<PAGE> 1
Annual Report
MAINSTAY(R) INSTITUTIONAL FUNDS INC.
OCTOBER 31, 2000
Growth Equity Fund
Indexed Equity Fund
Value Equity Fund
Asset Manager Fund
International Equity Fund
EAFE Index Fund
International Bond Fund
Bond Fund
Indexed Bond Fund
Short-Term Bond Fund
Money Market Fund
[MAINSTAY INVESTMENTS LOGO]
<PAGE> 2
<TABLE>
<CAPTION>
PERFORMANCE HIGHLIGHTS
TOTAL RETURNS*
INDIVIDUAL YEARS ENDED DECEMBER 31
TEN
MONTHS YEAR
ENDED ENDED
OCT 31, OCT 31,
FUNDS--INCEPTION DATE 1993 1994 1995 1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUNDS
Growth Equity 9.59% -2.23% 37.88% 21.62% 24.73% 40.50% 9.96% 12.24%
(Institutional Class)(+)--
1/2/91
Growth Equity (Service 9.59 -2.23 37.50 21.29 24.50 40.18 9.74 11.93
Class)(++)--1/1/95
INDEXED EQUITY 9.41 0.90 36.88 22.57 32.88 28.62 11.80 5.98
(INSTITUTIONAL CLASS)(+)--
1/2/91
INDEXED EQUITY (SERVICE 9.41 0.90 36.70 22.21 32.60 28.24 11.60 5.72
CLASS)(++)--1/1/95
GROWTH AND INCOME FUNDS
Value Equity (Institutional 14.90% 1.22% 29.42% 22.41% 22.63% -8.10% 7.91% 11.31%
Class)(+)--1/2/91
Value Equity (Service 14.90 1.22 29.32 22.10 22.28 -8.30 7.65 11.00
Class)(++)--1/1/95
ASSET MANAGER 8.79 -0.86 26.81 16.16 26.69 21.31 5.58 11.18
(INSTITUTIONAL CLASS)(+)--
1/2/91
ASSET MANAGER (SERVICE 8.79 -0.86 26.70 15.89 26.30 21.00 5.31 10.96
CLASS)(++)--1/1/95
INTERNATIONAL FUNDS
International Equity 25.03% 8.36% 7.17% 12.09% 5.44% 22.41% 11.23% -9.44%
(Institutional
Class)(sec.)--1/1/95
International Equity 25.03 8.36 6.86 11.59 4.88 22.20 10.96 -9.62
(Service Class)(sec.)--
1/1/95
EAFE Index (Institutional 28.97 6.83 9.03 6.45 0.40 19.15 12.31 -3.52
Class)(+)--1/2/91
EAFE Index (Service 28.97 6.83 8.63 6.37 0.08 18.83 12.08 -3.63
Class)(++)--1/1/95
INTERNATIONAL BOND 14.56 3.11 18.46 14.32 2.62 12.53 -5.33 -13.34
(INSTITUTIONAL
CLASS)(SEC.)--1/1/95
INTERNATIONAL BOND (SERVICE 14.56 3.11 18.26 14.08 2.27 12.30 -5.50 -13.49
CLASS)(SEC.)--1/1/95
INCOME FUNDS
Bond (Institutional 9.74% -3.31% 17.88% 2.80% 8.57% 7.93% -1.61% 6.21%
Class)(+)--1/2/91
Bond (Service 9.74 -3.31 17.55 2.62 8.21 7.73 -1.92 5.96
Class)(++)--1/1/95
INDEXED BOND (INSTITUTIONAL 9.64 -3.44 18.07 2.55 9.01 8.21 -1.56 7.27
CLASS)(+)--1/2/91
INDEXED BOND (SERVICE 9.64 -3.44 17.97 2.34 8.75 7.86 -1.65 6.87
CLASS)(++)--1/1/95
Short-Term Bond 5.67 0.11 10.27 4.81 6.13 6.37 2.12 6.05
(Institutional
Class)(+)--1/2/91
Short-Term Bond (Service 5.67 0.11 10.07 4.46 5.98 5.98 1.91 5.78
Class)(++)--1/1/95
MONEY MARKET (II) 2.89 3.88 5.63 5.11 5.27 5.25 3.96 5.98
(Institutional Class)(+)--
1/2/91
MONEY MARKET (II) (Service 2.89 3.88 5.46 4.85 5.01 4.99 3.74 5.72
Class)(++)--1/1/95
MONEY MARKET (II) (Sweep 2.89 3.88 5.46 4.85 5.01 4.99 3.53 5.46
Shares Class)(++)--
12/8/98
Money Market(II) (Institutional Class) 7-day current yield 6.21%
Money Market(II) (Service Class)(++) 7-day current yield 5.97%
Money Market(II) (Sweep Share Class)(+) 7-day current yield 5.72%
<CAPTION>
PERFORMANCE HIGHLIGHTS
AVERAGE ANNUAL
TOTAL RETURNS
AS OF OCTOBER 31, 2000
SINCE
INCEPTION/
FUNDS--INCEPTION DATE 1 YEAR 5 YEARS 10 YEARS
<S> <C> <C> <C>
GROWTH FUNDS
Growth Equity 12.24% 22.00% 21.61%
(Institutional Class)(+)--
1/2/91
Growth Equity (Service 11.93 21.71 21.43
Class)(++)--1/1/95
INDEXED EQUITY 5.98 21.40 18.28
(INSTITUTIONAL CLASS)(+)--
1/2/91
INDEXED EQUITY (SERVICE 5.72 21.10 18.12
CLASS)(++)--1/1/95
GROWTH AND INCOME FUNDS
Value Equity (Institutional 11.31% 12.18% 15.45%
Class)(+)--1/2/91
Value Equity (Service 11.00 11.89 15.29
Class)(++)--1/1/95
ASSET MANAGER 11.18 17.24 13.96
(INSTITUTIONAL CLASS)(+)--
1/2/91
ASSET MANAGER (SERVICE 10.96 16.95 13.81
CLASS)(++)--1/1/95
INTERNATIONAL FUNDS
International Equity -9.44% 9.52% 8.77%
(Institutional
Class)(sec.)--1/1/95
International Equity -9.62 9.18 8.52
(Service Class)(sec.)--
1/1/95
EAFE Index (Institutional -3.52 8.05 7.31
Class)(+)--1/2/91
EAFE Index (Service -3.63 7.81 7.17
Class)(++)--1/1/95
INTERNATIONAL BOND -13.34 2.41 6.63
(INSTITUTIONAL
CLASS)(SEC.)--1/1/95
INTERNATIONAL BOND (SERVICE -13.49 2.16 6.50
CLASS)(SEC.)--1/1/95
INCOME FUNDS
Bond (Institutional 6.21% 5.35% 6.79%
Class)(+)--1/2/91
Bond (Service 5.96 5.07 6.63
Class)(++)--1/1/95
