142,691
Glaxo Wellcome PLC (health &
personal care)................ 24,926 734,585
Granada Group PLC (leisure &
tourism)...................... 21,864 172,567
Great Universal Stores PLC
(The) (merchandising)......... 10,800 81,875
Halifax PLC (banking).......... 18,102 230,946
Hanson PLC (building materials
& components)................. 9,656 75,579
Hilton Group PLC (leisure &
tourism)...................... 18,213 55,438
HSBC Holdings PLC (banking)
(j)........................... 60,376 742,539
Imperial Chemical Industries
PLC (chemicals)............... 8,666 86,031
Invensys PLC (machinery &
engineering).................. 36,384 178,511
Kingfisher PLC
(merchandising)............... 12,822 139,809
Land Securities PLC (real
estate)....................... 7,747 96,612
LASMO PLC (energy sources)..... 22,009 48,665
Legal & General Group PLC
(insurance)................... 46,200 128,119
Lloyds TSB Group PLC
(banking)...................... 38,424 530,567
Marks & Spencer PLC
(merchandising)............... 23,340 107,236
National Grid Group PLC
(utilities-electrical &
gas).......................... 13,714 102,278
National Power PLC (utilities-
electrical & gas)............. 11,590 78,212
Next PLC (merchandising)....... 5,222 56,168
Pearson PLC (broadcasting &
publishing)................... 7,509 168,436
Peninsular & Oriental Steam
Navigation Co. Deferred Stock
(The) (transportation-
shipping)..................... 8,975 126,948
Prudential Corp. PLC
(insurance)................... 14,366 225,006
Racal Electronic PLC
(electrical & electronics).... 4,570 33,670
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
30
<PAGE> 33
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Railtrack Group PLC (business &
public services)............... 5,324 $ 107,630
Rank Group PLC (leisure &
tourism)....................... 12,294 38,279
Rentokil Initial PLC (business
& public services)............ 30,309 100,836
Reuters Group PLC (business &
public services).............. 12,768 118,478
Rio Tinto PLC Registered
(metals-nonferrous)........... 10,875 185,765
Rolls-Royce PLC (aerospace &
military technology).......... 20,600 73,014
Royal & Sun Alliance Insurance
Group PLC (insurance)......... 12,959 88,035
Royal Bank of Scotland Group
PLC (banking)................. 7,538 173,415
Sainsbury (J.) PLC
(merchandising)............... 18,817 112,778
Scottish & Newcastle PLC
(leisure & tourism)........... 8,661 80,581
Scottish Power PLC (utilities-
electrical & gas)............. 10,298 95,389
SmithKline Beecham PLC (health
& personal care).............. 39,881 513,057
Tarmac PLC (building materials
& components)................. 1,451 12,190
Tesco PLC (merchandising)...... 55,953 166,182
Thames Water PLC (business &
public services) (a).......... 5,760 83,174
Unilever PLC (food & household
products)..................... 21,387 198,106
United Biscuits (Holdings) PLC
(food & household
products)..................... 9,940 34,986
Vodafone Group PLC
(telecommunications).......... 142,280 660,714
Williams PLC (electronic
components & instruments)..... 10,172 50,908
Wilson Connolly Holdings PLC
(construction & housing)...... 5,216 11,127
-----------
13,114,092
-----------
UNITED STATES (0.5%)
DaimlerChrysler AG
(automobiles)................. 4,177 324,762
-----------
Total Common Stocks (Cost
$48,447,885).................. 65,169,390(g)
-----------
</TABLE>
<TABLE>
<CAPTION>
PREFERRED STOCKS (0.4%)
SHARES VALUE
-----------------------
<S> <C> <C>
AUSTRALIA (0.2%)
News Corp., Ltd.
A$ 0.0375
(broadcasting & publishing)
(d)(k)...................... 19,878 $ 134,499
-----------
GERMANY (0.2%)
RWE AG
E 0.92
(utilities-electrical & gas)
(d)(k)...................... 1,154 36,632
SAP AG
E 1.60
(business & public services)
(d)(k)...................... 300 132,124
-----------
168,756
-----------
Total Preferred Stocks
(Cost $233,975)..................... 303,255
-----------
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)(k).......... 6,885 266
Chinese Estates Holdings, Ltd.
Call Warrants
Strike price HK 1.02
Expire 11/24/00
(real estate) (a)(k).......... 6,885 110
-----------
Total Warrants (Cost $0)....... 376
-----------
<CAPTION>
SHORT-TERM INVESTMENTS (2.8%)
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
U.S. GOVERNMENT (2.8%)
United States Treasury Bill
4.78%, due 1/20/00 (c)........ $ 300,000 296,847
4.93%, due 1/27/00 (c)........ 100,000 98,807
4.94%, due 1/27/00 (c)........ 1,200,000 1,185,663
4.96%, due 1/27/00 (c)........ 300,000 296,401
-----------
Total Short-Term Investments
(Cost $1,877,718)............. 1,877,718
-----------
Total Investments
(Cost $50,559,578) (h).............. 98.9% 67,350,739(i)
Cash and Other Assets,
Less Liabilities.............. 1.1 781,086
---------- -----------
Net Assets..................... 100.0% $68,131,825
========== ===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
31
<PAGE> 34
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
FUTURES CONTRACTS (0.0%)(b)
CONTRACTS UNREALIZED
LONG APPRECIATION(j)
----------------------------
<S> <C> <C>
FRANCE (0.0%)(b)
Euro, CAC 40 Index,
December 1999........... 3 $ 3,819
GERMANY (0.0%)(b)
Euro, DAX Index, December
1999.................... 3 9,167
JAPAN (0.0%)(b)
Japanese Yen, TOPIX Index,
December 1999........... 3 13,319
UNITED KINGDOM (0.0%)(b)
Pound Sterling, FTSE 100
Index, December 1999.... 6 11,153
-------
Total Futures Contracts
(Settlement Value
$1,660,558) (g)......... $37,458
=======
</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) Securities deemed illiquid. Malaysian positions held or partially held in
Singapore with repatriation restrictions.
(f) Security deemed illiquid.
(g) The combined market value of common stocks and settlement value of Index
futures contracts represents 98.1% of net assets.
(h) The cost for Federal income tax purposes is $51,193,192.
(i) At October 31, 1999 net unrealized appreciation for securities was
$16,157,547, 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 $20,124,836 and aggregate
gross unrealized depreciation for all investments on which there was an
excess of cost over market value of $3,967,289.
(j) Represents the difference between the value of the contracts at the time
they were opened and the value at October 31, 1999.
(k) A$ --Australian Dollar
E --Euro
HK--Hong Kong Dollar
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................... $ 172,152 0.3%
Appliances & Household
Durables................... 1,460,535 2.1
Automobiles.................. 2,371,266 3.5
Banking...................... 9,810,132 14.4
Beverages & Tobacco.......... 1,088,445 1.6
Broadcasting & Publishing.... 876,408 1.3
Building Materials &
Components................. 751,728 1.1
Business & Public Services... 2,653,508 3.9
Chemicals.................... 1,661,976 2.4
Construction & Housing....... 505,106 0.7
Data Processing &
Reproduction............... 688,808 1.0
Electrical & Electronics..... 3,658,815 5.4
Electronic Components &
Instruments................ 1,393,558 2.1
Energy Equipment & Service... 29,396 0.0*
Energy Sources............... 4,150,432 6.1
Financial Services........... 936,893 1.4
Food & Household Products.... 1,608,120 2.4
Forest Products & Paper...... 216,838 0.3
Health & Personal Care....... 5,796,649 8.5
Industrial Components........ 898,458 1.3
Insurance.................... 4,033,539 5.9
Leisure & Tourism............ 617,614 0.9
Machinery & Engineering...... 1,131,622 1.7
Merchandising................ 2,794,328 4.1
Metals-Nonferrous............ 376,870 0.6
Metals-Steel................. 544,499 0.8
Miscellaneous-Materials &
Commodities................ 244,026 0.4
Multi-Industry............... 880,698 1.3
Real Estate.................. 915,984 1.3
Recreation & Other Consumer
Goods...................... 626,778 0.9
Telecommunications........... 8,082,083 11.9
Textile & Apparel............ 25,630 0.0*
Transportation-Airlines...... 407,194 0.6
Transportation-Road & Rail... 555,551 0.8
Transportation-Shipping...... 471,575 0.7
U.S. Government.............. 1,877,718 2.8
Utilities-Electrical & Gas... 2,668,918 3.9
Wholesale & International
Trade...................... 366,889 0.5
----------- -----
67,350,739 98.9
Cash and Other Assets, Less
Liabilities................ 781,086 1.1
----------- -----
Net Assets................... $68,131,825 100.0%
=========== =====
</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.
32
<PAGE> 35
MAINSTAY
INSTITUTIONAL FUNDS INC.
EAFE INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $50,559,578)............................ $ 67,350,739
Cash denominated in foreign currencies
(identified cost $24,485).................... 24,317
Cash........................................... 88,597
Deposit with broker for futures contracts (Note
7)........................................... 186,114
Receivables:
Fund shares sold............................. 657,115
Dividends and interest....................... 230,191
Investment securities sold................... 31,476
Variation margin on futures contracts........ 22,711
--------------
Total assets............................. 68,591,260
--------------
LIABILITIES:
Payables:
Fund shares redeemed......................... 328,485
Investment securities purchased.............. 28,504
Custodian.................................... 23,500
MainStay Management.......................... 15,422
Transfer agent............................... 2,352
Accrued expenses............................... 61,172
--------------
Total liabilities........................ 459,435
--------------
Net assets..................................... $ 68,131,825
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class.......................... $ 5,369
Institutional Service Class.................. 44
Additional paid-in capital..................... 46,250,280
Accumulated distribution in excess of net
investment income............................ (571,381)
Accumulated undistributed net realized gain on
investments and futures contracts............ 5,621,319
Net unrealized appreciation on investments and
futures contracts............................ 16,828,619
Net unrealized depreciation on translation of
other assets and liabilities in foreign
currencies................................... (2,425)
--------------
Net assets..................................... $ 68,131,825
==============
Institutional Class
Net assets applicable to outstanding shares.... $ 67,582,389
==============
Shares of capital stock outstanding............ 5,368,869
==============
Net asset value per share outstanding.......... $ 12.59
==============
Institutional Service Class
Net assets applicable to outstanding shares.... $ 549,436
==============
Shares of capital stock outstanding............ 43,906
==============
Net asset value per share outstanding.......... $ 12.51
==============
</TABLE>
STATEMENT OF OPERATIONS
For the period January 1, 1999 through October 31, 1999* and the year ended
December 31, 1998
<TABLE>
<CAPTION>
1999* 1998
-------------- --------------
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends (a)................. $ 1,148,543 $ 1,037,985
Interest...................... 83,034 49,176
-------------- --------------
Total income.............. 1,231,577 1,087,161
-------------- --------------
Expenses:
Management.................... 561,256 562,217
Portfolio pricing............. 66,838 74,836
Professional.................. 45,058 43,783
Custodian..................... 41,068 60,183
Registration.................. 25,657 25,236
Transfer agent................ 23,378 27,218
Shareholder communication..... 5,293 11,179
Directors..................... 1,311 1,345
Service....................... 1,136 1,208
Miscellaneous................. 8,868 8,226
-------------- --------------
Total expenses before
reimbursement............ 779,863 815,431
Expense reimbursement from
Manager..................... (223,379) (257,925)
-------------- --------------
Net expenses.............. 556,484 557,506
-------------- --------------
Net investment income........... 675,093 529,655
-------------- --------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Security transactions......... 6,014,803 4,249,864
Futures transactions.......... (83,037) 165,271
Foreign currency
transactions................ (679,189) (491)
-------------- --------------
Net realized gain on investments
and foreign currency
transactions.................. 5,252,577 4,414,644
-------------- --------------
Net change in unrealized
appreciation on investments:
Security transactions......... 2,333,712 6,075,674
Futures transactions.......... 44,479 10,157
Translation of other assets
and liabilities in foreign
currencies.................. (4,477) 15,803
-------------- --------------
Net unrealized gain on
investments and foreign
currency transactions......... 2,373,714 6,101,634
-------------- --------------
Net realized and unrealized gain
on investments and foreign
currency transactions......... 7,626,291 10,516,278
-------------- --------------
Net increase in net assets
resulting from operations..... $ 8,301,384 $ 11,045,933
============== ==============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
(a) Dividends recorded net of foreign withholding taxes of $161,675 and $145,064
for 1999 and 1998 respectively.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
33
<PAGE> 36
EAFE INDEX FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period January 1, 1999 through October 31, 1999* and the years ended
December 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
1999* 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 675,093 $ 529,655 $ 885,580
Net realized gain on investments and futures
contracts............................................. 5,931,766 4,415,135 13,669,000
Net realized loss on foreign currency transactions...... (679,189) (491) (12,176)
Net change in unrealized appreciation on investments and
futures contracts..................................... 2,378,191 6,085,831 (11,618,701)
Net change in unrealized appreciation (depreciation) on
translation of other assets and liabilities in foreign
currencies............................................ (4,477) 15,803 (7,995)
-------------- -------------- --------------
Net increase in net assets resulting from operations.... 8,301,384 11,045,933 2,915,708
-------------- -------------- --------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class................................... -- (526,186) (878,664)
Institutional Service Class........................... -- (3,469) (6,916)
From net realized gain on investments and foreign
currency transactions:
Institutional Class................................... (291,622) (3,871,228) (13,337,599)
Institutional Service Class........................... (2,418) (29,729) (106,298)
In excess of net investment income:
Institutional Class................................... (51,926) (560,314) (353,710)
Institutional Service Class........................... (339) (3,666) (1,817)
-------------- -------------- --------------
Total dividends and distributions to shareholders... (346,305) (4,994,592) (14,685,004)
-------------- -------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 64,643,850 29,896,062 10,993,310
Institutional Service Class........................... 107,045 86,552 140,022
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... 323,542 4,948,383 14,564,746
Institutional Service Class........................... 2,757 36,795 115,016
-------------- -------------- --------------
65,077,194 34,967,792 25,813,094
Cost of shares redeemed:
Institutional Class................................... (70,367,464) (30,946,559) (47,761,439)
Institutional Service Class........................... (118,913) (102,752) (91,780)
-------------- -------------- --------------
Increase (decrease) in net assets derived from capital
share transactions.................................. (5,409,183) 3,918,481 (22,040,125)
-------------- -------------- --------------
Net increase (decrease) in net assets................. 2,545,896 9,969,822 (33,809,421)
NET ASSETS:
Beginning of period....................................... 65,585,929 55,616,107 89,425,528
-------------- -------------- --------------
End of period............................................. $ 68,131,825 $ 65,585,929 $ 55,616,107
============== ============== ==============
Accumulated distribution in excess of net investment
income at end of period................................. $ (571,381) $ (867,449) $ (487,364)
============== ============== ==============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
34
<PAGE> 37
(THIS PAGE INTENTIONALLY LEFT BLANK)
35
<PAGE> 38
EAFE INDEX FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
JANUARY 1, 1999
THROUGH YEAR ENDED
OCTOBER 31, 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......................................... 1.39 1.38 1.84 1.83
Net realized and unrealized gain (loss) on foreign
currency transactions............................... (0.11) (0.11) 0.00(a) 0.00(a)
------- ------- ------- -------
Total from investment operations...................... 1.39 1.36 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............................... (0.06) (0.06) (0.72) (0.72)
In excess of net investment income.................... (0.01) (0.01) (0.09) (0.09)
------- ------- ------- -------
Total dividends and distributions..................... (0.07) (0.07) (0.92) (0.89)
------- ------- ------- -------
Net asset value at end of period...................... $ 12.59 $ 12.51 $ 11.27 $ 11.22
======= ======= ======= =======
Total investment return............................... 12.31%(b) 12.08%(b) 19.15% 18.83%
Ratios (to average net assets)/Supplemental Data:
Net investment income............................... 1.14%+ 0.89%+ 0.90% 0.65%
Net expenses........................................ 0.94%+ 1.19%+ 0.94% 1.19%
Expenses (before reimbursement)..................... 1.32%+ 1.57%+ 1.38% 1.63%
Portfolio turnover rate............................... 19% 19% 24% 24%
Net assets at end of period (in 000's)................ $67,582 $ 549 $65,087 $ 499
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
+ Annualized.
(a) Less than one cent per share.
(b) Total return is not annualized.
(c) Institutional Service Class commenced January 1, 1995.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
36
<PAGE> 39
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS (c) 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.
37
<PAGE> 40
Growth Equity Fund
- --------------------------------------------------------------------------------
For the ten months ended October 31, 1999,(1) the stock market was volatile,
with key benchmarks rising to new highs in July and August, but dropping
substantially in September and early October. They then staged strong recoveries
by the end of the MainStay Institutional Growth Equity Fund's ten-month
reporting period. During the reporting
period, growth and value stocks as well as large- and small-cap issues
alternately moved in and out of favor. Even so, technology and
technology-related stocks dominated the market through much of the reporting
period, providing the most substantial gains of any sector.
Ongoing inflation concerns caused interest rates to rise, with the Federal
Reserve Board increasing the targeted federal funds rate in two successive 25
basis-point moves, one at the end of June and another late in August 1999. Most
financial stocks, which performed well during the first calendar quarter of
1999, weakened as interest rates rose, but recovered at the end of October, when
a series of remarkably tame inflation reports and healthy economic growth
statistics led to a strong market upsurge. Health care stocks, which had
generally languished throughout much of the reporting period, also rose in the
rally at the end of October.
PERFORMANCE REVIEW
For the ten months ended October 31, 1999, the MainStay Institutional Growth
Equity Fund returned 9.96% for Institutional Class shares and 9.74% for Service
Class shares. Both share classes underperformed the 12.03% return of the S&P 500
Index(2) for the ten months ended October 31, 1999. Both share classes also
underperformed the 16.65% return of the average Lipper(3) large-cap growth fund
over the same period. The underperformance was partially due to the Fund's more
defensive supermarket and health care holdings, which faced pressures throughout
much of the reporting period. Some financial stocks that suffered as interest
rates rose also detracted from performance.
Both of the Fund's share classes were rated four stars overall by Morningstar(4)
as of October 31, 1999. Both share classes were rated four stars out of 3,272
domestic equity funds for the three-year period then ended, and Institutional
Class shares were rated four stars out of 2,047 domestic equity funds for the
five-year period then ended.
Technology stocks were by far the Fund's strongest performers for the ten months
ended October 31, 1999, and the Fund benefited by overweighting the technology
sector. Leaders included Sun Microsystems (+199%), EMC Corp. (+92%), Cisco
Systems (+76%), Microsoft (+42%), Intel (+38%), and Lucent Technologies (+21%).
During the second calendar quarter of 1999, the Fund sold BMC Software, a
relatively recent purchase, because the company failed to meet earnings
expectations. The Fund also watched Compuware closely, as Y2K concerns hampered
its performance through much of the reporting period. We believe the stock has
good long-term potential and continue to hold it in the Fund's portfolio. In the
latter half of the reporting period, the Fund added new positions in Honeywell
and Texas Instruments.
The Fund's health care stocks varied in their performance results, with
pharmaceuticals, such as Merck, Schering-Plough, Elan Corp., and Pfizer facing
pressures throughout much of the reporting period. The Fund sold its positions
in Eli Lilly, Monsanto, drug
- --------------------------------------------------------------------------------
(1) MainStay Institutional Funds recently changed its fiscal year end from
December 31 to October 31. The previous annual report provided information
through December 31, 1998. This report covers the ten-month fiscal period
from January 1, 1999, through October 31, 1999.
(2) "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.
(3) 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.
(4) Morningstar, Inc. is an independent fund performance monitor. Its ratings
reflect historic risk-adjusted performance, taking fees and sales charges
into account, and may change monthly. Its ratings of one (low) to five
(high) stars are based on a fund's three-, five-, and ten-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 funds in a
broad asset class receive five stars, the next 22.5% receive four stars, the
middle 35% receive three stars, the next 22.5% receive two stars, and the
bottom 10% receive one star. Funds (or share classes) are not rated until
they have three years of performance history.
38
<PAGE> 41
distributor McKesson HBOC, and rehabilitative health care service provider
HEALTHSOUTH during the first calendar half of 1999 and invested the proceeds in
more productive securities. Elan Corp. and Pfizer showed a turnaround in the
third calendar quarter of 1999 and Merck and Schering-Plough improved as the
market rallied in late October 1999.
The performance of consumer stocks was also mixed over the first ten months of
1999, with Kohl's, Circuit City, and Harley-Davidson showing strong gains early
in the year that tended to level off later in the reporting period. Cendant
weakened in the second calendar quarter, recovered, then declined through the
remainder of the reporting period. In the second calendar quarter, we trimmed
the Fund's positions in defensive supermarket stocks Safeway and Kroger. In the
third calendar quarter of 1999, Staples, Kohl's, and Circuit City were weak,
while Dollar General, Home Depot, and Omnicom were strong. Overall, the Fund's
consumer stocks contributed positively to the Fund's performance for the
ten-month reporting period.
Financial stocks came under pressure in a rising rate environment, but several
of the Fund's holdings provided positive returns for the ten months ended
October 31, 1999. Among them were Citigroup (+84%), AIG (+42%), and Wells Fargo
(+26%). In the second calendar quarter, the Fund added Firstar Corp., which had
volatile performance and returned -3% through the end of the reporting period.
As rates continued to rise in the third calendar quarter of 1999, we sold the
Fund's position in Freddie Mac at a loss for the reporting period and trimmed
holdings in Providian Financial and Associates First with mixed results.
The Fund benefited from the communications sector with MCI Worldcom (+24%),
which rose on news of a proposed merger with Sprint. During the second calendar
quarter the Fund purchased Motorola, which closed the Fund's reporting period on
a high note. The Fund also added America Online to its portfolio in the second
calendar quarter of 1999. Although the stock stalled a bit in the third calendar
quarter, it rose steadily from mid-September through the end of the reporting
period.
LOOKING AHEAD
As of the end of the Fund's reporting period, we believed the stock market
anticipated a third rate increase by the Federal Reserve, but the impact of such
a move had yet to be seen. Economic growth remained strong and inflation
appeared to be under control, even if oil prices and wages were beginning to
move higher. The Fund continued to favor the technology sector, which we believe
is likely to benefit from continued innovation and strong demand. If and when
the Federal Reserve indicates that it has finished hiking interest rates, we
believe investor opinions of financial and consumer stocks could improve. With
so many questions surrounding health care pricing and provider accountability,
the Fund tended to favor drug companies and medical device manufacturers over
hospitals and HMOs at the end of October 1999.
Whatever the economy or markets may bring, the Fund will continue to seek long-
term growth of capital, with dividend income, if any, as an incidental
consideration to the Fund's objective of growth of capital.
RUDOLPH C. CARRYL
EDMUND C. SPELMAN
Portfolio Managers
MacKay Shields LLC
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
39
<PAGE> 42
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
GROWTH EQUITY FUND VS S&P 500 INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
S&P 500 INDEX GROWTH EQUITY FUND
------------- ------------------
<S> <C> <C>
1/2/91 250000 250000
03/31/91 286325 314000
06/30/91 285666 302500
09/30/91 300950 367000
12/31/91 326169 417500
03/31/92 317917 409230
06/30/92 323958 354367
09/30/92 334162 368457
12/31/92 351004 441009
03/31/93 366343 435848
06/30/93 368138 441567
09/30/93 377636 479192
12/31/93 386397 483314
03/31/94 371753 476602
06/30/94 373314 443374
09/30/94 391569 486335
12/31/94 391491 472535
03/31/95 429622 515712
06/30/95 470651 568216
09/30/95 508068 635918
12/31/95 538653 651552
03/31/96 567579 701006
06/30/96 593063 723486
09/30/96 611389 769827
12/31/96 662317 792393
03/31/97 680068 758882
06/30/97 798875 897613
09/30/97 858631 988420
12/31/97 883274 988384
03/31/98 1006491 1132580
06/30/98 1039705 1179998
09/30/98 936254 1085163
12/31/98 1135676 1388703
03/31/99 1192347 1458802
06/30/99 1276526 1494473
09/30/99 1196743 1436403
10/31/99 1272497 1527058
</TABLE>
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
GROWTH EQUITY FUND VS S&P 500 INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
S&P 500 INDEX GROWTH EQUITY FUND
------------- ------------------
<S> <C> <C>
1/2/91 250000 250000
03/31/91 286325 314000
06/30/91 285666 302500
09/30/91 300950 367000
12/31/91 326169 417500
03/31/92 317917 409230
06/30/92 323958 354367
09/30/92 334162 368457
12/31/92 351004 441009
03/31/93 366343 435848
06/30/93 368138 441567
09/30/93 377636 479192
12/31/93 386397 483314
03/31/94 371753 476602
06/30/94 373314 443374
09/30/94 391569 486335
12/31/94 391491 472535
03/31/95 429622 515367
06/30/95 470651 567525
09/30/95 508068 634537
12/31/95 538653 649752
03/31/96 567579 698484
06/30/96 593063 720257
09/30/96 611389 766224
12/31/96 662317 788082
03/31/97 680068 754225
06/30/97 798875 891455
09/30/97 858631 981141
12/31/97 883274 981124
03/31/98 1006491 1123395
06/30/98 1039705 1169653
09/30/98 936254 1075194
12/31/98 1135676 1375292
03/31/99 1192347 1443787
06/30/99 1276526 1477827
09/30/99 1196743 1419710
10/31/99 1272497 1509195
</TABLE>
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF OCTOBER 31, 1999 AS OF OCTOBER 31, 1999
- --------------------------------------------------------------------------------------------------------
Year to date One year Five years Since inception
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Equity Fund Institutional Class 9.96% 32.29% 25.63% 22.72%
Growth Equity Fund Service Class(+) 9.74 32.01 25.33 22.56
Average Lipper large-cap growth
fund(++) 16.65 38.79 25.15 20.70
S&P 500 Index 12.03 25.67 26.02 20.61
</TABLE>
YEAR-BY-YEAR PERFORMANCE
YEAR END DECEMBER 31
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART] TOTAL RETURN %*
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
67.00 5.63 9.59 -2.23 37.88 21.62 24.73 40.50
<CAPTION>
1999 AS OF
10/31/99
----------
<S> <C>
9.96
</TABLE>
- --------------------------------------------------------------------------------
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%.
* 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.
++ Lipper's new fund classification structure, effective September 1999, is
reflected in this material.
40
<PAGE> 43
MAINSTAY
INSTITUTIONAL FUNDS INC.
GROWTH EQUITY FUND
PORTFOLIO OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (99.3%)+
SHARES VALUE
--------------------------
<S> <C> <C>
BANKS (2.4%)
Firstar Corp.................. 292,200 $ 8,583,375
Wells Fargo & Co.............. 354,700 16,981,262
--------------
25,564,637
--------------
BIOTECHNOLOGY (0.8%)
Genentech, Inc. (a)........... 60,000 8,745,000
--------------
BROADCAST/MEDIA (3.6%)
AMFM Inc. (a)................. 233,000 16,310,000
Clear Channel Communications,
Inc. (a)..................... 248,200 19,949,075
Fox Entertainment Group, Inc.
(a).......................... 100,000 2,162,500
--------------
38,421,575
--------------
COMMUNICATIONS--EQUIPMENT (8.1%)
Cisco Systems, Inc. (a)....... 569,750 42,161,500
JDS Uniphase Corp. (a)........ 35,500 5,924,062
Lucent Technologies Inc....... 614,800 39,500,900
--------------
87,586,462
--------------
COMPUTER SOFTWARE & SERVICES (8.3%)
America Online, Inc. (a)...... 82,500 10,699,219
Compuware Corp. (a)........... 657,100 18,275,593
Microsoft Corp. (a)........... 400,000 37,025,000
Oracle Corp. (a).............. 482,037 22,926,885
--------------
88,926,697
--------------
COMPUTER SYSTEMS (7.6%)
EMC Corp. (a)................. 545,000 39,785,000
Sun Microsystems, Inc. (a).... 401,800 42,515,463
--------------
82,300,463
--------------
ELECTRIC POWER COMPANIES (1.0%)
AES Corp. (The) (a)........... 188,000 10,610,250
--------------
ELECTRICAL EQUIPMENT (1.1%)
Honeywell Inc................. 110,800 11,682,475
--------------
ELECTRONICS--SEMICONDUCTORS (5.2%)
Intel Corp.................... 312,400 24,191,475
Motorola, Inc................. 167,000 16,272,063
Texas Instruments Inc......... 173,000 15,526,750
--------------
55,990,288
--------------
ENTERTAINMENT (1.7%)
Time Warner Inc............... 262,000 18,258,125
--------------
FINANCIAL--MISCELLANEOUS (3.7%)
Associates First Capital Corp.
Class A...................... 301,900 11,019,350
Citigroup Inc................. 534,895 28,951,192
--------------
39,970,542
--------------
FOOD & HEALTH CARE DISTRIBUTORS (1.1%)
Cardinal Health, Inc.......... 288,050 12,422,156
--------------
</TABLE>
<TABLE>
SHARES VALUE
--------------------------
<CAPTION>
<S> <C> <C>
HEALTH CARE--DRUGS (6.3%)
Elan Corp. PLC ADR (a) (b).... 362,500 $ 9,334,375
Merck & Co., Inc.............. 195,200 15,530,600
Pfizer Inc.................... 434,400 17,158,800
Schering-Plough Corp.......... 525,800 26,027,100
--------------
68,050,875
--------------
HEALTH CARE--MEDICAL PRODUCTS (4.6%)
Guidant Corp. (a)............. 490,800 24,233,250
Medtronic, Inc................ 747,200 25,871,800
--------------
50,105,050
--------------
HEALTH CARE--MISCELLANEOUS (2.8%)
Johnson & Johnson............. 283,104 29,655,144
--------------
HOTEL/MOTEL (1.4%)
Carnival Corp................. 337,700 15,027,650
--------------
HOUSEHOLD PRODUCTS (2.3%)
Colgate-Palmolive Co.......... 402,000 24,321,000
--------------
INSURANCE (2.8%)
American International Group,
Inc.......................... 293,062 30,167,070
--------------
LEISURE TIME (2.3%)
Harley-Davidson, Inc.......... 413,000 24,496,063
--------------
MANUFACTURING--DIVERSIFIED (4.4%)
Corning Inc................... 229,000 18,005,125
Tyco International Ltd........ 738,600 29,497,838
--------------
47,502,963
--------------
PERSONAL LOANS (2.0%)
Providian Financial Corp...... 195,550 21,314,950
--------------
RETAIL (16.5%)
Bed Bath & Beyond Inc. (a).... 409,400 13,638,137
Circuit City Stores-Circuit
City Group................... 476,400 20,336,325
CVS Corp...................... 289,400 12,570,812
Dollar General Corp........... 469,370 12,379,634
Home Depot, Inc. (The)........ 458,900 34,646,950
Kohl's Corp. (a).............. 380,000 28,428,750
Kroger Co. (The) (a).......... 806,200 16,779,037
Nordstrom, Inc................ 277,200 6,912,675
Safeway Inc. (a).............. 385,100 13,598,844
Staples, Inc. (a)............. 831,000 18,437,813
--------------
177,728,977
--------------
SPECIALIZED SERVICES (3.9%)
Cendant Corp. (a)............. 591,910 9,766,515
IMS Health Inc................ 514,600 14,923,400
Omnicom Group Inc............. 193,300 17,010,400
--------------
41,700,315
--------------
</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.
41
<PAGE> 44
GROWTH EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
--------------------------
<S> <C> <C>
TELECOMMUNICATIONS--LONG DISTANCE (3.3%)
MCI WorldCom, Inc. (a)........ 409,088 $ 35,104,864
--------------
TELEPHONE (2.1%)
ALLTEL Corp................... 272,500 22,685,625
--------------
Total Common Stocks (Cost
$540,255,499)................ 1,068,339,216
--------------
<CAPTION>
SHORT-TERM INVESTMENT (0.5%)
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
COMMERCIAL PAPER (0.5%)
Merrill Lynch & Co., Inc.
5.32%, due 11/8/99........... $5,105,000 5,099,717
--------------
Total Short-Term Investment
(Cost $5,099,717)............ 5,099,717
--------------
Total Investments
(Cost $545,355,216) (c)...... 99.8% 1,073,438,933(d)
Cash and Other Assets,
Less Liabilities............. 0.2 2,303,826
---------- --------------
Net Assets.................... 100.0% $1,075,742,759
========== ==============
</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 October 31, 1999, net unrealized appreciation was $528,083,717 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 $539,299,732 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $11,216,015.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
42
<PAGE> 45
MAINSTAY
INSTITUTIONAL FUNDS INC.
GROWTH EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $545,355,216)........................... $1,073,438,933
Cash........................................... 2,245
Receivables:
Investment securities sold................... 8,823,103
Dividends.................................... 209,410
Fund shares sold............................. 14,283
--------------
Total assets............................. 1,082,487,974
--------------
LIABILITIES:
Payables:
Investment securities purchased.............. 3,670,143
Fund shares redeemed......................... 2,117,711
MainStay Management.......................... 740,788
Transfer agent............................... 40,928
Custodian.................................... 32,558
Accrued expenses............................... 143,087
--------------
Total liabilities........................ 6,745,215
--------------
Net assets..................................... $1,075,742,759
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class.......................... $ 28,796
Institutional Service Class.................. 722
Additional paid-in capital..................... 447,451,845
Accumulated undistributed net realized gain on
investments.................................. 100,177,679
Net unrealized appreciation on investments..... 528,083,717
--------------
Net assets..................................... $1,075,742,759
==============
Institutional Class
Net assets applicable to outstanding shares.... $1,049,756,148
==============
Shares of capital stock outstanding............ 28,796,030
==============
Net asset value per share outstanding.......... $ 36.45
==============
Institutional Service Class
Net assets applicable to outstanding shares.... $ 25,986,611
==============
Shares of capital stock outstanding............ 722,100
==============
Net asset value per share outstanding.......... $ 35.99
==============
</TABLE>
STATEMENT OF OPERATIONS
For the period January 1, 1999 through October 31, 1999* and the year ended
December 31, 1998
<TABLE>
<CAPTION>
1999* 1998
-------------- --------------
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends (a)................. $ 3,138,017 $ 4,019,977
Interest...................... 661,429 1,142,273
-------------- --------------
Total income.............. 3,799,446 5,162,250
-------------- --------------
Expenses:
Management.................... 7,314,578 6,963,032
Transfer agent................ 407,686 316,855
Professional.................. 95,629 110,624
Shareholder communication..... 78,552 128,545
Custodian..................... 66,933 75,784
Service....................... 40,165 31,342
Registration.................. 22,545 45,413
Directors..................... 18,843 19,761
Miscellaneous................. 33,937 42,847
-------------- --------------
Total expenses............ 8,078,868 7,734,203
-------------- --------------
Net investment loss............. (4,279,422) (2,571,953)
-------------- --------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on
investments................... 100,178,405 62,407,353
Net change in unrealized
appreciation on investments... 2,256,265 227,097,694
-------------- --------------
Net realized and unrealized gain
on investments................ 102,434,670 289,505,047
-------------- --------------
Net increase in net assets
resulting from operations..... $ 98,155,248 $ 286,933,094
============== ==============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
(a) Dividends recorded net of foreign withholding taxes of $3,124 for 1998.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
43
<PAGE> 46
GROWTH EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period January 1, 1999 through October 31, 1999* and the years ended
December 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
1999* 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment loss..................................... $ (4,279,422) $ (2,571,953) $ (2,035,692)
Net realized gain on investments........................ 100,178,405 62,407,353 58,052,272
Net change in unrealized appreciation on investments.... 2,256,265 227,097,694 84,067,993
-------------- -------------- --------------
Net increase in net assets resulting from operations.... 98,155,248 286,933,094 140,084,573
-------------- -------------- --------------
Distributions to shareholders:
From net realized gain on investments:
Institutional Class................................... (9,645,711) (60,369,694) (49,601,396)
Institutional Service Class........................... (241,486) (994,776) (761,884)
-------------- -------------- --------------
Total distributions to shareholders................. (9,887,197) (61,364,470) (50,363,280)
-------------- -------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 181,040,640 135,442,134 191,569,771
Institutional Service Class........................... 12,746,881 3,436,490 3,838,239
Net asset value of shares issued to shareholders in
reinvestment of distributions:
Institutional Class................................... 9,645,054 60,366,383 49,596,146
Institutional Service Class........................... 227,218 900,466 691,022
-------------- -------------- --------------
203,659,793 200,145,473 245,695,178
Cost of shares redeemed:
Institutional Class................................... (202,660,461) (142,993,936) (170,865,746)
Institutional Service Class........................... (4,349,099) (2,633,729) (1,866,670)
-------------- -------------- --------------
Increase (decrease) in net assets derived from capital
share transactions.................................. (3,349,767) 54,517,808 72,962,762
-------------- -------------- --------------
Net increase in net assets............................ 84,918,284 280,086,432 162,684,055
NET ASSETS:
Beginning of period....................................... 990,824,475 710,738,043 548,053,988
-------------- -------------- --------------
End of period............................................. $1,075,742,759 $ 990,824,475 $ 710,738,043
============== ============== ==============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
44
<PAGE> 47
(THIS PAGE INTENTIONALLY LEFT BLANK)
45
<PAGE> 48
GROWTH EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
JANUARY 1, 1999
THROUGH YEAR ENDED
OCTOBER 31, 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)........................... (0.14)(a) (0.21)(a) (0.09)(a) (0.16)(a)
Net realized and unrealized gain (loss) on
investments.......................................... 3.45 3.41 10.35 10.26
---------- ---------- ---------- ----------
Total from investment operations....................... 3.31 3.20 10.26 10.10
---------- ---------- ---------- ----------
Less dividends and distributions:
From net investment income............................. -- -- -- --
From net realized gain on investments.................. (0.34) (0.34) (2.21) (2.21)
In excess of net investment income..................... -- -- -- --
In excess of net realized gain on investments.......... -- -- -- --
---------- ---------- ---------- ----------
Total dividends and distributions...................... (0.34) (0.34) (2.21) (2.21)
---------- ---------- ---------- ----------
Net asset value at end of period....................... $ 36.45 $ 35.99 $ 33.48 $ 33.13
========== ========== ========== ==========
Total investment return................................ 9.96%(c) 9.74%(c) 40.50% 40.18%
Ratios (to average net assets)/Supplemental Data:
Net investment income (loss)......................... (0.49%)+ (0.74%)+ (0.31%) (0.56%)
Net expenses......................................... 0.93%+ 1.18%+ 0.94% 1.19%
Portfolio turnover rate................................ 27% 27% 29% 29%
Net assets at end of period (in 000's)................. $1,049,756 $ 25,987 $ 975,010 $ 15,814
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
+ 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.
(d) Institutional Service Class commenced January 1, 1995.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
46
<PAGE> 49
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS(d) 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.