INDEXED BOND (INSTITUTIONAL 7.27 5.63 7.08
CLASS)(+)--1/2/91
INDEXED BOND (SERVICE 6.87 5.33 6.94
CLASS)(++)--1/1/95
Short-Term Bond 6.05 5.40 5.93
(Institutional
Class)(+)--1/2/91
Short-Term Bond (Service 5.78 5.12 5.77
Class)(++)--1/1/95
MONEY MARKET (II) 5.98 5.30 4.83
(Institutional Class)(+)--
1/2/91
MONEY MARKET (II) (Service 5.72 5.04 4.69
Class)(++)--1/1/95
MONEY MARKET (II) (Sweep 5.46 4.95 4.64
Shares Class)(++)--
12/8/98
Money Market(II) (Institutional Class) 7-day current yield 6.21%
Money Market(II) (Service Class)++ 7-day current yield 5.97%
Money Market(II) (Sweep Share Class) 7-day current yield 5.72%
</TABLE>
<TABLE>
<S> <C>
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO
MARKET VOLATILITY, CURRENT PERFORMANCE MAY BE LESS THAN THAT
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 MainStay Institutional
Value Equity Fund and MainStay Institutional Growth Equity Fund,
1996 for MainStay Institutional Asset Manager Fund, and 1998 for
MainStay Institutional 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.
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.
Foreign investing may be subject to greater risks than domestic
investing. These may include securities markets that are less
efficient, less liquid, and more volatile than those in the
United States, as well as foreign currency fluctuations and
different governmental regulatory concerns.
</TABLE>
<PAGE> 3
The views of the Funds' management and portfolio holdings are as
of October 31, 2000; views and portfolio holdings may have
changed subsequently. Nothing in this report is a recommendation
to purchase or sell securities.
* Total return includes the change in share price and
reinvestment of capital gain distributions and dividends.
(+) The inception date of these Institutional Class shares is
1/2/91.
(++) 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 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 these classes after these dates will vary based
on differences in their expense structures.
(sec.) Performance figures and inception dates for the MainStay
Institutional International Equity and MainStay
Institutional International Bond Funds include the
historical performance of the predecessor subaccounts, whose
inception dates were 7/31/92 and 1/31/90, respectively.
These Funds commenced 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) MainStay Institutional Money Market Fund had an effective
7-day yield of 6.41%, for the Institutional Class; 6.14% for
the Service Class; 5.88% for the Sweep Shares Class; all as
of 10/31/00. These yields reflect certain expense
limitations. Had these expense limitations not been in
effect, the effective 7-day yield and the current 7-day
yield would have been 6.31% and 6.12%, respectively, for the
Institutional Class; 6.05% and 5.87%, respectively, for the
Service Class; and 5.78% and 5.62%, respectively, for the
Sweep Shares Class. These expense limitations are voluntary
and may be terminated or revised at any time.
Investments in MainStay Institutional 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.
<TABLE>
<S> <C> <C>
NOT FDIC INSURED. NO BANK GUARANTEE. MAY LOSE VALUE.
</TABLE>
<PAGE> 4
TABLE OF CONTENTS
Chairman's Letter 2
Portfolio Managements' Discussions and Analyses
and
Financial Statements 3
GROWTH FUNDS
Growth Equity Fund 3
Indexed Equity Fund 14
GROWTH AND INCOME FUNDS
Value Equity Fund 30
Asset Manager Fund 40
INTERNATIONAL FUNDS
International Equity Fund 58
EAFE Index Fund 72
International Bond Fund 90
INCOME FUNDS
Bond Fund 100
Indexed Bond Fund 110
Short-Term Bond Fund 120
Money Market Fund 130
Note 1 Organization and Business 138
Note 2 Significant Accounting Policies 139
Note 3 Fees and Related Party Policies 148
Note 4 Federal Income Tax 151
Note 5 Financial Investments 152
Note 6 Line of Credit 152
Note 7 Purchases and Sales of Securities 154
Note 8 Capital Share Transactions 154
Report of Independent Accountants 156
<PAGE> 5
CHAIRMAN'S LETTER
--------------------------------------------------------------------------------
Report to shareholders for the period
November 1, 1999, through October 31, 2000.
The close of any fiscal year is a time for new beginnings. This is particularly
true at MainStay(R) Institutional Funds Inc., as we look forward to exciting new
developments in the months ahead.
On or about January 2, 2001, MainStay Institutional Funds will be renamed
Eclipse Funds Inc. At that time, our Fund family will be expanded with
additional Fund offerings. We will also lower our investment minimum to make our
Funds accessible to a wider range of investors. While the names of MainStay
Institutional Funds will change, their investment objectives, share classes, and
fee structures will remain the same--as will the portfolio managers responsible
for each Fund's day-to-day investment decisions.
During the 12 months ended October 31, 2000, investors weathered Y2K computer
concerns, rising interest rates, higher oil prices, a strengthening U.S. dollar,
and ongoing sensitivity to any signs of inflation. With slowing economic growth
and one of the tightest labor markets in history, the interplay of productivity,
wages, prices, and profits fueled ongoing stock market volatility, creating both
risks and opportunities.
After a smooth transition into the year 2000, technology stocks climbed to new
highs in early April, but rapidly retreated to more realistic levels. Reeling
from the sharp decline, technology investors were quick to respond to any
negative news through the end of October 2000. Large-cap stocks were also
volatile, with a number of peaks and valleys throughout the year. Disappointing
third-quarter earnings reports took a toll on large-cap equities in September
and October, but a late-October rally helped close the 12-month period on a
positive note.
The strength of the U.S. dollar negatively impacted most international stock
markets, with only a handful generating positive returns in U.S. dollar terms.
Rising interest rates and weak currencies hurt many international bond markets,
but several emerging bond markets benefited from rising oil prices and provided
strong returns.
The Federal Reserve raised the targeted federal funds rate four times in the 12
months ended October 31, 2000, for a total of 1.25%. Rising capital costs caused
corporate bonds to underperform, while a government buyback program and a
shifting yield curve created opportunities among Treasuries.
Each of the MainStay Institutional Funds uses a well-defined investment process
that's consistently applied across all market environments. This allows our
clients to focus on their long-range goals, while our portfolio managers pursue
competitive returns regardless of where the markets may move.
This annual report outlines the specific events that affected your MainStay
Institutional Funds during the 12 months ended October 31, 2000. We hope that
our focus on integrity, performance, and service have helped you pursue your
objectives with greater confidence and consistency during the past fiscal year.
As we look to the future, we hope our new name and new Funds will help expand
your options and opportunities for many years to come.
Sincerely,
[SIG]
Stephen C. Roussin
November 2000
2
<PAGE> 6
PORTFOLIO MANAGEMENT DISCUSSION AND ANALYSIS
Growth Equity Fund
--------------------------------------------------------------------------------
During the 12 months ended October 31, 2000, the U.S. stock market was buffeted
by a variety of forces. The Federal Reserve increased the targeted federal funds
rate four times--for a total of 1.25%--to slow the pace of the economy and keep
inflation in check. With the cost of capital and energy rising for corporations,
the market focused more closely on earnings projections and was particularly
unforgiving when companies failed to meet expectations.
Both "old-economy" stocks, such as health care, retailers, and utilities, and
"new-economy" technology stocks had their ups and downs in the 12 months ended
October 31, 2000, but the two seemed to move on different trajectories.
Technology stocks soared into 2000 and rose through early April, when a negative
inflation report and the Microsoft antitrust decision seemed to derail the
technology bandwagon. More defensive old-economy stocks picked up as technology
tumbled, and among large-cap equities, value outpaced growth through much of the
reporting period.
PERFORMANCE REVIEW
For the 12 months ended October 31, 2000, MainStay Institutional Growth Equity
Fund returned 12.24% for Institutional Class shares and 11.93% for Service Class
shares. Both share classes underperformed the 15.25% return of the average
Lipper(1) large-cap growth fund for the same period. During the 12-month period,
both share classes outperformed the 6.09% return of the S&P 500 Index.(2)
Both of the Fund's share classes were rated four stars overall out of 3,948
domestic equity funds by Morningstar(3) as of October 31, 2000. Both share
classes were rated four stars out of 3,948 domestic equity funds for the
three-year period then ended and four stars out of 2,458 domestic equity funds
for the five-year period then ended.
TECHNOLOGY
In the last two months of 1999, the Fund benefited from its overweighted
position in technology. Strong performers included Sun Microsystems, EMC, and
Oracle, all of which contributed positively to the Fund's performance throughout
the Fund's fiscal year. Careful security selection among technology stocks was a
strong contributor to overall performance, particularly in a year when many
technology names saw dramatic reversals. Although Texas Instruments and Intel
both provided positive returns for the Fund's fiscal year, both faced ups and
downs in an especially volatile market for technology stocks. Motorola's
continuing difficulties negatively impacted the Fund's performance, and in
September, we purchased shares of Hewlett-Packard for the Fund, expecting a
turnaround that has yet to occur.
CAPITAL GOODS AND CONSUMER CYCLICALS
The Fund's capital goods positions, including Corning and Tyco International,
contributed positively to performance during the Fund's fiscal year. The Fund
was also overweighted in consumer cyclicals early in 2000, benefiting from its
holdings in Time Warner, Circuit
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. THE FUND'S NET ASSET VALUE WILL FLUCTUATE AND YOU
COULD LOSE MONEY BY INVESTING IN THE FUND.