47
<PAGE> 50
Indexed Equity Fund
- --------------------------------------------------------------------------------
Strong earnings growth and subdued inflation propelled the stock market higher
during the ten months ended October 31, 1999,(1) providing investors seeking to
track the S&P 500 Index(2) with another round of double-digit returns. Growth
and value stocks alternately came in and out of favor, underscoring the
potential merits of diversifying across both investment disciplines.
Action by the Federal Reserve Board had a major influence on stock market
performance. Concerned that rapid economic growth might trigger higher
inflation, the Federal Reserve increased the targeted federal funds rate
twice--once at end of June and again in August 1999. The moves tended to dampen
investor enthusiasm and caused the stock market to give back some of its earlier
gains. In October 1999, however, the stock market again rallied on signals that
neither the economy nor inflation was overheating. With a 5% rise in less than
two days at the end of October, the MainStay Institutional Indexed Equity Fund's
reporting period ended on a positive note.
POSITIVE FUND PERFORMANCE
For the ten months ended October 31, 1999, the MainStay Institutional Indexed
Equity Fund returned 11.80% for Institutional Class shares and 11.60% for
Service Class shares. Both share classes outperformed the 11.40% return of the
average Lipper(3) S&P 500 fund over the same period, largely as a result of the
way changes in the S&P 500 Index were handled by the Fund. Although both share
classes trailed the 12.03% return of the S&P 500 Index for the ten-month period
ended October 31, 1999, investors should anticipate a slight lag, since the Fund
incurs real-world expenses that a hypothetical investment in an index does not.
Both of the Fund's share classes were rated five stars overall by Morningstar(4)
as of October 31, 1999. Both share classes were rated five stars out of 3,272
domestic equity funds for the three-year period then ended, and Institutional
Class shares were rated five stars out of 2,047 domestic equity funds for the
five-year period then ended.
During the ten-month reporting period, the top-performing industry groups
included miscellaneous (+65.29%), electronics--semicon-
ductors (+56.54%), metals--mining (+55.85%), communications--equipment
manufacturers (+49.95%), and broadcast/media (+48.64%). Because of their heavier
weightings in the S&P 500 Index, technology and financial companies tended to
have a greater impact on S&P 500 Index performance, even when returns were
somewhat lower. Communications--equipment manufacturers (+49.95%), which
accounted for 6.61% of the S&P 500 Index as of October 31, 1999, had the
greatest impact on the S&P 500 Index's performance during the reporting period.
Computer software and services (+36.98%) was next with an 8.02% weighting,
followed by electronics--semiconductors (+56.54%) with a 4.53% weighting,
electrical equipment (+30.73%) with a 4.53% weighting, and
financial--miscellaneous (+24.96%) with an S&P 500 Index weighting of 4.58% as
of October 31, 1999. Since the S&P 500 is a capitalization-weighted index, as
companies in these sectors outperformed over the ten-month period, their
weightings and general impact on the Index also increased.
Top-performing companies in the S&P 500 Index for the ten-month reporting period
included QUALCOMM (+759.83%), Nextel (+264.81%), Sprint (+258.65%), LSI Logic
(+229.84%), and Tandy (+205.61%). Mea-
- --------------------------------------------------------------------------------
(1) MainStay Institutional Funds recently changed its fiscal year end from
December 31 to October 31. The previous annual report provided information
through December 31, 1998. This report covers the ten-month fiscal period
from January 1, 1999, through October 31, 1999.
(2) "S&P 500(R)" is a trademark of The McGraw-Hill Companies, Inc. and has been
licensed for use by Monitor Capital Advisors LLC. Standard & Poor's does not
sponsor, endorse, sell, or promote the Fund or represent the advisability of
investing in the MainStay Institutional 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.
(3) 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.
(4) Morningstar, Inc. is an independent fund performance monitor. Its ratings
reflect historic risk-adjusted performance, taking fees and sales charges
into account, and may change monthly. Its ratings of one (low) to five
(high) stars are based on a fund's three-, five-, and ten-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 funds in a
broad asset class receive five stars, the next 22.5% receive four stars, the
middle 35% receive three stars, the next 22.5% receive two stars, and the
bottom 10% receive one star. Funds (or share classes) are not rated until
they have three years of performance history.
48
<PAGE> 51
- --------------------------------------------------------------------------------
sured in terms of overall impact, the top contributor to the performance of the
S&P 500 was Microsoft (+33.48%) with an S&P 500 Index weighting of 4.13% as of
October 31, 1999. GE (+32.82%) was next with a 3.93% weighting, followed by
Cisco Systems (+59.46%) weighted at 2.08%, Citigroup (+64.02%) weighted at
1.65%, and Wal-Mart (+39.22%) weighted at 2.24% of the S&P 500 Index as of
October 31, 1999.
DECLINING SECTORS AND STOCKS
Despite a general rise in the S&P 500 Index over the ten months ended October
31, 1999, not all sectors and stocks provided positive returns. The tobacco
industry (-50.25%) continued to face problems due to ongoing litigation, and
with a 0.60% weighting as of October 31, 1999, had the greatest negative impact
(-0.74%) of any industry in the S&P 500 Index and the Fund. Beverages (-13.68%),
retail stores--food (-38.02%), electric power companies (-13.36%), and
distributors (-44.53%) also had an adverse effect on S&P 500 Index performance
and Fund results. Due to differences in their S&P 500 Index weightings, each of
these industries had approximately a -0.3% impact on the total return of the S&P
500 Index.
The worst-performing stocks during the reporting period were Rite Aid (-82.35%),
Service Corp. International (-74.88%), McKesson HBOC (-74.62%), and HEALTHSOUTH
(-62.75%). Stocks with higher weightings had a greater negative impact on the
performance of the S&P 500 Index, even though their absolute returns were not as
low. The stock with the greatest negative impact on the S&P 500 Index and the
Fund was Philip Morris (-52.92%) accounting for 0.56% of the S&P 500 Index at
the end of the reporting period. Compaq (-54.69%) was next with a 0.29%
weighting, followed by Eli Lilly (-22.50%) with a 0.67% weighting, Xerox
(-52.54%) with a 0.16% weighting, and First Union (-29.80%), which accounted for
0.37% of the S&P 500 Index as of October 31, 1999. Together, these five stocks
had approximately a -1.7% impact on the total return of the S&P 500 Index.
EFFICIENT FUND MANAGEMENT
The Fund's performance benefited from the way its portfolio managers handled
changes in the S&P 500 Index. Due to corporate actions, such as mergers,
spin-offs, acquisitions, and the like, the list of companies included in the S&P
500 Index changes over time. The prices of stocks being added to the Index (or
deleted from it) often become very volatile in the days surrounding such
changes. The exact timing of purchases (or sales) of these positions may affect
how the Fund will perform relative to the S&P 500 Index. During the reporting
period, the timing of such transactions by the Fund's portfolio managers tended,
on average, to have a favorable impact on the Fund's performance relative to the
S&P 500 Index.
LOOKING AHEAD
With corporate earnings generally still healthy and the global economy in a
period of relative stability, inflation appears to be the big unknown in the
months ahead. On the one hand, signs of inflation are everywhere. Oil prices
have risen, various measures of economic activity are high, labor costs are
rising, the dollar is weakening, and many Asian economies are recovering from
several difficult years. On the other hand, the Federal Reserve Board has
already acted with visible effect. Debt yields are up, real estate construction
is slowing, consumer confidence is faltering, and the debate over whether
companies can continue to contain prices through productivity increases
continues to rage. While the jury is still out on how much inflation may lie
ahead, we believe that both inflation and investor perceptions regarding it are
likely to materially impact stock market performance.
Whatever happens in the economy or the markets, 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 S&P 500 Index.
JEFFERSON C. BOYCE
STEPHEN B. KILLIAN
Portfolio Managers
Monitor Capital Advisors LLC
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
49
<PAGE> 52
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
INDEXED EQUITY FUND VS S&P 500 INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
INDEXED
S&P 500 INDEX EQUITY FUND
------------- -----------
<S> <C> <C>
01/02/91 250000 250000
03/31/91 286325 286000
06/30/91 285666 284750
09/30/91 300950 299750
12/31/91 326169 324500
03/31/92 317917 316137
06/30/92 323958 321805
09/30/92 334162 331596
12/31/92 351004 347828
03/31/93 366343 362360
06/30/93 368138 363424
09/30/93 377636 372197
12/31/93 386397 380544
03/31/94 371753 365443
06/30/94 373314 366541
09/30/94 391569 384113
12/31/94 391491 383975
03/31/95 429622 421152
06/30/95 470651 460599
09/30/95 508068 496357
12/31/95 538653 525597
03/31/96 567579 553617
06/30/96 593063 577803
09/30/96 611389 594910
12/31/96 662317 644201
03/31/97 680068 661033
06/30/97 798875 776102
09/30/97 858631 833024
12/31/97 883274 856036
03/31/98 1006491 974710
06/30/98 1039705 1006356
09/30/98 936254 906353
12/31/98 1135676 1101022
03/31/99 1192347 1154441
06/30/99 1276526 1234899
09/30/99 1196743 1157079
10/31/99 1272497 1230908
</TABLE>
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
INDEXED EQUITY FUND VS S&P 500 INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
INDEXED
S&P 500 INDEX EQUITY FUND
------------- -----------
<S> <C> <C>
1/2/91 250000 250000
03/31/91 286325 286000
06/30/91 285666 284750
09/30/91 300950 299750
12/31/91 326169 324500
03/31/92 317917 316137
06/30/92 323958 321805
09/30/92 334162 331596
12/31/92 351004 347828
03/31/93 366343 362360
06/30/93 368138 363424
09/30/93 377636 372197
12/31/93 386397 380544
03/31/94 371753 365443
06/30/94 373314 366541
09/30/94 391569 384113
12/31/94 391491 383975
03/31/95 429622 421152
06/30/95 470651 460315
09/30/95 508068 496074
12/31/95 538653 524887
03/31/96 567579 552591
06/30/96 593063 576168
09/30/96 611389 592672
12/31/96 662317 641470
03/31/97 680068 657652
06/30/97 798875 771841
09/30/97 858631 828019
12/31/97 883274 850611
03/31/98 1006491 967535
06/30/98 1039705 998105
09/30/98 93254 898515
12/31/98 1135676 1090912
03/31/99 1192347 1142927
06/30/99 1276526 1222247
09/30/99 1196743 1144566
10/31/99 1272497 1217296
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF OCTOBER 31, 1999 AS OF OCTOBER 31, 1999
- ---------------------------------------------------------------------------------------------------------
YEAR TO DATE ONE YEAR FIVE YEARS SINCE INCEPTION
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Indexed Equity Fund Institutional Class 11.80% 25.63% 25.68% 19.76%
Indexed Equity Fund Service Class(+) 11.60 25.32 25.40 19.61
Average Lipper S&P 500 fund(++) 11.40 24.93 25.44 20.09
S&P 500 Index 12.03 25.67 26.02 20.61
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
TOTAL RETURN %*
YEAR ENDED
1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
29.80% 7.19% 9.41% 0.90% 36.88% 22.57% 32.88% 28.62%
<CAPTION>
TEN MONTHS
ENDED
OCTOBER 31, 1999
----------------
<S> <C>
11.80%
</TABLE>
- --------------------------------------------------------------------------------
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.
* 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.
++ Lipper's new fund classification structure, effective September 1999, is
reflected in this material.
50
<PAGE> 53
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (99.7%)+
SHARES VALUE
----------------------------
<S> <C> <C>
AEROSPACE/DEFENSE (1.0%)
Boeing Co. (The)............ 144,331 $ 6,648,247
General Dynamics Corp....... 29,919 1,658,634
Goodrich (B.F.) Co. (The)... 16,564 392,360
Lockheed Martin Corp........ 59,518 1,190,360
Northrop Grumman Corp....... 10,373 569,218
Raytheon Co. Class B........ 50,768 1,478,618
Rockwell International
Corp....................... 28,724 1,391,319
United Technologies Corp.... 72,725 4,399,863
--------------
17,728,619
--------------
AIRLINES (0.2%)
AMR Corp. (a)............... 23,158 1,470,533
Delta Air Lines, Inc........ 21,190 1,153,531
Southwest Airlines Co....... 75,925 1,276,489
US Airways Group, Inc.
(a)........................ 11,127 311,556
--------------
4,212,109
--------------
ALUMINUM (0.3%)
Alcan Aluminum Ltd.......... 34,135 1,124,322
Alcoa Inc................... 55,357 3,362,938
Reynolds Metals Co.......... 9,646 582,980
--------------
5,070,240
--------------
AUTO PARTS & EQUIPMENT (0.2%)
Cooper Tire & Rubber Co..... 11,423 192,049
Delphi Automotive Systems
Corp....................... 84,921 1,395,889
Genuine Parts Co............ 26,975 703,036
Goodyear Tire & Rubber Co.
(The)...................... 23,534 972,249
--------------
3,263,223
--------------
AUTOMOBILES (1.0%)
Ford Motor Co............... 182,678 10,024,455
General Motors Corp......... 97,815 6,871,504
--------------
16,895,959
--------------
BANKS--MAJOR REGIONAL (4.2%)
AmSouth Bancorp............. 59,142 1,522,907
Bank of New York Co., Inc.
(The)...................... 110,527 4,628,318
Bank One Corp............... 178,252 6,695,591
BB&T Corp................... 47,503 1,727,922
Comerica Inc................ 23,641 1,405,162
Fifth Third Bancorp......... 40,524 2,991,178
Firstar Corp................ 147,627 4,336,543
Fleet Boston Corp........... 139,086 6,067,627
Huntington Bancshares Inc... 34,847 1,032,342
KeyCorp..................... 67,641 1,889,720
Mellon Financial Corp....... 78,505 2,899,778
National City Corp.......... 94,848 2,798,016
Northern Trust Corp......... 16,900 1,631,906
PNC Bank Corp............... 45,792 2,730,348
Regions Financial Corp...... 33,745 1,014,459
Republic New York Corp...... 15,930 1,006,577
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------
<S> <C> <C>
BANKS--MAJOR REGIONAL (CONTINUED)
SouthTrust Corp............. 25,213 $ 1,008,520
State Street Corp........... 24,249 1,845,955
Summit Bancorp.............. 25,884 896,233
SunTrust Banks, Inc......... 48,425 3,544,105
Synovus Financial Corp...... 40,912 877,051
Union Planters Corp......... 21,488 956,216
U.S. Bancorp................ 109,608 4,062,347
Wachovia Corp............... 30,578 2,637,353
Wells Fargo Co.............. 249,239 11,932,317
--------------
72,138,491
--------------
BANKS--MONEY CENTER (2.2%)
Bank of America Corp........ 259,872 16,729,260
Chase Manhattan Corp.
(The)...................... 125,103 10,930,875
First Union Corp............ 145,987 6,231,820
Morgan (J.P.) & Co., Inc.... 26,740 3,499,598
--------------
37,391,553
--------------
BANKS--SAVINGS & LOANS (0.2%)
Golden West Financial
Corp....................... 8,422 941,159
Washington Mutual, Inc...... 87,017 3,127,173
--------------
4,068,332
--------------
BEVERAGES--ALCOHOLIC (0.4%)
Anheuser-Busch Cos., Inc.... 70,223 5,042,889
Brown-Forman Corp.
Class B.................... 10,335 697,612
Coors (Adolph) Co.
Class B.................... 5,597 310,634
--------------
6,051,135
--------------
BEVERAGES--SOFT DRINKS (1.8%)
Coca-Cola Co. (The) (c)..... 371,694 21,929,946
Coca-Cola Enterprises
Inc........................ 64,098 1,638,505
PepsiCo, Inc................ 219,633 7,618,520
--------------
31,186,971
--------------
BROADCAST/MEDIA (1.2%)
CBS Corp. (a)............... 107,064 5,226,062
Clear Channel
Communications, Inc. (a)... 50,186 4,033,700
Comcast Corp. Special Class
A.......................... 111,683 4,704,646
MediaOne Group Inc. (a)..... 91,439 6,497,884
--------------
20,462,292
--------------
BUILDING MATERIALS (0.2%)
Masco Corp.................. 66,687 2,033,954
Owens Corning............... 8,282 169,781
Sherwin-Williams Co.
(The)...................... 25,646 573,829
Vulcan Materials Co......... 15,200 627,950
--------------
3,405,514
--------------
</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.
51
<PAGE> 54
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
----------------------------
<S> <C> <C>
CHEMICALS (1.4%)
Air Products & Chemicals,
Inc........................ 34,697 $ 954,167
Dow Chemical Co. (The)...... 33,173 3,922,707
Du Pont (E.I.) De Nemours &
Co......................... 156,735 10,099,612
Eastman Chemical Co......... 11,732 452,415
Hercules Inc................ 15,249 366,929
Monsanto Co................. 95,281 3,668,319
Praxair, Inc................ 23,798 1,112,556
Rohm & Haas Co.............. 31,938 1,221,629
Union Carbide Corp.......... 19,976 1,218,536
--------------
23,016,870
--------------
CHEMICALS--DIVERSIFIED (0.2%)
Avery Dennison Corp......... 17,152 1,072,000
Engelhard Corp.............. 18,810 331,526
FMC Corp. (a)............... 4,833 196,643
PPG Industries, Inc......... 26,268 1,592,498
--------------
3,192,667
--------------
CHEMICALS--SPECIALTY (0.1%)
Grace (W.R.) & Co. (a)...... 10,444 156,007
Great Lakes Chemical Corp... 8,755 310,803
Sigma-Aldrich Corp.......... 15,243 434,425
--------------
901,235
--------------
COMMUNICATIONS--EQUIPMENT
MANUFACTURERS (5.6%)
ADC Telecommunications, Inc.
(a)........................ 22,500 1,072,969
Andrew Corp. (a)............ 12,447 160,255
Cabletron Systems, Inc.
(a)........................ 27,782 460,139
Cisco Systems, Inc. (a)..... 489,854 36,249,196
Comverse Technology, Inc.
(a)........................ 10,600 1,203,100
General Instrument Corp.
(a)........................ 26,082 1,403,538
Lucent Technologies Inc..... 461,280 29,637,240
Network Appliance, Inc.
(a)........................ 11,034 816,516
Nortel Networks Corp........ 200,072 12,391,960
QUALCOMM, Inc. (a).......... 24,100 5,368,275
Scientific-Atlanta, Inc..... 11,237 643,318
Tellabs, Inc. (a)........... 59,090 3,737,442
3Com Corp. (a).............. 54,606 1,583,574
--------------
94,727,522
--------------
COMPUTER SOFTWARE & SERVICES (7.7%)
Adobe Systems Inc........... 18,234 1,275,240
America Online Inc. (a)..... 166,487 21,591,283
Autodesk, Inc............... 8,901 166,894
Automatic Data Processing,
Inc........................ 93,279 4,494,882
BMC Software, Inc. (a)...... 35,678 2,290,082
Ceridian Corp. (a).......... 21,788 477,974
Computer Associates
International, Inc......... 80,929 4,572,488
Computer Sciences Corp.
(a)........................ 24,022 1,650,011
Compuware Corp. (a)......... 55,450 1,542,203
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------
<S> <C> <C>
COMPUTER SOFTWARE & SERVICES (CONTINUED)
Electronic Data Systems
Corp....................... 74,214 $ 4,341,519
Equifax Inc................. 21,756 587,412
First Data Corp............. 65,149 2,976,495
Microsoft Corp. (a)(c)...... 769,041 71,184,358
Novell, Inc. (a)............ 50,752 1,018,212
Oracle Corp. (a)............ 217,146 10,328,007
Parametric Technology Corp.
(a)........................ 40,843 778,570
Paychex, Inc................ 37,102 1,460,891
PeopleSoft, Inc. (a)........ 36,316 544,740
Shared Medical Systems
Corp....................... 3,974 150,018
--------------
131,431,279
--------------
COMPUTER SYSTEMS (5.3%)
Apple Computer, Inc. (a).... 23,968 1,920,436
Compaq Computer Corp........ 256,439 4,872,341
Dell Computer Corp. (a)..... 382,616 15,352,467
EMC Corp. (a)............... 152,727 11,149,071
Gateway Inc. (a)............ 47,286 3,123,831
Hewlett-Packard Co.......... 147,448 10,920,368
International Business
Machines Corp.............. 272,120 26,769,805
Lexmark International Group,
Inc. (a)................... 19,400 1,514,412
Seagate Technology, Inc.
(a)........................ 33,557 987,834
Silicon Graphics, Inc.
(a)........................ 28,473 220,666
Sun Microsystems, Inc.
(a)........................ 116,764 12,355,091
Unisys Corp. (a)............ 45,995 1,115,379
--------------
90,301,701
--------------
CONGLOMERATES (0.1%)
Tenneco Inc................. 25,718 411,488
Textron Inc................. 22,742 1,755,398
--------------
2,166,886
--------------
CONTAINERS--METAL & GLASS (0.1%)
Ball Corp................... 4,691 189,106
Crown Cork & Seal Co.,
Inc........................ 18,489 442,580
Owens-Illinois, Inc. (a).... 23,568 564,159
--------------
1,195,845
--------------
CONTAINERS--PAPER (0.0%) (b)
Bemis Co., Inc.............. 7,941 277,439
Temple-Inland Inc........... 8,366 486,274
--------------
763,713
--------------
COSMETICS/PERSONAL CARE (0.5%)
Alberto-Culver Co. Class
B.......................... 8,486 199,951
Avon Products, Inc.......... 39,463 1,272,682
Gillette Co. (The).......... 162,197 5,869,504
International Flavors &
Fragrances Inc............. 16,021 612,803
--------------
7,954,940
--------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
52
<PAGE> 55
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
----------------------------
<S> <C> <C>
ELECTRIC POWER COMPANIES (1.9%)
Ameren Corp................. 20,772 $ 785,441
American Electric Power Co.,
Inc........................ 29,122 1,004,709
Carolina Power & Light Co... 24,054 829,863
Central & South West Corp... 32,083 711,842
Cinergy Corp................ 23,977 677,350
CMS Energy Corp............. 17,729 653,757
Consolidated Edison, Inc.... 34,188 1,305,554
Constellation Energy Group.. 22,516 690,960
Dominion Resources, Inc..... 28,975 1,394,422
DTE Energy Co............... 21,865 725,645
Duke Energy Corp............ 54,820 3,097,330
Edison International........ 52,372 1,551,521
Entergy Corp................ 37,269 1,115,741
FirstEnergy Corp............ 35,364 921,675
Florida Progress Corp....... 14,674 672,253
FPL Group, Inc.............. 27,172 1,367,091
GPU, Inc.................... 18,990 644,473
New Century Energies Inc.... 17,215 560,563
Niagara Mohawk Holdings Inc.
(a)........................ 28,192 447,548
Northern States Power Co.... 23,077 496,156
PacifiCorp.................. 44,831 924,639
PECO Energy Co.............. 28,890 1,103,237
PG&E Corp................... 57,894 1,327,944
Pinnacle West Capital
Corp....................... 12,800 472,000
PP&L Resources, Inc......... 23,778 643,492
Public Service Enterprise
Group Inc.................. 33,140 1,311,101
Reliant Energy, Inc......... 44,617 1,215,813
Southern Co. (The).......... 105,079 2,791,161
Texas Utilities Co.......... 42,314 1,639,667
Unicom Corp................. 32,746 1,254,581
--------------
32,337,529
--------------
ELECTRICAL EQUIPMENT (4.6%)
Cooper Industries, Inc...... 14,270 614,502
Emerson Electric Co......... 65,624 3,941,542
General Electric Co. (c).... 495,162 67,125,399
Grainger (W.W.), Inc........ 14,066 596,047
Honeywell Inc............... 18,986 2,001,836
Solectron Corp. (a)......... 40,516 3,048,829
Thomas & Betts Corp......... 8,607 386,239
--------------
77,714,394
--------------
ELECTRONICS--DEFENSE (0.0%) (b)
PerkinElmer, Inc............ 6,889 281,157
--------------
ELECTRONICS--INSTRUMENTATION (0.1%)
PE Corp.--PE Biosystems
Group...................... 15,428 1,000,891
Tektronix, Inc.............. 7,106 239,828
--------------
1,240,719
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------
<S> <C> <C>
ELECTRONICS--SEMICONDUCTORS (4.2%)
Adaptec, Inc. (a)........... 15,200 $ 684,000
Advanced Micro Devices, Inc.
(a)........................ 22,190 439,639
Analog Devices, Inc. (a).... 25,900 1,375,938
Applied Materials, Inc.
(a)........................ 56,306 5,056,983
Intel Corp.................. 498,374 38,592,837
KLA-Tencor Corp. (a)........ 13,353 1,057,391
LSI Logic Corp. (a)......... 21,573 1,147,414
Micron Technology, Inc.
(a)........................ 37,630 2,683,489
Motorola, Inc............... 91,006 8,867,397
National Semiconductor Corp.
(a)........................ 25,337 758,526
Texas Instruments Inc....... 118,160 10,604,860
--------------
71,268,474
--------------
ENGINEERING & CONSTRUCTION (0.0%) (b)
Fluor Corp.................. 11,458 456,888
Foster Wheeler Corp......... 6,083 68,434
--------------
525,322
--------------
ENTERTAINMENT (1.8%)
King World Productions, Inc.
(a)........................ 10,452 405,015
Seagram Co. Ltd. (The)...... 64,584 3,188,835
Time Warner Inc............. 194,772 13,573,174
Viacom Inc. Class B (a)..... 104,181 4,662,100
Walt Disney Co. (The)....... 310,677 8,194,106
--------------
30,023,230
--------------
FINANCIAL--MISCELLANEOUS (4.7%)
AFLAC Inc................... 40,282 2,059,417
American Express Co......... 67,309 10,365,586
American General Corp....... 37,826 2,806,216
Associates First Capital
Corp. Class A.............. 109,848 4,009,452
Citigroup Inc............... 508,921 27,545,349
Fannie Mae.................. 104,825 5,667,102
Franklin Resources Inc...... 154,694 10,944,601
Freddie Mac................. 38,016 1,330,560
MBIA Inc.................... 14,964 853,883
MBNA Corp................... 120,943 3,341,051
Morgan Stanley Dean Witter &
Co......................... 86,064 9,493,935
Price (T. Rowe) Associates,
Inc........................ 19,200 681,600
SLM Holding Corp............ 24,612 1,204,450
--------------
80,303,202
--------------
FOOD (1.8%)
Bestfoods................... 42,070 2,471,612
Campbell Soup Co............ 65,810 2,961,450
ConAgra, Inc................ 73,681 1,920,311
General Mills, Inc.......... 23,043 2,009,062
Heinz (H.J.) Co............. 54,267 2,591,249
Hershey Foods Corp.......... 21,142 1,067,671
Kellogg Co.................. 61,071 2,431,389
Nabisco Group Holdings
Corp....................... 48,998 627,787
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
53
<PAGE> 56
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
----------------------------
<S> <C> <C>
FOOD (CONTINUED)
Quaker Oats Co. (The)....... 20,300 $ 1,421,000
Ralston-Ralston Purina
Group...................... 49,164 1,545,593
Sara Lee Corp............... 136,296 3,688,511
Unilever N.V................ 86,286 5,754,198
Wrigley (Wm.) Jr. Co........ 17,552 1,403,063
--------------
29,892,896
--------------
FOOD & HEALTH CARE DISTRIBUTORS (0.3%)
Cardinal Health, Inc........ 41,112 1,772,955
McKesson HBOC, Inc.......... 41,924 841,100
SUPERVALU Inc............... 18,108 380,268
SYSCO Corp.................. 49,898 1,917,955
--------------
4,912,278
--------------
GOLD & PRECIOUS METALS MINING (0.2%)
Barrick Gold Corp........... 58,851 1,077,709
Homestake Mining Co......... 39,199 328,292
Newmont Mining Corp......... 25,243 553,768
Placer Dome Inc............. 49,127 595,665
--------------
2,555,434
--------------
HARDWARE & TOOLS (0.1%)
Black & Decker Corp.
(The)...................... 13,201 567,643
Snap-on Inc................. 9,967 302,748
Stanley Works (The)......... 13,372 371,073
--------------
1,241,464
--------------
HEALTH CARE--DIVERSIFIED (4.4%)
Abbott Laboratories......... 229,338 9,259,522
Allergan, Inc............... 10,117 1,086,313
American Home Products
Corp....................... 197,045 10,295,601
Bristol-Myers Squibb Co..... 299,571 23,010,798
Johnson & Johnson........... 202,539 21,215,960
Mallinckrodt Inc............ 10,720 363,810
Warner-Lambert Co........... 128,291 10,239,225
--------------
75,471,229
--------------
HEALTH CARE--DRUGS (4.6%)
Lilly (Eli) & Co............ 164,172 11,307,347
Merck & Co., Inc............ 352,388 28,036,870
Pfizer Inc.................. 76,382 4,119,854
Pharmacia & Upjohn, Inc..... 582,273 22,999,783
Schering-Plough Corp........ 221,417 10,960,142
Watson Pharmaceuticals, Inc.
(a)........................ 14,379 456,533
--------------
77,880,529
--------------
HEALTH CARE--HMOS (0.2%)
Aetna Inc................... 21,316 1,071,129
Humana Inc. (a)............. 25,293 173,889
United Healthcare Corp...... 26,123 1,350,233
Wellpoint Health Networks
Inc. (a)................... 10,244 594,152
--------------
3,189,403
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------
<S> <C> <C>
HEALTH CARE--HOSPITAL MANAGEMENT (0.2%)
Columbia/HCA Healthcare
Corp....................... 85,598 $ 2,065,052
Tenet Healthcare Corp.
(a)........................ 46,757 908,839
--------------
2,973,891
--------------
HEALTH CARE--MEDICAL PRODUCTS (0.9%)
Bard (C.R.), Inc............ 7,816 421,575
Bausch & Lomb Inc........... 8,589 463,806
Baxter International Inc.... 43,932 2,850,089
Becton, Dickinson & Co...... 37,858 960,647
Biomet, Inc................. 16,888 508,751
Boston Scientific Corp.
(a)........................ 59,793 1,203,334
Guidant Corp. (a)........... 45,615 2,252,241
Medtronic, Inc.............. 176,310 6,104,734
St. Jude Medical, Inc.
(a)........................ 12,763 349,387
--------------
15,114,564
--------------
HEALTH CARE--MISCELLANEOUS (0.4%)
ALZA Corp. (a).............. 15,249 652,848
Amgen Inc. (a).............. 77,142 6,152,074
HEALTHSOUTH Corp. (a)....... 16,760 263,970
Manor Care, Inc. (a)........ 62,541 359,611
--------------
7,428,503
--------------
HEAVY DUTY TRUCKS & PARTS (0.2%)
Cummins Engine Co., Inc..... 6,320 320,345
Dana Corp................... 25,027 739,861
Eaton Corp.................. 10,854 816,764
ITT Industries, Inc......... 13,266 453,531
Navistar International Corp.
(a)........................ 10,066 419,626
PACCAR Inc.................. 11,716 552,117
--------------
3,302,244
--------------
HOMEBUILDING (0.0%) (b)
Centex Corp................. 8,945 239,838
Kaufman & Broad Home
Corp....................... 7,199 144,430
Pulte Corp.................. 6,478 130,370
--------------
514,638
--------------
HOTEL/MOTEL (0.4%)
Carnival Corp............... 92,582 4,119,899
Harrah's Entertainment, Inc.
(a)........................ 19,270 557,625
Hilton Hotels Corp.......... 38,903 359,853
Marriott International, Inc.
Class A.................... 37,700 1,270,019
--------------
6,307,396
--------------
HOUSEHOLD--FURNISHINGS & APPLIANCES (0.1%)
Armstrong World Industries,
Inc........................ 6,030 225,371
Leggett & Platt, Inc........ 30,200 670,063
Maytag Corp................. 13,344 534,594
Whirlpool Corp.............. 11,351 791,023
--------------
2,221,051
--------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
54
<PAGE> 57
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
----------------------------
<S> <C> <C>
HOUSEHOLD PRODUCTS (2.0%)
Clorox Co. (The)............ 35,446 $ 1,451,071
Colgate-Palmolive Co........ 88,400 5,348,200
Fort James Corp............. 33,243 874,706
Kimberly-Clark Corp......... 80,168 5,060,605
Procter & Gamble Co. (The).. 200,307 21,007,197
--------------
33,741,779
--------------
HOUSEWARES (0.1%)
Fortune Brands, Inc......... 25,174 892,104
Newell Rubbermaid Inc....... 42,612 1,475,441
Tupperware Corp............. 8,681 171,992
--------------
2,539,537
--------------
INSURANCE BROKERS (0.3%)
Aon Corp.................... 38,592 1,370,016
Marsh & McLennan Cos.,
Inc........................ 39,764 3,143,841
--------------
4,513,857
--------------
INSURANCE--LIFE (0.3%)
Conseco, Inc................ 48,840 1,187,423
Jefferson-Pilot Corp........ 16,146 1,211,959
Lincoln National Corp....... 30,483 1,406,028
Torchmark Corp.............. 20,036 624,873
UNUMProvident Corp.......... 35,872 1,181,534
--------------
5,611,817
--------------
INSURANCE--MULTI-LINE (1.7%)
American International
Group, Inc................. 233,665 24,052,891
CIGNA Corp.................. 30,666 2,292,284
Hartford Financial Services
Group, Inc. (The).......... 34,302 1,777,272
--------------
28,122,447
--------------
INSURANCE--PROPERTY & CASUALTY (0.6%)
Allstate Corp. (The)........ 121,698 3,498,817
Chubb Corp. (The)........... 26,474 1,452,761
Cincinnati Financial
Corp....................... 24,873 890,764
Loews Corp.................. 16,498 1,169,296
MGIC Investment Corp........ 16,400 979,900
Progressive Corp. (The)..... 11,008 1,018,928
SAFECO Corp................. 20,487 563,393
St. Paul Cos., Inc. (The)... 34,200 1,094,400
--------------
10,668,259
--------------
INVESTMENT BANK/BROKERAGE (0.7%)
Bear Stearns Cos., Inc.
(The)...................... 17,613 750,754
Lehman Brothers Holdings
Inc........................ 17,968 1,324,017
Merrill Lynch & Co., Inc.... 55,474 4,354,709
Paine Webber Group Inc...... 21,862 890,877
Schwab (Charles) Corp.
(The)...................... 123,216 4,797,723
--------------
12,118,080
--------------
LEISURE TIME (0.0%) (b)
Brunswick Corp.............. 13,970 316,071
Mirage Resorts, Inc. (a).... 29,992 436,759
--------------
752,830
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------
<S> <C> <C>
MACHINE TOOLS (0.0%) (b)
Milacron Inc................ 5,611 $ 92,231
--------------
MACHINERY--DIVERSIFIED (0.4%)
Briggs & Stratton Corp...... 3,489 203,889
Case Corp................... 11,227 595,031
Caterpillar Inc............. 53,749 2,969,632
Deere & Co.................. 35,016 1,269,330
Ingersoll-Rand Co........... 25,005 1,306,511
NACCO Industries, Inc. Class
A.......................... 1,185 54,954
Thermo Electron Corp. (a)... 23,843 321,881
Timken Co. (The)............ 9,332 167,393
--------------
6,888,621
--------------
MANUFACTURED HOUSING (0.0%) (b)
Fleetwood Enterprises,
Inc........................ 5,297 115,541
--------------
MANUFACTURING--DIVERSIFIED (1.4%)
AlliedSignal Inc............ 83,288 4,742,211
Crane Co.................... 10,284 210,179
Danaher Corp................ 20,384 984,802
Dover Corp.................. 32,232 1,371,875
Illinois Tool Works Inc..... 37,794 2,768,410
Johnson Controls, Inc....... 12,848 780,516
Millipore Corp.............. 6,608 210,630
Pall Corp................... 18,833 413,149
Parker-Hannifin Corp........ 16,383 750,546
Sealed Air Corp. (a)........ 12,666 701,380
Tyco International Ltd...... 252,842 10,097,877
--------------
23,031,575
--------------
METALS--MINING (0.1%)
Freeport-McMoRan Copper &
Gold Inc. Class B (a)...... 24,662 411,547
Inco Ltd. (a)............... 29,019 587,635
Phelps Dodge Corp........... 11,712 660,264
--------------
1,659,446
--------------
MISCELLANEOUS (1.3%)
AES Corp. (The) (a)......... 31,088 1,754,529
American Greetings Corp.
Class A.................... 10,241 264,986
Archer-Daniels-Midland Co... 93,183 1,147,316
Corning Inc................. 36,775 2,891,434
Harris Corp................. 11,945 268,016
Jostens, Inc................ 5,209 110,040
Minnesota Mining &
Manufacturing Co........... 60,708 5,771,054
Nextel Communications, Inc.
Class A (a)................ 49,853 4,296,705
Sprint Corp. (PCS Group)
(a)........................ 66,331 5,501,327
TRW, Inc.................... 18,152 778,267
--------------
22,783,674
--------------
NATURAL GAS DISTRIBUTORS & PIPELINES (0.7%)
Coastal Corp. (The)......... 32,137 1,353,771
Columbia Energy Group....... 12,654 822,510
Consolidated Natural Gas
Co......................... 14,452 924,928
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
55
<PAGE> 58
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
----------------------------
<S> <C> <C>
NATURAL GAS DISTRIBUTORS & PIPELINES (CONTINUED)
Eastern Enterprises......... 3,421 $ 174,898
El Paso Energy Corp......... 34,551 1,416,591
Enron Corp.................. 106,602 4,257,417
NICOR Inc................... 7,146 276,908
ONEOK, Inc.................. 4,787 139,721
Peoples Energy Corp......... 5,326 202,388
Sempra Energy............... 36,294 741,759
Williams Cos., Inc. (The)... 65,033 2,438,737
--------------
12,749,628
--------------
OFFICE EQUIPMENT & SUPPLIES (0.3%)
Pitney Bowes Inc............ 40,488 1,844,735
Xerox Corp.................. 99,782 2,793,896
--------------
4,638,631
--------------
OIL & GAS DRILLING (0.0%) (b)
Helmerich & Payne, Inc...... 7,460 177,641
Rowan Cos., Inc. (a)........ 12,620 196,399
--------------
374,040
--------------
OIL & GAS--EQUIPMENT & SERVICES (0.5%)
Baker Hughes Inc............ 49,371 1,379,303
Halliburton Co.............. 66,417 2,503,091
McDermott International,
Inc........................ 8,858 160,551
Schlumberger Ltd............ 82,500 4,996,406
--------------
9,039,351
--------------
OIL & GAS--EXPLORATION & PRODUCTION (0.2%)
Anadarko Petroleum Corp..... 18,264 562,760
Apache Corp................. 16,786 654,654
Burlington Resources Inc.... 26,735 932,383
Union Pacific Resources
Group, Inc................. 38,055 551,797
Unocal Corp................. 36,590 1,262,355
--------------
3,963,949
--------------
OIL--INTEGRATED DOMESTIC (0.8%)
Amerada Hess Corp........... 13,703 786,210
Ashland Inc................. 11,162 368,346
Atlantic Richfield Co....... 48,567 4,525,837
Conoco Inc. Class B......... 94,216 2,555,609
Kerr-McGee Corp............. 13,017 699,664
Occidental Petroleum Corp... 52,513 1,197,953
Phillips Petroleum Co....... 38,114 1,772,301
Sunoco Inc.................. 13,594 327,955
Tosco Corp.................. 23,000 582,188
USX-Marathon Group.......... 46,507 1,354,516
--------------
14,170,579
--------------
OIL--INTEGRATED INTERNATIONAL (4.2%)
Chevron Corp................ 98,802 9,021,858
Exxon Corp.................. 365,563 27,074,510
Mobil Corp.................. 118,040 11,390,860
Royal Dutch Petroleum Co.
ADR (d).................... 323,480 19,388,582
Texaco Inc.................. 83,045 5,096,887
--------------
71,972,697
--------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------
<S> <C> <C>
PAPER & FOREST PRODUCTS (0.5%)
Boise Cascade Corp.......... 8,486 $ 302,314
Champion International
Corp....................... 14,517 839,264
Georgia-Pacific Group....... 25,843 1,025,644
International Paper Co...... 62,030 3,264,329
Louisiana-Pacific Corp...... 16,256 206,248
Mead Corp. (The)............ 15,340 552,240
Potlatch Corp............... 4,405 185,836
Westvaco Corp............... 15,135 449,320
Weyerhaeuser Co............. 30,265 1,806,442
Willamette Industries,
Inc........................ 16,672 692,930
--------------
9,324,567
--------------
PERSONAL LOANS (0.5%)
Capital One Financial
Corp....................... 29,782 1,578,446
Countrywide Credit
Industries, Inc............ 16,859 572,152
Household International,
Inc........................ 72,239 3,223,666
Providian Financial Corp.... 21,512 2,344,808
--------------
7,719,072
--------------
PHOTOGRAPHY/IMAGING (0.2%)
Eastman Kodak Co............ 47,524 3,276,186
IKON Office Solutions,
Inc........................ 22,420 154,137
Polaroid Corp............... 6,608 147,441
--------------
3,577,764
--------------
POLLUTION CONTROL (0.1%)
Allied Waste Industries,
Inc. (a)................... 28,200 296,100
Waste Management, Inc....... 91,927 1,689,159
--------------
1,985,259
--------------
PUBLISHING (0.1%)
Harcourt General Inc........ 10,699 411,912
McGraw-Hill Cos., Inc.
(The)...................... 29,803 1,777,004
Meredith Corp............... 7,882 281,289
--------------
2,470,205
--------------
PUBLISHING--NEWSPAPER (0.5%)
Dow Jones & Co., Inc........ 13,702 842,673
Gannett Co., Inc............ 42,141 3,250,125
Knight-Ridder, Inc.......... 11,874 753,999
New York Times Co. (The)
Class A.................... 26,685 1,074,071
Times Mirror Co. (The) Class
A.......................... 8,894 641,480
Tribune Co.................. 35,822 2,149,320
--------------
8,711,668
--------------
RAILROADS (0.5%)
Burlington Northern Santa Fe
Corp....................... 70,880 2,259,300
CSX Corp.................... 32,821 1,345,661
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
56
<PAGE> 59
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
----------------------------
<S> <C> <C>
RAILROADS (CONTINUED)
Kansas City Southern
Industries, Inc............. 16,545 $ 784,853
Norfolk Southern Corp....... 57,350 1,401,491
Union Pacific Corp.......... 37,367 2,083,210
--------------
7,874,515
--------------
RESTAURANTS (0.6%)
Darden Restaurants, Inc..... 20,178 384,643
McDonald's Corp............. 204,531 8,436,904
Tricon Global Restaurants,
Inc. (a)................... 23,146 930,180
Wendy's International,
Inc........................ 18,582 443,645
--------------
10,195,372
--------------
RETAIL STORES--APPAREL (0.4%)
Gap, Inc. (The)............. 129,410 4,804,346
Limited, Inc. (The)......... 32,215 1,324,842
TJX Cos., Inc. (The)........ 48,589 1,317,977
--------------
7,447,165
--------------
RETAIL STORES--DEPARTMENT (0.4%)
Dillard's, Inc. Class A..... 16,157 304,963
Federated Department Stores,
Inc. (a)................... 31,503 1,344,784
Kohl's Corp. (a)............ 24,579 1,838,816
May Department Stores Co.
(The)...................... 50,392 1,747,973
Nordstrom, Inc.............. 21,419 534,120
Penney (J.C.) Co., Inc...... 39,712 1,007,692
--------------
6,778,348
--------------
RETAIL STORES--DRUGS (0.3%)
Longs Drug Stores Corp...... 5,931 161,620
Rite Aid Corp............... 39,028 341,492
Walgreen Co................. 150,495 3,790,593
--------------
4,293,705
--------------
RETAIL STORES--FOOD (0.5%)
Albertson's, Inc............ 63,293 2,298,327
Great Atlantic & Pacific Tea
Co., Inc. (The)............ 5,746 164,120
Kroger Co. (The) (a)........ 124,632 2,593,904
Safeway Inc. (a)............ 74,949 2,646,637
Winn-Dixie Stores, Inc...... 22,420 606,741
--------------
8,309,729
--------------
RETAIL STORES--GENERAL MERCHANDISE (2.6%)
Dayton Hudson Corp.......... 66,686 4,309,583
Kmart Corp. (a)............. 74,331 747,956
Sears, Roebuck & Co......... 57,443 1,619,174
Wal-Mart Stores, Inc........ 670,111 38,280,091
--------------
44,956,804
--------------
RETAIL STORES--SPECIALTY (2.1%)
AutoZone, Inc. (a).......... 22,512 597,975
Bed Bath and Beyond (a)..... 20,100 669,581
Best Buy Co. Inc. (a)....... 30,700 1,705,769
Circuit City Stores-Circuit
City Group................. 30,268 1,292,065
Consolidated Stores Corp.
(a)........................ 16,528 302,669
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------
<S> <C> <C>
RETAIL STORES--SPECIALTY (CONTINUED)
Costco Wholesale Corp.
(a)........................ 33,049 $ 2,654,248
CVS Corp.................... 58,946 2,560,467
Dollar General Corp......... 33,509 883,800
Home Depot, Inc. (The)...... 223,525 16,876,137
Lowe's Cos., Inc............ 56,082 3,084,510
Office Depot, Inc. (a)...... 56,335 700,667
Pep Boys-Manny, Moe & Jack
(The)...................... 7,936 99,200
Staples Inc. (a)............ 70,124 1,555,876
Tandy Corp.................. 29,640 1,865,468
Toys "R" Us, Inc. (a)....... 37,479 529,391
--------------
35,377,823
--------------
SHOES (0.2%)
NIKE, Inc. Class B.......... 42,558 2,401,867
Reebok International Ltd.
(a)........................ 8,442 82,837
--------------
2,484,704
--------------
SPECIALIZED SERVICES (0.6%)
Block (H&R), Inc............ 14,617 622,136
Cendant Corp. (a)........... 108,168 1,784,772
Dun & Bradstreet Corp.
(The)...................... 24,708 725,797
Ecolab Inc.................. 19,613 663,165
IMS Health Inc.............. 47,711 1,383,619
Interpublic Group of Cos.,
Inc. (The)................. 42,388 1,722,013
Laidlaw Inc................. 49,855 305,362
National Service Industries,
Inc........................ 6,181 199,337
Omnicom Group Inc........... 26,952 2,371,776
Service Corp.
International.............. 41,021 392,263
--------------
10,170,240
--------------
SPECIALTY PRINTING (0.0%) (b)
Deluxe Corp................. 11,694 330,356
Donnelley (R.R.) & Sons
Co......................... 19,671 477,022
--------------
807,378
--------------
STEEL (0.1%)
Allegheny Teledyne Inc...... 29,056 441,288
Bethlehem Steel Corp. (a)... 19,627 136,162
Nucor Corp.................. 13,284 689,108
USX-U.S. Steel Group........ 13,335 340,876
Worthington Industries,
Inc........................ 13,882 230,788
--------------
1,838,222
--------------
TELECOMMUNICATIONS--LONG DISTANCE (3.6%)
AT&T Corp................... 482,890 22,575,108
Global Crossing Ltd. (a).... 115,459 3,997,768
MCI WorldCom, Inc. (a)...... 281,484 24,154,846
Sprint Corp. (FON Group).... 130,521 9,699,342
--------------
60,427,064
--------------
TELEPHONE (4.4%)
ALLTEL Corp................. 45,990 3,828,667
Bell Atlantic Corp.......... 234,126 15,203,557
BellSouth Corp.............. 283,327 12,749,715
CenturyTel, Inc............. 21,028 850,320
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
57
<PAGE> 60
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
----------------------------
<S> <C> <C>
TELEPHONE (CONTINUED)
GTE Corp.................... 147,892 $ 11,091,900
SBC Communications Inc...... 514,471 26,205,867
US West Inc................. 75,977 4,639,346
--------------
74,569,372
--------------
TEXTILES--APPAREL MANUFACTURERS (0.1%)
Liz Claiborne, Inc.......... 9,439 377,560
Russell Corp................ 5,129 77,897
Springs Industries, Inc.
Class A.................... 2,672 106,379
V.F. Corp................... 18,106 544,311
--------------
1,106,147
--------------
TOBACCO (0.6%)
Philip Morris Cos. Inc...... 359,160 9,046,343
UST Inc..................... 26,570 735,657
--------------
9,782,000
--------------
TOYS (0.1%)
Hasbro, Inc................. 29,616 610,830
Mattel, Inc................. 62,851 840,632
--------------
1,451,462
--------------
TRANSPORTATION--MISCELLANEOUS (0.1%)
FDX Corp. (a)............... 44,832 1,930,578
Ryder System, Inc........... 10,706 228,841
--------------
2,159,419
--------------
Total Common Stocks
(Cost $972,366,304)........ 1,697,593,216(e)
--------------
<CAPTION>
SHORT-TERM INVESTMENTS (0.3%)
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
U.S. GOVERNMENT (0.3%)
United States Treasury Bills
4.70%, due 1/20/00 (c)..... $2,000,000 1,978,979
4.96%, due 1/27/00 (c)..... 4,100,000 4,051,274
--------------
Total Short-Term Investments
(Cost $6,030,253).......... 6,030,253
--------------
Total Investments
(Cost $978,396,557) (f).... 100.0% 1,703,623,469(g)
Liabilities in Excess of
Cash and Other Assets
(b)........................ (0.0) (385,732)
---------- --------------
Net Assets.................. 100.0% $1,703,237,737
========== ==============
</TABLE>
<TABLE>
<CAPTION>
FUTURES CONTRACTS (0.0%) (b)
CONTRACTS UNREALIZED
LONG APPRECIATION(h)
----------------------------
<S> <C> <C>
Standard & Poor's 500 Index
December 1999.............. 15 $ 299,379
December 1999 (Mini)....... 3 3,529
--------------
Total Futures Contracts
(Settlement Value
$5,367,180) (e)............ $ 302,908
==============
</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 100% of net assets.
(f) The cost for Federal income tax purposes is $979,364,934.
(g) At October 31, 1999, net unrealized appreciation was $724,258,535, 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 $765,000,902 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $40,742,367.
(h) Represents the difference between the value of the contracts at the time
they were opened and the value at October 31, 1999.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
58
<PAGE> 61
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $978,396,557)........................... $1,703,623,469
Cash........................................... 30,680
Receivables:
Investment securities sold................... 1,760,504
Fund shares sold............................. 1,524,328
Dividends and interest....................... 1,413,626
Variation margin on futures contracts........ 97,120
--------------
Total assets............................. 1,708,449,727
--------------
LIABILITIES:
Payables:
Investment securities purchased.............. 2,897,293
Fund shares redeemed......................... 1,615,610
MainStay Management.......................... 361,843
Custodian.................................... 64,571
Transfer agent............................... 4,581
Accrued expenses............................... 268,092
--------------
Total liabilities........................ 5,211,990
--------------
Net assets..................................... $1,703,237,737
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class.......................... $ 44,380
Institutional Service Class.................. 1,675
Additional paid-in capital..................... 898,636,258
Accumulated undistributed net investment
income....................................... 14,052,668
Accumulated undistributed net realized gain on
investments and futures contracts............ 64,972,936
Net unrealized appreciation on investments and
futures contracts............................ 725,529,820
--------------
Net assets..................................... $1,703,237,737
==============
Institutional Class
Net assets applicable to outstanding shares.... $1,641,590,851
==============
Shares of capital stock outstanding............ 44,379,506
==============
Net asset value per share outstanding.......... $ 36.99
==============
Institutional Service Class
Net assets applicable to outstanding shares.... $ 61,646,886
==============
Shares of capital stock outstanding............ 1,675,161
==============
Net asset value per share outstanding.......... $ 36.80
==============
</TABLE>
STATEMENT OF OPERATIONS
For the period January 1, 1999 through October 31, 1999* and the year ended
December 31, 1998
<TABLE>
<CAPTION>
1999* 1998
-------------- --------------
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends (a)................. $ 16,986,272 $ 17,922,084
Interest...................... 1,183,939 1,943,830
-------------- --------------
Total income.............. 18,170,211 19,865,914
-------------- --------------
Expenses:
Management.................... 6,695,784 6,263,846
Shareholder communication..... 169,300 201,314
Custodian..................... 140,668 157,270
Professional.................. 121,295 165,346
Service....................... 100,072 71,771
Transfer agent................ 43,581 40,041
Registration.................. 43,298 113,053
Directors..................... 28,928 29,413
Miscellaneous................. 66,823 57,958
-------------- --------------
Total expenses before re-
imbursement.............. 7,409,749 7,100,012
Expense reimbursement from
Manager..................... (3,292,206) (3,269,934)
-------------- --------------
Net expenses.............. 4,117,543 3,830,078
-------------- --------------
Net investment income........... 14,052,668 16,035,836
-------------- --------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Security transactions......... 66,459,504 51,291,155
Futures transactions.......... (363,239) 2,727,576
-------------- --------------
Net realized gain on
investments................... 66,096,265 54,018,731
-------------- --------------
Net change in unrealized
appreciation on investments:
Security transactions......... 94,871,689 244,039,298
Futures transactions.......... (14,354) 278,027
-------------- --------------
Net unrealized gain on
investments................... 94,857,335 244,317,325
-------------- --------------
Net realized and unrealized gain
on investments................ 160,953,600 298,336,056
-------------- --------------
Net increase in net assets
resulting from operations..... $ 175,006,268 $ 314,371,892
============== ==============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
(a) Dividends recorded net of foreign withholding taxes of $262,018 and $105,046
for 1999 and 1998 respectively.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
59
<PAGE> 62
INDEXED EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period January 1, 1999 through October 31, 1999* and the years ended
December 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
1999* 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income................................... $ 14,052,668 $ 16,035,836 $ 12,926,062
Net realized gain on investments and futures
contracts............................................. 66,096,265 54,018,731 13,824,202
Net change in unrealized appreciation on investments and
futures contracts..................................... 94,857,335 244,317,325 199,341,116
-------------- -------------- --------------
Net increase in net assets resulting from operations.... 175,006,268 314,371,892 226,091,380
-------------- -------------- --------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class................................... -- (15,890,238) (12,753,262)
Institutional Service Class........................... -- (314,560) (156,133)
From net realized gain on investments:
Institutional Class................................... (13,798,796) (43,243,748) (18,598,652)
Institutional Service Class........................... (520,131) (1,050,731) (264,603)
-------------- -------------- --------------
Total dividends and distributions to shareholders... (14,318,927) (60,499,277) (31,772,650)
-------------- -------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 239,078,730 355,359,146 295,739,975
Institutional Service Class........................... 32,503,215 23,308,027 10,256,956
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... 13,796,673 59,128,205 31,351,914
Institutional Service Class........................... 520,113 1,359,018 420,736
-------------- -------------- --------------
285,898,731 439,154,396 337,769,581
Cost of shares redeemed:
Institutional Class................................... (240,105,604) (156,430,972) (170,645,271)
Institutional Service Class........................... (11,948,104) (7,935,488) (4,979,101)
-------------- -------------- --------------
Increase in net assets derived from capital share
transactions........................................ 33,845,023 274,787,936 162,145,209
-------------- -------------- --------------
Net increase in net assets............................ 194,532,364 528,660,551 356,463,939
NET ASSETS:
Beginning of period....................................... 1,508,705,373 980,044,822 623,580,883
-------------- -------------- --------------
End of period............................................. $1,703,237,737 $1,508,705,373 $ 980,044,822
============== ============== ==============
Accumulated undistributed net investment income at end of
period.................................................. $ 14,052,668 $ -- $ 16,667
============== ============== ==============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
60
<PAGE> 63
(THIS PAGE INTENTIONALLY LEFT BLANK)
61
<PAGE> 64
INDEXED EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
JANUARY 1, 1999
THROUGH YEAR ENDED
OCTOBER 31, 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.................................. 0.31 0.21 0.38 0.31
Net realized and unrealized gain (loss) on
investments.......................................... 3.60 3.62 7.36 7.31
---------- ---------- ---------- ----------
Total from investment operations....................... 3.91 3.83 7.74 7.62
---------- ---------- ---------- ----------
Less dividends and distributions:
From net investment income............................. -- -- (0.38) (0.31)
From net realized gain on investments.................. (0.31) (0.31) (1.02) (1.02)
In excess of net realized gain on investments.......... -- -- -- --
---------- ---------- ---------- ----------
Total dividends and distributions...................... (0.31) (0.31) (1.40) (1.33)
---------- ---------- ---------- ----------
Net asset value at end of period....................... $ 36.99 $ 36.80 $ 33.39 $ 33.28
========== ========== ========== ==========
Total investment return................................ 11.80%(b) 11.60%(b) 28.62% 28.24%
Ratios (to average net assets)/Supplemental Data:
Net investment income................................ 1.06%+ 0.81%+ 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................................ 7% 7% 8% 8%
Net assets at end of period (in 000's)................. $1,641,591 $ 61,647 $1,472,263 $ 36,442
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
+ Annualized.
(a) Less than one cent per share.
(b) Total return is not annualized.
(c) Institutional Service Class commenced January 1, 1995.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
62
<PAGE> 65
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS(c) 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.
63
<PAGE> 66
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Stock markets began 1999 on a positive note, as a bailout package for Brazil,
led by the International Monetary Fund, eased investor concerns about continuing
volatility. Early in the year, enthusiasm over the January introduction of the
euro began to fade and European stocks declined, while a strengthening economy
in Japan caused stocks there to rise. In the second calendar quarter of 1999,
European stocks began to recover and Asian equities continued to advance. In the
third calendar quarter of 1999, Europe saw mixed results, with markets in
Denmark and Norway rising 10% in U.S.-dollar terms and markets in Austria and
Spain both declining. France was the strongest of the Euroland(1) markets,
advancing 5% during the third calendar quarter of 1999. Japanese stocks
continued to advance and the yen rose against the dollar in the third calendar
quarter and continued to do so through the end of the Fund's ten-month reporting
period.(2)
For the ten months ended October 31, 1999, Morgan Stanley Capital International
indexes showed Finland (+60.01%) as the strongest European market, followed by
Sweden (+37.01%), Norway (+16.38%), and France (+12.32%), all in U.S.-dollar
terms. Investors saw negative returns in U.S.-dollar terms in Portugal, Belgium,
Ireland, Italy, Spain, Switzerland, and Germany for the same period. In the Far
East, Singapore (+67.71%), Japan (+45.84%), and Hong Kong (+29.72%) were among
the leading developed markets in U.S.-dollar terms for the same period.
PERFORMANCE REVIEW
For the ten months ended October 31, 1999, the MainStay Institutional
International Equity Fund returned 11.23% for Institutional Class shares and
10.96% for Service Class shares. Both share classes underperformed the 15.93%
return of the average Lipper(3) international fund for the ten months ended
October 31, 1999. Both share classes also underperformed the Fund's benchmark,
the Morgan Stanley Capital International Europe, Australia, and Far East
Index,(4) which returned 12.60% in U.S. dollars during the ten-month reporting
period.
Both of the Fund's share classes were rated four stars overall by Morningstar(5)
as of October 31, 1999. Both share classes were rated four stars out of 1,053
international equity funds for the three-year period then ended, and
Institutional Class shares were rated four stars out of 597 international equity
funds for the five-year period then ended.
PACIFIC-RIM INVESTMENTS
Perhaps the most significant move the Fund made during the ten months ended
October 31, 1999, was to dramatically increase its weighting in Japanese stocks.
Since the economic recovery in Japan is still in its nascent stages, the Fund
focused primarily on companies with global demand, such as Sony and Toyota, and
later on companies and industries undergoing positive restructurings. The Fund
initially purchased NTT Mobile Communications in the first calendar quarter of
1999, and by the end of the reporting period, it was the Fund's second largest
holding and one of its best-performing stocks.
During the first and second calendar quarters of 1999, underweighting the yen
helped performance, but for the remainder of the Fund's reporting period, being
underweighted in yen exposure detracted from performance as the yen rose
dramatically against the U.S. dollar. The Fund's overexposure to European
currencies during the period from July through October, on the other hand, had a
positive impact on Fund performance.
- --------------------------------------------------------------------------------
(1) Euroland refers to the countries participating in European Monetary Union, a
system that allows several European nations to operate with a common
currency.
(2) MainStay Institutional Funds recently changed its fiscal year end from
December 31 to October 31. The previous annual report provided information
through December 31, 1998. This report covers the ten-month fiscal period
from January 1, 1999, through October 31, 1999.
(3) 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.
(4) 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.
(5) Morningstar, Inc. is an independent fund performance monitor. Its ratings
reflect historic risk-adjusted performance, taking fees and sales charges
into account, and may change monthly. Its ratings of one (low) to five
(high) stars are based on a fund's three-, five-, and ten-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 funds in a
broad asset class receive five stars, the next 22.5% receive four stars, the
middle 35% receive three stars, the next 22.5% receive two stars, and the
bottom 10% receive one star. Funds (or share classes) are not rated until
they have three years of performance history.
64
<PAGE> 67
In October 1999, the Fund took some profits in Cable Wireless Optus, the number
two Australian telecommunication company, to increase its position in Telstra,
which completed its sale of a portion of the government's interest in the
company.
EUROPEAN HIGHLIGHTS
In Europe, the Fund had established positions in Finland and Sweden late in
1998. During the reporting period, these proved to be among the best-performing
European markets. Finnish cellular company Nokia returned 90.29% in U.S.-dollar
terms for the ten months ended October 31, 1999, and on that date, the stock was
the Fund's largest holding. The Fund had purchased Ericsson, a Swedish cellular
company, late in 1998. Although the stock had a positive impact on Fund
performance during the reporting period, we sold it in the first calendar
quarter of 1999 when new product delays and management changes began to
undermine investor confidence in the company.
Core European countries had mixed returns, with France leading the Euroland
market with a gain of 12.32% in U.S.-dollar terms for the ten-month period. AXA
is a French insurance group that was a successful investment during the
reporting period and whose stock the Fund continues to hold. The company
provides life and nonlife insurance products as well as reinsurance, financial,
and real estate services worldwide. During the reporting period, the company
announced that it would invest 200 billion yen in Nippon Dantai Life Insurance
Co. in Japan in a bid to expand its Asian business. The German market as a whole
declined 0.28% in U.S.-dollar terms over the same period, despite an 11.41% gain
in local-currency terms. Deutsche Telekom showed outstanding performance in the
first calendar quarter of 1999 and was generally a strong performer throughout
the reporting period. In October 1999, the Fund reduced its position in
Mannesmann AG in Germany in favor of Vodafone Group PLC in the U.K. With modest
but generally positive returns, U.K. stocks had a positive impact on the Fund's
performance for the ten months ended October 31, 1999.
During the third calendar quarter of 1999, pharmaceuticals, including the Swiss
company Roche Holdings, provided attractive returns in local terms. Overall,
however, the Fund's Irish stocks were weak in U.S.-dollar terms for the ten
months ended October 31, 1999. Irish stocks fell mainly due to sales by local
investors. We believe the introduction of the euro has caused Irish
institutional investors to diversify holdings into continental European
equities. With a few notable exceptions, the Fund's Portuguese, Belgian,
Italian, Spanish, and Swiss holdings tended to follow local-market trends and
detracted from the Fund's performance over the ten-month reporting period.
LOOKING AHEAD
As of October 31, 1999, the Fund held its top five country positions in Japan,
the United Kingdom, Germany, France, and Switzerland. We continue to see growth
potential in Japan, and the Fund ended the reporting period at about a market
weight in that country. We believe that the economy in Europe is growing faster
than the economy in the United States and is poised to outperform in the coming
months. At the end of the Fund's reporting period, we believed that the yen was
extremely overvalued. We remain bullish on the Canadian dollar, which we believe
has been undeservedly weak in the recent past. While Y2K concerns may be a
short-term distraction, we believe Europe and Asia may continue to offer
attractive opportunities for long-term investors, including value-enhancing
mergers, acquisitions, and restructurings.
Whatever the markets or global economy may bring, the Fund will continue to seek
long-term growth of capital by investing in a portfolio consisting primarily of
non-U.S. equity securities, with current income as a secondary objective.
JOSEPH PORTERA
Portfolio Manager
MacKay Shields LLC
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
65
<PAGE> 68
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
INTERNATIONAL EQUITY FUND VS
MSCI EAFE INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY
MSCI EAFE INDEX FUND
------------------ ------
<S> <C> <C>
07/31/92 250000 250000
09/30/92 260425 237802
12/31/92 250373 236565
03/31/93 280392 264043
06/30/93 308600 282360
09/30/93 329060 294530
12/31/93 331890 295768
03/31/94 343506 306458
06/30/94 361059 318090
09/30/94 361420 319490
12/31/94 357734 320490
03/31/95 364388 315042
06/30/95 367048 304145
09/30/95 382353 325297
12/31/95 397839 343479
03/31/96 409336 360404
06/30/96 415804 372683
09/30/96 415263 371687
12/31/96 421866 384995
03/31/97 415243 385358
06/30/97 469141 431354
09/30/97 465857 431716
12/31/97 429381 405952
03/31/98 492542 462368
06/30/98 497763 477494
09/30/98 427031 416581
12/31/98 515256 496921
03/31/99 522418 500708
06/30/99 535687 508281
09/30/99 559204 533527
10/31/99 580174 552700
</TABLE>
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
INTERNATIONAL EQUITY FUND VS
MSCI EAFE INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY
MSCI EAFE INDEX FUND
------------------ ------
<S> <C> <C>
07/31/92 250000 250000
09/30/92 260425 237802
12/31/92 250373 236565
03/31/93 280392 264042
06/30/93 308600 282360
09/30/93 329060 294530
12/31/93 331890 295768
03/31/94 343506 306458
06/30/94 361059 318090
09/30/94 361420 319490
12/31/94 357734 320490
03/31/95 364388 315042
06/30/95 367048 303825
09/30/95 382353 324336
12/31/95 397839 342463
03/31/96 409336 358707
06/30/96 415804 370642
09/30/96 415263 369316
12/31/96 421866 382164
03/31/97 415243 382525
06/30/97 469141 428038
09/30/97 465857 428038
12/31/97 429381 400803
03/31/98 492542 455736
06/30/98 497763 471198
09/30/98 427031 410569
12/31/98 515256 489775
03/31/99 522418 493118
06/30/99 535687 500223
09/30/99 559204 524879
10/31/99 580174 543473
</TABLE>
Source: Lipper, Inc.
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 7/31/92.(+)
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF OCTOBER 31, 1999 AS OF OCTOBER 31, 1999
- -----------------------------------------------------------------------------------------------------------------
YEAR TO DATE ONE YEAR FIVE YEARS SINCE INCEPTION
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
International Equity Fund Institutional
Class(+) 11.23% 22.57% 11.14% 11.56%
International Equity Fund Service Class(+) 10.96 22.31 10.77 11.30
Average Lipper international fund 15.93 25.53 9.50 11.80
MSCI EAFE Index 12.60 23.03 9.21 12.31
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
Year end Ten months
TOTAL RETURN %* December 31 ended October 31
1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-5.37 25.03 8.36 7.17 12.09 5.44 22.41 11.23
</TABLE>
- --------------------------------------------------------------------------------
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.
* 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.
+ The inception date of the International Equity Fund's predecessor separate
account ("Separate Account") is 7/31/92. Performance figures, and, in the case
of the graphs reflecting the investment of $250,000, 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 LLC, 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.
66
<PAGE> 69
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (97.7%)+
SHARES VALUE
------------------------
<S> <C> <C>
AUSTRALIA (2.2%)
Australia & New Zealand Banking
Group, Ltd. (banking).......... 97,637 $ 643,957
Broken Hill Proprietary Co., Ltd
(energy sources)............... 64,232 663,434
Cable & Wireless Optus, Ltd.
(telecommunications) (a)....... 254,049 581,240
Telstra Corp., Ltd.
(telecommunications)........... 126,635 643,780
Telstra Corp., Ltd.
(telecommunications) (c)....... 51,745 165,875
WMC, Ltd. (metals-nonferrous)... 152,835 655,514
------------
3,353,800
------------
BELGIUM (2.3%)
Delhaize-Le Lion, S.A.
(merchandising)................ 4,940 347,116
Electrabel, S.A. (utilities-
electrical & gas).............. 2,550 840,548
Fortis AG (insurance)........... 32,040 1,081,045
Solvay, S.A. Class A
(chemicals).................... 6,850 525,245
Tractebel, S.A.
(utilities-electrical & gas)... 4,160 726,726
------------
3,520,680
------------
FINLAND (4.8%)
Merita PLC (banking)............ 72,650 420,759
Nokia Oyj Class A (electrical &
electronics)................... 39,318 4,496,828
Outokumpu Oyj (metals-
nonferrous).................... 47,190 539,666
Pohjola Group Insurance Corp.
Class B (insurance)............ 24,200 1,297,274
UPM-Kymmene Oyj (forest products
& paper)....................... 20,060 632,555
------------
7,387,082
------------
FRANCE (8.4%)
Air Liquide, S.A. (chemicals)... 2,990 460,421
AXA, S.A. (insurance)........... 5,774 813,864
Carrefour, S.A.
(merchandising)................ 9,150 1,692,699
Elf Aquitaine, S.A. (energy
sources)....................... 10,435 1,535,559
Eridania Beghin-Say, S.A. (food
& household products).......... 2,140 242,931
France Telecom, S.A.
(telecommunications)........... 9,630 929,719
Groupe Danone, S.A. (food &
household products)............ 3,367 858,225
Lafarge, S.A. (building
materials & components)........ 3,973 382,108
Lagardere S.C.A.
(multi-industry)............... 27,607 1,117,187
L'Oreal, S.A. (health & personal
care).......................... 2,198 1,465,904
Pernod-Ricard, S.A. (beverages &
tobacco)....................... 4,950 334,031
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
FRANCE (CONTINUED)
Pinault-Printemps-Redoute, S.A.
(merchandising)................ 2,250 $ 428,772
Schneider, S.A. (electrical &
electronics)................... 5,626 387,335
Societe Generale, S.A. Class A
(banking)...................... 2,054 446,907
Thomson CSF, S.A. (aerospace &
military technology)........... 10,205 346,467
Total Fina, S.A. Strip (energy
sources)....................... 5,445 57
Vivendi, S.A. (business & public
services)...................... 19,026 1,440,879
------------
12,883,065
------------
GERMANY (9.3%)
Allianz AG Registered
(insurance).................... 3,600 1,095,462
Bayer AG (chemicals)............ 27,850 1,138,730
DaimlerChrysler AG
(automobiles).................. 25,195 1,959,712
Deutsche Bank AG (banking)...... 10,700 767,033
Deutsche Telekom AG
(telecommunications)........... 31,360 1,440,468
Dresdner Bank AG (banking)...... 16,900 865,979
Epcos AG (electronic components
& instruments)................. 16,100 656,604
Karstadt AG (merchandising)..... 14,000 632,765
Mannesmann AG
(telecommunications)........... 3,194 501,906
Metro AG (merchandising)........ 9,900 531,744
Muenchener Rueckversicherungs-
Gesellschaft AG Registered
(insurance).................... 1,390 318,506
RWE AG (utilities-electrical &
gas)........................... 15,800 636,066
SAP AG (business & public
services)...................... 2,170 805,613
Schering AG (health & personal
care).......................... 14,320 1,702,361
Veba AG (utilities-electrical &
gas)........................... 15,050 813,103
Viag AG (utilities-electrical &
gas)........................... 26,000 479,619
------------
14,345,671
------------
HONG KONG (0.5%)
Cheung Kong (Holdings) Ltd.
(real estate).................. 82,000 744,061
------------
IRELAND (4.2%)
Allied Irish Banks PLC
(banking)...................... 78,558 982,615
Eircom PLC (telecommunications)
(a)............................ 134,550 560,755
CRH PLC (building materials &
components).................... 109,084 2,058,124
</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.
67
<PAGE> 70
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
IRELAND (CONTINUED)
Elan Corp. PLC (health &
personal care) (a).............. 42,400 $ 1,089,660
Irish Life & Permanent PLC
(insurance).................... 30,063 306,514
Kerry Group PLC Class A (food &
household products)............ 40,277 497,440
Smurfit (Jefferson) Group PLC
(forest products & paper)...... 347,647 902,571
------------
6,397,679
------------
ITALY (3.2%)
Assicurazioni Generali S.p.A.
(insurance).................... 14,015 449,303
Banca Commerciale Italiana
S.p.A. (banking)............... 78,400 471,366
Benetton Group S.p.A. (textile &
apparel)....................... 114,400 252,517
ENI S.p.A. (energy sources)..... 217,140 1,268,997
Italgas S.p.A.
(utilities-electrical & gas)... 43,000 177,626
Parmalat Finanziaria S.p.A.
(food & household products).... 43,000 56,452
Pirelli S.p.A. (industrial
components).................... 35,000 80,199
Riunione Adriatica di Sicurta
S.p.A. (insurance)............. 8,600 79,276
Telecom Italia S.p.A.
(telecommunications)........... 56,630 488,693
Telecom Italia Mobile S.p.A.
(telecommunications)........... 161,300 1,007,087
Unicredito Italiano S.p.A.
(banking)...................... 114,700 536,500
------------
4,868,016
------------
JAPAN (27.3%)
Ajinomoto Co., Inc. (food &
household products) (b)........ 66,000 739,290
Bandai Co. Ltd. First Section
(recreation & other consumer
goods)......................... 19,000 464,248
Bank of Tokyo-Mitsubishi, Ltd.
(banking)...................... 89,000 1,473,635
Bridgestone Corp. (industrial
components).................... 15,000 412,505
Fuji Bank (banking)............. 66,000 904,349
Fujitsu, Ltd. (data processing &
reproduction).................. 60,000 1,805,249
Hitachi, Ltd. (electrical &
electronics) (b)............... 54,000 583,141
Honda Motor Co., Ltd.
(automobiles) (b).............. 25,000 1,054,020
Industrial Bank of Japan, Ltd.
(The) (banking) (b)............ 102,000 1,378,083
Ito-Yokado Co., Ltd.
(merchandising) (b)............ 11,000 879,053
Japan Airlines Co., Ltd.
(transportation-airlines)...... 206,000 690,862
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
JAPAN (CONTINUED)
Matsushita Electric Industrial
Co., Ltd. (appliances &
household durables) (b)........ 22,000 $ 462,715
Mitsubishi Electric Corp.
(electrical & electronics)
(b)............................ 137,000 757,448
Mitsubishi Estate Co., Ltd.
(real estate) (b).............. 22,000 220,290
Mitsubishi Heavy Industries,
Ltd. (machinery & engineering)
(b)............................ 90,000 352,713
Mitsui Fudosan Co., Ltd. (real
estate)........................ 35,000 261,253
NEC Corp. (electrical &
electronics)................... 74,000 1,496,133
Nikko Securities Co., Ltd.
(financial services)........... 93,000 873,303
Nintendo Co., Ltd. (recreation &
other consumer goods).......... 4,000 634,328
Nippon Express Co., Ltd.
(transportation-road & rail)... 15,000 106,073
Nippon Mitsubishi Oil Corp.
(energy sources)............... 56,000 246,832
Nippon Steel Corp.
(metals-steel)................. 146,000 370,728
Nippon Telegraph & Telephone
Corp. (telecommunications)..... 84 1,287,821
NKK Corp. (metals-steel) (a).... 1,012,000 833,941
NTT Data Corp. (business &
public services)............... 190 3,003,957
NTT Mobile Communications
Network, Inc.
(telecommunications)........... 163 4,326,369
Olympus Optical Co., Ltd.
(electronic components &
instruments)................... 31,000 418,829
Rohm Co., Ltd. (electronic
components & instruments)...... 6,000 1,345,313
Sharp Corp. (appliances &
household durables)............. 23,000 365,841
Sony Corp. (appliances &
household durables)............ 15,000 2,337,050
Sumitomo Bank, Ltd. (banking)... 56,000 900,401
Sumitomo Electric Industries
(industrial components)........ 19,000 255,063
Sumitomo Forestry Co., Ltd.
(building materials &
components).................... 52,000 349,283
Sumitomo Marine & Fire Insurance
Co., Ltd. (insurance).......... 213,000 1,642,978
Takeda Chemical Industries, Ltd.
(health & personal care)....... 20,000 1,147,924
TDK Corp. (electronic components
& instruments)................. 4,000 391,329
Tokio Marine & Fire Insurance
Co., Ltd. (insurance).......... 125,000 1,634,929
Tokyo Electric Power Co., Inc.
(utilities-electrical & gas)... 15,300 341,589
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
68
<PAGE> 71
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
JAPAN (CONTINUED)
Tokyo Seimitsu Co., Ltd.
(electronic components &
instruments).................... 10,000 $ 1,217,872
Toshiba Corp. (electrical &
electronics)................... 120,000 754,295
Tostem Corp. (building materials
& components).................. 18,000 402,731
Toyota Motor Corp.
(automobiles).................. 64,000 2,213,825
Trans Cosmos First Section
(business & public services)... 1,000 126,962
Yamanouchi Pharmaceutical Co.,
Ltd. (health & personal
care).......................... 9,000 407,906
------------
41,872,459
------------
NETHERLANDS (3.9%)
ABN AMRO Holding N.V.
(banking)...................... 30,600 739,446
Akzo Nobel N.V. (chemicals)..... 8,800 378,684
Elsevier N.V. (broadcasting &
publishing).................... 10,900 103,457
Heineken N.V. (beverages &
tobacco)....................... 9,100 463,810
ING Groep N.V. (financial
services)...................... 20,505 1,208,687
Koninklijke KPN N.V.
(telecommunications)........... 10,586 542,886
Koninklijke (Royal) Philips
Electronics N.V. (appliance &
household durables)............ 7,600 778,869
Royal Dutch Petroleum Co.
(energy sources)............... 22,921 1,369,170
TNT Post Group N.V. (business &
public services)............... 10,286 261,642
Wolters Kluwer CVA N.V.