(1) Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with capital gain and dividend distributions reinvested.
(2) "S&P 500(R)" is a trademark of The McGraw-Hill Companies, Inc. The S&P 500
is an unmanaged index and is widely regarded as the standard for measuring
large-cap U.S. stock market performance. Returns assume the reinvestment of
all income and capital gain distributions. An investment cannot be made
directly into an index.
(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 10-year average annual
returns (if applicable) in excess of 90-day Treasury bill returns, and a
risk factor that reflects fund performance below 90-day Treasury bill
returns. The Overall Morningstar Rating(TM) represents a weighted average of
the three-, five-, and 10-year (if applicable) risk-adjusted performance.
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. Past performance is
no guarantee of future results.
3
<PAGE> 7
--------------------------------------------------------------------------------
City, and Harley-Davidson. As 2000 progressed, however, Circuit City floundered
and we sold the Fund's entire position. Although Time Warner lost much of the
ground that it had gained, we believe the stock continues to have potential.
Fortunately, Harley-Davidson's performance was particularly strong throughout
the Fund's fiscal year.
HEALTH CARE AND RELATED ISSUES
The health care sector had mixed results. Merck and Schering-Plough both
suffered early in 2000 as the market focused on technology stocks. When the
technology bubble burst, however, many investors turned their attention to
steady performers such as pharmaceuticals. Both stocks ended the Fund's fiscal
year in positive territory, with Merck staging a significant rally at the end of
October. Recent pharmaceutical stock purchases include generic, respiratory, and
cancer drug maker IVAX; time-release drug producer Andrx; and eye and skin care
specialist, Allergan. All three stocks have increased in value since their
purchase.
Medical device manufacturer Medtronic had a positive impact on the Fund's
performance, climbing significantly throughout the year. Guidant also had
positive results for the Fund's fiscal year, despite a significant drop in
October, when analysts reevaluated the company's coronary stent business. After
peaking in early March, PE Biosystems followed the technology trend downward,
but made a substantial recovery, to close the Fund's fiscal year at more than
three times its price on November 1, 1999.
OTHER SECTORS
The Fund benefited from a heavily overweighted position in utilities during the
third calendar quarter of 2000, with AES and Enron providing strong performance.
Even with weaker performance in October, both stocks ended the reporting period
at more than twice their price on November 1, 1999. General Electric, one of the
Fund's ten largest holdings as of October 31, 2000, also provided positive
results for the Fund.
On the whole, telecommunications did not fare as well as other sectors. The Fund
sold AT&T Wireless and Global Crossing and reduced its position in Nextel.
WorldCom and Voicestream provided modest gains, but the Fund's purchase of
Nortel Networks had a negative impact on performance, when its stock price
dropped at the end of the reporting period on disappointing earnings news.
Communications equipment companies also had mixed results, with Cisco Systems
rising and Nokia holding its own, while Tellabs had a difficult year. The Fund
sold Lucent Technologies in the midst of the stock's extended decline.
Among retailers, Kohl's and CVS provided positive results for the Fund, while
some others faced setbacks. Home Depot dropped precipitously in early October
after an earnings warning, but we continue to hold the stock, believing the
price adjustment was excessive, based on the company's still-solid underlying
business fundamentals. Staples, on the other hand, saw continued price erosion,
and we reduced the Fund's position to put the assets to more productive use.
Finally, the Fund benefited from a substantial position in Citigroup and
selective new purchases in the financial services sector, including Household
International, MBNA, and Mellon Financial.
LOOKING AHEAD
With signs that the economy is beginning to slow and that inflation may remain
subdued,
4
<PAGE> 8
--------------------------------------------------------------------------------
we are optimistic for growth prospects in the coming months. We believe the Fund
is appropriately overweighted in technology stocks and utilities and will
continue to seek investment opportunities as an election year ends and a new
administration takes the helm.
No matter what the economy or markets may bring, the Fund will continue to seek
long-term growth of capital, with dividend income, if any, remaining an
incidental consideration.
RUDOLPH C. CARRYL
EDMUND C. SPELMAN
Portfolio Managers
MacKay Shields LLC
5
<PAGE> 9
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
GROWTH EQUITY FUND VS S&P 500 INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Line Graph]
<TABLE>
<CAPTION>
S&P 500 INDEX GROWTH EQUITY FUND
------------- ------------------
<S> <C> <C>
1/2/91 $250000.00000 $250000.00000
91 $326169.00000 $417500.00000
92 $351004.00000 $441009.00000
93 $386397.00000 $483314.00000
94 $391491.00000 $472535.00000
95 $538653.00000 $651552.00000
96 $662317.00000 $792393.00000
97 $883274.00000 $988384.00000
98 $113568.00000 $138870.00000
99 $137482.00000 $174060.00000
00 as of 10/31/00 $134992.00000 $171400.00000
</TABLE>
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
GROWTH EQUITY FUND VS S&P 500 INDEX
SERVICE CLASS SHARES
[Service Class Shares Line Graph]
<TABLE>
<CAPTION>
S&P 500 INDEX GROWTH EQUITY FUND
------------- ------------------
<S> <C> <C>
1/2/91 $250000.00000 $250000.00000
91 $326169.00000 $417500.00000
92 $351004.00000 $441009.00000
93 $386397.00000 $483314.00000
94 $391491.00000 $472535.00000
95 $538653.00000 $649752.00000
96 $662317.00000 $788082.00000
97 $883274.00000 $981124.00000
98 $113568.00000 $137529.00000
99 $137482.00000 $171952.00000
00 as of 10/31/00 $134992.00000 $168929.00000
</TABLE>
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(*)
PERFORMANCE AS OF OCTOBER 31, 2000
-------------------------------------------------------------------------------
ONE YEAR FIVE YEARS SINCE INCEPTION
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Equity Fund Institutional Class 12.24% 22.00% 21.61%
Growth Equity Fund Service Class(+) 11.93 21.71 21.43
Average Lipper large-cap growth
fund(++) 15.25 22.17 19.29
S&P 500 Index(sec.) 6.09 21.67 19.03
</TABLE>
YEAR-BY-YEAR PERFORMANCE
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[BAR GRAPH]
<TABLE>
<CAPTION>
TEN
MONTHS YEAR
YEAR END ENDED ENDED
DECEMBER 31 OCTOBER 31 OCTOBER 31
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
67 5.63% 9.59% -2.23% 37.88% 21.62% 24.73% 40.50% 9.96% 12.24%
</TABLE>
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
(*) 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 will vary after this date based on differences in their expense
structures.