(broadcasting & publishing).... 5,240 174,982
------------
6,021,633
------------
NEW ZEALAND (0.2%)
Contact Energy Ltd. (utilities-
electrical & gas) (a).......... 180,684 313,716
------------
PORTUGAL (2.2%)
Banco Comercial Portugues, S.A.
Registered (banking)........... 34,773 978,811
Banco Espirito Santo, S.A.
(banking)...................... 40,069 1,041,125
Electricidade de Portugal, S.A.
(utilities-electrical & gas)... 23,500 365,080
Jeronimo Martins SGPS, S.A.
(merchandising)................ 4,000 111,585
Portugal Telecom, S.A.
Registered
(telecommunications)........... 11,600 516,976
Sonae SGPS, S.A. (forest
products & paper).............. 12,210 407,608
------------
3,421,185
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
SPAIN (3.7%)
Acerinox, S.A. (metals-steel)... 11,550 $ 350,854
Autopistas Concesionaria
Espanola, S.A. (business &
public services)............... 11,893 128,133
Banco Bilbao Vizcaya, S.A.
Registered (banking)........... 54,840 736,672
Banco Santander Central Hispano,
S.A. (banking)................. 100,576 1,043,416
Endesa, S.A.
(utilities-electrical & gas)... 28,370 567,472
Fomento de Construcciones y
Contratas, S.A. (construction &
housing)....................... 4,360 109,300
Gas Natural SDG, S.A.
(utilities-electrical & gas)... 12,180 268,852
Iberdrola, S.A.
(utilities-electrical & gas)... 36,370 529,850
Repsol, S.A. (energy sources)... 28,650 590,237
Telefonica, S.A.
(telecommunications) (a)....... 78,780 1,295,087
------------
5,619,873
------------
SWEDEN (1.5%)
AstraZeneca AB Series A (health
& personal care)............... 22,803 1,028,299
ForeningsSparbanken AB
(banking)...................... 19,950 317,236
Hennes & Mauritz AB Series B
(merchandising)................ 11,600 307,665
Skandia Forsakrings AB
(insurance).................... 14,800 328,762
Svenska Handelsbanken Series A
(banking)...................... 23,100 319,658
------------
2,301,620
------------
SWITZERLAND (5.9%)
Credit Suisse Group Registered
(banking)...................... 5,200 999,934
Nestle S.A. Registered (food &
household products)............ 900 1,736,562
Novartis AG Registered (health &
personal care)................. 726 1,086,355
Roche Holdings AG Genusscheine
(health & personal care)....... 200 2,402,047
Schweizerische
Rueckversicherungs Gesellschaft
Registered (insurance)......... 400 829,559
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
69
<PAGE> 72
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
------------------------
<S> <C> <C>
SWITZERLAND (CONTINUED)
UBS AG Registered (banking)..... 5,084 $ 1,479,788
Zurich Allied AG Registered
(insurance).................... 1,000 566,384
------------
9,100,629
------------
UNITED KINGDOM (17.6%)
Abbey National PLC (banking)
(b)............................ 33,338 650,983
Allied Zurich PLC (insurance)
(b)............................ 21,703 261,752
Barclays PLC (banking) (b)...... 33,031 1,009,759
Bass PLC (leisure & tourism)
(b)............................ 86,203 945,599
BG PLC (utilities- electrical &
gas) (b)....................... 120,167 665,984
Boots Co. PLC
(merchandising) (b)............ 39,404 404,114
BP Amoco PLC (energy sources)
(b)............................ 182,680 1,770,085
British Airways PLC
(transportation-airlines)
(b)............................ 96,104 499,507
British American Tobacco PLC
(beverages & tobacco) (b)...... 21,703 143,518
British Telecommunications PLC
(telecommunications) (b)....... 124,236 2,249,588
Cable & Wireless PLC
(telecommunications) (b)....... 116,658 1,361,029
CGU PLC (insurance) (b)......... 38,124 554,575
Diageo PLC (beverages & tobacco)
(b)............................ 79,623 803,520
EMI Group PLC (recreation &
other consumer goods) (b)...... 116,840 916,437
General Electric Co. PLC
(electrical & electronics)
(b)............................ 100,912 1,095,357
Granada Group PLC (leisure &
tourism) (b)................... 40,332 318,330
Great Universal Stores PLC (The)
(merchandising) (b)............ 48,686 369,087
Imperial Chemical Industries PLC
(chemicals) (b)................ 105,460 1,046,951
Kingfisher PLC (merchandising)
(b)............................ 43,556 474,926
Lloyds TSB Group PLC (banking)
(b)............................ 100,858 1,392,668
Marks & Spencer PLC
(merchandising) (b)............ 82,288 378,075
National Power PLC (utilities-
electrical & gas) (b).......... 28,450 191,987
National Westminster Bank PLC
(banking)...................... 30,162 680,033
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------------------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Peninsular & Oriental Steam
Navigation Co. Deferred Stock
(The) (transportation-
shipping) (b).................. 22,626 $ 320,036
Prudential Corp. PLC (insurance)
(b)............................ 47,209 739,408
Reed International PLC
(broadcasting & publishing)
(b)............................ 47,962 279,389
Rio Tinto PLC Registered
(metals-nonferrous) (b)........ 34,448 588,434
Royal Bank of Scotland Group PLC
(banking)...................... 48,500 1,115,765
Sainsbury (J.) PLC
(merchandising) (b)............ 56,459 338,381
Scottish Power PLC (utilities-
electrical & gas) (b).......... 47,860 443,323
SmithKline Beecham PLC (health &
personal care)................. 133,840 1,721,810
Unilever PLC (food & household
products) (b).................. 92,101 853,123
Vodafone AirTouch PLC
(telecommunications) (b)....... 546,441 2,537,540
------------
27,121,073
------------
UNITED STATES (0.5%)
Hellenic Telecommunications
Organization S.A.
(telecommunications)........... 75,200 799,000
------------
Total Common Stocks
(Cost $116,553,947)............ 150,071,242
------------
<CAPTION>
PURCHASED OPTIONS (0.1%)
NOTIONAL
AMOUNT
----------
<S> <C> <C>
UNITED STATES (0.1%)
U.S. Dollar Call/Japanese Yen
Put Strike price Y110
Expire 2/9/00 (a)(f)........... 7,445,000 59,429
------------
Total Options
(Cost $125,076)................ 59,429
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
70
<PAGE> 73
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENT (1.4%)
PRINCIPAL
AMOUNT VALUE
-------------------------
<S> <C> <C>
COMMERCIAL PAPER (1.4%)
UNITED STATES (1.4%)
Xerox Credit Corp.
5.33%, due 11/1/99
(financial services)........... $2,200,000 $ 2,200,000
------------
Total Short-Term Investment
(Cost $2,200,000).............. 2,200,000
------------
Total Investments
(Cost $118,879,023) (d)........ 99.2% 152,330,671(e)
Cash and Other Assets,
Less Liabilities............... 0.8 1,268,172
---------- ------------
Net Assets...................... 100.0% $153,598,843
========== ============
</TABLE>
- ------------
(a) Non-income producing security.
(b) Segregated or partially segregated as collateral for forward foreign
currency contracts.
(c) Installment receipt is a transaction with a set contract price which is
paid in installments over a period of time.
(d) The cost for Federal income tax purposes is $120,033,002.
(e) At October 31, 1999 net unrealized appreciation for securities was
$32,297,669, 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 $36,462,304 and aggregate
gross unrealized depreciation for all investments on which there was an
excess of cost over market value of $4,164,635.
(f) Y--Japanese Yen.
The table below sets forth the diversification of International Equity Fund
investments excluding currency options by industry.
INDUSTRY DIVERSIFICATION
<TABLE>
<CAPTION>
VALUE PERCENT +
------------------------
<S> <C> <C>
Aerospace & Military
Technology................ $ 346,467 0.2%
Appliances & Household
Durables.................. 3,944,474 2.6
Automobiles................. 5,227,557 3.4
Banking..................... 22,296,881 14.5
Beverages & Tobacco......... 1,744,879 1.1
Broadcasting & Publishing... 557,828 0.4
Building Materials &
Components................ 3,192,247 2.1
Business & Public
Services.................. 5,767,186 3.8
Chemicals................... 3,550,031 2.3
Construction & Housing...... 109,300 0.1
Data Processing &
Reproduction.............. 1,805,249 1.2
Electrical & Electronics.... 9,570,539 6.2
Electronic Components &
Instruments............... 4,029,947 2.6
Energy Sources.............. 7,444,373 4.8
Financial Services.......... 4,281,991 2.8
Food & Household Products... 4,984,022 3.2
Forest Products & Paper..... 1,535,126 1.0
Health & Personal Care...... 12,052,265 7.8
Industrial Components....... 747,768 0.5
Insurance................... 11,999,590 7.8
Leisure & Tourism........... 1,263,929 0.8
Machinery & Engineering..... 352,713 0.2
Merchandising............... 7,303,590 4.8
Metals-Nonferrous........... 1,783,614 1.2
Metals-Steel................ 1,555,522 1.0
Multi-Industry.............. 1,117,187 0.7
Real Estate................. 1,225,604 0.8
Recreation & Other Consumer
Goods..................... 2,015,013 1.3
Telecommunications.......... 21,235,816 13.8
Textile & Apparel........... 252,517 0.2
Transportation-Airlines..... 1,190,369 0.8
Transportation-Road & Rail.. 106,073 0.1
Transportation-Shipping..... 320,036 0.2
Utilities-Electrical &
Gas....................... 7,361,539 4.8
------------ -----
152,271,242 99.1
Cash and Other Assets,
Less Liabilities.......... 1,327,601 0.9
------------ -----
Net Assets.................. $153,598,843 100.0%
============ =====
</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.
71
<PAGE> 74
INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $118,879,023)........................... $ 152,330,671
Cash denominated in foreign currencies
(identified cost $1,243,760)................. 1,248,083
Cash........................................... 45,782
Receivables:
Dividends and interest....................... 523,664
Fund shares sold............................. 301,730
Unrealized appreciation on foreign currency
forward contracts............................ 352,203
--------------
Total assets............................. 154,802,133
--------------
LIABILITIES:
Payables:
MainStay Management.......................... 107,684
Custodian.................................... 15,550
Transfer agent............................... 2,312
Fund shares redeemed......................... 35
Accrued expenses............................... 64,345
Unrealized depreciation on foreign currency
forward contracts............................ 1,013,364
--------------
Total liabilities........................ 1,203,290
--------------
Net assets..................................... $ 153,598,843
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class.......................... $ 11,677
Institutional Service Class.................. 52
Additional paid-in capital..................... 115,109,037
Accumulated distribution in excess of net
investment income............................ (204,575)
Accumulated undistributed net realized gain on
investments.................................. 5,910,172
Net unrealized appreciation on investments..... 33,451,648
Net unrealized depreciation on translation of
other assets and liabilities in foreign
currencies and foreign currency forward
contracts.................................... (679,168)
--------------
Net assets..................................... $ 153,598,843
==============
Institutional Class
Net assets applicable to outstanding shares.... $ 152,927,969
==============
Shares of capital stock outstanding............ 11,677,509
==============
Net asset value per share outstanding.......... $ 13.10
==============
Institutional Service Class
Net assets applicable to outstanding shares.... $ 670,874
==============
Shares of capital stock outstanding............ 51,734
==============
Net asset value per share outstanding.......... $ 12.97
==============
</TABLE>
STATEMENT OF OPERATIONS
For the period January 1, 1999 through October 31, 1999* and the year ended
December 31, 1998
<TABLE>
<CAPTION>
1999* 1998
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends (a).................... $ 2,330,017 $ 2,152,305
Interest......................... 63,930 633,970
------------ ------------
Total income................. 2,393,947 2,786,275
------------ ------------
Expenses:
Management....................... 1,013,499 1,104,413
Custodian........................ 51,529 69,466
Professional..................... 47,321 52,964
Transfer agent................... 23,070 26,706
Registration..................... 22,060 25,862
Shareholder communication........ 9,152 22,772
Directors........................ 2,626 2,927
Amortization of organization
expense........................ 1,888 2,267
Service.......................... 1,386 1,606
Miscellaneous.................... 27,369 28,622
------------ ------------
Total expenses before
reimbursement............... 1,199,900 1,337,605
Expense reimbursement from
Manager........................ -- (36,690)
------------ ------------
Net expenses................. 1,199,900 1,300,915
------------ ------------
Net investment income.............. 1,194,047 1,485,360
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) from:
Security transactions............ 10,337,607 3,455,663
Option transactions.............. 33,590 (131,742)
Foreign currency transactions.... (541,007) 215,414
------------ ------------
Net realized gain on investments
and foreign currency
transactions..................... 9,830,190 3,539,335
------------ ------------
Net change in unrealized
appreciation (depreciation) on
investments:
Security transactions............ 4,910,478 21,531,002
Translation of other assets and
liabilities in foreign
currencies and foreign currency
forward contracts.............. (382,376) (517,137)
------------ ------------
Net unrealized gain on investments
and foreign currency
transactions..................... 4,528,102 21,013,865
------------ ------------
Net realized and unrealized gain on
investments and foreign currency
transactions..................... 14,358,292 24,553,200
------------ ------------
Net increase in net assets
resulting from operations........ $ 15,552,339 $ 26,038,560
============ ============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
(a) Dividends recorded net of foreign withholding taxes of $324,720 and $296,522
for 1999 and 1998 respectively.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
72
<PAGE> 75
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period January 1, 1999 through October 31, 1999* and the years ended
December 31, 1998 and December 31, 1997.
<TABLE>
<CAPTION>
1999* 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 1,194,047 $ 1,485,360 $ 1,587,348
Net realized gain (loss) on investments................. 10,337,607 3,455,663 (1,080,939)
Net realized gain (loss) on option transactions......... 33,590 (131,742) --
Net realized gain (loss) on foreign currency
transactions.......................................... (541,007) 215,414 10,328,021
Net change in unrealized appreciation on investments.... 4,910,478 21,531,002 2,187,439
Net change in unrealized appreciation (depreciation) on
translation of other assets and liabilities in foreign
currencies and foreign currency forward contracts..... (382,376) (517,137) (4,839,110)
------------ ------------ ------------
Net increase in net assets resulting from operations.... 15,552,339 26,038,560 8,182,759
------------ ------------ ------------
Dividends and distributions to shareholders:
From net investment income and net realized gain on
foreign currency transactions:
Institutional Class................................... -- (2,785,467) (9,819,650)
Institutional Service Class........................... -- (12,219) (50,906)
From net realized gain on investments:
Institutional Class................................... -- -- (2,944,160)
Institutional Service Class........................... -- -- (15,790)
In excess of net investment income:
Institutional Class................................... (397,399) (1,254,408) --
Institutional Service Class........................... (1,740) (5,503) --
------------ ------------ ------------
Total dividends and distributions to shareholders... (399,139) (4,057,597) (12,830,506)
------------ ------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 18,761,908 40,302,257 11,849,479
Institutional Service Class........................... 115,655 44,972 163,090
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... 397,290 4,039,873 12,104,179
Institutional Service Class........................... 1,740 17,705 66,689
------------ ------------ ------------
19,276,593 44,404,807 24,183,437
Cost of shares redeemed:
Institutional Class................................... (21,946,803) (39,356,137) (31,841,602)
Institutional Service Class........................... (189,178) (105,878) (318,224)
------------ ------------ ------------
Increase (decrease) in net assets derived from capital
share transactions.................................. (2,859,388) 4,942,792 (7,976,389)
------------ ------------ ------------
Net increase (decrease) in net assets................. 12,293,812 26,923,755 (12,624,136)
NET ASSETS:
Beginning of period....................................... 141,305,031 114,381,276 127,005,412
------------ ------------ ------------
End of period............................................. $153,598,843 $141,305,031 114,381,276
============ ============ ============
Accumulated distribution in excess of net investment
income at end of period................................. $ (204,575) $ (1,496,798) $ (236,887)
============ ============ ============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
73
<PAGE> 76
INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
JANUARY 1, 1999
THROUGH YEAR ENDED
OCTOBER 31, 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.................................. 0.10 0.05 0.13 0.11
Net realized and unrealized gain (loss) on
investments.......................................... 1.30 1.31 2.12 2.11
Net realized and unrealized gain (loss) on foreign
currency transactions................................ (0.08) (0.08) (0.03) (0.03)
-------- -------- -------- --------
Total from investment operations....................... 1.32 1.28 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..................... (0.03) (0.03) (0.10) (0.10)
-------- -------- -------- --------
Total dividends and distributions...................... (0.03) (0.03) (0.34) (0.32)
-------- -------- -------- --------
Net asset value at end of period....................... $ 13.10 $ 12.97 $ 11.81 $ 11.72
======== ======== ======== ========
Total investment return................................ 11.23%(c) 10.96%(c) 22.41% 22.20%
Ratios (to average net assets)/Supplemental Data:
Net investment income................................ 1.00%+ 0.75%+ 1.14% 0.89%
Net expenses......................................... 1.01%+ 1.26%+ 1.00% 1.25%
Expenses (before reimbursement)...................... 1.01%+ 1.26%+ 1.03% 1.28%
Portfolio turnover rate................................ 35% 35% 51% 51%
Net assets at end of period (in 000's)................. $152,928 $ 671 $140,630 $ 675
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
+ 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.
74
<PAGE> 77
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.
75
<PAGE> 78
VALUE EQUITY FUND
- --------------------------------------------------------------------------------
During the ten months ended October 31, 1999,(1) value investors had something
of a roller coaster ride. In the first quarter of calendar 1999, the market
focused on the largest of the large-cap growth stocks. In the second quarter,
value stocks and smaller-capitalization companies came back into favor after a
long hiatus. The third quarter was challenging for both growth and value stocks,
as the Federal Reserve Board raised the targeted federal funds rate by 25 basis
points for the second time this year on August 24, 1999. Since higher interest
rates make it more expensive for companies to borrow capital and more difficult
for them to meet earnings projections, most sectors suffered setbacks in the
third quarter of 1999--with technology serving as a notable exception. In
October, equity markets rebounded on news that gross domestic product rose 4.8%
in the third quarter, while the Employment Cost Index remained lower than
expected.
Oil prices continued to trend upward through most of the ten months ended
October 31, 1999. During the reporting period, consumer sectors became highly
reactive to interest rates and inflation expectations. Financial stocks, which
suffered as interest rates climbed through much of the reporting period,
recorded a brisk recovery at the end of October 1999.
PERFORMANCE REVIEW
For the ten months ended October 31, 1999, the MainStay Institutional Value
Equity Fund returned 7.91% for Institutional Class shares and 7.65% for Service
Class shares. Both share classes outperformed the 3.46% return of the average
Lipper(2) multi-cap value fund over the same period. Much of the Fund's
outperformance was due to its overweighted positions in traditional value
sectors, including basic materials, energy, and consumer cyclicals, which
performed well as oil prices rose and value stocks soared in the second quarter
of 1999. The Fund also benefited by being underweighted in consumer staples and
health care, which were generally weak sectors throughout the reporting period.
The primary factor influencing the Fund's performance was its strict value
discipline. Although growth-oriented stocks such as large-cap technology issues
generally outperformed the rest of the market, the Fund continued to invest in
stocks that met the Fund's rigorous value standards. Given the high
price/earnings ratios of most technology issues, they did not fall within the
Fund's investment process. One technology stock that did fit the Fund's
investment profile and performed well, however, was Adaptec, which more than
doubled in price over the ten-month reporting period. Electrical equipment
manufacturer Honeywell also benefited from strong demand, rising 37% in the ten
months ended October 31, 1999.
SECTORS AND SECURITIES
In a rising interest-rate environment, financial and insurance stocks tended to
decline. There were exceptions, however, including Citigroup, which rose over
50% for the ten months ended October 31, 1999, and MGIC Investment, which ended
the reporting period at a 52-week high.
After recording substantial gains in the first and second quarters of 1999,
United Health Care declined in September in response to concerns about
litigation against the HMO industry. As the market rallied in October, however,
the stock made a substantial recovery to close the reporting period about 15%
higher than where it started calendar 1999.
Oil and gas services stocks rose with rising oil and gas prices. Among the
strong performers in this sector were Kerr-McGee, Texaco, Union Pacific
Resources, and Ocean Energy. Another strong sector for the ten-month period was
paper and forest products, with Georgia-Pacific, International Paper, and
Bowater all recording gains. Paper container company Smurfit-Stone Container
also gained ground for the reporting period, despite setbacks as the market
anticipated or reacted to moves by the Federal Reserve.
- --------------------------------------------------------------------------------
(1) MainStay Institutional Funds recently changed its fiscal year end from
December 31 to October 31. The previous annual report provided information
through December 31, 1998. This report covers the ten-month fiscal period
from January 1, 1999, through October 31, 1999.
(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.
76
<PAGE> 79
Other positive performers for the Fund included Harrah's Entertainment, Mark IV
Industries, and Reynolds Metals. The Fund's utility stocks had mixed results,
with Energy East and Texas Utilities trending downward, while Illinova and El
Paso Energy recorded substantial gains for the reporting period.
The Fund also had several stocks that performed poorly during the reporting
period. The Fund purchased the stock of Service Corp. International, a leading
funeral service company, after a sharp price decline. Despite cost cutting
initiatives, however, the stock continued to trend downward through the end of
October. Kmart and Sherwin-Williams were other consumer cyclical stocks that
suffered from July through October 1999, amid investor concerns about rising
rates and possible inflation. Despite earlier gains, Federated Department Stores
also lost ground from July through October, to end the ten-month reporting
period almost where it began.
Finally, Philip Morris, which we continue to believe is trading at a significant
discount, suffered from tobacco litigation concerns and was among the Fund's
worst-performing stocks for the ten months ended October 31, 1999.
LOOKING AHEAD
We believe the upsurge in value stocks and smaller-capitalization equities in
the second quarter of 1999 underscores the importance of including value
investments in a well-diversified portfolio. Value stocks typically outperform
in periods in which their earnings growth exceeds that of the broad market. With
the current backdrop of a continued global economic recovery and rising oil
prices, earnings growth for industrial, commodity-oriented, and energy stocks is
gaining considerable momentum. We believe these very favorable earnings
fundamentals, combined with historically-low valuations, make value stocks an
extremely attractive investment opportunity for investors.
Whatever the markets or economy may bring, the Fund will continue to seek
maximum long-term total return from a combination of capital growth and income.
RICHARD A. ROSEN
Portfolio Manager
MacKay Shields LLC
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
77
<PAGE> 80
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
VALUE EQUITY FUND VS
S&P 500 INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
VALUE
S&P 500 INDEX EQUITY FUND
------------- -----------
<S> <C> <C>
01/02/91 250000 250000
03/31/91 286325 288750
06/30/91 285666 295750
09/30/91 300950 321750
12/31/91 326169 341500
03/31/92 317917 367387
06/30/92 323958 365932
09/30/92 334162 371172
12/31/92 351004 412219
03/31/93 366343 436628
06/30/93 368138 441749
09/30/93 377636 467011
12/31/93 386397 473637
03/31/94 371753 474401
06/30/94 373314 476692
09/30/94 391569 500374
12/31/94 391491 479424
03/31/95 429622 521653
06/30/95 470651 554773
09/30/95 508068 590792
12/31/95 538653 620473
03/31/96 567579 660032
06/30/96 593063 668201
09/30/96 611389 690131
12/31/96 662317 759502
03/31/97 680068 755194
06/30/97 798875 843731
09/30/97 858631 913125
12/31/97 883274 931372
03/31/98 1006491 1028722
06/30/98 1039705 967237
09/30/98 936254 801002
12/31/98 1135676 855946
03/31/99 1192347 868319
06/30/99 1276526 986958
09/30/99 1196743 901072
10/31/99 1272497 923651
</TABLE>
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
VALUE EQUITY FUND VS
S&P 500 INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
VALUE
S&P 500 INDEX EQUITY FUND
------------- -----------
<S> <C> <C>
01/02/91 250000 250000
03/31/91 286325 288750
06/30/91 285666 295750
09/30/91 300950 321750
12/31/91 326169 341500
03/31/92 317917 367387
06/30/92 323958 365932
09/30/92 334162 371172
12/31/92 351004 412219
03/31/93 366343 436628
06/30/93 368138 441749
09/30/93 377636 467011
12/31/93 386397 473637
03/31/94 371753 474401
06/30/94 373314 476692
09/30/94 391569 500374
12/31/94 391491 479424
03/31/95 429622 522067
06/30/95 470651 555187
09/30/95 508068 590792
12/31/95 538653 619976
03/31/96 567579 659073
06/30/96 593063 666807
09/30/96 611389 688289
12/31/96 662317 756979
03/31/97 680068 752203
06/30/97 798875 839602
09/30/97 858631 908375
12/31/97 883274 925611
03/31/98 100649 102185
06/30/98 10397 960145
09/30/98 936254 794271
12/31/98 113568 848787
03/31/99 119235 860335
06/30/99 127653 977260
09/30/99 119674 891371
10/31/99 12725 913753
</TABLE>
Source: Lipper, Inc.
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF OCTOBER 31, 1999 AS OF OCTOBER 31, 1999
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
YEAR TO DATE ONE YEAR FIVE YEARS SINCE INCEPTION
- --------------------------------------------------------------------------------------------------------
Value Equity Fund Institutional
Class 7.91% 6.39% 13.16% 15.94%
Value Equity Fund Service Class(+) 7.65 6.12 12.92 15.79
Average Lipper multi-cap value
fund(++) 3.46 11.66 17.17 15.81
S&P 500 Index 12.03 25.67 26.02 20.61
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
Year end Ten Months
TOTAL RETURN %* December 31 ended October 31,
1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
36.60 20.71 14.90 1.22 29.42 22.41 22.63 -8.1 7.91%
</TABLE>
- --------------------------------------------------------------------------------
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%.
* 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.
++ Lipper's new fund classification structure, effective September 1999, is
reflected in this material.
78
<PAGE> 81
MAINSTAY
INSTITUTIONAL FUNDS INC.
VALUE EQUITY FUND
PORTFOLIO OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (93.7%)+
SHARES VALUE
-------------------------
<S> <C> <C>
ALUMINUM (1.9%)
Reynolds Metals Co. ........... 234,800 $ 14,190,725
------------
AUTO PARTS & EQUIPMENT (1.8%)
Federal-Mogul Corp. ........... 255,900 6,429,488
Mark IV Industries, Inc. ...... 371,800 7,157,150
------------
13,586,638
------------
BANKS (7.3%)
Bank of America Corp. ......... 250,920 16,152,975
Chase Manhattan Corp. (The).... 154,200 13,473,225
Fleet Boston Corp. ............ 203,716 8,887,111
Washington Mutual, Inc. ....... 448,300 16,110,781
------------
54,624,092
------------
BUILDING MATERIALS (0.6%)
Sherwin-Williams Co. (The)..... 196,100 4,387,738
------------
CHEMICALS (1.1%)
IMC Global Inc. ............... 621,260 7,921,065
------------
COMPUTER SYSTEMS (2.1%)
Seagate Technology, Inc. (a)... 524,300 15,434,081
------------
CONTAINERS (4.4%)
Owens-Illinois, Inc. (a)....... 410,300 9,821,556
Smurfit-Stone Container Corp.
(a)........................... 714,900 15,459,713
Temple-Inland Inc. ............ 134,600 7,823,625
------------
33,104,894
------------
ELECTRIC POWER COMPANIES (8.0%)
DTE Energy Co. ................ 276,200 9,166,388
Energy East Corp. ............. 364,000 9,145,500
Illinova Corp. ................ 456,800 14,531,950
Niagara Mohawk Holdings Inc.
(a)........................... 749,500 11,898,312
Texas Utilities Co. ........... 400,000 15,500,000
------------
60,242,150
------------
ELECTRICAL EQUIPMENT (1.4%)
Honeywell Inc. ................ 103,000 10,860,062
------------
ELECTRONICS--SEMICONDUCTORS (2.0%)
Adaptec, Inc. (a).............. 331,300 14,908,500
------------
ENGINEERING & CONSTRUCTION (1.7%)
Fluor Corp. ................... 325,100 12,963,362
------------
FINANCIAL--MISCELLANEOUS (8.2%)
American General Corp. ........ 264,500 19,622,594
AXA Financial, Inc. ........... 562,100 18,022,331
Citigroup Inc. ................ 279,500 15,127,938
SLM Holding Corp. ............. 170,000 8,319,375
------------
61,092,238
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
FOOD (3.2%)
ConAgra, Inc. ................. 459,500 $ 11,975,719
Heinz (H.J.) Co. .............. 252,200 12,042,550
------------
24,018,269
------------
HEALTH CARE--MEDICAL PRODUCTS (1.0%)
Becton, Dickinson & Co. ....... 285,700 7,249,637
------------
HEALTH CARE--MISCELLANEOUS (1.8%)
United HealthCare Corp. ....... 260,500 13,464,594
------------
HEAVY DUTY TRUCKS & PARTS (1.0%)
Dana Corp. .................... 250,900 7,417,231
------------
HOTEL/MOTEL (1.6%)
Harrah's Entertainment, Inc.
(a)........................... 427,800 12,379,462
------------
INSURANCE (6.0%)
Allstate Corp. (The)........... 574,042 16,503,707
Conseco, Inc. ................. 363,100 8,827,869
MGIC Investment Corp. ......... 322,700 19,281,325
------------
44,612,901
------------
LEISURE TIME (0.4%)
Callaway Golf Co. ............. 200,900 2,699,594
------------
MACHINERY--DIVERSIFIED (2.4%)
American Standard Cos. Inc.
(a)........................... 472,500 18,043,594
------------
NATURAL GAS DISTRIBUTORS & PIPELINES (3.6%)
Coastal Corp. (The)............ 362,000 15,249,250
El Paso Energy Corp. .......... 286,500 11,746,500
------------
26,995,750
------------
OIL & GAS SERVICES (9.6%)
Noble Affiliates, Inc. ........ 510,600 12,924,563
Ocean Energy, Inc. (a)......... 682,400 6,269,550
Santa Fe Snyder Corp. (a)...... 1,065,600 9,190,800
Union Pacific Resources Group
Inc. ......................... 1,327,800 19,253,100
Unocal Corp. .................. 431,800 14,897,100
Valero Energy Corp. ........... 531,600 9,768,150
------------
72,303,263
------------
OIL--INTEGRATED DOMESTIC (3.9%)
Kerr-McGee Corp. .............. 268,283 14,420,211
Tosco Corp. ................... 590,600 14,949,563
------------
29,369,774
------------
OIL--INTEGRATED INTERNATIONAL (2.1%)
Texaco Inc. ................... 260,800 16,006,600
------------
PAPER & FOREST PRODUCTS (1.8%)
Georgia-Pacific Group.......... 334,800 13,287,375
------------
</TABLE>
- ------------
+ Percentages indicated are based on Fund net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
79
<PAGE> 82
VALUE EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
RETAIL (3.3%)
Federated Department Stores,
Inc. (a)...................... 304,900 $ 13,015,419
Office Depot, Inc. (a)......... 486,600 6,052,087
Payless ShoeSource, Inc. (a)... 127,000 5,818,188
------------
24,885,694
------------
STEEL (1.4%)
USX--U.S. Steel Group.......... 416,400 10,644,225
------------
TELECOMMUNICATIONS--LONG DISTANCE (2.6%)
AT&T Corp. .................... 418,100 19,546,175
------------
TELEPHONE (3.8%)
Bell Atlantic Corp. ........... 257,800 16,740,887
Nippon Telegraph & Telephone
Corp. ADR (b)(c).............. 150,000 11,606,250
------------
28,347,137
------------
TEXTILES--APPAREL MANUFACTURERS (1.0%)
Liz Claiborne, Inc. ........... 190,700 7,628,000
------------
TEXTILES--HOME FURNISHINGS (1.2%)
Shaw Industries, Inc. ......... 563,600 8,700,575
------------
TOBACCO (1.1%)
Philip Morris Cos. Inc. ....... 320,300 8,067,556
------------
TOYS (0.4%)
Mattel, Inc. .................. 220,200 2,945,175
------------
Total Common Stocks
(Cost $664,428,854)........... 701,928,126
------------
<CAPTION>
SHORT-TERM INVESTMENTS (3.5%)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
COMMERCIAL PAPER (3.5%)
American Express Credit Corp.
5.27%, due 11/10/99........... $ 7,925,000 $ 7,914,554
General Electric Co. 5.26%, due
11/4/99....................... 10,000,000 9,995,609
Merrill Lynch & Co., Inc.
5.32%, due 11/8/99............ 8,000,000 7,991,721
------------
Total Short-Term Investments
(Cost $25,901,884)............ 25,901,884
------------
Total Investments
(Cost $690,330,738) (d)....... 97.2% 727,830,010(e)
Cash and Other Assets,
Less Liabilities.............. 2.8 20,887,393
----------- ------------
Net Assets..................... 100.0% $748,717,403
=========== ============
</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 $692,296,014.
(e) At October 31 1999, net unrealized appreciation was $35,533,996 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 $92,805,225 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $57,271,229.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
80
<PAGE> 83
MAINSTAY
INSTITUTIONAL FUNDS INC.
VALUE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $690,330,738)........................... $ 727,830,010
Cash......................................... 3,475
Receivables:
Investment securities sold................... 20,454,080
Dividends.................................... 707,523
Fund shares sold............................. 527,363
Other assets................................... 178,590
--------------
Total assets............................. 749,701,041
--------------
LIABILITIES:
Payables:
MainStay Management.......................... 521,397
Fund shares redeemed......................... 136,942
Transfer agent............................... 38,029
Custodian.................................... 32,892
Accrued expenses............................... 117,032
Unrealized depreciation on foreign currency
forward contract............................. 137,346
--------------
Total liabilities........................ 983,638
--------------
Net assets..................................... $ 748,717,403
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share) 1
billion shares authorized
Institutional Class.......................... $ 58,409
Institutional Service Class.................. 586
Additional paid-in capital..................... 733,849,254
Accumulated undistributed net investment
income....................................... 5,050,776
Accumulated net realized loss on investments... (27,603,548)
Net unrealized appreciation on investments..... 37,499,272
Net unrealized depreciation on foreign currency
forward contract............................. (137,346)
--------------
Net assets..................................... $ 748,717,403
==============
Institutional Class
Net assets applicable to outstanding shares.... $ 741,299,694
==============
Shares of capital stock outstanding............ 58,409,114
==============
Net asset value per share outstanding.......... $ 12.69
==============
Institutional Service Class
Net assets applicable to outstanding shares.... $ 7,417,709
==============
Shares of capital stock outstanding............ 585,816
==============
Net asset value per share outstanding.......... $ 12.66
==============
</TABLE>
STATEMENT OF OPERATIONS
For the period January 1, 1999 through
October 31, 1999* and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999* 1998
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends (a).................... $ 10,772,059 $ 16,935,634
Interest......................... 1,064,057 1,833,972
------------ ------------
Total income................. 11,836,116 18,769,606
------------ ------------
Expenses:
Management....................... 5,585,920 7,963,179
Transfer agent................... 451,916 595,714
Professional..................... 79,060 122,370
Custodian........................ 61,200 76,203
Shareholder communication........ 56,341 157,349
Registration..................... 27,322 45,092
Service.......................... 18,025 26,870
Directors........................ 14,355 23,873
Miscellaneous.................... 25,454 38,594
------------ ------------
Total expenses............... 6,319,593 9,049,244
------------ ------------
Net investment income.............. 5,516,523 9,720,362
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
FORWARD CONTRACT TRANSACTIONS:
Net realized gain (loss) from:
Security transactions............ (19,012,807) 129,651,994
Foreign currency forward contract
transactions................... (463,313) --
------------ ------------
Net realized gain (loss) on
investments and foreign currency
forward contract transactions.... (19,476,120) 129,651,994
------------ ------------
Net change in unrealized
appreciation (depreciation) on
investments:
Security transactions............ 72,502,018 (210,699,021)
Foreign currency forward
contract....................... 65,533 (202,879)
------------ ------------
Net unrealized gain (loss) on
investments and foreign currency
forward contract................. 72,567,551 (210,901,900)
------------ ------------
Net realized and unrealized gain
(loss) on investments............ 53,091,431 (81,249,906)
------------ ------------
Net increase (decrease) in net
assets resulting from
operations....................... $ 58,607,954 $(71,529,544)
============ ============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
(a) Dividends recorded net of foreign withholding taxes of $15,795 and $113,694
for 1999 and 1998 respectively.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
81
<PAGE> 84
VALUE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period January 1, 1999 through October 31, 1999* and the years ended
December 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
1999* 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 5,516,523 $ 9,720,362 $ 11,824,808
Net realized gain (loss) on investments................. (19,012,807) 129,651,994 153,566,785
Net realized loss on foreign currency forward
contract.............................................. (463,313) -- --
Net change in unrealized appreciation (depreciation) on
investments........................................... 72,502,018 (210,699,021) 19,142,088
Net change in unrealized depreciation on foreign
currency forward contract............................. 65,533 (202,879) --
------------- ------------- -------------
Net increase (decrease) in net assets resulting from
operations............................................ 58,607,954 (71,529,544) 184,533,681
------------- ------------- -------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class................................... (11,708) (9,628,522) (11,794,002)
Institutional Service Class........................... (59) (90,474) (93,075)
From net realized gain on investments:
Institutional Class................................... -- (153,210,452) (143,738,757)
Institutional Service Class........................... -- (1,867,811) (1,600,702)
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... (11,767) (173,385,823) (157,226,536)
------------- ------------- -------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 42,954,878 85,177,154 182,364,147
Institutional Service Class........................... 934,186 1,986,558 4,997,992
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... 11,706 171,050,165 155,256,205
Institutional Service Class........................... 59 2,062,197 1,693,777
------------- ------------- -------------
43,900,829 260,276,074 344,312,121
Cost of shares redeemed:
Institutional Class................................... (160,535,158) (197,456,599) (200,632,469)
Institutional Service Class........................... (3,977,132) (2,401,236) (12,233,644)
------------- ------------- -------------
Increase (decrease) in net assets derived from capital
share transactions.................................. (120,611,461) 60,418,239 131,446,008
------------- ------------- -------------
Net increase (decrease) in net assets................. (62,015,274) (184,497,128) 158,753,153
NET ASSETS:
Beginning of period....................................... 810,732,677 995,229,805 836,476,652
------------- ------------- -------------
End of period............................................. $ 748,717,403 $ 810,732,677 $ 995,229,805
============= ============= =============
Accumulated undistributed net investment income at end of
period.................................................. $ 5,050,776 $ 7,156 $ 5,790
============= ============= =============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
82
<PAGE> 85
(THIS PAGE INTENTIONALLY LEFT BLANK)
83
<PAGE> 86
VALUE EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
JANUARY 1, 1999
THROUGH YEAR ENDED
OCTOBER 31, 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.................................. 0.09 0.06 0.18 0.14
Net realized and unrealized gain (loss) on
investments.......................................... 0.84 0.84 (1.58) (1.57)
-------- -------- -------- --------
Total from investment operations....................... 0.93 0.90 (1.40) (1.43)
-------- -------- -------- --------
Less dividends and distributions:
From net investment income............................. (0.00)(b) (0.00)(b) (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...................... (0.00)(b) (0.00)(b) (3.20) (3.16)
-------- -------- -------- --------
Net asset value at end of period....................... $ 12.69 $ 12.66 $ 11.76 $ 11.76
======== ======== ======== ========
Total investment return................................ 7.91%(a) 7.65%(a) (8.10%) (8.30%)
Ratios (to average net assets)/Supplemental Data:
Net investment income................................ 0.84%+ 0.59%+ 1.04% 0.79%
Net expenses......................................... 0.96%+ 1.21%+ 0.98% 1.23%
Portfolio turnover rate................................ 49% 49% 76% 76%
Net assets at end of period (in 000's)................. $741,300 $ 7,418 $800,993 $ 9,740
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
+ Annualized.
(a) Total return is not annualized.
(b) Less than one cent per share.
(c) Institutional Service Class commenced January 1, 1995.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
84
<PAGE> 87
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS(c) 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> 88
BOND FUND
- --------------------------------------------------------------------------------
After moving to lower interest rates three times in 1998, the Federal Reserve
changed course in the first ten months of 1999,(1) raising the targeted federal
funds rate by 25 basis points twice--once on June 30 and again on August 24,
1999. At its October 5, 1999, meeting, the Federal Reserve Board left interest
rates unchanged, but expressed a bias toward continued tightening. Since rising
interest rates generally mean declining bond prices, the Federal Reserve's
activity during the first ten months of 1999 has had a generally negative impact
on domestic bond markets.
From January through October 1999, bond investors focused their attention on
potential signs of inflation, such as rising oil prices and increases in the
Producer Price Index (PPI) and Consumer Price Index (CPI). With the budget
surplus reducing the supply of new Treasury securities, the market for agency
securities has begun to blossom, with greater liquidity and larger issues.
Investors pursuing higher yields have continued to seek selective opportunities
among mortgage-backed securities and asset-backed bonds, which may offer yield
advantages over Treasury securities in certain market environments. Corporate
bonds suffered as rising interest rates made it more expensive for corporations
to raise the capital they may need to meet earnings projections.
PERFORMANCE REVIEW
During the ten months ended October 31, 1999, the MainStay Institutional Bond
Fund returned -1.61% for Institutional Class shares and -1.92% for Service Class
shares. Both share classes underperformed the -1.17% return of the average
Lipper(2) intermediate U.S. government fund over the same period.
Although the Fund was initially positioned with an average maturity close to
that of the market, early in the second quarter, we positioned the Fund very
defensively by shortening duration and emphasizing certain portions of the yield
curve. This strategy had a positive impact on the Fund's relative performance as
interest rates rose throughout the remainder of the ten-month reporting period.
In the first calendar quarter of 1999, investors realized that another global
financial crisis was unlikely. The resulting decrease in demand for new U.S.
Treasury securities caused older Treasury issues to outperform, which had a
positive impact on the Fund's performance. Strategic shifts in the Fund's
emphasis on older and newer Treasuries helped the Fund's performance in the
third calendar quarter of 1999, as newly issued Treasuries tended to outperform
older Treasury issues.
With the budget surplus causing new issuance among Treasury securities to
decline, agency issues continued their quest to become the heir apparent to the
Treasury market. As liquidity and size increased, activity in the agency market
provided opportunities for the Fund to increase its positions at what we
believed were attractive spreads. Overall, agency securities had a positive
impact on the Fund's relative performance during the ten-month period ended
October 31, 1999.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES
Both mortgage-backed and asset-backed securities had a strong first calendar
quarter of 1999, contributing positively to Fund performance as spreads
tightened. Although rising interest rates tended to decrease prepayment risk
among mortgage-backed securities, credit risk tended to increase and the market
moved toward longer maturities. To help manage this concern, in the second
calendar quarter of 1999, the Fund favored securities backed by commercial
mortgages, which tend to be overcollateralized. By selecting securities in the
highest rating category, the Fund sought to manage credit risk. Although spreads
on these securities have widened and tightened, overall they have provided
attractive yields and contributed positively to the Fund's relative returns over
the ten-month reporting period.
The Fund continued to add asset-backed securities in the second and third
calendar quarters of 1999, to take advantage of what we believed to be
attractive spread opportu-
- --------------------------------------------------------------------------------
(1) MainStay Institutional Funds recently changed its fiscal year end from
December 31 to October 31. The previous annual report provided information
through December 31, 1998. This report covers the ten-month fiscal period
from January 1, 1999, through October 31, 1999.
(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.
86
<PAGE> 89
- --------------------------------------------------------------------------------
nities. The Fund concentrated on purchasing airplane lease obligations,
equipment loans, and financial asset-backed securities, and decreased its
holdings in securities backed by auto leases and consumer loans to manage risk
in a rising rate environment. Overall, asset-backed securities had a positive
impact on the Fund's relative performance for the ten months ended October 31,
1999.
CORPORATE BONDS
Despite a strong first calendar quarter of 1999, corporate bonds tended to
underperform as interest rates rose throughout the remainder of the reporting
period. To manage risk, the Fund underweighted corporate bonds from the second
calendar quarter of 1999 through the end of the reporting period. With a focus
on defensive, cyclical, and liquid bonds, the Fund sought to navigate the
troubled waters in the corporate bond market. In the third calendar quarter of
1999, fears of a surge in corporate bond supply caused prices to decline
further, negatively impacting the Fund's performance. Although the supply surge
did not materialize, we believe that supply remains a concern. In our opinion,
the Fund's decision to remain underweighted in the corporate bond sector for
most of the ten-month reporting period contributed positively to the Fund's
relative performance.
LOOKING AHEAD
As the market contends with the uncertainties surrounding Y2K, we expect quality
and liquidity to command a premium. We also anticipate that in the near term,
newly issued securities may outperform older issues and have positioned the Fund
accordingly. We will continue to monitor the economy, Federal Reserve activity,
inflation indicators, and general market sentiment to seek opportunities as they
may arise.
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 LLC
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
87
<PAGE> 90
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL BOND FUND VS LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND
BOND INDEX FUND
----------------------- -------
<S> <C> <C>
01/02/91 250000 $ 250000
03/31/91 256750 256000
06/30/91 260627 258750
09/30/91 275613 274000
12/31/91 290331 285000
03/31/92 285976 281588
06/30/92 297558 291166
09/30/92 312108 301565
12/31/92 312358 303207
03/31/93 326883 315676
06/30/93 336689 324015
09/30/93 347834 333544
12/31/93 346825 332738
03/31/94 335969 323736
06/30/94 331803 319402
09/30/94 333462 320736
12/31/94 334696 321737
03/31/95 351364 336509
06/30/95 374167 356685
09/30/95 381314 363170
12/31/95 399083 379249
03/31/96 389745 370009
06/30/96 391577 372319
09/30/96 398468 378094
12/31/96 410661 389872
03/31/97 407130 387413
06/30/97 421949 400941
09/30/97 436717 413650
12/31/97 450736 423268
03/31/98 457587 429371
06/30/98 469576 439396
09/30/98 492820 457705
12/31/98 493461 456821
03/31/99 487539 451750
06/30/99 482176 446680
09/30/99 484780 448062
10/31/99 486040 449450
</TABLE>
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL BOND FUND VS LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND
BOND INDEX FUND
----------------------- -------
<S> <C> <C>
010/2/91 250000 $ 250000
03/31/91 256750 256000
06/30/91 260627 258750
09/30/91 275613 274000
12/31/91 290331 285000
03/31/92 285976 281588
06/30/92 297558 291166
09/30/92 312108 301565
12/31/92 312358 303207
03/31/93 326883 315676
06/30/93 336689 324015
09/30/93 347834 333544
12/31/93 346825 332738
03/31/94 335969 323736
06/30/94 331803 319402
09/30/94 333462 320736
12/31/94 334696 321737
03/31/95 351364 336148
06/30/95 374167 356324
09/30/95 381314 362810
12/31/95 399083 378212
03/31/96 389745 368978
06/30/96 391577 370902
09/30/96 398468 376288
12/31/96 410661 388121
03/31/97 407130 384849
06/30/97 421949 398345
09/30/97 436717 410615
12/31/97 450736 419984
03/31/98 457587 425625
06/30/98 469576 435604
09/30/98 492820 453392
12/31/98 493461 452463
03/31/99 487539 446968
06/30/99 482176 441472
09/30/99 484780 442846
10/31/99 486040 443766
</TABLE>
Source: Lipper, Inc.
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN* AS OF
PERFORMANCE AS OF OCTOBER 31, 1999 OCTOBER 31, 1999
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
YEAR TO DATE ONE YEAR FIVE YEARS SINCE INCEPTION
- ------------------------------------------------------------------------------------------------------------------
Bond Fund Institutional Class -1.61% -1.05% 7.00% 6.86%
Bond Fund Service Class(+) -1.92 -1.27 6.73 6.71
Average Lipper intermediate U.S. government
fund -1.17 -0.83 6.50 6.38
Lehman Brothers Government/Corporate Bond Index -1.49 -0.66 7.85 7.82
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
Year end Ten months
TOTAL RETURN %* December 31 ended October 31,
1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
14.00 6.39 9.74 -3.31 17.88 2.80 8.57 7.93 -1.61
</TABLE>
- --------------------------------------------------------------------------------
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%.
* 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.
88
<PAGE> 91
MAINSTAY
INSTITUTIONAL FUNDS INC.
BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
LONG-TERM INVESTMENTS (83.7%)+
ASSET-BACKED SECURITIES (11.7%)
<S> <C> <C>
<CAPTION>
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 $ 1,210,480
Aircraft Lease Portfolio
Securitization Ltd.
Series 1996-1 Class CX
6.7875%, due 6/15/06 (b).... 1,801,247 1,753,334
Airplanes Pass-Through Trust
Series 1 Class C
8.15%, due 3/15/19.......... 1,847,286 1,718,900
------------
4,682,714
------------
AUTO LEASES (3.4%)
Premier Auto Trust
Series 1998-4 Class A3
5.69%, due 6/8/02........... 2,235,000 2,222,328
Series 1999-1 Class A3
5.69%, due 11/8/02.......... 1,705,000 1,685,819
Toyota Auto Lease Trust
Series 1998-B Class A1
5.35%, due 7/25/02.......... 2,215,000 2,193,204
------------
6,101,351
------------
CREDIT CARD RECEIVABLES (1.1%)
Chase Credit Card Master Trust
Series 1997-2 Class A
6.30%, due 4/15/03.......... 1,910,000 1,911,853
------------
ELECTRIC UTILITIES (0.8%)
Boston Edison Co.
Series 1999-1 Class A2
6.45%, due 3/15/06.......... 1,525,000 1,515,545
------------
EQUIPMENT LOANS (2.4%)
Case Equipment Loan Trust
Series 1999-A
5.77%, due 8/15/05.......... 1,650,000 1,608,354
Ikon Receivables LLC
Series 1999-1 Class A3
5.99%, due 5/15/05.......... 2,005,000 1,985,171
Newcourt Equipment Trust
Securities
Series 1998-1 Class A3
5.24%, due 12/20/02......... 670,000 661,330
------------
4,254,855
------------
FINANCE (0.8%)
Green Tree Financial Corp.
Series 1999-4 Class A4
6.64%, due 5/1/31........... 1,495,000 1,478,749
------------
HOME EQUITY LOAN (0.6%)
Conseco Finance
Securitizations Corp.
Series 1999-F Class A2
6.72%, due 10/15/14......... 1,010,000 1,005,707
------------
Total Asset-Backed Securities
(Cost $21,491,169).......... 20,950,774
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
CORPORATE BONDS (22.1%)
AUTO PARTS & EQUIPMENT (1.9%)
Delphi Automotive Systems
Corp.
7.125%, due 5/1/29.......... $ 1,030,000 $ 929,544
Ford Motor Co.
7.45%, due 7/16/31.......... 835,000 824,855
Pennzoil-Quaker State Co.
7.375%, due 4/1/29.......... 1,850,000 1,688,773
------------
3,443,172
------------
BANKS (1.7%)
Banc One Corp.
7.60%, due 5/1/07........... 2,110,000 2,154,542
Bankamerica Corp.
6.625%, due 6/15/04......... 870,000 862,953
------------
3,017,495
------------
BROADCAST/MEDIA (0.6%)
Liberty Media Corp.
8.50%, due 7/15/29 (a)...... 1,035,000 1,055,183
------------
CONSUMER FINANCIAL SERVICES (1.7%)
Fremont General Corp.
7.70%, due 3/17/04.......... 1,460,000 1,372,911
Household Finance Corp.
6.50%, due 11/15/08......... 1,850,000 1,746,289
------------
3,119,200
------------
ELECTRIC UTILITIES (1.2%)
National Rural Utilities
Cooperative Finance Corp.
6.20%, due 2/1/08........... 2,165,000 2,056,295
------------
FINANCE-AUTO LOANS (1.0%)
Ford Motor Credit Corp.
7.375%, due 10/28/09........ 1,805,000 1,823,357
------------
FINANCIAL SERVICES (1.1%)
Salomon, Smith Barney
Holdings Inc.
6.25%, due 5/15/03.......... 695,000 679,119
</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> 92
BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
CORPORATE BONDS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
FINANCIAL SERVICES (CONTINUED)
Sears Roebuck
Acceptance Corp.
Medium-Term Note
Series IV
6.36%, due 12/4/01......... $ 1,360,000 $ 1,340,688
------------
2,019,807
------------
BEVERAGES--ALCOHOLIC (0.5%)
Seagram, Joseph E. & Sons Inc.
5.79%, due 4/15/01.......... 880,000 865,990
------------
GAS DISTRIBUTION (0.9%)
Southern Union Co.
8.25%, due 11/15/29......... 1,600,000 1,637,792
------------
HEAVY DUTY TRUCKS (0.8%)
DaimlerChrysler North America
Holdings, Inc.
7.20%, due 9/1/09........... 1,365,000 1,368,617
------------
INDUSTRIAL (0.6%)
Vastar Resources, Inc.
6.50%, due 4/1/09........... 1,040,000 994,178
------------
INSURANCE (1.1%)
Conseco, Inc.
6.40%, due 6/15/01.......... 2,010,000 1,948,112
------------
INVESTMENT BANK/BROKERAGE (1.4%)
Donaldson, Lufkin & Jenrette
Inc.
5.875%, due 4/1/02.......... 2,175,000 2,122,800
Lehman Brothers Holdings,
Inc.
6.625%, due 2/5/06.......... 480,000 460,642
------------
2,583,442
------------
MEDIA (1.5%)
Turner Broadcasting, Inc.
8.375%, due 7/1/13.......... 2,513,000 2,682,954
------------
OIL--INTEGRATED INTERNATIONAL (1.9%)
Amerada Hess Corp.
7.875%, due 10/1/29......... 2,175,000 2,163,603
Chevron Corp.
6.625%, due 10/1/04......... 1,150,000 1,149,195
------------
3,312,798
------------
RETAIL STORES--GENERAL MERCHANDISE (0.4%)
Wal-Mart Stores Inc.
6.875%, due 8/10/09......... 725,000 727,704
------------
TELECOMMUNICATIONS--LONG DISTANCE (1.9%)
AT&T Corp.
6.00%, due 3/15/09.......... 1,840,000 1,704,226
Sprint Capital Corp.
6.875%, due 11/15/28........ 1,840,000 1,688,200
------------
3,392,426
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
TRANSPORTATION (1.9%)
Atlas Air, Inc.
Series 1999-1C
8.77%, due 1/2/11........... $ 1,745,000 $ 1,687,066
Northwest Airlines Inc.
Series 1999-1B
7.36%, due 2/1/20........... 1,796,399 1,675,358
------------
3,362,424
------------
Total Corporate Bonds
(Cost $40,269,401).......... 39,410,946
------------
MORTGAGE-BACKED SECURITIES (5.1%)
COMMERCIAL MORTGAGE LOANS
(COLLATERALIZED MORTGAGE OBLIGATIONS) (5.1%)
Asset Securitization Corp.
Series 1997-MD7 Class A1B
7.41%, due 1/13/30.......... 1,935,000 1,908,336
Commercial Mortgage Asset
Trust
Series 1999-C2 Class A2
7.546%, due 11/17/31........ 1,010,000 1,019,151
GMAC Commercial Mortgage
Securities Inc.
Series 1998-5 Class A2
6.42%, due 8/15/35.......... 1,100,000 1,045,946
GS Mortgage Securities Corp.
II
Series 1997-GL Class A2B
6.86%, due 7/13/30.......... 890,000 885,906
Merrill Lynch Mortgage
Investors, Inc.
Series 1998-C2 Class A1
6.22%, due 2/15/30.......... 885,033 862,783
Series 1995-C2 Class A1
7.108%, due 6/15/21 (b)..... 1,004,634 1,004,091
Series 1999-C1 Class A2
7.56%, due 11/15/31......... 1,000,000 1,018,270
Salomon Brothers Mortgage
Securities, Inc.
Series 1997-TZH Class A1
7.15%, due 3/25/25.......... 1,391,870 1,397,201
------------
Total Mortgage-Backed
Securities
(Cost $9,248,295)........... 9,141,684
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
90
<PAGE> 93
MAINSTAY
INSTITUTIONAL FUNDS INC.
U.S. GOVERNMENT &
FEDERAL AGENCIES (41.1%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------------------------
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION (8.8%)
5.125%, due 2/13/04 (c)..... $ 9,735,000 $ 9,258,472
5.625%, due 3/15/01......... 6,435,000 6,399,929
------------
15,658,401
------------
UNITED STATES TREASURY BONDS (17.2%)
6.125%, due 8/15/29 (c)..... 25,540,000 25,428,135
8.75%, due 8/15/20 (c)...... 1,830,000 2,292,642
8.875%, due 8/15/17......... 2,374,000 2,961,185
------------
30,681,962
------------
UNITED STATES TREASURY NOTES (15.1%)
5.625%, due 11/30/00 (c).... 630,000 629,899
6.00%, due 8/15/09.......... 395,000 394,443
6.25%, due 2/28/02-2/15/03
(c)....................... 8,205,000 8,275,981
7.00%, due 7/15/06.......... 12,950,000 13,515,786
7.875%, due 11/15/04........ 3,760,000 4,051,400
------------
26,867,509
------------
Total U.S. Government &
Federal Agencies
(Cost $73,857,265).......... 73,207,872
------------
YANKEE BONDS (3.7%)
BUILDING SOCIETIES (1.2%)
Abbey National PLC
7.95%, due 10/26/29......... 1,975,000 2,018,371
------------
ELECTRIC UTILITIES (0.7%)
United Utilities PLC
6.45%, due 4/1/08........... 1,425,000 1,315,246
------------
OIL & GAS--EQUIPMENT & SERVICES (0.9%)
Petroleum Geo-Services ASA
8.15%, due 7/15/29.......... 1,610,000 1,627,774
------------
SPECIALIZED SERVICES (0.9%)
WPP Finance (USA) Corp.
6.625%, due 7/15/05......... 1,685,000 1,597,987
------------
Total Yankee Bonds
(Cost $6,658,423)........... 6,559,378
------------
Total Long-Term Investments
(Cost $151,524,553)......... 149,270,654
------------
</TABLE>
SHORT-TERM INVESTMENTS (22.8%)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
COMMERCIAL PAPER (22.8%)
American Express Credit Corp.
5.25%, due 11/23/99......... $ 7,000,000 $ 6,977,509
Bellsouth Telecommunications
Inc.
5.26%, due 11/3/99.......... 6,185,000 6,183,189
General Electric Co.
5.26%, due 11/19/99......... 5,000,000 4,986,831
IBM Credit Corp.
5.24%, due 11/5/99.......... 5,870,000 5,866,577
Salomon Smith Barney Inc.
5.28%, due 11/5/99.......... 5,045,000 5,042,037
UBS Finance (DE), Inc.
5.30%, due 11/17/99......... 5,000,000 4,988,203
Xerox Credit Corp.
5.33%, due 11/1/99.......... 6,520,000 6,520,000
------------
Total Short-Term Investments
(Cost $40,564,346).......... 40,564,346
------------
Total Investments
(Cost $192,088,899) (d)..... 106.5% 189,835,000(e)
Liabilities in Excess of
Cash and Other Assets....... (6.5) (11,571,999)
------------ -----------
Net Assets................... 100.0% $178,263,001
============ ===========
</TABLE>
- ------------
(a) May be sold to institutional investors only.
(b) Floating rate. Rate shown is the rate in effect at October 31, 1999.
(c) Represents securities out on loan or a portion of which is out on loan.
(See Note 2(O))
(d) The cost for Federal income tax purposes is $192,299,296.
(e) At October 31, 1999 net unrealized depreciation was $2,464,296, 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 $441,788 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $2,906,084
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
91
<PAGE> 94
BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $192,088,899)............................. $189,835,000
Cash............................................. 7,069
Collateral held for securities loaned at value
(Note 2(O)).................................... 45,345,360
Receivables:
Investment securities sold..................... 9,063,702
Interest....................................... 2,053,968
Fund shares sold............................... 60,480
------------
Total assets............................... 246,365,579
------------
LIABILITIES:
Securities lending collateral (Note 2(O))........ 45,345,360
Payables:
Investment securities purchased................ 22,568,563
MainStay Management............................ 103,034
Fund shares redeemed........................... 13,456
Custodian...................................... 12,500
Transfer agent................................. 2,573
Accrued expenses................................. 57,092
------------
Total liabilities.......................... 68,102,578
------------
Net assets....................................... $178,263,001
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class............................ $ 17,908
Institutional Service Class.................... 386
Additional paid-in capital....................... 187,598,626
Accumulated undistributed net investment
income......................................... 8,597,008
Accumulated net realized loss on investments..... (15,697,028)
Net unrealized depreciation on investments....... (2,253,899)
------------
Net assets....................................... $178,263,001
============
Institutional Class
Net assets applicable to outstanding shares...... $174,520,794
============
Shares of capital stock outstanding.............. 17,908,432
============
Net asset value per share
outstanding.................................... $ 9.75
============
Institutional Service Class
Net assets applicable to outstanding shares...... $ 3,742,207
============
Shares of capital stock outstanding.............. 386,224
============
Net asset value per share
outstanding.................................... $ 9.69
============
</TABLE>
STATEMENT OF OPERATIONS
For the period January 1, 1999 through
October 31, 1999* and the year ended December 31, 1998
<TABLE>
<CAPTION>
1999* 1998
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Income:
Interest......................... $ 9,709,098 $ 11,581,029
------------ ------------
Expenses:
Management....................... 1,156,712 1,373,917
Professional..................... 42,589 49,692
Custodian........................ 40,064 34,583
Transfer agent................... 25,348 28,905
Registration..................... 24,569 26,293
Shareholder communication........ 11,937 31,055
Service.......................... 9,044 8,980
Directors........................ 3,420 4,514
Miscellaneous.................... 11,222 17,440
------------ ------------
Total expenses before
reimbursement............... 1,324,905 1,575,379
Expense reimbursement from
Manager........................ (159,149) (192,482)
------------ ------------
Net expenses................. 1,165,756 1,382,897
------------ ------------
Net investment income.............. 8,543,342 10,198,132
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on
investments...................... (8,369,780) 5,448,970
Net change in unrealized
appreciation on investments...... (3,487,234) (1,510,793)
------------ ------------
Net realized and unrealized gain
(loss) on investments............ (11,857,014) 3,938,177
------------ ------------
Net increase (decrease) in net
assets resulting from
operations....................... $ (3,313,672) $ 14,136,309
============ ============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
92
<PAGE> 95
MAINSTAY
INSTITUTIONAL FUNDS INC.
BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period January 1, 1999 through October 31, 1999* and the years ended
December 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
1999* 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 8,543,342 $ 10,198,132 $ 11,105,409
Net realized gain (loss) on investments................. (8,369,780) 5,448,970 1,673,440
Net change in unrealized appreciation on investments.... (3,487,234) (1,510,793) 1,794,244
------------- ------------- -------------
Net increase (decrease) in net assets resulting from
operations............................................ (3,313,672) 14,136,309 14,573,093
------------- ------------- -------------
Dividends to shareholders:
From net investment income:
Institutional Class................................... (1,803) (9,963,260) (10,960,664)
Institutional Service Class........................... (39) (233,262) (87,118)
------------- ------------- -------------
Total dividends to shareholders..................... (1,842) (10,196,522) (11,047,782)
------------- ------------- -------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 12,117,127 27,884,675 9,276,484
Institutional Service Class........................... 5,168,118 4,359,791 645,193
Net asset value of shares issued to shareholders in
reinvestment of dividends:
Institutional Class................................... 1,777 9,817,383 10,960,664
Institutional Service Class........................... 31 181,161 86,673
------------- ------------- -------------
17,287,053 42,243,010 20,969,014
Cost of shares redeemed:
Institutional Class................................... (16,799,256) (43,075,789) (16,896,833)
Institutional Service Class........................... (5,601,072) (1,791,909) (826,594)
------------- ------------- -------------
Increase (decrease) in net assets derived from capital
share transactions.................................. (5,113,275) (2,624,688) 3,245,587
------------- ------------- -------------
Net increase (decrease) in net assets................. (8,428,789) 1,315,099 6,770,898
NET ASSETS:
Beginning of period....................................... 186,691,790 185,376,691 178,605,793
------------- ------------- -------------
End of period............................................. $ 178,263,001 $ 186,691,790 $ 185,376,691
============= ============= =============
Accumulated undistributed net investment income at end of
period.................................................. $ 8,597,008 $ 1,610 $ --
============= ============= =============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
93
<PAGE> 96
BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
JANUARY 1, 1999
THROUGH YEAR ENDED
OCTOBER 31, 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.................................. 0.47 0.47 0.57 0.54
Net realized and unrealized gain (loss) on
investments.......................................... (0.63) (0.66) 0.20 0.20
-------- -------- -------- --------
Total from investment operations....................... (0.16) (0.19) 0.77 0.74
-------- -------- -------- --------
Less dividends from net investment income.............. (0.00)(b) (0.00)(b) (0.57) (0.54)
-------- -------- -------- --------
Net asset value at end of period....................... $ 9.75 $ 9.69 $ 9.91 $ 9.88
======== ======== ======== ========
Total investment return................................ (1.61%)(a) (1.92%)(a) 7.93% 7.73%
Ratios (to average net assets)/Supplemental Data:
Net investment income................................ 5.55%+ 5.30%+ 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................................ 245% 245% 335% 335%
Net assets at end of period (in 000's)................. $174,521 $ 3,742 $182,402 $ 4,290
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
+ Annualized.
(a) Total return is not annualized.
(b) Less than one cent per share.
(c) Institutional Service Class commenced January 1, 1995.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
94
<PAGE> 97
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS(c) 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> 98
INDEXED BOND FUND
- --------------------------------------------------------------------------------
The ten months ended October 31, 1999,(1) were challenging for domestic bond
investors. The Federal Reserve Board, which had moved to lower targeted interest
rates three times in 1998, expressed concern over rapid economic growth, high
consumer spending, and the possibility of impending inflation. In successive
preemptive moves, the Federal Reserve raised the targeted federal funds rate by
25 basis points on June 30 and by another 25 basis points on August 24, 1999.
Since bond prices generally decline when interest rates rise, these moves had a
negative impact on the bond market, even though they were anticipated by many
investors. The possibility of further rate hikes has also had a dampening effect
on domestic bond markets, as investors carefully review economic data and
employment figures seeking indications of what the Federal Reserve Board is
likely to do next.
COMPETITIVE PERFORMANCE IN A CHALLENGING MARKET
For the ten months ended October 31, 1999, the MainStay Institutional Indexed
Bond Fund returned -1.56% for Institutional Class shares and -1.65% for Service
Class shares. Both share classes underperformed the Fund's benchmark, the
Salomon Smith Barney Broad Investment Grade (BIG) Bond Index,(2) which returned
- -0.37% for the same period. On the other hand, both share classes outperformed
the -2.20% return of average Lipper(3) general U.S. government fund for the ten
months ended October 31, 1999. Within the bond fund universe, active managers
did not fare well against indexed funds during the ten-month period.
The Fund closely tracked its benchmark in terms of quality, duration, and
average coupon throughout the ten months ended October 31, 1999. Investors
should anticipate that the Fund will underperform the BIG Bond Index by at least
a small margin, since the Fund carries real-world investment costs that are not
incurred by a hypothetical investment in an index. As of October 31, 1999, the
average quality of securities in the Fund's portfolio and the BIG Bond Index was
AAA.(4) The Fund's yield to maturity was 6.86%, versus 6.85% for the BIG Bond
Index. The Fund's effective duration was 4.89 years, compared to 4.99 years for
the BIG Bond Index. Finally, the Fund's average coupon of 6.70% slightly trailed
the 6.74% average coupon of bonds in the Index.
SECTOR-BY-SECTOR RESULTS
The best-performing sectors of the BIG Bond Index were mortgage-backed bonds,
which returned 2.08%, and corporate bonds, which returned -1.35% for the ten
months ended October 31, 1999. The Treasury sector was the worst-performing
sector, returning -1.63% for the reporting period. Within the corporate bond
sector, bonds rated BBB returned -0.47%, while bonds rated AA returned -0.60%.
The performance of various sectors within the Fund's portfolio closely reflected
the results of the corresponding BIG Bond Index components, within acceptable
tracking variations.
Although the Federal Reserve's moves to tighten monetary policy influenced the
downtrend in Treasury returns, there were also other contributing factors. In
1998, many investors concerned about a global financial crisis had taken refuge
in Treasury securities, viewing them as a potential "safe haven" until economic
difficulties in Asia, Russia, and Latin America could be resolved. After the
devaluation of the Brazilian real in early 1999, the Brazilian economy took a
dramatic and unexpected upturn. The Japanese economy continued to strengthen
throughout the ten-month reporting period, and other Asian economies were
bolstered
- --------------------------------------------------------------------------------
(1) MainStay Institutional Funds recently changed its fiscal year end from
December 31 to October 31. The previous annual report provided information
through December 31, 1998. This report covers the ten-month fiscal period
from January 1, 1999, through October 31, 1999.
(2) 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.
(3) 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.
(4) Currently debt rated AAA has the highest rating assigned by Standard &
Poor's and according to Standard & Poor's, the obligor's capacity to meet
its financial commitment on the obligation is extremely strong. Debt rated
AA differs from the highest rated issues only in small degree. The obligor's
capacity to meet its financial commitment on the obligation is very strong.
Debt rated BBB exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial commitment on the
obligation. These ratings are based solely on the creditworthiness of the
bonds in the portfolio and are not meant to represent the stability or
safety of the Fund.
96
<PAGE> 99
by economic stimulus packages. As economies began to stabilize, the "flight to
quality" premium investors had paid to purchase U.S. government bonds began to
unwind, and as demand decreased, prices declined and rates began to rise.
The rising rate environment had a negative impact on corporate bonds. Investors
were concerned about the ability of corporations to sustain profitability as
borrowing costs increased. At the same time, extremely heavy bond supply and
insufficient demand caused corporate bond prices to decline, particularly among
utility and industrial bonds. In October, similar supply and demand factors took
a toll on high-yield bonds, which otherwise experienced a positive but volatile
ten months. Mortgage-backed securities benefited from strong performance among
bonds with higher coupons.
INDEX CHANGES AND MARKET FORCES
During the reporting period, the Lehman Brothers Aggregate Bond Index(5) raised
the minimum total issue size required for inclusion in the Index from $100
million to $150 million. Salomon did not follow suit with the BIG Bond Index and
as a result, there was no impact on the Fund.
As of October 31, 1999, many investors believed that the Federal Reserve Board
would again tighten monetary policy by raising the targeted federal funds rate
another 25 basis points. During the third calendar quarter of 1999, gross
domestic product (GDP) data showed the U.S. economy growing at 4.8% while
inflation, as measured by the Employment Cost Index, grew only 0.8%, despite
much higher expectations. These numbers have dramatically improved the outlook
for Treasury securities going forward and have combined with dwindling supply in
the corporate bond market to produce a fairly dramatic spread tightening, which
has been good news for bond investors.
Wherever the markets, the economy, or investor expectations may turn, the Fund
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 LLC
- --------------------------------------------------------------------------------
(5) The Lehman Brothers Aggregate Bond Index includes fixed-rate debt issues
rated investment grade or higher by Moody's Investors Service, Standard &
Poor's, or Fitch Investor's Service, in that order. All issues must have at
least one year left to maturity and have an outstanding par value of at
least $150 million. The Lehman Brothers Aggregate Bond Index is comprised of
the Lehman Brothers Government/Corporate, the Mortgage-Backed Securities,
and the Asset-Backed Securities Indices. An investment cannot be made
directly into an index.
Past performance is no guarantee of future results.
97
<PAGE> 100
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
INDEXED BOND FUND VS
SALOMON SMITH BARNEY BIG BOND INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
INDEXED BOND SALOMON SMITH BARNEY BIG BOND
FUND INDEX
----------------------------------- -----------------------------
<S> <C> <C>
01/02/91 250000 $ 250000
03/31/91 256575 255500
06/30/91 261193 259500
09/30/91 276081 273250
12/31/91 289968 286750
03/31/92 286605 283362
06/30/92 298241 293906
09/30/92 311095 306558
12/31/92 311935 307085
03/31/93 324943 319709
06/30/93 333944 328212
09/30/93 342760 337282
12/31/93 342897 336674
03/31/94 333261 326647
06/30/94 330029 322697
09/30/94 331811 323912
12/31/94 333138 325086
03/31/95 349995 340921
06/30/95 371415 361279
09/30/95 378434 368065
12/31/95 394858 383841
03/31/96 387948 375808
06/30/96 389849 376856
09/30/96 397139 382793
12/31/96 409133 393620
03/31/97 407006 391000
06/30/97 421658 404470
09/30/97 435657 417940
12/31/97 448509 429101
03/31/98 455730 435494
06/30/98 466257 445083
09/30/98 485607 463062
12/31/98 487598 464316
03/31/99 485355 458794
06/30/99 480841 453271
09/30/99 484303 456245
10/31/99 485756 457095
</TABLE>
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
INDEXED BOND FUND VS
SALOMON SMITH BARNEY BIG BOND INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
INDEXED BOND SALOMON SMITH BARNEY BIG BOND
FUND INDEX
----------------------------------- -----------------------------
<S> <C> <C>
01/02/91 250000 $ 250000
03/31/91 256575 255500
06/30/91 261193 259500
09/30/91 276081 273250
12/31/91 289968 286750
03/31/92 286605 283362
06/30/92 298241 293906
09/30/92 311095 306558
12/31/92 311935 307085
03/31/93 324943 319709
06/30/93 333944 328212
09/30/93 342760 337282
12/31/93 342897 336674
03/31/94 333261 326647
06/30/94 330029 322697
09/30/94 331811 323912
12/31/94 333138 325086
03/31/95 349995 341567
06/30/95 371415 361925
09/30/95 378434 368065
12/31/95 394858 383515
03/31/96 387948 375488
06/30/96 389849 376186
09/30/96 397139 382119
12/31/96 409133 392477
03/31/97 407006 389492
06/30/97 421658 402923
09/30/97 435657 415981
12/31/97 448509 426819
03/31/98 455730 432780
06/30/98 466257 441920
09/30/98 485607 459804
12/31/98 487598 460362
03/31/99 485355 454881
06/30/99 480841 448979
09/30/99 484303 451930
10/31/99 485756 452773
</TABLE>
Source: Lipper, Inc.
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF OCTOBER 31, 1999 AS OF OCTOBER 31, 1999
- --------------------------------------------------------------------------------------------------------------
YEAR TO DATE ONE YEAR FIVE YEARS SINCE INCEPTION
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Indexed Bond Fund Institutional Class -1.56% -0.78% 7.17% 7.07%
Indexed Bond Fund Service Class(+) -1.65 -0.93 6.97 6.95
Average Lipper general U.S. government fund -2.20 -1.74 6.79 6.59
Salomon Smith Barney BIG Bond Index -0.37 0.49 7.94 7.81
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
Year end Ten months
TOTAL RETURN %* December 31 ended October 31
1991 1992 1993 1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
14.70 7.09 9.64 -3.44 18.07 2.55 9.01 8.21 -1.56
</TABLE>
- --------------------------------------------------------------------------------
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%.
* 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.
98
<PAGE> 101
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
LONG-TERM INVESTMENTS (98.1%)+
CORPORATE BONDS (21.1%)
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
AUTO LEASING (0.7%)
Ryder System Inc.
9.875%, due 5/15/17............ $1,000,000 $ 1,112,500
------------
AUTOMOTIVE RENTALS (0.5%)
Hertz Corp.
7.00%, due 7/15/03............. 700,000 697,375
------------
BANKS (0.7%)
First Union Corp.
8.77%, due 11/15/04............ 1,000,000 1,001,250
------------
BEVERAGES--SOFT DRINKS (0.4%)
Coca-Cola Enterprises, Inc.
8.50%, due 2/1/22.............. 500,000 545,000
------------
BROADCAST/MEDIA (2.8%)
Cox Communications, Inc.
6.50%, due 11/15/02............ 1,200,000 1,182,000
Viacom Inc.
8.25%, due 8/1/22.............. 3,000,000 2,951,250
------------
4,133,250
------------
CHEMICALS (0.6%)
DuPont (E.I.) de Nemours & Co.
8.125%, due 3/15/04............ 800,000 840,000
------------
ELECTRIC POWER COMPANIES (1.2%)
PP & L Resources, Inc.
7.30%, due 3/1/24.............. 1,000,000 922,500
Texas Utility Electric Co.
8.25%, due 4/1/04.............. 800,000 827,000
------------
1,749,500
------------
ELECTRONICS--SEMICONDUCTORS (1.1%)
Motorola, Inc.
8.40%, due 8/15/31............. 1,500,000 1,666,875
------------
ENTERTAINMENT (0.4%)
Walt Disney Co. (The)
6.75%, due 3/30/06............. 600,000 593,250
------------
FINANCE (3.3%)
American Express Credit Corp.
6.13%, due 11/15/01............ 2,000,000 1,990,000
Commercial Credit Co.
8.70%, due 6/15/10............. 450,000 491,063
KFW International Finance, Inc.
9.125%, due 5/15/01............ 500,000 520,000
Morgan Stanley Group Inc.
7.50%, due 2/1/24.............. 1,000,000 933,750
Private Export Funding Corp.
8.35%, due 1/31/01............. 1,000,000 1,026,250
------------
4,961,063
------------
INSURANCE (1.9%)
Aetna Services Inc.
7.625%, due 8/15/26............ $3,000,000 $ 2,805,000
------------
MACHINERY (0.4%)
Caterpillar, Inc.
9.00%, due 4/15/06............. 500,000 540,625
------------
OFFICE EQUIPMENT & SUPPLIES (0.8%)
Xerox Corp.
5.91%, due 4/1/37.............. 1,250,000 1,243,750
------------
OIL--INTEGRATED DOMESTIC (0.7%)
USX--Marathon Corp.