(++) Lipper Inc. is an independent fund performance monitor. Results are based
on total returns with capital gain and dividend distributions reinvested.
(sec.) "S&P 500(R)" is a trademark of The McGraw-Hill Companies, Inc. The S&P
500 is an unmanaged index and is widely regarded as the standard for
measuring large-cap U.S. stock market performance. Returns assume the
reinvestment of all income and capital gain distributions. An investment
cannot be made directly into an index.
6
<PAGE> 10
MAINSTAY
INSTITUTIONAL FUNDS INC.
GROWTH EQUITY FUND
PORTFOLIO OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (100.2%)+
SHARES VALUE
---------------------------
<S> <C> <C>
BANKS (0.5%)
Mellon Financial Corp. ...... 131,500 $ 6,344,875
--------------
BIOTECHNOLOGY (1.6%)
Genentech, Inc. (a).......... 240,000 19,800,000
--------------
BROADCAST/MEDIA (1.4%)
Clear Channel Communications,
Inc. (a).................... 273,620 16,434,301
--------------
COMMUNICATIONS--EQUIPMENT (10.1%)
Cisco Systems, Inc. (a)...... 795,600 42,862,950
Corning, Inc. ............... 586,500 44,867,250
Nokia Corp. PLC ADR (b)...... 232,000 9,918,000
Nortel Networks Corp. ....... 193,900 8,822,450
Tellabs, Inc. (a)............ 350,000 17,478,125
--------------
123,948,775
--------------
COMPUTER SOFTWARE & SERVICES (5.4%)
Microsoft Corp. (a).......... 465,000 32,026,875
Oracle Corp. (a)............. 1,023,748 33,783,684
--------------
65,810,559
--------------
COMPUTER SYSTEMS (9.6%)
EMC Corp. (a)................ 626,200 55,770,937
Hewlett-Packard Co. ......... 109,400 5,080,263
Sun Microsystems, Inc. (a)... 505,800 56,080,575
--------------
116,931,775
--------------
ELECTRIC POWER COMPANIES (3.4%)
AES Corp. (The) (a).......... 734,800 41,516,200
--------------
ELECTRICAL EQUIPMENT (3.1%)
General Electric Co. ........ 691,800 37,919,287
--------------
ELECTRONICS--SEMICONDUCTORS (8.0%)
Analog Devices, Inc. (a)..... 213,000 13,845,000
Applied Materials, Inc.
(a)......................... 153,600 8,160,000
Cypress Semiconductor Corp.
(a)......................... 193,000 7,225,437
Intel Corp. ................. 633,700 28,516,500
Motorola, Inc. .............. 686,100 17,109,619
Texas Instruments Inc. ...... 477,600 23,432,250
--------------
98,288,806
--------------
ENTERTAINMENT (4.6%)
Time Warner Inc. ............ 268,900 20,412,199
Viacom, Inc. Class B (a)..... 457,761 26,035,157
Walt Disney Co. (The)........ 263,300 9,429,431
--------------
55,876,787
--------------
FINANCE (4.3%)
Citigroup Inc. .............. 713,193 37,531,781
MBNA Corp. .................. 411,900 15,471,994
--------------
53,003,775
--------------
</TABLE>
<TABLE>
SHARES VALUE
---------------------------
<CAPTION>
<S> <C> <C>
HEALTH CARE--DRUGS (5.7%)
Andrx Group (a).............. 68,000 $ 4,896,000
IVAX Corp. (a)............... 274,500 11,940,750
Merck & Co., Inc. ........... 340,800 30,650,700
Schering-Plough Corp. ....... 433,100 22,385,856
--------------
69,873,306
--------------
HEALTH CARE--MEDICAL PRODUCTS (6.5%)
Baxter International Inc. ... 246,800 20,283,875
Guidant Corp. (a)............ 363,400 19,237,488
Medtronic, Inc. ............. 522,400 28,372,850
PE Corp-PE Biosystems Group.. 100,000 11,700,000
--------------
79,594,213
--------------
HEALTH CARE--MISCELLANEOUS (6.1%)
Abgenix, Inc. (a)(c)(d)...... 100,000 7,000,000
Allergan, Inc. .............. 157,600 13,248,250
Amgen Inc. (a)............... 326,900 18,939,769
Bristol-Myers Squibb Co. .... 454,900 27,720,469
MedImmune, Inc. (a).......... 107,800 7,047,425
--------------
73,955,913
--------------
HOUSEHOLD PRODUCTS (2.0%)
Colgate-Palmolive Co. ....... 413,600 24,303,136
--------------
INDEPENDENT POWER PRODUCER (0.6%)
Calpine Corp. (a)............ 90,000 7,104,375
--------------
INSURANCE (4.2%)
American International Group,
Inc. ....................... 328,143 32,158,014
Marsh & McLennan Cos.,
Inc. ....................... 142,900 18,684,175
--------------
50,842,189
--------------
INVESTMENT BANK/BROKERAGE (1.4%)
Goldman Sachs Group, Inc.
(The)....................... 174,300 17,397,319
--------------
LEISURE TIME (3.2%)
Harley-Davidson, Inc. ....... 797,800 38,443,987
--------------
MANUFACTURING (3.4%)
Tyco International Ltd. ..... 738,600 41,869,388
--------------
NATURAL GAS DISTRIBUTORS & PIPELINES (2.1%)
Enron Corp. ................. 314,900 25,841,481
--------------
PERSONAL LOANS (3.1%)
Household International,
Inc. ....................... 352,600 17,740,188
Providian Financial Corp. ... 195,550 20,337,200
--------------
38,077,388
--------------
RETAIL (7.2%)
Bed Bath & Beyond Inc. (a)... 818,800 21,135,275
CVS Corp. ................... 230,000 12,175,625
Home Depot, Inc. (The)....... 367,050 15,783,150
Kohl's Corp. (a)............. 608,000 32,946,000
Staples, Inc. (a)............ 396,000 5,643,000
--------------
87,683,050
--------------
</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.
7
<PAGE> 11
GROWTH EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
---------------------------
<S> <C> <C>
SPECIALIZED SERVICES (1.3%)
Omnicom Group Inc. .......... 170,000 $ 15,682,500
--------------
TELECOMMUNICATIONS (1.4%)
Nextel Communications, Inc.
Class A (a)................. 132,000 5,073,750
WorldCom, Inc. (a)........... 523,932 12,443,385
--------------
17,517,135
--------------
Total Common Stocks (Cost
$709,363,183)............... 1,224,060,520
--------------
<CAPTION>
SHORT-TERM INVESTMENTS (0.6%)
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
COMMERCIAL PAPER (0.5%)
Associates Corp.
6.63%, due 11/1/00.......... $ 5,425,000 5,425,000
--------------
Total Commercial Paper
(Cost $5,425,000)........... 5,425,000
--------------
<CAPTION>
SHARES
-----------
<S> <C> <C>
INVESTMENT COMPANY (0.1%)
Merrill Lynch Premier
Institutional Fund.......... 1,745,910 1,745,910
--------------
Total Investment Company
(Cost $1,745,910)........... 1,745,910
--------------
Total Short-Term Investments
(Cost $7,170,910)........... 7,170,910
--------------
Total Investments
(Cost $716,534,093) (e)..... 100.8% 1,231,231,430(f)
Liabilities in Excess of
Cash and Other Assets....... (0.8) (9,283,314)
----------- --------------
Net Assets................... 100.0% $1,221,948,116
=========== ==============
</TABLE>
------------
(a) Non-income producing security.
(b) ADR--American Depository Receipt.
(c) Restricted security.
(d) Fair valued security.
(e) The cost stated also represents the aggregate cost for federal income tax
purposes.
(f) At October 31, 2000 net unrealized appreciation was $514,697,337, 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 $549,775,372 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $35,078,035.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
8
<PAGE> 12
MAINSTAY
INSTITUTIONAL FUNDS INC.
GROWTH EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $716,534,093)........................... $1,231,231,430
Cash........................................... 3,730
Receivables:
Dividends.................................... 349,482
Fund shares sold............................. 282,283
--------------
Total assets............................. 1,231,866,925
--------------
LIABILITIES:
Payables:
Investment securities purchased.............. 7,000,000
Fund shares redeemed......................... 1,810,768
MainStay Management.......................... 872,278
Transfer agent............................... 101,331
Custodian.................................... 51,408
Accrued expenses............................... 83,024
--------------
Total liabilities........................ 9,918,809
--------------
Net assets..................................... $1,221,948,116
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class.......................... $ 31,928
Institutional Service Class.................. 670
Additional paid-in capital..................... 555,894,730
Accumulated undistributed net realized gain on
investments.................................. 151,323,451
Net unrealized appreciation on investments..... 514,697,337
--------------
Net assets..................................... $1,221,948,116
==============
Institutional Class
Net assets applicable to outstanding shares.... $1,197,215,779
==============
Shares of capital stock outstanding............ 31,927,773
==============
Net asset value per share outstanding.......... $ 37.50
==============
Institutional Service Class
Net assets applicable to outstanding shares.... $ 24,732,337
==============
Shares of capital stock outstanding............ 670,532
==============
Net asset value per share outstanding.......... $ 36.88
==============
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a).................................. $ 4,330,469
Interest....................................... 667,620
------------
Total income............................... 4,998,089
------------
Expenses:
Management..................................... 10,407,231
Transfer agent................................. 542,486
Professional................................... 141,332
Custodian...................................... 106,419
Service........................................ 63,763
Shareholder communication...................... 50,483
Directors...................................... 32,363
Registration................................... 15,973
Miscellaneous.................................. 35,945
------------
Total expenses............................. 11,395,995
------------
Net investment loss.............................. (6,397,906)
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments................. 151,326,925
Net change in unrealized appreciation on
investments.................................... (13,386,380)
------------
Net realized and unrealized gain on investments.. 137,940,545
------------
Net increase in net assets resulting from
operations..................................... $131,542,639
============
</TABLE>
------------
(a) Dividends recorded net of foreign withholding taxes of $7,833.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
9
<PAGE> 13
GROWTH EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 2000, the period January 1, 1999 through October