7.20%, due 2/15/04............. 1,100,000 1,090,375
------------
OIL--INTEGRATED INTERNATIONAL (0.3%)
Texaco Capital Inc.
9.75%, due 3/15/20............. 350,000 428,313
------------
PAPER & FOREST PRODUCTS (0.4%)
Scott Paper Co.
7.00%, due 8/15/23............. 650,000 603,688
------------
RETAIL STORES--APPAREL (1.1%)
Limited, Inc.
7.50%, due 3/15/23............. 1,900,000 1,655,375
------------
TELECOMMUNICATIONS--LONG DISTANCE (2.5%)
AT&T Corp.
8.625%, due 12/1/31............ 2,500,000 2,600,000
Sprint Corp.
9.50%, due 4/1/03.............. 1,000,000 1,071,250
------------
3,671,250
------------
TELEPHONE INTEGRATED (0.6%)
SBC Communications, Inc.
7.375%, due 7/15/43............ 1,000,000 938,750
------------
UTILITY--ELECTRIC (0.7%)
Duke Capital Corp.
6.25%, due 7/15/05............. 1,200,000 1,135,500
------------
Total Corporate Bonds
(Cost $32,666,636)............. 31,412,689
------------
INTERNATIONAL
CORPORATE BONDS (2.7%)
BANKS (2.7%)
ABN Amro Bank, NV
Chicago Branch
7.55%, due 6/28/06............. 800,000 809,000
Bayerische Landesbank
Girozentrale
New York Branch
6.20%, due 2/9/06.............. 2,900,000 2,755,000
</TABLE>
- ------------
+ Percentages indicated are based on Fund net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
99
<PAGE> 102
INDEXED BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<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 $ 430,000
------------
Total International Corporate
Bonds
(Cost $4,164,190).............. 3,994,000
------------
U.S. GOVERNMENT &
FEDERAL AGENCIES (71.6%)
FEDERAL HOME LOAN BANK
(MEDIUM TERM NOTE) (1.0%)
8.00%, due 9/11/01............. 1,400,000 1,443,848
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION (0.7%)
6.45%, due 4/29/09............. 1,100,000 1,047,563
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(MORTGAGE PASS-THROUGH SECURITIES) (9.3%)
6.00%, due 9/1/02-6/1/29....... 2,423,138 2,305,102
6.50%, due 10/1/01-7/1/29...... 7,844,242 7,625,253
7.00%, due 6/1/11-12/1/27...... 2,303,344 2,271,548
7.50%, due 9/1/11-3/1/27....... 1,268,205 1,276,701
8.00%, due 7/1/26.............. 349,136 356,335
------------
13,834,939
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (0.6%)
(zero coupon), due 7/5/14...... 2,500,000 907,125
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MEDIUM TERM NOTE)(0.3%)
5.83%, due 12/10/99............ 500,000 500,205
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (16.4%)
5.50%, due 3/1/05.............. 1,175,444 1,118,141
6.00%, due 5/1/29.............. 5,075,773 4,729,960
6.50%, due 7/1/03-2/1/28....... 9,675,490 9,318,149
7.00%, due 8/1/03-1/1/28....... 3,309,416 3,278,459
7.50%, due 11/1/26-1/1/28...... 1,388,892 1,391,489
8.00%, due 7/1/07-1/1/28....... 3,266,108 3,328,903
9.50%, due 3/1/16-9/1/19....... 1,224,481 1,302,149
------------
24,467,250
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION I
(MORTGAGE PASS-THROUGH SECURITIES) (7.8%)
6.00%, due 10/15/28-12/15/28... 3,975,550 3,688,555
6.50%, due 2/15/29-3/15/29..... 3,449,716 3,295,548
7.00%, due 3/15/07-12/15/27.... 2,194,306 2,164,535
7.50%, due 1/15/09-11/15/26.... 1,704,190 1,715,010
8.00%, due 6/15/26-9/15/27..... 319,340 326,324
8.50%, due 7/15/26-11/15/26.... 363,613 378,158
------------
11,568,130
------------
TENNESSEE VALLEY AUTHORITY (0.7%)
Power Board 1994 Series A
7.85%, due 6/15/44............. $1,000,000 $ 1,016,250
------------
UNITED STATES TREASURY BONDS (12.0%)
7.125%, due 2/15/23............ 600,000 646,488
7.25%, due 5/15/16............. 1,500,000 1,615,140
7.50%, due 11/15/16............ 800,000 882,024
7.625%, due 11/15/22........... 400,000 454,144
8.00%, due 11/15/21............ 1,000,000 1,173,730
8.125%, due 8/15/19-5/15/21.... 1,300,000 1,535,955
8.50%, due 2/15/20............. 400,000 488,620
8.75%, due 5/15/17-8/15/20..... 1,500,000 1,869,175
8.875%, due 2/15/19............ 600,000 754,134
9.375%, due 2/15/06............ 530,000 616,703
9.875%, due 11/15/15........... 600,000 799,446
10.375%, due 11/15/12.......... 500,000 623,040
11.25%, due 2/15/15............ 400,000 583,540
11.75%, due 2/15/01............ 1,700,000 1,825,664
11.875%, due 11/15/03.......... 500,000 600,840
12.75%, due 11/15/10........... 400,000 527,648
13.125%, due 5/15/01........... 1,000,000 1,106,560
13.375%, due 8/15/01........... 1,200,000 1,351,584
14.25%, due 2/15/02............ 300,000 353,025
------------
17,807,460
------------
UNITED STATES TREASURY NOTES (21.0%)
4.75%, due 11/15/08............ 5,000,000 4,520,050
5.25%, due 5/15/04............. 5,000,000 4,855,400
5.625%, due 12/31/02........... 400,000 396,604
5.75%, due 10/31/00-8/15/03.... 2,200,000 2,187,606
6.125%, due 9/30/00-8/15/07.... 2,100,000 2,096,570
6.25%, due 4/30/01-2/15/03..... 9,200,000 9,272,082
6.375%, due 3/31/01-8/15/02 (a) 1,500,000 1,516,250
6.50%, due 10/15/06............ 1,200,000 1,220,628
6.75%, due 4/30/00............. 700,000 704,536
7.50%, due 11/15/01-2/15/05.... 3,750,000 3,890,916
7.75%, due 2/15/01............. 500,000 512,425
------------
31,173,067
------------
UNITED STATES TREASURY NOTES
(SECURED STRIPPED BONDS) (1.8%)
(zero coupon), due 2/15/01..... 1,000,000 930,160
(zero coupon), due 2/15/05..... 2,500,000 1,809,200
------------
2,739,360
------------
Total U.S. Government &
Federal Agencies
(Cost $108,125,903)............ 106,505,197(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> 103
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 $ 698,250
Inter-American Development Bank
6.80%, due 10/15/25............ 1,200,000 1,096,500
------------
1,794,750
------------
CONSUMER FINANCIAL SERVICES (0.4%)
Japan Financial Corp.
8.70%, due 7/30/01............. 600,000 620,250
------------
FOREIGN GOVERNMENT (0.8%)
Ontario Hydro
7.45%, due 3/31/13............. 500,000 513,125
Quebec (Province of)
7.50%, due 7/15/23............. 600,000 601,500
------------
1,114,625
------------
TELEPHONE UTILITIES (0.3%)
Nortel Networks Corp.
8.75%, due 6/12/01............. 500,000 515,625
------------
Total Yankee Bonds
(Cost $3,874,511)............... 4,045,250
------------
Total Long-Term Investments
(Cost $148,831,240)............ 145,957,136
------------
U.S. GOVERNMENT (0.1%)
United States Treasury Bills
4.67%, due 1/20/00 (a)......... 100,000 98,962
4.95%, due 1/27/00 (a)......... 100,000 98,807
------------
Total Short-Term Investments
(Cost $197,769)................ 197,769
------------
Total Investments
(Cost $149,029,009) (c)........ 98.2% 146,154,905(d)
Cash and Other Assets,
Less Liabilities............... 1.8 2,617,493
---------- ----------
Net Assets...................... 100% $148,772,398
========== ==========
</TABLE>
<TABLE>
<CAPTION>
FUTURES CONTRACTS (0.0%)(e)
CONTRACTS UNREALIZED
LONG APPRECIATION(f)
---------------------------
<S> <C> <C>
United States Treasury Note
December 1999 (5 Year)..... 1 $ 1,115
United States Treasury Note
December 1999 (10 Year).... 1 1,912
--------
Total Futures Contracts
(Settlement Value
$217,672).................. $ 3,027
========
</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 71.7% of net assets.
(c) The cost stated also represents the aggregate cost for Federal income tax
purposes.
(d) At October 31, 1999, net unrealized depreciation was $2,874,104, based on
cost for Federal income tax purposes. This consisted of aggregate gross
unrealized appreciation for all investments on which there was an excess of
market value over cost of $1,376,917 and aggregate unrealized depreciation
for all investments on which there was an excess of cost over market value
of $4,251,021.
(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 October 31, 1999.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
101
<PAGE> 104
INDEXED BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $149,029,009)............................. $146,154,905
Cash............................................. 129,007
Receivables:
Interest....................................... 2,356,250
Fund shares sold............................... 255,369
Variation margin on futures contracts.......... 2,976
------------
Total assets............................... 148,898,507
------------
LIABILITIES:
Payables:
MainStay Management............................ 44,220
Custodian...................................... 14,864
Fund shares redeemed........................... 7,656
Transfer agent................................. 2,477
Accrued expenses................................. 56,892
------------
Total liabilities.......................... 126,109
------------
Net assets....................................... $148,772,398
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class............................ $ 13,512
Institutional Service Class.................... 312
Additional paid-in capital....................... 146,394,198
Accumulated undistributed net investment
income......................................... 8,560,517
Accumulated net realized loss on investments and
futures contracts.............................. (3,325,064)
Net unrealized depreciation on investments....... (2,871,077)
------------
Net assets....................................... $148,772,398
============
Institutional Class
Net assets applicable to outstanding shares...... $145,427,049
============
Shares of capital stock outstanding.............. 13,511,574
============
Net asset value per share
outstanding.................................... $ 10.76
============
Institutional Service Class
Net assets applicable to outstanding shares...... $ 3,345,349
============
Shares of capital stock outstanding.............. 311,512
============
Net asset value per share
outstanding.................................... $ 10.74
============
</TABLE>
STATEMENT OF OPERATIONS
For the period January 1, 1999 through
October 31, 1999* and the year ended
December 31, 1998
<TABLE>
<CAPTION>
1999* 1998
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Income:
Interest......................... $ 9,175,515 $ 10,238,145
------------ ------------
Expenses:
Management....................... 662,306 744,747
Professional..................... 40,212 45,767
Custodian........................ 31,710 45,451
Registration..................... 26,597 37,318
Transfer agent................... 24,503 27,508
Pricing Service.................. 18,410 22,101
Shareholder communication........ 10,685 23,980
Service.......................... 7,652 8,837
Directors........................ 2,951 3,511
Miscellaneous.................... 9,740 16,945
------------ ------------
Total expenses before
reimbursement............... 834,766 976,165
Expense reimbursement from
Manager........................ (164,813) (222,581)
------------ ------------
Net expenses................. 669,953 753,584
------------ ------------
Net investment income.............. 8,505,562 9,484,561
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) from:
Security transactions............ (1,217,013) 68,759
Futures transactions............. (417,412) (135,817)
------------ ------------
Net realized loss on investments... (1,634,425) (67,058)
------------ ------------
Net change in unrealized
appreciation on investments:
Security transactions............ (9,413,485) 2,305,816
Futures transactions............. 16,780 (13,061)
------------ ------------
Net unrealized gain (loss) on
investments...................... (9,396,705) 2,292,755
------------ ------------
Net realized and unrealized gain
(loss) on investments............ (11,031,130) 2,225,697
------------ ------------
Net increase (decrease) in net
assets resulting from
operations....................... $ (2,525,568) $ 11,710,258
============ ============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
102
<PAGE> 105
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period January 1, 1999 through October 31, 1999* and the years ended
December 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
1999* 1998 1997
-------------- -------------- --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 8,505,562 $ 9,484,561 $ 7,845,428
Net realized loss on investments and futures
contracts............................................. (1,634,425) (67,058) (147,749)
Net change in unrealized appreciation on investments and
futures contracts..................................... (9,396,705) 2,292,755 2,570,186
-------------- -------------- --------------
Net increase (decrease) in net assets resulting from
operations............................................ (2,525,568) 11,710,258 10,267,865
-------------- -------------- --------------
Dividends to shareholders:
From net investment income:
Institutional Class................................... -- (9,236,677) (7,646,229)
Institutional Service Class........................... -- (219,665) (184,643)
-------------- -------------- --------------
Total dividends to shareholders..................... -- (9,456,342) (7,830,872)
-------------- -------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 25,386,219 61,976,290 26,987,386
Institutional Service Class........................... 772,435 1,367,196 1,425,561
Net asset value of shares issued to shareholders in
reinvestment of dividends:
Institutional Class................................... -- 9,210,122 7,626,166
Institutional Service Class........................... -- 219,629 184,643
-------------- -------------- --------------
26,158,654 72,773,237 36,223,756
Cost of shares redeemed:
Institutional Class................................... (33,747,011) (35,070,585) (28,549,926)
Institutional Service Class........................... (1,238,448) (768,339) (1,420,783)
-------------- -------------- --------------
Increase (decrease) in net assets derived from capital
share transactions.................................. (8,826,805) 36,934,313 6,253,047
-------------- -------------- --------------
Net increase (decrease) in net assets................. (11,352,373) 39,188,229 8,690,040
NET ASSETS:
Beginning of period....................................... 160,124,771 120,936,542 112,246,502
-------------- -------------- --------------
End of period............................................. $ 148,772,398 $ 160,124,771 $ 120,936,542
============== ============== ==============
Accumulated undistributed net investment income at end of
period.................................................. $ 8,560,517 $ -- $ 2,820
============== ============== ==============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
103
<PAGE> 106
INDEXED BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
JANUARY 1, 1999
THROUGH YEAR ENDED
OCTOBER 31, 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.................................. 0.62 0.61 0.69 0.66
Net realized and unrealized gain (loss) on
investments.......................................... (0.79) (0.79) 0.19 0.18
-------- -------- -------- --------
Total from investment operations....................... (0.17) (0.18) 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....................... $ 10.76 $ 10.74 $ 10.93 $ 10.92
======== ======== ======== ========
Total investment return................................ (1.56%)(a) (1.65%)(a) 8.21% 7.86%
Ratios (to average net assets)/Supplemental Data:
Net investment income................................ 6.42%+ 6.17%+ 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................................ 31% 31% 14% 14%
Net assets at end of period (in 000's)................. $145,427 $ 3,345 $156,244 $ 3,881
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
+ Annualized.
(a) Total return is not annualized.
(b) Institutional Service Class commenced January 1, 1995.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
104
<PAGE> 107
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS(b) 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> 108
International Bond Fund
- --------------------------------------------------------------------------------
During the first ten months of 1999,(1) international bond markets faced a
variety of challenges. As evidence emerged that the Brazilian economy would
stabilize and the Japanese economy would recover, concern over a continuing
global economic crisis abated. Rising oil and natural gas prices raised the
specter of inflation and the U.S. dollar surged ahead versus other currencies
during the first half of calendar 1999.
The European Central Bank eased interest rates by a half of a percent during the
first half of the calendar year, seeking to stimulate economic growth. The
introduction of the euro in January came with much pomp--but little
circumstance--as interest in the new currency quickly faded, taking a toll on
U.S. investors in Euroland(2) bonds. Finally, in the third calendar quarter of
1999, Western Europe saw signs of a sustainable rise in industrial production
and, at the end of the reporting period, appeared to be growing faster than the
United States. Unfortunately, the potential for increasing inflation moved
interest rates higher in several countries, as the markets anticipated
central-bank rate hikes in most G-7 nations in November. The overall impact on
European bonds has been negative.
Japan may be the exception to the rate- hike rule. Since the end of the first
half of calendar 1999, the yen has continued to strengthen against the U.S.
dollar and the Japanese economy has continued to improve--largely as a result of
an economic stimulus package and progress on bank reform.
PERFORMANCE REVIEW
During the ten months ended October 31, 1999, the MainStay Institutional
International Bond Fund returned -5.33% for Institutional Class shares and
- -5.50% for Service Class shares. Both share classes underperformed the - 4.11%
return of the average Lipper(3) international income fund over the same period.
The Fund also lagged the Salomon Smith Barney Non-U.S. Dollar World Government
Bond Index,(4) which returned -3.66% over the ten-month period ended October 31,
1999. Much of the Fund's underperformance was due to starting the year without
any exposure to Japanese bonds, which were among the best-performing securities
during the reporting period.
The Fund maintained a close-to-neutral duration(5) during the first half of
1999, which had a mixed, but generally positive impact on Fund performance for
that period. The Fund started the year with longer-duration bonds in Europe, but
shortened duration to neutral as the European Central Bank cut interest rates.
Early in the year, the Fund established shorter duration positions in Japan and
dollar-bloc countries Australia and Canada, which proved beneficial throughout
the first half of 1999. From July through October the Fund made selective
modifications in duration in response to general market trends. Overall, the
Fund's duration strategy has had a positive impact on the Fund's performance
throughout the ten-month reporting period.
JAPANESE MARKET ADVANCES
After assiduously avoiding Japanese bonds for the past several years, the Fund
began to invest in them early in the calendar year, increasing its holdings to
25% of the Fund's portfolio by October 31, 1999. Although raising the Fund's
Japanese bond exposure had a positive impact on performance, in relation to peer
funds, the contribution appears to have been insufficient as Japan now
represents 36% of the Salomon Smith Barney Non-U.S. Dollar World Government Bond
Index.
- --------------------------------------------------------------------------------
(1) MainStay Institutional Funds recently changed its fiscal year end from
December 31 to October 31. The previous annual report provided information
through December 31, 1998. This report covers the ten-month fiscal period
from January 1, 1999, through October 31, 1999.
(2) Euroland refers to the countries participating in European Monetary Union, a
system that allows several European nations to operate with a common
currency.
(3) 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.
(4) 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.
(5) 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. A portfolio's duration is
considered neutral when it reflects the duration of its benchmark.
106
<PAGE> 109
The Fund remained underweighted in the Japanese yen throughout the reporting
period. During the first half of 1999, this had a positive impact as the U.S.
dollar gained versus the yen. From July through October, however, the Fund's
hedged position had a negative impact on performance as the yen moved ahead
strongly. We believe that Japan's fiscal stimulus package, which initially
strengthened the yen, may have the opposite effect on the currency going forward
as market liquidity increases. As a result, we have continued to hedge a portion
of the Fund's yen exposure.
EUROPEAN STRATEGIES
In Europe, the Fund focused on markets that we believed would need to ease
monetary policy. During the first quarter of 1999, the Fund benefited from
positions in Norwegian bonds, which were quite strong. The Fund was overweighted
in the U.K., which tended to lag the market, despite easing by the Bank of
England during the first half of calendar 1999. Early in October, however, we
established a tactical position in five-year U.K. bonds following their
underperformance, then took profits as they led the market in the second half of
that month.
In Euroland, the Fund has its highest weightings in German, Italian, and Spanish
bonds, but during the first half of 1999, performance suffered when the Fund
underweighted portions of the yield curve that tended to outperform. From July
through October, the Fund has added to its weighting in German bonds and has
benefited from overexposure to the euro as it revived from its earlier weakness.
DOLLAR-BLOC STRATEGIES
The Fund's dollar-bloc investments, including Australian and Canadian bonds, had
negative returns for the ten-month reporting period, although Australian bonds
were among the global market leaders in local-currency terms--and both markets
also registered positive returns in U.S.-dollar terms-- during the third
quarter. As we approached the end of the reporting period, we believed that
weakness in the Canadian dollar had been excessive, and in October, the Fund
took a long position in this currency, seeking to benefit from its potential for
recovery.
LOOKING AHEAD
With rate hikes anticipated in most of the G-7 nations except Japan, the
near-term outlook for bonds may be challenging. On the other hand, the
revitalization of the European economy looks positive for U.S. investors, and we
believe that if Japan can sustain its recovery, the overall outlook for bond
markets may improve. Also, we believe the euro is poised for a substantial
recovery versus the dollar and we have positioned the Fund to benefit from this
in the new year. Worldwide, the inflation outlook continues to be a pivotal
factor in determining monetary policy. We will continue to assess bond and
currency markets, seeking to identify excesses and capitalize on opportunities
as they may occur.
While Y2K concerns may lead to short-term volatility, over the long term, we
believe international bonds offer attractive opportunities for investors.
Whatever the markets or global economy may bring, the Fund will continue to seek
to provide total return by investing primarily in a portfolio of non-U.S.
(primarily government) debt securities.
JOSEPH PORTERA
Portfolio Manager
MacKay Shields LLC
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
107
<PAGE> 110
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
INTERNATIONAL BOND FUND VS
SALOMON SMITH BARNEY NON-US DOLLAR WORLD
GOVERNMENT BOND INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
SALOMON SMITH BARNEY NON-US DOLLAR
INTERNATIONAL BOND FUND WORLD GOVERNMENT BOND INDEX
----------------------- ---------------------------------
<S> <C> <C>
1/30/90 250000 250000
12/31/90 249944 291754
3/31/91 258015 279355
6/30/91 249285 277288
9/30/91 270845 306874
12/31/91 296770 339034
3/31/92 285575 322625
6/30/92 312013 352920
9/30/92 328393 379001
12/31/92 319553 355199
3/31/93 340275 376334
6/30/93 351213 387285
9/30/93 359600 408160
12/31/93 366070 408935
3/31/94 367598 416868
6/30/94 369718 423955
9/30/94 376295 430950
12/31/94 377438 433407
3/31/95 407255 495991
6/30/95 420088 520245
9/30/95 425372 507603
12/31/95 447112 518161
3/31/96 454725 509404
6/30/96 469548 511442
9/30/96 490381 528115
12/31/96 511145 539311
3/31/97 497330 508139
6/30/97 514829 522519
9/30/97 529104 523616
12/31/97 524554 516338
3/31/98 530817 518455
6/30/98 541778 527113
9/30/98 576226 577769
12/31/98 590275 608217
3/31/99 563445 578779
6/30/99 536055 552792
9/30/99 561209 586623
10/31/99 558805 585978
</TABLE>
Source: Lipper, Inc
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/31/90.(+)
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
INTERNATIONAL BOND FUND VS
SALOMON SMITH BARNEY NON-US DOLLAR WORLD
GOVERNMENT BOND INDEX
SERVICE CLASS SHARES
[SERVICE CLASS SHARES GRAPH]
<TABLE>
<CAPTION>
SALOMON SMITH BARNEY NON-US DOLLAR
INTERNATIONAL BOND FUND WORLD GOVERNMENT BOND INDEX
----------------------- ---------------------------------
<S> <C> <C>
1/30/90 250000 250000
12/31/90 249944 291754
3/31/91 258015 279355
6/30/91 249285 277288
9/30/91 270845 306874
12/31/91 296770 339034
3/31/92 285575 322625
6/30/92 312013 352920
9/30/92 328393 379001
12/31/92 319553 355199
3/31/93 340275 376334
6/30/93 351213 387285
9/30/93 359600 408160
12/31/93 366070 408935
3/31/94 367598 416868
6/30/94 369718 423955
9/30/94 376295 430950
12/31/94 377438 433407
3/31/95 407255 495991
6/30/95 420088 520245
9/30/95 424995 507603
12/31/95 446358 518161
3/31/96 453971 509404
6/30/96 467994 511442
9/30/96 488830 528115
12/31/96 509186 539311
3/31/97 494927 508139
6/30/97 511946 522519
9/30/97 525745 523616
12/31/97 520728 516338
3/31/98 526970 518455
6/30/98 537374 527113
9/30/98 571708 577769
12/31/98 584776 608217
3/31/99 558094 578779
6/30/99 530856 552792
9/30/99 554759 586623
10/31/99 552595 585978
</TABLE>
Source: Lipper, Inc
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/31/90.(+)
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF OCTOBER 31, 1999 AS OF OCTOBER 31, 1999
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
YEAR TO DATE ONE YEAR FIVE YEARS SINCE INCEPTION
- --------------------------------------------------------------------------------------------------------------------------
International Bond Fund Institutional Class(+) -5.33% -3.46% 7.81% 8.59%
International Bond Fund Service Class(+) -5.50 -3.69 7.57 8.47
Average Lipper international income fund -4.11 -2.06 6.33 6.74
Salomon Smith Barney Non-U.S. Dollar World Government -3.66 -2.96 5.80 9.13
Bond Index
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[BAR 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
10/31/99
----------
<S> <C>
-5.33
</TABLE>
- --------------------------------------------------------------------------------
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 Bond Fund and the date such shares were
first offered to the public was 1/1/95.
* 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.
+ The inception date of the International Bond Fund's predecessor separate
account ("Separate Account") is 1/31/90. Performance figures, and, in the case
of the graphs reflecting the investment of $250,000, 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 LLC, 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> 111
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
LONG-TERM BONDS (97.1%)+
CORPORATE BONDS (13.6%)
PRINCIPAL
AMOUNT VALUE
---------------------------
<S> <C> <C>
GERMANY (5.0%)
Bayerische VBK New York
4.50%, due 6/24/02.......... E 536,345 $ 564,227
Deutsche Pfandbriefbank
Series 436
5.75%, due 3/4/09........... 1,060,000 1,135,563
Kredit Fuer Wiederaufbau
5.00%, due 1/4/09........... 1,220,000 1,244,198
-----------
2,943,988
-----------
JAPAN (3.3%)
International Bank
Reconstruction & Development
4.75%, due 12/20/04......... Y 170,900,000 1,949,630
-----------
SWEDEN (1.3%)
Banque Nationale de Paris
Medium-Term Notes Series E
11.00%, due 11/4/99......... SK 6,050,000 735,524
-----------
UNITED KINGDOM (3.2%)
European Investment Bank
6.25%, due 12/7/08.......... L 285,000 461,882
European Investment Bank
7.625%, due 12/7/07......... 355,000 620,797
International Bank
Reconstruction & Development
Medium-Term Notes Series E
7.125%, due 7/30/07......... 474,000 805,050
-----------
1,887,729
-----------
UNITED STATES (0.8%)
Conproca S.A.
12.00%, due 6/16/10 (c)..... $ 470,000 444,150
-----------
Total Corporate Bonds
(Cost $8,168,823)........... 7,961,021
-----------
GOVERNMENTS &
FEDERAL AGENCIES (83.5%)
AUSTRALIA (1.7%)
Australian Government Series
302
9.75%, due 3/15/02.......... A$ 817,000 563,661
Federal National Mortgage
Association
Series EMTN
6.375%, due 8/15/07......... 712,000 436,848
-----------
1,000,509
-----------
AUSTRIA (2.9%)
Republic of Austria
Series 98 2
4.30%, due 7/15/03.......... E 1,627,000 $ 1,689,626
-----------
BELGIUM (4.4%)
Kingdom of Belgium
Series 10
8.75%, due 6/25/02.......... 2,197,000 2,557,294
-----------
CANADA (4.7%)
Canadian Government
Series WH31
6.00%, due 6/1/08........... C$ 1,761,000 1,196,029
Series VR22
7.50%, due 3/1/01........... 2,280,000 1,589,149
-----------
2,785,178
-----------
DENMARK (2.2%)
Kingdom of Denmark
7.00%, due 11/10/24......... DK 3,515,000 546,089
7.00%, due 12/15/04......... 5,051,000 772,293
-----------
1,318,382
-----------
FINLAND (3.0%)
Finnish Government
Series RG
10.00%, due 9/15/01......... E 1,492,000 1,732,593
-----------
FRANCE (4.1%)
France Obligations
Assimilables du Tresor
4.00%, due 4/25/09.......... 1,508,000 1,440,033
5.50%, due 4/25/29.......... 968,000 968,529
-----------
2,408,562
-----------
GERMANY (13.7%)
Bundesobligation
Series 127
4.50%, due 5/19/03 (d)...... 3,760,000 3,955,514
Republic of Deutschland
Series 98
5.25%, due 1/4/08........... 953,000 1,004,708
5.625%, due 1/4/28.......... 1,087,000 1,104,847
Series 96
6.00%, due 1/5/06........... 1,785,000 1,972,848
-----------
8,037,917
-----------
ITALY (7.5%)
Buoni Poliennali del Tesoro
5.00%, due 5/1/08........... 1,075,000 1,104,853
6.50%, due 11/1/27.......... 547,000 607,899
8.25%, due 7/1/01........... 1,581,000 1,771,642
8.50%, due 1/1/04........... 766,000 914,485
-----------
4,398,879
-----------
</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> 112
INTERNATIONAL BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
GOVERNMENTS &
FEDERAL AGENCIES (CONTINUED)
PRINCIPAL
AMOUNT VALUE
---------------------------
<S> <C> <C>
JAPAN (21.3%)
Japanese Government
Series 207
0.90%, due 12/22/08......... Y 211,400,000 $ 1,863,584
Series 206
1.50%, due 9/22/08.......... 84,000,000 792,758
Series 43
2.90%, due 9/20/19.......... 68,300,000 693,037
Series 182
3.00%, due 9/20/05.......... 306,000,000 3,236,003
Series 174
4.60%, due 9/20/04.......... 227,900,000 2,565,936
Series 145
5.50%, due 3/20/02.......... 312,100,000 3,358,857
-----------
12,510,175
-----------
NETHERLANDS (3.0%)
Netherlands Government
3.75%, due 7/15/09.......... E 1,920,000 1,783,011
-----------
NEW ZEALAND (2.4%)
New Zealand Government
Series 404
8.00%, due 4/15/04.......... N$ 2,708,000 1,429,502
-----------
SPAIN (4.8%)
Bonos Y Obligacion del Estado
4.50%, due 7/30/04.......... E 1,713,000 1,771,194
5.15%, due 7/30/09.......... 1,000,000 1,033,447
-----------
2,804,641
-----------
SWEDEN (0.9%)
Swedish Government
Series 1040
6.50%, due 5/5/08........... SK 4,100,000 549,751
-----------
UNITED KINGDOM (6.9%)
Federal National Mortgage
Association
Series EMTN
6.875%, due 6/7/02.......... L 1,210,000 1,991,848
United Kingdom Treasury Bonds
6.00%, due 12/7/28.......... 283,000 578,612
7.25%, due 12/7/07.......... 310,000 555,987
8.00%, due 12/7/15.......... 434,000 949,299
-----------
4,075,746
-----------
Total Governments &
Federal Agencies
(Cost $50,931,872)........... 49,081,766
-----------
Total Long-Term Bonds
(Cost $59,100,695).......... 57,042,787
-----------
</TABLE>
<TABLE>
<CAPTION>
PURCHASED OPTION (0.0%) (b)
NOTIONAL
AMOUNT VALUE
---------------------------
<S> <C> <C>
UNITED STATES (0.0%) (b)
U.S. Dollar Call/Japanese Yen
Put Strike price Y110
Expire 2/9/00 (a)(g)........ 2,900,000 $ 23,149
-----------
Total Option
(Cost $48,720).............. 23,149
-----------
<CAPTION>
SHORT-TERM INVESTMENT (0.5%)
COMMERCIAL PAPER (0.5%)
PRINCIPAL
AMOUNT
-------------
<S> <C> <C>
UNITED STATES (0.5%)
Xerox Credit Corp.
5.33%, due 11/1/99.......... $ 290,000 290,000
-----------
Total Short-Term Investment
(Cost $290,000)............. 290,000
-----------
Total Investments
(Cost $59,439,415) (e)...... 97.6% 57,355,936(f)
Cash and Other Assets,
Less Liabilities............ 2.4 1,428,330
------------- -----------
Net Assets................... 100.0% $58,784,266
============= ===========
</TABLE>
- ------------
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) May be sold to institutional investors only.
(d) Partially segregated as collateral for forward foreign currency contracts.
(e) The cost for Federal income tax purposes is $59,738,227.
(f) At October 31, 1999 net unrealized depreciation for securities was
$2,382,291, 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 $678,479, and aggregate
gross unrealized depreciation for all investments on which there was an
excess of cost over market value of $3,060,770.
(g) The following abbreviations are used in the above portfolio:
A$ --Australian Dollar
C$ --Canadian Dollar
DK--Danish Krone
E --Euro
Y --Japanese Yen
N$--New Zealand Dollar
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> 113
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $59,439,415)............................... $57,355,936
Cash denominated in foreign currencies (identified
cost $178,383).................................. 175,753
Cash.............................................. 68,651
Receivables:
Investment securities sold...................... 1,150,763
Interest........................................ 1,287,319
Fund shares sold................................ 561
Unrealized appreciation on foreign currency
forward contracts............................... 243,006
-----------
Total assets................................ 60,281,989
-----------
LIABILITIES:
Payables:
Investment securities purchased................. 1,151,141
MainStay Management............................. 29,802
Custodian....................................... 12,875
Transfer agent.................................. 2,224
Accrued expenses.................................. 54,026
Unrealized depreciation on foreign currency
forward contracts............................... 247,655
-----------
Total liabilities........................... 1,497,723
-----------
Net assets........................................ $58,784,266
===========
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class............................. $ 5,981
Institutional Service Class..................... 20
Additional paid-in capital........................ 61,246,440
Accumulated undistributed net investment income... 440,285
Accumulated net realized loss on investments...... (817,180)
Net unrealized depreciation on investments........ (2,083,479)
Net unrealized depreciation on translation of
other assets and liabilities in foreign
currencies and foreign currency forward
contracts....................................... (7,801)
-----------
Net assets........................................ $58,784,266
===========
Institutional Class
Net assets applicable to outstanding shares....... $58,585,224
===========
Shares of capital stock outstanding............... 5,981,013
===========
Net asset value per share outstanding............. $ 9.80
===========
Institutional Service Class
Net assets applicable to outstanding shares....... $ 199,042
===========
Shares of capital stock outstanding............... 20,446
===========
Net asset value per share outstanding............. $ 9.74
===========
</TABLE>
STATEMENT OF OPERATIONS
For the period January 1, 1999 through October 31, 1999* and the year ended
December 31, 1998
<TABLE>
<CAPTION>
1999* 1998
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Income:
Interest (a)......................... $ 2,611,044 $3,613,231
----------- ----------
Expenses:
Management........................... 393,177 440,402
Professional......................... 44,581 43,837
Registration......................... 25,220 27,181
Transfer agent....................... 22,216 27,596
Custodian............................ 20,282 30,397
Shareholder communication............ 4,009 8,897
Directors............................ 1,137 1,285
Amortization of organization
expense............................ 632 759
Service.............................. 444 586
Miscellaneous........................ 13,624 13,050
----------- ----------
Total expenses before
reimbursement................... 525,322 593,990
Expense reimbursement from Manager... (57,982) (70,444)
----------- ----------
Net expenses..................... 467,340 523,546
----------- ----------
Net investment income.................. 2,143,704 3,089,685
----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) from:
Security transactions................ (809,727) 1,420,414
Option transactions.................. 13,234 (52,912)
Foreign currency transactions........ (1,569,155) 597,311
----------- ----------
Net realized gain (loss) on investments
and foreign currency transactions.... (2,365,648) 1,964,813
----------- ----------
Net change in unrealized appreciation
(depreciation) on investments:
Security transactions................ (2,881,428) 1,431,603
Translation of other assets and
liabilities in foreign currencies
and foreign currency forward
contracts.......................... (177,735) 149,867
----------- ----------
Net unrealized gain (loss) on
investments and foreign currency
transactions......................... (3,059,163) 1,581,470
----------- ----------
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions......................... (5,424,811) 3,546,283
----------- ----------
Net increase (decrease) in net assets
resulting from operations............ $(3,281,107) $6,635,968
=========== ==========
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
(a) Interest recorded net of foreign withholding taxes of $2,171 and $326 for
1999 and 1998 respectively.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
111
<PAGE> 114
INTERNATIONAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period January 1, 1999 through October 31, 1999* and the years ended
December 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
1999* 1998 1997
-------------- -------------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 2,143,704 $ 3,089,685 $ 2,993,215
Net realized gain (loss) on investments................. (809,727) 1,420,414 1,535,035
Net realized gain (loss) on option transactions......... 13,234 (52,912) --
Net realized gain (loss) on foreign currency
transactions.......................................... (1,569,155) 597,311 1,308,158
Net change in unrealized appreciation (depreciation) on
investments........................................... (2,881,428) 1,431,603 (4,098,551)
Net change in unrealized appreciation on translation of
other assets and liabilities in foreign currencies and
foreign currency forward contracts.................... (177,735) 149,867 (382,945)
-------------- -------------- -----------
Net increase (decrease) in net assets resulting from
operations............................................ (3,281,107) 6,635,968 1,354,912
-------------- -------------- -----------
Dividends and distributions to shareholders:
From net investment income and net realized gain on
foreign currency transactions:
Institutional Class................................... (234,371) (3,476,092) (4,197,703)
Institutional Service Class........................... (851) (12,646) (19,891)
From net realized gain on investments:
Institutional Class................................... (780,510) (645,156) (1,539,271)
Institutional Service Class........................... (2,666) (2,456) (7,516)
In excess of net investment income:
Institutional Class................................... (146,208) -- --
Institutional Service Class........................... (531) -- --
-------------- -------------- -----------
Total dividends and distributions to shareholders... (1,165,137) (4,136,350) (5,764,381)
-------------- -------------- -----------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 3,608,411 11,263,450 1,477,297
Institutional Service Class........................... 814 21,938 58,930
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... 1,147,733 4,116,548 5,736,968
Institutional Service Class........................... 4,078 14,879 27,401
-------------- -------------- -----------
4,761,036 15,416,815 7,300,596
Cost of shares redeemed:
Institutional Class................................... (4,290,956) (3,932,796) (6,192,594)
Institutional Service Class........................... (22,173) (49,589) (54,357)
-------------- -------------- -----------
Increase in net assets derived from capital share
transactions........................................ 447,907 11,434,430 1,053,645
-------------- -------------- -----------
Net increase (decrease) in net assets................. (3,998,337) 13,934,048 (3,355,824)
NET ASSETS:
Beginning of period....................................... 62,782,603 48,848,555 52,204,379
-------------- -------------- -----------
End of period............................................. $ 58,784,266 $ 62,782,603 $48,848,555
============== ============== ===========
Accumulated undistributed net investment income at end of
period.................................................. $ 440,285 $ 235,222 $ 89,876
============== ============== ===========
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
112
<PAGE> 115
(THIS PAGE INTENTIONALLY LEFT BLANK)
113
<PAGE> 116
INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
JANUARY 1, 1999
THROUGH YEAR ENDED
OCTOBER 31, 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.................................. 0.35 0.37 0.56 0.53
Net realized and unrealized gain (loss) on
investments.......................................... (0.62) (0.65) 0.71 0.71
Net realized and unrealized gain (loss) on foreign
currency transactions................................ (0.30) (0.30) (0.01) (0.01)
------- ------- ------- -------
Total from investment operations....................... (0.57) (0.58) 1.26 1.23
------- ------- ------- -------
Less dividends and distributions:
From net investment income and net realized gain on
foreign currency transactions........................ (0.04) (0.04) (0.63) (0.60)
From net realized gain on investments.................. (0.13) (0.13) (0.12) (0.12)
In excess of net investment income..................... (0.02) (0.03) -- --
------- ------- ------- -------
Total dividends and distributions...................... (0.19) (0.20) (0.75) (0.72)
------- ------- ------- -------
Net asset value at end of period....................... $ 9.80 $ 9.74 $ 10.56 $ 10.52
======= ======= ======= =======
Total investment return................................ (5.33%)(b) (5.50%)(b) 12.53% 12.30%
Ratios (to average net assets)/Supplemental Data:
Net investment income................................ 4.36%+ 4.11%+ 5.61% 5.36%
Net expenses......................................... 0.95%+ 1.20%+ 0.95% 1.20%
Expenses (before reimbursement)...................... 1.07%+ 1.32%+ 1.08% 1.33%
Portfolio turnover rate................................ 251% 251% 299% 299%
Net assets at end of period (in 000's)................. $58,585 $ 199 $62,549 $ 234
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
+ 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> 117
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> 118
Money Market Fund
- --------------------------------------------------------------------------------
During the ten months ended October 31, 1999,(1) the most significant events
affecting the money markets were the two rate hikes by the Federal Reserve Board
on June 30 and August 24, 1999. Each of these moves increased the targeted
federal funds rate by 25 basis points.
The rate increases generally had a positive impact on the returns available to
money market investors. Nevertheless, since bond prices tend to decline when
interest rates rise, the Federal Reserve Board's tightening moves had a
generally negative impact on the bond markets overall.
PERFORMANCE OVERVIEW
For the ten months ended October 31, 1999, the MainStay Institutional Money
Market Fund returned 3.96% for Institutional Class shares, 3.74% for Service
Class shares, and 3.53% for Sweep Shares Class shares. All share classes
underperformed the 4.00% return of the average Lipper(2) institutional money
market fund over the same ten-month period.
The Fund's underperformance relative to its peers was largely attributable to
two factors. First, the Fund purchased short-term corporate bonds in the first
calendar quarter of 1999, but did so before the yield curve finished steepening.
While the Fund initially benefited from these purchases because the yield curve
had already steepened by 30 basis points, it would have benefited even more if
the purchases had been made in the second calendar quarter, after the yield
curve steepened another 30 basis points. A second factor that negatively
impacted the Fund's performance relative to its peers was a longer duration
strategy, which detracted from the Fund's ability to respond in a changing rate
environment.
STRATEGIES AND SECTORS
During the ten months ended October 31, 1999, the Fund's duration ranged from 51
to 78 days. The Fund's target duration shifted within a range of 60 to 65 days,
but remained at 65 days for most of the reporting period.
In the first calendar quarter of 1999, the Fund benefited from a duration that
was about a week longer than that of the average money market fund.
Unfortunately, the Fund retained the longer duration even after the Federal
Reserve's tightening move at the end of June. Although we anticipated another
tightening, we also believed the Fund could benefit from the higher yields of
longer-term securities. Unfortunately, the Federal Reserve moved to raise rates
a second time earlier than we expected. Since the Fund tends to hold securities
to maturity, it suddenly found itself at a disadvantage to funds with shorter
duration, which were able to benefit sooner from the higher rates then available
in the marketplace.
Utilizing extensive experience with asset-backed commercial paper, the Fund was
able to make several successful investments in these securities. Although
asset-backed securities tend to trade cheaper than other securities because of
their complexity, they are still of high quality. The Fund also found value in
floating-rate securities. These bonds offer a yield premium over commercial
paper because they are somewhat less liquid. While the floaters' maturities tend
to be longer, their rates are tied to short-term benchmarks, such as the federal
funds rate or one-month or quarterly LIBOR rates.
Significant Fund purchases during the reporting period included an asset-backed
security from Heart Equipment Trust and floaters from Comerica and First Union.
The Fund's exposure to floaters and short-term corporate securities decreased
during the ten-month reporting period, even though the sectors appeared
attractive. One reason for the decrease was a 33% increase in the Fund's net
assets from $305 million on December 31, 1998, to $405 million on October 31,
1999. When buying floaters and corporates, which are less liquid than
- --------------------------------------------------------------------------------
(1) MainStay Institutional Funds recently changed its fiscal year end from
December 31 to October 31. The previous annual report provided information
through December 31, 1998. This report covers the ten-month fiscal period
from January 1, 1999, through October 31, 1999.
(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.
116
<PAGE> 119
other money market instruments, the Fund seeks broad diversification to help
manage risk and possibly shield investors if a credit event should occur.
Unfortunately, it became increasingly difficult to find floaters of sufficient
size in companies of sufficient quality to meet the Fund's diversification and
investment criteria.
The Fund remains underweighted in Treasury securities and agencies and continues
to emphasize securities that tend to offer yield advantages over Treasuries.
LOOKING AHEAD
As we look toward the year 2000, the Fund may begin to explore agency securities
and other callable and putable structures, as size and liquidity have improved
in this sector over the last year and a half. After three moves to ease interest
rates in 1998, the Federal Reserve would still need to tighten once again to
fully undo what it did in the last calendar year. While we anticipate another
tightening move, we believe timing will be a key factor in determining which
funds will benefit.
Whatever the economy or the markets may bring, the MainStay Institutional Money
Market Fund will continue to seek a high level of current income while
preserving capital and maintaining liquidity for its shareholders.
DAVID CLEMENT
Portfolio Manager
New York Life Insurance Company
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
117
<PAGE> 120
$250,000 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 MARKET
MONEY MARKET FUND FUND
-------------------------------- -----------------
<S> <C> <C>
1/2/91 250000 250000
03/31/91 254200 254048
06/30/91 257962 257817
09/30/91 261625 261517
12/31/91 264974 264886
03/31/92 267703 267672
06/30/92 270220 270192
09/30/92 272462 272471
12/31/92 274560 274574
03/31/93 276565 276575
06/30/93 278528 278504
09/30/93 280534 280508
12/31/93 282582 282505
03/31/94 284673 284563
06/30/94 287178 286970
09/30/94 290193 290003
12/31/94 293763 293461
03/31/95 297817 297573
06/30/95 302075 301769
09/30/95 306274 305862
12/31/95 310470 309973
03/31/96 314413 313892
06/30/96 318312 317752
09/30/96 322354 321748
12/31/96 326448 325805
03/31/97 330496 329815
06/30/97 334793 334066
09/30/97 339245 338494
12/31/97 343791 342990
03/31/98 348295 347421
06/30/98 352858 351901
09/30/98 357551 356506
12/31/98 362020 360986
03/31/99 366219 365126
06/30/99 370394 369251
09/30/99 374913 373662
10/31/99 376525 375266
</TABLE>
$250,000 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 MARKET
MONEY MARKET FUND FUND
-------------------------------- -----------------
<S> <C> <C>
1/2/91 250000 250000
03/31/91 254200 254048
06/30/91 257962 257817
09/30/91 261625 261517
12/31/91 264974 264886
03/31/92 267703 267672
06/30/92 270220 270192
09/30/92 272462 272471
12/31/92 274560 274574
03/31/93 276565 276575
06/30/93 278528 278504
09/30/93 280534 280508
12/31/93 282582 282505
03/31/94 284673 284563
06/30/94 287178 286970
09/30/94 290193 290003
12/31/94 293763 293461
03/31/95 297817 297573
06/30/95 302075 301660
09/30/95 306274 305562
12/31/95 310470 309478
03/31/96 314413 313199
06/30/96 318312 316855
09/30/96 322354 320639
12/31/96 326448 324481
03/31/97 330496 328273
06/30/97 334793 332299
09/30/97 339245 336493
12/31/97 343791 340748
03/31/98 348295 344940
06/30/98 352858 349172
09/30/98 357551 353518
12/31/98 362020 357764
03/31/99 366219 361426
06/30/99 370394 365056
09/30/99 374913 368953
10/31/99 376525 370380
</TABLE>
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
MONEY MARKET FUND VS
AVERAGE LIPPER INSTITUTIONAL MONEY MARKET FUND
SERVICE CLASS SHARES
[SERVICE CLASS SHARES GRAPH]
<TABLE>
<CAPTION>
AVERAGE LIPPER INSTITUTIONAL MONEY MARKET
MONEY MARKET FUND FUND
-------------------------------- -----------------
<S> <C> <C>
1/2/91 250000 250000
03/31/91 254200 254048
06/30/91 257962 257817
09/30/91 261625 261517
12/31/91 264974 264886
03/31/92 267703 267672
06/30/92 270220 270192
09/30/92 272462 272471
12/31/92 274560 274574
03/31/93 276565 276575
06/30/93 278528 278504
09/30/93 280534 280508
12/31/93 282582 282505
03/31/94 284673 284563
06/30/94 287178 286970
09/30/94 290193 290003
12/31/94 293763 293461
03/31/95 297817 297573
06/30/95 302075 301660
09/30/95 306274 305562
12/31/95 310470 309478
03/31/96 314413 313199
06/30/96 318312 316855
09/30/96 322354 320639
12/31/96 326448 324481
03/31/97 330496 328273
06/30/97 334793 332299
09/30/97 339245 336493
12/31/97 343791 340748
03/31/98 348295 344940
06/30/98 352858 349172
09/30/98 357551 353518
12/31/98 362020 357737
03/31/99 366219 361619
06/30/99 370394 365477
09/30/99 374913 369612
10/31/99 376525 371120
</TABLE>
Source: Lipper, Inc.
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF OCTOBER 31, 1999 AS OF OCTOBER 31, 1999
- -----------------------------------------------------------------------------------------------------------------
YEAR TO DATE ONE YEAR FIVE YEARS SINCE INCEPTION
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market Fund Institutional Class(+) 3.96% 4.81% 5.22% 4.70%
Money Market Fund Service Class(+) 3.74 4.55 4.98 4.57
Money Market Fund Sweep Shares Class(+) 3.53 4.34 4.94 4.55
Average Lipper institutional money market fund 4.00 4.85 5.31 4.89
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[BAR CHART]
<TABLE>
<CAPTION>
TOTAL RETURN %*
1991 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
5.95 3.66 2.89 3.88 5.63 5.11 5.27
</TABLE>
<TABLE>
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
5.25 3.96
</TABLE>
- --------------------------------------------------------------------------------
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%.
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.
* 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 5.28% and 5.15%, respectively, for the Institutional Class; 5.02% and
4.90%, respectively, for the Service Class; and 4.76% and 4.65%, respectively,
for the Sweep Shares Class; all as of 10/31/99. 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 5.20% and 5.07%,
respectively, for the Institutional Class; 4.94% and 4.82%, respectively, for
the Service Class; and 4.67% and 4.57%, respectively, for the Sweep Shares
Class. These expense limitations are voluntary and may be terminated or
revised at any time.
118
<PAGE> 121
MAINSTAY
INSTITUTIONAL FUNDS INC.
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS (103.6%)+
PRINCIPAL AMORTIZED
AMOUNT COST
-------------------------
<S> <C> <C>
ASSET-BACKED SECURITY (0.4%)
Heller Equipment Asset
Receivable Trust, Series
1999-1 Class A1
4.95%, due 5/13/00 (c)..... $ 1,809,987 $ 1,809,987
------------
1,809,987
------------
BANK NOTES (6.7%)
Comerica Bank (Detroit,
Michigan)
5.34%, due 2/2/00 (b)(c)... 5,000,000 4,999,625
5.45%, due 9/11/00
(b)(c)................... 5,000,000 4,997,884
First National Bank Commerce
New Orleans
6.50%, due 1/14/00 (c)..... 4,150,000 4,161,681
First Union National Bank
5.50%, due 11/23/99
(b)(c)................... 3,000,000 3,000,000
5.52%, due 8/18/00
(b)(c)................... 5,000,000 5,000,000
PNC Bank North America
5.04%, due 2/16/00 (c)..... 5,000,000 4,999,434
------------
27,158,624
------------
COMMERCIAL PAPER (91.1%)
American General Finance
Corp.
5.78%, due 2/25/00......... 5,000,000 4,906,878
Asset Portfolio Funding
Corp.
5.90%, due 1/31/00 (a)..... 10,000,000 9,850,861
Associates Corp. of North
America
5.15%, due 11/19/99........ 10,000,000 9,974,250
Associates First Capital
Corp.
5.34%, due 12/24/99........ 10,000,000 9,921,383
Blue Ridge Asset Funding
Corp.
5.98%, due 2/15/00 (a)..... 10,000,000 9,823,922
6.15%, due 1/20/00 (a)..... 10,000,000 9,863,333
Carolina Power & Light Co.
5.20%, due 11/5/99......... 8,500,000 8,495,089
Centric Capital Corp.
5.20%, due 11/10/99 (a).... 10,000,000 9,987,000
6.05%, due 1/6/00 (a)...... 7,515,000 7,431,646
Coca-Cola Enterprises Inc.
5.36%, due 11/22/99 (a).... 10,000,000 9,968,733
Cooperative Association of
Tractor Dealers Inc.
5.85%, due 1/21/00......... 11,100,000 10,953,896
DaimlerChrysler North
America Holding Corp.
5.15%, due 11/8/99......... 8,000,000 7,991,989
5.94%, due 2/23/00......... 10,000,000 9,811,900
Delaware Funding Corp.
5.88%, due 1/24/00 (a)..... 10,000,000 9,862,800
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
-------------------------
<S> <C> <C>
COMMERCIAL PAPER (CONTINUED)
Duke Capital Corp.
5.85%, due 2/11/00 (a)..... $10,000,000 $ 9,834,250
DuPont (E.I.) De Nemours &
Co.
5.23%, due 12/2/99......... 10,000,000 9,954,964
Finova Capital Corp.
5.37%, due 11/1/99......... 4,925,000 4,925,000
Ford Motor Credit Corp.
5.14%, due 11/15/99........ 10,000,000 9,980,011
Fortune Brands Inc.
5.30%, due 11/2/99......... 10,000,000 9,998,528
General Electric Capital
Corp.
5.75%, due 3/6/00.......... 8,000,000 7,839,000
5.98%, due 2/22/00......... 10,000,000 9,812,294
General Motors Acceptance
Corp.
5.87%, due 2/18/00......... 7,000,000 6,875,589
Goldman Sachs Group Inc.
(The)
5.93%, due 3/24/00......... 10,000,000 9,762,800
Govco Inc.
5.35%, due 11/8/99 (a)..... 10,000,000 9,989,597
5.38%, due 11/23/99 (a).... 10,000,000 9,967,122
Jefferson Smurfit Finance
Corp.
5.78%, due 1/19/00......... 9,000,000 8,885,845
John Deere Capital Corp.
5.15%, due 12/6/99......... 10,000,000 9,949,931
Market Street Funding
5.86%, due 2/7/00 (a)...... 7,137,000 7,023,149
Merita North America Inc.
5.35%, due 12/9/99......... 10,000,000 9,943,528
Merrill Lynch & Co., Inc.
5.30%, due 11/1/99......... 15,000,000 15,000,000
Morgan (J.P.) & Co. Inc.
5.00%, due 11/1/99......... 8,000,000 8,000,000
5.90%, due 3/10/00......... 10,000,000 9,786,944
Park Avenue Receivables
Corp.
5.92%, due 3/16/00 (a)..... 10,000,000 9,776,356
Procter & Gamble Co.
5.31%, due 12/13/99........ 10,000,000 9,938,050
Salomon Smith Barney
Holdings Inc.
5.47%, due 3/13/00
(b)(c)................... 5,000,000 5,000,000
Special Purpose Accounts
Receivables Corp.
5.88%, due 1/28/00 (a)..... 10,000,000 9,856,267
UBS Finance Delaware LLC
5.31%, due 12/20/99........ 10,000,000 9,927,725
5.34%, due 12/1/99......... 10,000,000 9,955,500
</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> 122
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST
-------------------------
<S> <C> <C>
COMMERCIAL PAPER (CONTINUED)
Wells Fargo Co.
5.93%, due 3/1/00.......... $10,000,000 $ 9,800,686
Windmill Funding Corp.
5.37%, due 12/16/99 (a).... 8,000,000 7,946,300
------------
368,573,116
------------
CORPORATE BOND (0.6%)
Morgan Stanley, Dean Witter,
Discover & Co.
6.25%, due 3/15/00 (c)..... 2,500,000 2,509,157
------------
2,509,157
------------
MEDIUM-TERM NOTES (4.8%)
Ford Motor Credit Co.
5.83%, due 2/28/00 (c)..... 6,550,000 6,565,102
General Motors Acceptance
Corp.
5.45%, due 2/22/00 (c)..... 3,700,000 3,703,918
Morgan Stanley, Dean Witter,
Discover & Co., Series C
5.47%, due 2/11/00
(b)(c)................... 2,000,000 2,000,189
5.89%, due 3/20/00 (c)..... 2,000,000 2,004,562
Wells Fargo Co., Series J
5.23%, due 4/10/00 (c)..... 5,000,000 4,999,446
------------
19,273,217
------------
Total Short-Term Investments
(Amortized Cost
$419,324,101) (d).......... 103.6% 419,324,101
Liabilities in Excess of
Cash and Other Assets...... (3.6) (14,712,966)
----------- ------------
Net Assets.................. 100.0% $404,611,135
=========== ============
</TABLE>
- ------------
(a) May be sold to institutional investors only.
(b) Floating rate. Rate shown is the rate in effect at October 31, 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............... $ 27,124,620 6.7%
Auto Manufacturing......... 17,803,889 4.4
Banks...................... 89,572,453 22.1
Beverages.................. 9,968,733 2.4
Brokerage.................. 36,276,708 9.0
Chemicals.................. 9,954,964 2.4
Conglomerates.............. 17,651,294 4.4
Consumer Products.......... 9,998,528 2.5
Cosmetics & Toiletries..... 9,938,050 2.5
Diversified Financial
Services................. 4,925,000 1.2
Farm Equipment............. 9,949,931 2.5
Finance.................... 41,662,339 10.3
Forest Products & Paper.... 8,885,845 2.2
Insurance.................. 15,860,774 3.9
Special Purpose Finance.... 91,421,634 22.6
Utilities.................. 8,495,089 2.1
Utilities-Electric......... 9,834,250 2.4
------------ ---------
419,324,101 103.6
Liabilities in Excess of
Cash and Other Assets.... (14,712,966) (3.6)
------------ ---------
Net Assets................. $404,611,135 100.0%
------------ ---------
------------ ---------
</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> 123
MAINSTAY
INSTITUTIONAL FUNDS INC.
MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $419,324,101)............................. $419,324,101
Cash............................................. 101
Receivables:
Interest....................................... 593,909
Fund shares sold............................... 278,498
Other assets..................................... 3,328
------------
Total assets............................... 420,199,937
------------
LIABILITIES:
Payables:
Fund shares redeemed........................... 15,162,115
MainStay Management............................ 129,188
Custodian...................................... 17,500
Transfer agent................................. 4,322
Accrued expenses................................. 221,782
Dividend payable................................. 53,895
------------
Total liabilities.......................... 15,588,802
------------
Net assets....................................... $404,611,135
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
12 billion shares authorized
Institutional Class............................ $ 246,735
Institutional Service Class.................... 5,630
Sweep Shares Class............................. 152,268
Additional paid-in capital....................... 404,228,490
Accumulated net realized loss on investments..... (21,988)
------------
Net assets....................................... $404,611,135
============
Institutional Class
Net assets applicable to outstanding shares...... $246,713,488
============
Shares of capital stock outstanding.............. 246,735,443
============
Net asset value per share outstanding............ $ 1.00
============
Institutional Service Class
Net assets applicable to outstanding shares...... $ 5,629,567
============
Shares of capital stock outstanding.............. 5,629,568
============
Net asset value per share outstanding............ $ 1.00
============
Sweep Shares Class
Net assets applicable to outstanding shares...... $152,268,080
============
Shares of capital stock outstanding.............. 152,268,112
============
Net asset value per share outstanding............ $ 1.00
============
</TABLE>
STATEMENT OF OPERATIONS
For the period January 1, 1999 through October 31, 1999* and the year ended
December 31, 1998
<TABLE>
<CAPTION>
1999* 1998
------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Income:
Interest........................... $15,229,691 $15,605,964
----------- -----------
Expenses:
Management......................... 1,470,982 1,386,536
Distribution--Sweep Shares Class... 258,999 107
Service--Sweep Shares Class........ 258,999 107
Service--Institutional Service
Class............................ 26,983 204,779
Shareholder communication.......... 110,353 152,814
Professional....................... 67,172 89,900
Registration....................... 52,236 44,420
Transfer agent..................... 43,836 35,893
Custodian.......................... 29,337 31,093
Directors.......................... 6,193 6,903
Pricing Service.................... 2,238 2,197
Miscellaneous...................... 32,378 19,819
----------- -----------
Total expenses before
reimbursement................. 2,359,706 1,974,568
Expense reimbursement from
Manager.......................... (343,743) (383,039)
----------- -----------
Net expenses................... 2,015,963 1,591,529
----------- -----------
Net investment income................ 13,213,728 14,014,435
----------- -----------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
investments........................ 5,267 (22,863)
----------- -----------
Net increase in net assets resulting
from operations.................... $13,218,995 $13,991,572
=========== ===========
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
121
<PAGE> 124
MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period January 1, 1999 through October 31, 1999* and the years ended
December 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
1999* 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income................................... $ 13,213,728 $ 14,014,435 $ 10,768,396
Net realized gain (loss) on investments................. 5,267 (22,863) (497)
------------- ------------- -------------
Net increase in net assets resulting from operations.... 13,218,995 13,991,572 10,767,899
------------- ------------- -------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class................................... (8,402,982) (10,021,538) (8,228,621)
Institutional Service Class........................... (487,323) (3,989,833) (2,539,775)
Sweep Shares Class.................................... (4,323,423) (3,064) --
From net realized gain on investments:
Institutional Class................................... -- -- (2,265)
Institutional Service Class........................... -- -- (742)
------------- ------------- -------------
Total dividends and distributions to shareholders... (13,213,728) (14,014,435) (10,771,403)
------------- ------------- -------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 478,066,197 267,338,520 383,541,801
Institutional Service Class........................... 10,416,347 92,388,730 90,078,559
Sweep Shares Class.................................... 251,505,734 7,085,440 --
Net asset value of shares issued to shareholders in
reinvestment of dividends:
Institutional Class................................... 8,988,009 10,079,609 7,733,123
Institutional Service Class........................... 810,782 3,866,077 2,386,943
Sweep Shares Class.................................... 4,313,813 -- --
------------- ------------- -------------
754,100,882 380,758,376 483,740,426
Cost of shares redeemed:
Institutional Class................................... (434,683,773) (273,376,385) (311,712,755)
Institutional Service Class........................... (109,362,209) (56,718,408) (62,901,724)
Sweep Shares Class.................................... (110,508,066) (128,810) --
------------- ------------- -------------
Increase in net assets derived from capital share
transactions........................................ 99,546,834 50,534,773 109,125,947
------------- ------------- -------------
Net increase in net assets............................ 99,552,101 50,511,910 109,122,443
NET ASSETS:
Beginning of period....................................... 305,059,034 254,547,124 145,424,681
------------- ------------- -------------
End of period............................................. $ 404,611,135 $ 305,059,034 $ 254,547,124
============= ============= =============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
122
<PAGE> 125
(THIS PAGE INTENTIONALLY LEFT BLANK)
123
<PAGE> 126
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
------------- ------------- ------------ ------------- -------------
JANUARY 1, 1999
THROUGH YEAR ENDED
OCTOBER 31, 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............... 0.04 0.04 0.04 0.05 0.05
-------- -------- -------- -------- --------
Less dividends and distributions:
From net investment income.......... (0.04) (0.04) (0.04) (0.05) (0.05)
From net realized gain on
investments....................... -- -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions... (0.04) (0.04) (0.04) (0.05) (0.05)
-------- -------- -------- -------- --------
Net asset value at end of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total investment return............. 3.96%(b) 3.74%(b) 3.53%(b) 5.25% 4.99%
Ratios (to average net assets)/
Supplemental Data:
Net investment income............. 4.68%+ 4.43%+ 4.18%+ 5.12% 4.87%
Net expenses...................... 0.50%+ 0.75%+ 1.00%+ 0.50% 0.75%
Expenses (before reimbursement)... 0.62%+ 0.87%+ 1.12%+ 0.63% 0.88%
Net assets at end of period (in
000's)............................ $246,713 $ 5,630 $152,268 $194,338 $103,765
</TABLE>
- ------------
<TABLE>
<C> <S>
* The Fund changed its fiscal year end from December 31 to
October 31.
** Sweep Shares Class first offered on December 8, 1998.
+ Annualized.
(a) Less than one cent per share.
(b) Total return is not annualized.
(c) Institutional Service Class commenced January 1, 1995.
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
124
<PAGE> 127
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>
$ 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(c) CLASS
------------- -------------
YEAR ENDED DECEMBER 31
-----------------------------
1995 1994
------------- -------------
<S> <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> 128
Short-Term Bond Fund
- --------------------------------------------------------------------------------
After lowering interest rates three times in 1998, the Federal Reserve Board
changed course during the first ten months of 1999,(1) raising the targeted
federal funds rate by 25 basis points on June 30 and again on August 24, 1999.
At its meeting on October 5, 1999, the Federal Reserve Board left interest rates
unchanged, but expressed a bias toward continued tightening. Since rising
interest rates generally mean declining bond prices, the Federal Reserve's
activity throughout the first ten months of 1999 had a negative impact on
long-term bond investors. Short-term investors, on the other hand, were able to
capture increasing yields as their investments matured and the proceeds were
reinvested at higher rates.
PERFORMANCE REVIEW
During the ten months ended October 31, 1999, the MainStay Institutional
Short-Term Bond Fund returned 2.12% for Institutional Class shares and 1.91% for
Service Class shares. This compared with a 2.25% return for the average
Lipper(2) short U.S. government fund over the same period. The Fund's focus on
higher-quality securities, which have lower yields than alternative investments,
was partly responsible for the Fund underperforming its peers.
Both of the Fund's share classes were rated four stars overall by Morningstar(3)
as of October 31, 1999. Institutional Class shares were rated five stars and
Service Class shares were rated four stars out of 1,598 taxable bond funds for
the three-year period then ended, and Institutional Class shares were rated four
stars out of 1,176 taxable bond funds for the five-year period then ended.
HIGH-QUALITY SECURITIES
Throughout the reporting period, the Fund continued to focus on high-quality
securities. On October 31, 1999, 81% of the Fund's assets were 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. Given the
high exposure to government securities, at the end of the reporting period,
securities in the Fund's portfolio had an average rating 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
In the first half of calendar 1999, the Fund reduced its allocation to Treasury
securities and increased its allocation to agencies. As liquidity increased
among agency issues, we believed these securities offered attractive yield
potential and the increased agency weighting contributed positively to the
Fund's performance over the ten-month reporting period.
Asset-backed securities also presented opportunities for the Fund to capture
higher yields and the Fund increased its commitment to asset-backed securities
in the highest rating category from 3% at the beginning of the calendar year to
15% as of October 31, 1999. Overall, asset-backed securities contributed
positively to performance during the reporting period.
Rising interest rates took a toll on corporate debt securities, causing the Fund
to reduce its already underweighted allocation to this sector during the
reporting period. Overall, corporate securities had a negative impact on the
Fund's relative performance.
LOOKING AHEAD
As investors face the uncertainties surrounding Y2K, we believe the markets may
favor the type of high-quality short-term securities in which the Fund invests.
The Federal Reserve Board's bias toward tightening interest rates may also have
a positive impact on the
- --------------------------------------------------------------------------------
(1) MainStay Institutional Funds recently changed its fiscal year end from
December 31 to October 31. The previous annual report provided information
through December 31, 1998. This report covers the ten-month fiscal period
from January 1, 1999, through October 31, 1999.
(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 fees and sales charges
into account, and may change monthly. Its ratings of one (low) to five
(high) stars are based on a fund's three-, five-, and ten-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 funds in a
broad asset class receive five stars, the next 22.5% receive four stars, the
middle 35% receive three stars, the next 22.5% receive two stars, and the
bottom 10% receive one star.
126
<PAGE> 129
market for short-term securities, as investors seek to take advantage of rising
interest rates by reducing maturities.
Over the longer-term, we believe that economic growth and inflation will
continue to be key focal points for the Federal Reserve as it considers future
monetary policy. Whatever the economy, the markets, or the Federal Reserve may
do, 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 LLC
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results.
127
<PAGE> 130
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
SHORT-TERM BOND FUND VS
SALOMON SMITH BARNEY 1-3 YEAR TREASURY INDEX
INSTITUTIONAL CLASS SHARES
[LINE GRAPH]
<TABLE>
<CAPTION>
SALOMON SMITH BARNEY 1-3 YEAR
SHORT-TERM BOND FUND TREASURY INDEX
-------------------- -----------------------------
<S> <C> <C>
1/2/91 250000 250000
3/31/91 255500 255500
6/30/91 260500 260482
9/30/91 269000 269208
12/31/91 278250 279142
3/31/92 278491 279505
6/30/92 286366 287527
9/30/92 293715 296095
12/31/92 294765 296747
3/31/93 301982 303097
6/30/93 305360 306522
9/30/93 309581 310844
12/31/93 311468 312740
3/31/94 309357 311176
6/30/94 309357 311332
9/30/94 312372 314321
12/31/94 311813 314415
3/31/95 322129 324728
6/30/95 331446 334924
9/30/95 336105 339781
12/31/95 343849 348173
3/31/96 344915 349636
6/30/96 348467 353272
9/30/96 353795 359136
12/31/96 360374 365888
3/31/97 362655 368376
6/30/97 370257 376370
9/30/97 376720 383747
12/31/97 382476 390193
3/31/98 387771 395851
6/30/98 393066 401947
9/30/98 404064 414327
12/31/98 406824 417476
3/31/99 408550 420023
6/30/99 410276 422417
9/30/99 414590 427782
10/31/99 415453 428851
</TABLE>
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
SHORT-TERM BOND FUND VS
SALOMON SMITH BARNEY 1-3 YEAR TREASURY INDEX
SERVICE CLASS SHARES
[LINE GRAPH]
<TABLE>
<CAPTION>
SALOMON SMITH BARNEY 1-3 YEAR
SHORT-TERM BOND FUND TREASURY INDEX
-------------------- -----------------------------
<S> <C> <C>
1/2/91 250000 250000
3/31/91 255500 255500
6/30/91 260500 260482
9/30/91 269000 269208
12/31/91 278250 279142
3/31/92 278491 279505
6/30/92 286366 287527
9/30/92 293715 296095
12/31/92 294765 296747
3/31/93 301982 303097
6/30/93 305360 306522
9/30/93 309581 310844
12/31/93 311468 312740
3/31/94 309357 311176
6/30/94 309357 311332
9/30/94 312372 314321
12/31/94 311813 314415
3/31/95 322129 324728
6/30/95 331114 334924
9/30/95 335440 339781
12/31/95 343197 348173
3/31/96 343907 349636
6/30/96 347101 353272
9/30/96 352069 359136
12/31/96 358490 365888
3/31/97 360385 368376
6/30/97 367964 376370
9/30/97 374406 383747
12/31/97 379941 390193
3/31/98 384802 395851
6/30/98 389663 401947
9/30/98 400194 414327
12/31/98 402666 417476
3/31/99 404378 420023
6/30/99 405662 422417
9/30/99 409513 427782
10/31/99 410369 428851
</TABLE>
Source:Lipper, Inc.
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
<TABLE>
<CAPTION>
TOTAL RETURN* SEC AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF OCTOBER 31, 1999 AS OF OCTOBER 31, 1999
- -----------------------------------------------------------------------------------------------------------------
YEAR TO DATE
ONE YEAR FIVE YEARS SINCE INCEPTION
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Short-Term Bond Fund Institutional Class 2.12% 2.51% 5.85% 5.91%
Short-Term Bond Fund Service Class(+) 1.91 2.23 5.59 5.77
Average Lipper short U.S. government fund 2.25 2.52 5.48 5.55
Salomon Smith Barney 1-3 Year Treasury Index 2.72 2.97 6.35 6.29
</TABLE>
YEAR-BY-YEAR PERFORMANCE
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[BAR CHART]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11.30 5.94 5.67 0.11 10.27 4.81 6.13 6.37
<CAPTION>
1999 AS OF
10/31/99
----------
<S> <C>
2.12
</TABLE>
- --------------------------------------------------------------------------------
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%.
* 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.
128
<PAGE> 131
MAINSTAY
INSTITUTIONAL FUNDS INC.
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 1999
- ------------
<TABLE>
<CAPTION>
LONG-TERM INVESTMENTS (99.0%)+
ASSET-BACKED SECURITIES (15.0%)
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
AUTO LEASES (2.8%)
Premier Auto Trust
Series 1999-1 Class A3
5.69%, due 11/8/02.............. $1,390,000 $ 1,374,362
-----------
CONSUMER LOANS (1.6%)
Green Tree Financial Corporation
Series 1999-4 Class A4
6.64%, due 5/1/31............... 775,000 766,576
-----------
EQUIPMENT LOANS (4.3%)
Case Equipment Loan Trust
Series 1999-A Class A4
5.77%, due 8/15/05.............. 1,110,000 1,081,983
Ikon Receivables LLC
Series 1999-1 Class A3
5.99%, due 5/15/05.............. 1,065,000 1,054,467
-----------
2,136,450
-----------
HOME EQUITY LOANS (1.0%)
Conseco Finance
Securitizations Corp.
Series 1999-F Class A2
6.72%, due 10/15/14............. 515,000 512,811
-----------
LEISURE TIME (2.2%)
Harley-Davidson Eaglemark
Motorcycle Trust
Series 1999-1 Class A2
5.52%, due 2/15/05.............. 1,120,000 1,095,270
-----------
RECREATIONAL VEHICLES (1.0%)
Fleetwood Credit Corp.
Grantor Trust
Series 1996-A Class A
6.75%, due 10/17/11............. 481,832 480,989
-----------
UTILITIES--ELECTRIC (2.1%)
Boston Edison Company
Series 1999-1 Class A2
6.45%, due 3/15/06.............. 1,045,000 1,038,521
-----------
Total Asset-Backed Securities
(Cost $7,497,738)............... 7,404,979
-----------
CORPORATE BONDS (3.4%)
BEVERAGE--ALCOHOLIC (1.2%)
Seagram, Joseph E. & Sons Inc.
5.79%, due 4/15/01.............. 575,000 565,846
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
INVESTMENT BANK/BROKERAGE (2.2%)
Donaldson, Lufkin & Jenrette Inc.
5.875%, due 4/1/02.............. $1,120,000 $ 1,093,120
-----------
Total Corporate Bonds
(Cost $1,692,066)............... 1,658,966
-----------
U.S. GOVERNMENT &
FEDERAL AGENCIES (80.6%)
FEDERAL NATIONAL MORTGAGE ASSOCIATION (23.2%)
5.375%, due 3/15/02............. 3,900,000 3,829,878
5.625%, due 3/15/01............. 7,600,000 7,558,580
-----------
11,388,458
-----------
UNITED STATES TREASURY NOTES (57.4%)
5.625%, due 11/30/00 (a)........ 5,700,000 5,699,088
5.75%, due 10/31/00 (a)......... 4,575,000 4,579,804
6.00%, due 7/31/02.............. 5,170,000 5,186,958
6.25%, due 1/31/02.............. 110,000 110,893
6.375%, due 3/31/01............. 1,210,000 1,219,825
6.50%, due 8/31/01.............. 4,285,000 4,334,535
6.625%, due 3/31/02 (a)......... 5,005,000 5,087,883
7.50%, due 11/15/01 (a)......... 1,980,000 2,042,489
-----------
28,261,475
-----------
Total U.S. Government &
Federal Agencies
(Cost $40,136,437).............. 39,649,933
-----------
Total Investments
(Cost $49,326,241) (b).......... 99.0% 48,713,878(c)
Cash and Other Assets,
Less Liabilities................ 1.0 472,420
---------- -----------
Net Assets....................... 100.0% $49,186,298
========== ===========
</TABLE>
- ------------
(a) Represents securities out on loan or a portion which is out on loan. (See
Note 2(O))
(b) The cost for Federal income tax purposes is $49,368,868.
(c) At October 31, 1999 gross unrealized depreciation was $654,990, based on
cost for Federal income tax purposes. This consisted of aggregate gross
unrealized depreciation for all investments on which there was an excess of
cost over market value of $654,990.
------------
+ 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.