31, 1999* and the year ended December 31, 1998
<TABLE>
<CAPTION>
2000 1999* 1998
-------------- -------------- --------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment loss..................................... $ (6,397,906) $ (4,279,422) $ (2,571,953)
Net realized gain on investments........................ 151,326,925 100,178,405 62,407,353
Net change in unrealized appreciation on investments.... (13,386,380) 2,256,265 227,097,694
-------------- -------------- --------------
Net increase in net assets resulting from operations.... 131,542,639 98,155,248 286,933,094
-------------- -------------- --------------
Distributions to shareholders:
From net realized gain on investments:
Institutional Class................................... (97,923,006) (9,645,711) (60,369,694)
Institutional Service Class........................... (2,258,147) (241,486) (994,776)
-------------- -------------- --------------
Total distributions to shareholders................. (100,181,153) (9,887,197) (61,364,470)
-------------- -------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 158,989,894 181,040,640 135,442,134
Institutional Service Class........................... 6,666,807 12,746,881 3,436,490
Net asset value of shares issued to shareholders in
reinvestment of distributions:
Institutional Class................................... 97,916,401 9,645,054 60,366,383
Institutional Service Class........................... 2,244,713 227,218 900,466
-------------- -------------- --------------
265,817,815 203,659,793 200,145,473
Cost of shares redeemed:
Institutional Class................................... (140,111,689) (202,660,461) (142,993,936)
Institutional Service Class........................... (10,862,255) (4,349,099) (2,633,729)
-------------- -------------- --------------
Increase (decrease) in net assets derived from capital
share transactions.................................. 114,843,871 (3,349,767) 54,517,808
-------------- -------------- --------------
Net increase in net assets............................ 146,205,357 84,918,284 280,086,432
NET ASSETS:
Beginning of period....................................... 1,075,742,759 990,824,475 710,738,043
-------------- -------------- --------------
End of period............................................. $1,221,948,116 $1,075,742,759 $ 990,824,475
============== ============== ==============
</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.
10
<PAGE> 14
(THIS PAGE INTENTIONALLY LEFT BLANK)
11
<PAGE> 15
GROWTH EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- -------------
JANUARY 1, 1999
YEAR ENDED THROUGH YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999* DECEMBER 31, 1998
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period.................. $ 36.45 $ 35.99 $ 33.48 $ 33.13 $ 25.43 $ 25.24
---------- ---------- ---------- ---------- ---------- ----------
Net investment income
(loss)..................... (0.20)(a) (0.29)(a) (0.14)(a) (0.21)(a) (0.09)(a) (0.16)(a)
Net realized and unrealized
gain on investments........ 4.66 4.59 3.45 3.41 10.35 10.26
---------- ---------- ---------- ---------- ---------- ----------
Total from investment
operations................. 4.46 4.30 3.31 3.20 10.26 10.10
---------- ---------- ---------- ---------- ---------- ----------
Less dividends and
distributions:
From net investment income.. -- -- -- -- -- --
From net realized gain on
investments................ (3.41) (3.41) (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.............. (3.41) (3.41) (0.34) (0.34) (2.21) (2.21)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of
period..................... $ 37.50 $ 36.88 $ 36.45 $ 35.99 $ 33.48 $ 33.13
========== ========== ========== ========== ========== ==========
Total investment return..... 12.24% 11.93% 9.96%(c) 9.74%(c) 40.50% 40.18%
Ratios (to average net
assets)/Supplemental Data:
Net investment income
(loss)................... (0.52%) (0.77%) (0.49%)+ (0.74%)+ (0.31%) (0.56%)
Net expenses............... 0.93% 1.18% 0.93%+ 1.18%+ 0.94% 1.19%
Portfolio turnover rate..... 48% 48% 27% 27% 29% 29%
Net assets at end of period
(in 000's)................. $1,197,216 $ 24,732 $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.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
12
<PAGE> 16
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
---------------------------------------------------------------------------------------------
1997 1996 1995
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 21.99 $ 21.88 $ 18.84 $ 18.80 $ 13.68 $ 13.68
---------- ---------- ---------- ---------- ---------- ----------
(0.08)(a) (0.14)(a) (0.06)(a) (0.11)(a) 0.02 (0.01)
5.45 5.43 4.14 4.12 5.16 5.14
---------- ---------- ---------- ---------- ---------- ----------
5.37 5.29 4.08 4.01 5.18 5.13
---------- ---------- ---------- ---------- ---------- ----------
-- -- -- -- (0.02) (0.01)
(1.93) (1.93) (0.93) (0.93) -- --
-- -- -- -- (0.00)(b) (0.00)(b)
-- -- -- -- (0.00)(b) (0.00)(b)
---------- ---------- ---------- ---------- ---------- ----------
(1.93) (1.93) (0.93) (0.93) (0.02) (0.01)
---------- ---------- ---------- ---------- ---------- ----------
$ 25.43 $ 25.24 $ 21.99 $ 21.88 $ 18.84 $ 18.80
========== ========== ========== ========== ========== ==========
24.73% 24.50% 21.62% 21.29% 37.88% 37.50%
(0.31%) (0.56%) (0.27%) (0.52%) 0.12% (0.13%)
0.93% 1.18% 0.92% 1.17% 0.93% 1.18%
36% 36% 22% 22% 33% 33%
$ 700,070 $ 10,668 $ 541,212 $ 6,842 $ 412,129 $ 2,729
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
13
<PAGE> 17
Indexed Equity Fund
--------------------------------------------------------------------------------
During the 12 months ended October 31, 2000, the U.S. stock market was buffeted
by a variety of forces. The Federal Reserve increased the targeted federal funds
rate four times--for a total of 1.25%--to slow the pace of the economy and keep
inflation in check. With the cost of capital rising for corporations, the market
focused more closely on earnings projections and was particularly unforgiving
when companies failed to meet expectations.
Both "old-economy" stocks, such as health care, retailers, and utilities, and
"new-economy" technology stocks had their ups and downs in the 12 months ended
October 31, 2000, but the two seemed to move on different trajectories.
Technology stocks soared into 2000 and rose through early April, when a negative
inflation report and the Microsoft antitrust decision seemed to derail "dot.com"
fever. More defensive old-economy stocks picked up as technology tumbled, and
among large-cap equities, value outpaced growth through much of the reporting
period.
PERFORMANCE REVIEW
For the 12 months ended October 31, 2000, MainStay Institutional Indexed Equity
Fund returned 5.98% for Institutional Class shares and 5.72% for Service Class
shares. Both share classes outperformed the 5.48% return of the average
Lipper(1) S&P 500 Index objective fund for the same period. During the 12-month
period, both share classes underperformed the 6.09% return of the S&P 500
Index.(2) Investors should expect the Fund to lag the Index somewhat, since the
Fund faces real-world fees and expenses that a hypothetical index does not.
Both of the Fund's share classes were rated four stars overall out of 3,948
domestic equity funds by Morningstar(3) as of October 31, 2000. Both share
classes were rated four stars out of 3,948 domestic equity funds for the
three-year period then ended and four stars out of 2,458 domestic equity funds
for the five-year period then ended.
BEST AND WORST PERFORMERS
During the 12 months ended October 31, 2000, several "old-economy" stock sectors
had the highest total returns in the S&P 500 Index, with health-related
industries leading the pack. Hospital management returned 76.9%, health
care--HMOs advanced 74.3%, and retail stores--drugs returned 68.8%. Other top
performing sectors included food and health distributors, which advanced 61.4%,
and investment banks/brokerage, which rose 58.3%.
The weakest sectors in the Index included containers (-60.4%), office equipment
(-56.3%), telecommunications--long distance (-54.8%), and photography and
imaging (-36.4%).
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
The Fund's net asset value will fluctuate and you could lose money by investing
in the Fund. The Fund may invest in derivatives, which may increase the
volatility of the Fund's net asset value and may result in a loss to the Fund.
(1) Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with capital gain and dividend distributions reinvested.
(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. S&P does not sponsor,
endorse, sell, or promote the Fund. The S&P 500 is an unmanaged index and is
widely regarded as the standard for measuring large-cap U.S. stock market
performance. Returns assume the reinvestment of all income and capital gain
distributions. An investment cannot be made directly into an index.
(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 10-year average annual
returns (if applicable) in excess of 90-day Treasury bill returns, and a
risk factor that reflects fund performance below 90-day Treasury bill
returns. The Overall Morningstar Rating(TM) represents a weighted average of
the three-, five-, and 10-year (if applicable) risk-adjusted performance.
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. Past performance is
no guarantee of future results.
14
<PAGE> 18
--------------------------------------------------------------------------------
In terms of overall impact on the Index taking both returns and weightings into
account, the best-performing sectors were computers--networking,
computers--peripherals, diversified financial companies, electrical equipment,
and multi-line insurance companies. Taking both returns and weightings into
account, long-distance telephone companies were the weakest-performing sector,
followed by communication equipment, general merchandise retailers, computer
software/services, and money-center banks.
Advances and declines among individual companies were considerably more
dramatic. Network Appliance (+543.2%) was a top-performer, with an expanding
market for its Internet and intranet file-delivery systems. Siebel Systems
produces customer relationship software and provided an outstanding 282.2%
return during the Fund's fiscal year. Life sciences specialist PE
Corporation--PE Biosystems Group (+260.7%) and integrated circuit and digital
equipment manufacturer Broadcom (+248.0%) rounded out the top five companies in
the Index in terms of total return.
Based on total return alone, the worst-performing stocks in the S&P 500 for the
12-month period were Armstrong Holdings (-92.3%) and Owens-Illinois (-75.2%),
both of which suffered from concerns over asbestos litigation. W. R. Grace
(-74.5%), Compuware (-71.7%), and Conseco (-71.5%), were also among the weakest
stocks in the Index in terms of total return.
Taking both returns and weightings into account, the companies with the greatest
positive impact on the performance of the Index during the reporting period were
Oracle, EMC, General Electric, American International Group, and Citigroup. On a
weighted return basis, the companies that detracted most from the performance of
the Index during the Fund's fiscal year were Microsoft, Lucent Technologies,
AT&T, WorldCom Inc., and Wal-Mart Stores.
INDEX CHANGES
From time to time, Standard & Poor's adjusts the S&P 500 Index to reflect
changes in the companies and industries that impact our economy. There were two
significant additions to the S&P 500 Index during the reporting period. Yahoo!,
a global Internet media company, was added on December 8, 1999, as the 30th
largest member of the