129
<PAGE> 132
SHORT-TERM BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $49,326,241)............................... $48,713,878
Cash.............................................. 34,250
Collateral held for securities loaned at value
(Note 2(O))..................................... 13,872,490
Receivables:
Investment securities sold...................... 2,153,706
Interest........................................ 693,125
Fund shares sold................................ 19,742
-----------
Total assets................................ 65,487,191
-----------
LIABILITIES:
Securities lending collateral (Note 2(O))......... 13,872,490
Payables:
Investment securities purchased................. 2,216,760
Fund shares redeemed............................ 150,000
MainStay Management............................. 9,542
Custodian....................................... 5,407
Transfer agent.................................. 2,465
Accrued expenses.................................. 44,229
-----------
Total liabilities........................... 16,300,893
-----------
Net assets........................................ $49,186,298
===========
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class............................. $ 5,001
Institutional Service Class..................... 108
Additional paid-in capital........................ 54,933,768
Accumulated undistributed net investment income... 2,382,682
Accumulated net realized loss on investments...... (7,522,898)
Net unrealized depreciation on investments........ (612,363)
-----------
Net assets........................................ $49,186,298
===========
Institutional Class
Net assets applicable to outstanding shares....... $48,149,887
===========
Shares of capital stock outstanding............... 5,001,171
===========
Net asset value per share
outstanding..................................... $ 9.63
===========
Institutional Service Class
Net assets applicable to outstanding shares....... $ 1,036,411
===========
Shares of capital stock outstanding............... 108,061
===========
Net asset value per share
outstanding..................................... $ 9.59
===========
</TABLE>
STATEMENT OF OPERATIONS
For the period January 1, 1999 through October 31, 1999* and the year ended
December 31, 1998
<TABLE>
<CAPTION>
1999* 1998
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Income:
Interest............................. $ 2,657,222 $2,842,304
----------- ----------
Expenses:
Management........................... 264,919 260,453
Professional......................... 34,833 34,105
Registration......................... 26,814 27,239
Transfer agent....................... 24,281 27,678
Custodian............................ 7,816 11,419
Shareholder communication............ 3,694 7,692
Service.............................. 2,352 3,348
Pricing Service...................... 2,072 3,090
Directors............................ 959 1,059
Miscellaneous........................ 8,783 15,661
----------- ----------
Total expenses before
reimbursement................... 376,523 391,744
Expense reimbursement from Manager... (109,252) (127,949)
----------- ----------
Net expenses..................... 267,271 263,795
----------- ----------
Net investment income.................. 2,389,951 2,578,509
----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on
investments.......................... (440,119) 26,879
Net change in unrealized appreciation
on investments....................... (830,282) 84,111
----------- ----------
Net realized and unrealized gain (loss)
on investments....................... (1,270,401) 110,990
----------- ----------
Net increase in net assets resulting
from operations...................... $ 1,119,550 $2,689,499
=========== ==========
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
130
<PAGE> 133
SHORT-TERM BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period January 1, 1999 through October 31, 1999* and the years ended
December 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
1999* 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 2,389,951 $ 2,578,509 $ 3,208,385
Net realized gain (loss) on investments................. (440,119) 26,879 (245,150)
Net change in unrealized appreciation on investments.... (830,282) 84,111 107,487
------------ ------------ ------------
Net increase in net assets resulting from operations.... 1,119,550 2,689,499 3,070,722
------------ ------------ ------------
Dividends to shareholders:
From net investment income:
Institutional Class................................... -- (2,516,800) (3,108,772)
Institutional Service Class........................... -- (67,925) (95,584)
------------ ------------ ------------
Total dividends to shareholders..................... -- (2,584,725) (3,204,356)
------------ ------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 28,062,583 17,781,967 19,252,118
Institutional Service Class........................... 298,883 791,418 803,378
Net asset value of shares issued to shareholders in
reinvestment of dividends:
Institutional Class................................... -- 2,516,797 3,108,769
Institutional Service Class........................... -- 67,923 95,581
------------ ------------ ------------
28,361,466 21,158,105 23,259,846
Cost of shares redeemed:
Institutional Class................................... (23,230,166) (24,848,447) (33,366,279)
Institutional Service Class........................... (557,420) (1,081,302) (720,752)
------------ ------------ ------------
Increase (decrease) in net assets derived from capital
share transactions.................................. 4,573,880 (4,771,644) (10,827,185)
------------ ------------ ------------
Net increase (decrease) in net assets................. 5,693,430 (4,666,870) (10,960,819)
NET ASSETS:
Beginning of period....................................... 43,492,868 48,159,738 59,120,557
------------ ------------ ------------
End of period............................................. $ 49,186,298 $ 43,492,868 $ 48,159,738
============ ============ ============
Accumulated undistributed net investment income at end of
period.................................................. $ 2,382,682 $ -- $ 4,103
============ ============ ============
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
131
<PAGE> 134
SHORT-TERM BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS
------------- ------------- ------------- -------------
JANUARY 1, 1999
THROUGH YEAR ENDED
OCTOBER 31, 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.................................. 0.47 0.45 0.56 0.53
Net realized and unrealized gain (loss) on
investments.......................................... (0.27) (0.27) 0.04 0.03
------- ------- ------- -------
Total from investment operations....................... 0.20 0.18 0.60 0.56
------- ------- ------- -------
Less dividends from net investment income.............. -- -- (0.56) (0.53)
------- ------- ------- -------
Net asset value at end of period....................... $ 9.63 $ 9.59 $ 9.43 $ 9.41
======= ======= ======= =======
Total investment return................................ 2.12%(a) 1.91%(a) 6.37% 5.98%
Ratios (to average net assets)/Supplemental Data:
Net investment income................................ 5.42%+ 5.17%+ 5.95% 5.70%
Net expenses......................................... 0.60%+ 0.85%+ 0.60% 0.85%
Expenses (before reimbursement)...................... 0.85%+ 1.10%+ 0.89% 1.14%
Portfolio turnover rate................................ 105% 105% 125% 125%
Net assets at end of period (in 000's)................. $48,150 $ 1,036 $42,219 $ 1,273
</TABLE>
- ------------
* The Fund changed its fiscal year end from December 31 to October 31.
+ Annualized.
(a) Total return is not annualized.
(b) Institutional Service Class commenced January 1, 1995.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
132
<PAGE> 135
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS(b) 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> 136
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1--Organization and Business:
- --------------------------------------------------------------------------------
MainStay Institutional Funds Inc. (the "Company") was incorporated in the
state of Maryland on September 21, 1990 and commenced operations on January 2,
1991. The Company is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended, ("Investment Company
Act"). As of October 31, 1999, the Company has eleven separate investment
portfolios: Asset Manager Fund (formerly known as the Multi-Asset Fund), EAFE
Index Fund, Growth Equity Fund, Indexed Equity Fund, International Equity 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 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 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 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.
134
<PAGE> 137
MAINSTAY
INSTITUTIONAL FUNDS INC.
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.
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
135
<PAGE> 138
NOTES TO FINANCIAL STATEMENTS (Continued)
on the market where any such options 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.
(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.
136
<PAGE> 139
MAINSTAY
INSTITUTIONAL FUNDS INC.
The following table discloses the current year reclassifications between
accumulated undistributed net investment income (loss) and accumulated
undistributed net realized gain (loss) on investments and paid-in capital
arising from permanent differences; net assets at October 31, 1999 are not
affected.
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED
ACCUMULATED ACCUMULATED NET REALIZED
UNDISTRIBUTED UNDISTRIBUTED GAIN (LOSS)
NET NET REALIZED ON FOREIGN ADDITIONAL
INVESTMENT GAIN (LOSS) CURRENCY PAID-IN
INCOME (LOSS) ON INVESTMENTS TRANSACTIONS CAPITAL
------------- -------------- ------------- -----------
<S> <C> <C> <C> <C>
Asset Manager Fund........................... $ (538,911) $ 538,911 $ -- $ --
EAFE Index Fund.............................. $ (326,760) $ (303,004) $ 679,189 $ (49,425)
Growth Equity Fund........................... $ 4,279,422 $ -- $ -- $(4,279,422)
Value Equity Fund............................ $ (461,136) $ 461,136 $ -- $ --
International Equity Fund.................... $ 497,315 $(1,038,322) $ 541,007 $ --
Bond Fund.................................... $ 53,898 $ (53,898) $ -- $ --
Indexed Bond Fund............................ $ 54,955 $ (54,955) $ -- $ --
International Bond Fund...................... $(1,556,680) $ (12,475) $1,569,155 $ --
Short-Term Bond Fund......................... $ (7,269) $ 7,269 $ -- $ --
</TABLE>
The reclassifications for the Funds are primarily due to foreign currency gain
(loss), distributions in excess of net investment income, gain on sales of
passive foreign investment companies, paydown gain (loss), and net operating
losses.
(E)
CHANGE IN FISCAL YEAR END. During fiscal year 1999, the Company changed its
fiscal year end from December 31 to October 31.
(F)
SECURITY TRANSACTIONS AND INVESTMENT INCOME. The Company records security
transactions on the trade date. Realized gains and losses on security
transactions are determined using the identified cost method and include gains
and losses from repayments of principal on mortgage-related and other
asset-backed securities. Dividend income is recognized on the ex-dividend date
and interest income is accrued daily. Discounts on securities, other than
short-term securities, purchased for all Funds are 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.
(G)
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.
(H)
EXPENSES. Expenses with respect to any two or more Funds are allocated in
proportion to the net assets of the respective Funds when the expenses are
incurred except where 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
137
<PAGE> 140
NOTES TO FINANCIAL STATEMENTS (Continued)
allocated to separate classes of shares based upon their relative net assets on
the date the income is earned or expenses and realized and unrealized gains and
losses are incurred.
(I)
USE OF ESTIMATES. The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
(J)
FOREIGN CURRENCY TRANSACTIONS. The books and records of the Company are kept in
U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the
mean between the buying and selling rates last quoted by any major U.S. bank at
the following dates:
(i) market value of investment securities, other assets and
liabilities--at the valuation date.
(ii) income and expenses--at the date of such transactions.
The assets and liabilities are presented at the exchange rates and market
values at the close of the period. The realized and unrealized gains and losses
on securities arising from changes in exchange rates and those resulting from
changes in market prices are not separately presented, except that 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.
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. Realized gains and losses from
certain foreign currency transactions are treated as ordinary income for Federal
income tax purposes.
EAFE INDEX FUND
Foreign cash held at October 31, 1999:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
- ------------------------------------------- ----------- -----------
<S> <C> <C> <C> <C>
Australian Dollar A$ 13,680 $ 8,743 $ 8,719
Euro E 472 496 496
Pound Sterling L 9,203 15,246 15,102
---------- ----------
$ 24,485 $ 24,317
========== ==========
</TABLE>
INTERNATIONAL EQUITY FUND
Foreign cash held at October 31, 1999:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
- ------------------------------------------- ----------- -----------
<S> <C> <C> <C> <C>
Australian Dollar A$ 34,471 $ 22,030 $ 21,968
Euro E 642,112 677,710 674,927
Hong Kong Dollar HK 13,280 1,709 1,709
Japanese Yen Y 56,790,714 536,930 544,169
New Zealand Dollar N$ 155 81 78
Swedish Krona SK 43,098 5,300 5,232
---------- ----------
$1,243,760 $1,248,083
========== ==========
</TABLE>
138
<PAGE> 141
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL BOND FUND
Foreign cash held at October 31, 1999:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
- ------------------------------------------- ----------- -----------
<S> <C> <C> <C> <C>
Canadian Dollar C$ 51 $ 35 $ 35
Euro E 149,271 159,392 156,899
Japanese Yen Y 71,370 678 684
Norwegian Krone NK 920 117 117
Pound Sterling L 10,980 18,161 18,018
---------- ----------
$ 178,383 $ 175,753
========== ==========
</TABLE>
(K)
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 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 October 31, 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
11/18/99....................................... A$ 1,244,500 $ 810,110 $ 16,793
Canadian Dollar vs. U.S. Dollar, expiring
11/26/99....................................... C$ 5,638,151 $ 3,775,000 (60,242)
Euro vs. Swedish Krona, expiring 11/30/99........ E 1,334,481 SK 11,630,000 8,678
Euro vs. U.S. Dollar, expiring 11/12/99.......... E 704,000 $ 740,538 (172)
Japanese Yen vs. U.S. Dollar, expiring 12/1/99... Y 754,971,750 $ 7,305,000 34,256
Japanese Yen vs. U.S. Dollar, expiring 12/1/99... Y 1,443,860,000 $ 13,258,248 (646,824)
New Zealand Dollar vs. U.S. Dollar, expiring
11/16/99....................................... N$ 2,216,000 $ 1,176,807 54,600
Pound Sterling vs. U.S. Dollar, expiring
11/12/99....................................... L 1,861,000 $ 3,079,583 25,810
</TABLE>
<TABLE>
<CAPTION>
CONTRACT AMOUNT CONTRACT AMOUNT
PURCHASED SOLD
------------------ ------------------
<S> <C> <C> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
- -------------------------------
Australian Dollar vs. U.S. Dollar, expiring
11/18/99....................................... A$ 1,244,500 $ 800,774 (7,457)
Canadian Dollar vs. U.S. Dollar, expiring
11/26/99....................................... C$ 11,150,218 $ 7,550,000 34,717
Euro vs. U.S. Dollar, expiring 11/12/99.......... E 12,201,892 $ 13,117,565 (279,414)
Japanese Yen vs. U.S. Dollar, expiring 12/1/99... Y 672,588,000 $ 6,300,000 177,349
New Zealand Dollar vs. U.S. Dollar, expiring
11/16/99....................................... N$ 2,216,000 $ 1,141,462 (19,255)
---------
Net unrealized depreciation on forward foreign
currency contracts............................. $(661,161)
=========
</TABLE>
139
<PAGE> 142
NOTES TO FINANCIAL STATEMENTS (Continued)
VALUE EQUITY FUND
Foreign currency forward contracts open at October 31, 1999:
<TABLE>
<CAPTION>
CONTRACT AMOUNT CONTRACT AMOUNT UNREALIZED
SOLD PURCHASED DEPRECIATION
-------------------- -------------------- ------------
<S> <C> <C> <C> <C> <C>
FOREIGN CURRENCY SALE CONTRACTS
- --------------------------------
Japanese Yen vs. U.S. Dollar, expiring
12/16/99................................... Y 1,084,000,000 $ 10,333,651 $(137,346)
---------
Net unrealized depreciation on foreign
currency forward contracts................. $(137,346)
=========
</TABLE>
INTERNATIONAL BOND FUND
Foreign currency forward contracts open at October 31, 1999:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT AMOUNT CONTRACT AMOUNT APPRECIATION/
SOLD PURCHASED (DEPRECIATION)
-------------------- -------------------- --------------
<S> <C> <C> <C> <C> <C>
FOREIGN CURRENCY SALE CONTRACTS
- --------------------------------
Australian Dollar vs. U.S. Dollar, expiring
11/18/99................................... A$ 3,477,000 $ 2,267,060 $ 50,617
Canadian Dollar vs. U.S. Dollar, expiring
11/26/99................................... C$ 2,969,720 $ 1,988,124 (31,970)
Danish Krone vs. Euro, expiring 11/23/99..... DK 1,323,000 E 177,703 (260)
Euro vs. U.S. Dollar, expiring 11/12/99...... E 1,073,000 $ 1,147,380 18,430
Japanese Yen vs. U.S. Dollar, expiring
12/1/99.................................... Y 44,700,000 $ 407,912 (22,571)
Japanese Yen vs. U.S. Dollar, expiring
12/1/99.................................... Y 300,231,750 $ 2,905,000 13,623
New Zealand Dollar vs. U.S. Dollar, expiring
11/18/99................................... ND 2,832,000 $ 1,460,618 26,396
Pound Sterling vs. Euro, expiring 2/7/00..... L 690,000 E 1,054,643 (15,952)
Pound Sterling vs. U.S. Dollar, expiring
11/12/99................................... L 2,522,000 $ 4,169,194 30,765
Swedish Krona vs. Euro, expiring 11/30/99.... SK 2,570,000 E 294,894 (1,918)
</TABLE>
<TABLE>
<CAPTION>
CONTRACT AMOUNT CONTRACT AMOUNT
PURCHASED SOLD
-------------------- --------------------
<S> <C> <C> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
- -------------------------------
Australian Dollar vs. U.S. Dollar, expiring
11/18/99................................... A$ 2,647,000 $ 1,735,532 $ (48,180)
Canadian Dollar vs. U.S. Dollar, expiring
11/26/99................................... C$ 4,364,092 $ 2,955,000 13,588
Euro vs. U.S. Dollar, expiring 11/12/99...... E 4,740,728 $ 5,095,896 (107,965)
Euro vs. U.S. Dollar, expiring 11/12/99...... E 2,584,000 $ 2,718,110 631
Japanese Yen vs. U.S. Dollar, expiring
12/1/99.................................... Y 337,361,600 $ 3,160,000 88,956
Pound Sterling vs. U.S. Dollar, expiring
11/12/99................................... L 691,000 $ 1,152,723 (18,839)
---------
Net unrealized depreciation on foreign
currency forward contracts................. $ (4,649)
=========
</TABLE>
(L)
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,
140
<PAGE> 143
MAINSTAY
INSTITUTIONAL FUNDS INC.
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.
INTERNATIONAL EQUITY FUND
Purchased option activity for the ten months ended October 31, 1999 was as
follows:
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUM
----------- ----------
<S> <C> <C>
Options outstanding at December 31, 1998.................... -- --
Options--purchased.......................................... 64,784,160 $ 706,663
Options--sold............................................... (36,391,160) (415,508)
Options--expired............................................ (20,948,000) (166,079)
----------- ---------
Options outstanding at October 31, 1999..................... 7,445,000 $ 125,076
=========== =========
</TABLE>
Written option activity for the ten months ended October 31, 1999 was as
follows:
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUM
----------- ----------
<S> <C> <C>
Options outstanding at December 31, 1998.................... -- --
Options--written............................................ (7,360,000) $ (19,872)
Options--expired............................................ 7,360,000 19,872
----------- ---------
Options outstanding at October 31, 1999..................... -- $ --
=========== =========
</TABLE>
INTERNATIONAL BOND FUND
Purchased option activity for the ten months ended October 31, 1999 was as
follows:
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUM
----------- ----------
<S> <C> <C>
Options outstanding at December 31, 1998.................... -- --
Options--purchased.......................................... 26,881,450 $ 291,297
Options--sold............................................... (15,201,450) (172,599)
Options--expired............................................ (8,780,000) (69,978)
----------- ---------
Options outstanding at October 31, 1999..................... 2,900,000 $ 48,720
=========== =========
</TABLE>
Written option activity for the ten months ended October 31, 1999 was as
follows:
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUM
----------- ----------
<S> <C> <C>
Options outstanding at December 31, 1998.................... -- --
Options--written............................................ (2,955,000) $ (7,979)
Options--expired............................................ 2,955,000 7,979
----------- ---------
Options outstanding at October 31, 1999..................... -- $ --
=========== =========
</TABLE>
(M)
FUTURES CONTRACTS. A futures contract is an agreement to purchase or sell a
specified quantity of an underlying instrument at a specified future date and
price, or to make or receive a cash payment based on
141
<PAGE> 144
NOTES TO FINANCIAL STATEMENTS (Continued)
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).
(N)
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.
(O)
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 October 31, 1999, the Bond Fund and Short-Term Bond Fund had portfolio
securities with a fair market value of $40,382,729 and $13,287,687,
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.
Non-cash collateral received and held by the Bond Fund, in the form of U.S.
Government obligations, had a value of $206,125 at the period ended October 31,
1999.
Net income earned on securities lending amounted to $100,221 and $14,764,
net of broker fees and rebates, for the Bond Fund and Short-Term Bond Fund,
respectively, for the period January 1, 1999 through October 31, 1999 and is
included as interest income on the Statement of Operations.
142
<PAGE> 145
MAINSTAY
INSTITUTIONAL FUNDS INC.
BOND FUND
Investments made with cash collateral at October 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
SHORT-TERM COMMERCIAL PAPER
AIM Institutional Funds Group 5.37%, due 11/1/99............ $ 122,930 $ 122,930
Aquinas Funding Corp. 5.38%, due 11/1/99.................... 9,000,000 9,000,000
Breeds Hill Capital Corp. 5.40%, due 11/1/99................ 5,210,000 5,210,000
Textron Financial Corp. 5.61%, due 11/24/99................. 8,000,000 7,996,800
Variable Funding Capital Corp. 6.01%, due 1/18/00........... 6,600,000 6,515,630
-----------
28,845,360
-----------
REPURCHASE AGREEMENTS
Donaldson, Lufkin & Jenrette Inc.
5.48%, due 12/31/99
(Collateralized by
$5,106,178 PNC Mortgage Securities Corp. 7.813%, due
11/25/29 Market Value $5,135,633
$3,074,535 PNC Mortgage Securities Corp. 7.934%, due
12/26/29 Market Value $3,114,673
$1,002,271 Residential Accredit Loans, Inc. 6.75%, due
5/25/29 Market Value $1,008,320)........................ 9,000,000 9,000,000
Prudential Securities Inc.
5.38%, due 11/5/99
(Collateralized by
$7,650,882 Federal Mortgage Corp. zero coupon, due 3/9/00
Market Value $7,650,882)................................ 7,500,000 7,500,000
-----------
$45,345,360
===========
</TABLE>
Non-cash collateral investments at October 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
United States Treasury Notes
6.25%, due 8/15/23........................................ $ 99,125 $ 99,125
6.875%, due 8/15/25....................................... 107,000 107,000
-----------
$ 206,125
===========
</TABLE>
143
<PAGE> 146
NOTES TO FINANCIAL STATEMENTS (Continued)
SHORT-TERM BOND FUND
Investments made with cash collateral at October 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -----------
<S> <C> <C>
SHORT-TERM COMMERCIAL PAPER
ACE Overseas Corp. 5.41%, due 11/22/99...................... $1,355,000 $ 1,350,748
AIM Institutional Funds Group 5.39%, due 11/2/99............ 20,752 20,752
Alpine Securitization Corp. 6.20%, due 1/20/00.............. 2,050,000 2,022,211
Breeds Hill Capital Corp. 5.38%, due 11/1/99................ 2,090,000 2,090,000
Crown Point Capital Co. LLC 5.38%, due 11/1/99.............. 430,000 430,000
Galleon Capital Corp. 5.40%, due 11/19/99................... 2,000,000 1,994,620
Textron Financial Corp. 5.61%, due 11/24/99................. 2,000,000 1,999,200
Variable Funding Capital Corp. 6.01%, due 1/18/00........... 2,350,000 2,319,959
-----------
12,227,490
-----------
REPURCHASE AGREEMENTS
Morgan (J.P.) Securities Inc.
5.40%, due 12/30/99
(Collateralized by
$1,645,000 U.S. Bancorp 6.75%, due 10/15/05 Market Value
$1,722,700)............................................. 1,645,000
-----------
$13,872,490
===========
</TABLE>
- --------------------------------------------------------------------------------
NOTE 3 -- Fees and Related Party Policies:
- --------------------------------------------------------------------------------
(A)
MANAGER, SUBADVISORS, AND SUB-ADMINISTRATOR. MainStay Management LLC (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 LLC ("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 LLC ("Monitor Capital"), a registered
investment adviser and an indirect wholly-owned subsidiary of New York Life,
serves as subadvisor to the Asset Manager Fund, EAFE Index Fund, Indexed Equity
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>
Asset Manager Fund............. .65%
EAFE Index Fund................ .95%
Growth Equity Fund............. .85%
Indexed Equity Fund............ .50%
International Equity Fund...... .85%
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>
144
<PAGE> 147
MAINSTAY
INSTITUTIONAL FUNDS INC.
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>
Asset Manager Fund............. .15%
EAFE Index Fund................ .15%
Growth Equity Fund............. .25%
Indexed Equity Fund............ .10%
International Equity Fund...... .35%
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>
Asset Manager Fund............. .50%
EAFE Index Fund................ .80%
Growth Equity Fund............. .60%
Indexed Equity Fund............ .40%
International Equity 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 period January 1, 1999 through October 31, 1999 (except for
International Equity Fund) and for the year ended December 31, 1998, 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%
International Equity Fund...... 1.00%
Bond Fund...................... .75%
Indexed Bond Fund.............. .50%
International Bond Fund........ .95%
Money Market Fund.............. .50%
Short-Term Bond Fund........... .60%
</TABLE>
In connection with the voluntary expense limitations, the Manager assumed
the following expenses for the period January 1, 1999 through October 31, 1999
and the year ended December 31, 1998:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
EAFE Index Fund...... $ 223,379 $ 257,925
Indexed Equity
Fund**............. 3,292,206 3,269,934
International Equity
Fund............... -- 36,690
Bond Fund............ 159,149 192,482
Indexed Bond Fund.... 164,813 222,581
</TABLE>
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
International Bond
Fund............... $ 57,982 $ 70,444
Money Market Fund.... 343,743 383,039
Short-Term Bond
Fund............... 109,252 127,949
</TABLE>
- ------------
** For the Indexed Equity Fund, the Manager, assumed $2,622,628 and $2,643,549,
for 1999 and 1998, respectively. Monitor Capital, the subadvisor, assumed
$669,578 and $626,385 for 1999 and 1998, respectively.
The Asset Manager Fund, Growth Equity Fund, International Equity Fund and
the Value Equity Fund do not have a voluntary expense limitation. The
International Equity Fund did have a voluntary expense limitation in 1998.
These voluntary expense limitations will remain in effect through October
31, 2000, after which they may be terminated or revised at anytime.
(B)
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.
145
<PAGE> 148
NOTES TO FINANCIAL STATEMENTS (Continued)
(C)
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., an indirect wholly owned subsidiary of New York Life,
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.
(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 period January 1, 1999
through October 31, 1999 and the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Asset Manager Fund... $327,355 $247,196
EAFE Index Fund...... 23,378 17,876
Growth Equity Fund... 407,686 238,005
Indexed Equity
Fund............... 43,581 29,983
International Equity
Fund............... 23,070 17,765
Value Equity Fund.... 451,916 447,308
</TABLE>
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Bond Fund............ $ 25,348 $ 19,448
Indexed Bond Fund.... 24,503 18,274
International Bond
Fund............... 22,216 16,966
Money Market Fund.... 43,836 25,738
Short-Term Bond
Fund............... 24,281 18,712
</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.
(F)
CAPITAL. The Funds have been advised that at October 31, 1999 affiliates of New
York Life owned a significant number of shares of the Funds with the following
market values:
<TABLE>
<S> <C>
Asset Manager Fund....... $ 378,128,740
EAFE Index Fund.......... 46,185,777
Growth Equity Fund....... 925,352,220
Indexed Equity Fund...... 1,215,933,983
International Equity
Fund................... 119,452,460
Value Equity Fund........ 635,047,342
Bond Fund................ $ 150,406,099
Indexed Bond Fund........ 89,904,755
International Bond Fund.. 49,084,578
Money Market Fund........ 161,149,028
Short-Term Bond Fund..... 9,476,946
</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.
146
<PAGE> 149
MAINSTAY
INSTITUTIONAL FUNDS INC.
(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
period January 1, 1999 through October 31, 1999 and the year ended December 31,
1998, these fees were as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Asset Manager Fund.... $29,781 $25,620
EAFE Index Fund....... 4,085 3,144
Growth Equity Fund.... 56,302 43,823
Indexed Equity Fund... 88,471 65,352
International Equity
Fund................ 7,975 6,588
Value Equity Fund..... 44,550 52,780
</TABLE>
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Bond Fund............. $10,274 $ 9,929
Indexed Bond Fund..... 8,876 7,868
International Bond
Fund................ 3,250 2,934
Money Market Fund..... 36,900 41,308
Short-Term Bond Fund.. 2,818 2,390
</TABLE>
- --------------------------------------------------------------------------------
NOTE 4 -- Federal Income Tax:
- --------------------------------------------------------------------------------
At October 31, 1999 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.
<TABLE>
<CAPTION>
1999
----
CAPITAL LOSS
AVAILABLE THROUGH AMOUNT (000'S)
----------------- --------------
<S> <C> <C>
Value Equity Fund.................................... 2007 $25,638
=======
Bond Fund............................................ 2002 $ 5,265
2004 1,625
2007 8,597
=======
$15,487
=======
Indexed Bond Fund.................................... 2004 $ 1,439
2005 44
2006 111
2007 1,728
=======
$ 3,322
=======
Money Market Fund.................................... 2006 $ 22
=======
Short-Term Bond Fund................................. 2001 $ 101
2002 4,478
2003 1,770
2004 485
2005 173
2007 473
=======
$ 7,480
=======
</TABLE>
The International Equity Fund and the Money Market Fund utilized $672,107 and
$5,267, respectively, of capital loss carryforwards during the ten months ended
October 31, 1999.
147
<PAGE> 150
NOTES TO FINANCIAL STATEMENTS (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
forward 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 and Asset Manager Fund use foreign currency exchange
contracts 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 $375,000,000 with The Bank of New York in order to secure a source of
funds for temporary purposes to meet unanticipated or excessive shareholder
redemption requests. The Funds pay a commitment fee, at an annual rate of .075%
of the average commitment amount, regardless of usage. Such commitment fees are
allocated amongst the Funds based upon net assets and other factors. Interest on
any revolving credit loan is charged based upon the Federal Funds Advances rate.
There were no borrowings on the line of credit during the period ended October
31, 1999.
148
<PAGE> 151
MAINSTAY
INSTITUTIONAL FUNDS INC.
- --------------------------------------------------------------------------------
NOTE 7 -- Deposit with Broker:
- --------------------------------------------------------------------------------
At October 31, 1999 the Funds had foreign currency exchange contracts to
convert each of the foreign currencies to U.S. dollars settling on November 2,
1999. The balances held with broker at October 31, 1999 were as follows:
ASSET MANAGER FUND
<TABLE>
<CAPTION>
CURRENCY COST VALUE
- ------------------------------------------ ------------ ------------
<S> <C> <C> <C> <C>
Australian
Dollar A$ 3,366,398 $ 2,138,263 $ 2,145,406
Canadian Dollar C$ (574,250) (385,946) (390,407)
Euro E 5,288,995 5,831,390 5,559,289
Hong Kong Dollar HK 17,286,650 2,229,492 2,227,744
Japanese Yen Y (251,417,500) (2,166,021) (2,409,137)
Pound Sterling L 4,662,041 7,632,490 7,649,962
U.S. Dollar $ (14,773,953) (14,773,953) (14,773,953)
------------ ------------
$ 505,715 $ 8,904
------------ ------------
</TABLE>
EAFE INDEX FUND
<TABLE>
<CAPTION>
CURRENCY COST VALUE
- ------------------------------------------ ------------ ------------
<S> <C> <C> <C> <C>
Euro E (36,413) $ (38,245) $ (25,259)
Japanese Yen Y (19,821,932) (189,937) (176,618)
Pound Sterling L 48,381 79,443 90,596
U.S. Dollar $ 297,395 297,395 297,395
------------ ------------
$ 148,656 $ 186,114
============ ============
</TABLE>
149
<PAGE> 152
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
NOTE 8-- Purchases and Sales of Securities (in 000's):
- --------------------------------------------------------------------------------
During the period January 1, 1999 through October 31, 1999, purchases and
sales of securities, other than securities subject to repurchase transactions
and short-term securities, were as follows:
<TABLE>
<CAPTION>
Asset Manager Fund EAFE Index Fund Growth Equity Fund Indexed Equity Fund
Purchases Sales Purchases Sales Purchases Sales Purchases Sales
=========================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government
securities $ 38,062 $ 75,495 $ -- $ -- $ -- $ -- $ -- $ --
All others 17,487 55,216 12,679 20,072 280,051 277,363 139,137 105,837
-----------------------------------------------------------------------------------------
Total $ 55,549 $130,711 $ 12,679 $ 20,072 $280,051 $277,363 $139,137 $105,837
=========================================================================================
</TABLE>
- --------------------------------------------------------------------------------
NOTE 9--Capital Share Transactions (in 000's):
- --------------------------------------------------------------------------------
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
Asset Manager Fund
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- -------------
January 1, 1999
through Year ended Year ended
October 31, 1999 1998 1997
=============================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares sold 2,735 1,009 3,875 443 3,058 260
Shares issued in
reinvestment of
dividends and
distributions 3,585 205 4,797 158 3,152 74
---------------------------------------------------------------------------------------------
6,320 1,214 8,672 601 6,210 334
Shares redeemed (3,630) (307) (4,061) (169) (2,779) (84)
---------------------------------------------------------------------------------------------
Net increase
(decrease) 2,690 907 4,611 432 3,431 250
=============================================================================================
<CAPTION>
EAFE Index Fund
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- -------------
January 1, 1999
through Year ended Year ended
October 31, 1999 1998 1997
=============================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares sold 5,615 9 2,636 8 766 9
Shares issued in
reinvestment of
dividends and
distributions 27 --(a) 442 3 1,467 12
---------------------------------------------------------------------------------------------
5,642 9 3,078 11 2,233 21
Shares redeemed (6,050) (9) (2,690) (10) (3,202) (6)
---------------------------------------------------------------------------------------------
Net increase
(decrease) (408) -- 388 1 (969) 15
=============================================================================================
</TABLE>
<TABLE>
<CAPTION>
International Equity Fund
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- -------------
January 1, 1999
through Year ended Year ended
October 31, 1999 1998 1997
=============================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,534 10 3,583 4 1,051 14
Shares issued in
reinvestment of
dividends and
distributions 32 --(a) 343 2 1,247 7
---------------------------------------------------------------------------------------------
1,566 10 3,926 6 2,298 21
Shares redeemed (1,792) (15) (3,477) (10) (2,721) (28)
---------------------------------------------------------------------------------------------
Net increase
(decrease) (226) (5) 449 (4) (423) (7)
=============================================================================================
<CAPTION>
Value Equity Fund
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- -------------
January 1, 1999
through Year ended Year ended
October 31, 1999 1998 1997
=============================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares sold 3,537 73 5,203 125 10,407 287
Shares issued in
reinvestment of
dividends and
distributions 4 --(a) 14,874 179 9,661 105
---------------------------------------------------------------------------------------------
3,541 73 20,077 304 20,068 392
Shares redeemed (13,226) (315) (12,155) (150) (11,665) (649)
---------------------------------------------------------------------------------------------
Net increase
(decrease) (9,685) (242) 7,922 154 8,403 (257)
=============================================================================================
</TABLE>
<TABLE>
<CAPTION>
International Bond Fund
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- -------------
January 1, 1999
through Year ended Year ended
October 31, 1999 1998 1997
=============================================================================================
<S> <C> <C> <C> <C> <C> <C>
Shares sold 367 --(a) 1,062 2 137 5
Shares issued in
reinvestment of
dividends and
distributions 116 --(a) 392 2 567 3
---------------------------------------------------------------------------------------------
483 --(a) 1,454 4 704 8
Shares redeemed (427) (2) (369) (5) (546) (5)
---------------------------------------------------------------------------------------------
Net increase
(decrease) 56 (2) 1,085 (1) 158 3
=============================================================================================
<CAPTION>
Money Market Fund
Institutional Institutional Institutional
Class Service Class Sweep Shares Class
------------- ----------------- ------------------
January 1, 1999
through
October 31, 1999
==========================================================
<S> <C> <C> <C>
Shares sold 478,066 10,416 251,505
Shares issued in
reinvestment of
dividends and
distributions 8,988 811 4,314
----------------------------------------------------------
487,054 11,227 255,819
Shares redeemed (434,684) (109,362) (110,508)
----------------------------------------------------------
Net increase
(decrease) 52,370 (98,135) 145,311
==========================================================
</TABLE>
- ------------
* Sweep Shares Class first offered on December 8, 1998.
(a) Less than one thousand.
150
<PAGE> 153
MAINSTAY
INSTITUTIONAL FUNDS INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International International
Equity Fund Value Equity Fund Bond Fund Indexed Bond Fund Bond Fund
Purchases Sales Purchases Sales Purchases Sales Purchases Sales Purchases Sales
====================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ -- $ -- $ -- $ -- $302,493 $325,009 $ 65,964 $ 34,204 $ 4,881 $ 6,635
48,837 49,553 365,527 515,680 111,532 108,675 11,098 13,311 138,337 129,512
- --------------------------------------------------------------------------------------------------------------------
$ 48,837 $ 49,553 $365,527 $515,680 $414,025 $433,684 $ 77,062 $ 47,515 $143,218 $136,147
====================================================================================================================
<CAPTION>
Short-Term Bond Fund
Purchases Sales
--------------------
<S> <C> <C>
$ 46,704 $ 49,595
12,074 4,394
--------------------
$ 58,778 $ 53,989
====================
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Growth Equity Fund
Institutional Institutional Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
January 1, 1999 January 1, 1999
through Year ended Year ended through
October 31, 1999 1998 1997 October 31, 1999
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
5,302 365 4,734 119 7,615 160 6,739 902
287 7 1,838 28 2,018 28 403 15
- ---------------------------------------------------------------------------------------------------------------------------------
5,589 372 6,572 147 9,633 188 7,142 917
(5,914) (127) (4,977) (93) (6,715) (78) (6,855) (337)
- ---------------------------------------------------------------------------------------------------------------------------------
(325) 245 1,595 54 2,918 110 287 580
=================================================================================================================================
<CAPTION>
Indexed Equity Fund
Institutional Institutional Institutional Institutional
Class Service Class Class Service Class
------------- ------------- ------------- -------------
Year ended Year ended
1998 1997
=============================================================
<S> <C> <C> <C>
11,881 806 12,006 404
1,778 41 1,180 16
-------------------------------------------------------------
13,659 847 13,186 420
(5,280) (264) (6,821) (187)
-------------------------------------------------------------
8,379 583 6,365 233
=============================================================
</TABLE>
<TABLE>
<CAPTION>
Bond Fund
Institutional Institutional Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
January 1, 1999 January 1, 1999
through Year ended Year ended through
October 31, 1999 1998 1997 October 31, 1999
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
1,239 528 2,773 435 944 67 2,351 72
--(a) --(a) 998 19 1,129 9 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
1,239 528 3,771 454 2,073 76 2,351 72
(1,728) (576) (4,316) (178) (1,737) (86) (3,139) (115)
- ---------------------------------------------------------------------------------------------------------------------------------
(489) (48) (545) 276 336 (10) (788) (43)
=================================================================================================================================
<CAPTION>
Indexed Bond Fund
Institutional Institutional Institutional Institutional
Class Service Class Class Service Class
------------- ------------- ------------- -------------
Year ended Year ended
1998 1997
=============================================================
<S> <C> <C> <C>
5,611 123 2,458 131
847 20 710 17
-------------------------------------------------------------
6,458 143 3,168 148
(3,138) (69) (2,590) (130)
-------------------------------------------------------------
3,320 74 578 18
=============================================================
</TABLE>
<TABLE>
<CAPTION>
Money Market Fund
(Continued) Short-Term Bond Fund
Institutional Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Sweep Shares Class* Class Service Class Class Service Class
------------- ------------- ------------------- ------------- ------------- ------------- -------------
January 1, 1999
Year ended Year ended through
1998 1997 October 31, 1999
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
267,338 92,389 7,086 383,542 90,079 2,968 32
10,080 3,866 -- 7,733 2,387 -- --
-------------------------------------------------------------------------------------------------------------------
277,418 96,255 7,086 391,275 92,466 2,968 32
(273,376) (56,718) (129) (311,713) (62,902) (2,446) (59)
-------------------------------------------------------------------------------------------------------------------
4,042 39,537 6,957 79,562 29,564 522 (27)
===================================================================================================================
<CAPTION>
Short-Term Bond Fund
Institutional Institutional Institutional Institutional
Class Service Class Class Service Class
------------- ------------- ------------- -------------
Year ended Year ended
1998 1997
=============================================================
<S> <C> <C> <C>
1,826 81 1,988 82
268 7 331 10
-------------------------------------------------------------
2,094 88 2,319 92
(2,584) (111) (3,450) (73)
-------------------------------------------------------------
(490) (23) (1,131) 19
=============================================================
</TABLE>
151
<PAGE> 154
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors and Shareholders of
MainStay Institutional Funds Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Asset Manager Fund (formerly
Multi-Asset Fund), EAFE Index Fund, Growth Equity Fund, Indexed Equity Fund,
International Equity Fund, Value Equity Fund, Bond Fund, Indexed Bond Fund,
International Bond Fund, Money Market Fund, and Short-Term Bond Fund
(constituting MainStay Institutional Funds Inc., hereafter referred to as the
"Funds") at October 31, 1999, and the results of their operations, the changes
in each of their net assets and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards, which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at October
31, 1999 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
1177 Avenue of the Americas
New York, New York
December 22, 1999
152
<PAGE> 155
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
JOHN FLANAGAN
Treasurer
MANAGER
MainStay Management LLC
SUBADVISORS
New York Life Insurance Company
MacKay Shields LLC
Monitor Capital Advisors LLC
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
*As of October 31, 1999.
<PAGE> 156
----------------------------------------------------------------------------
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
MacKay Shields LLC
Monitor Capital Advisors LLC
New York Life Insurance Company
[MAINSTAY LOGO] MAINSTAY Investments
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.
- --------------------------------------------------------------------------------
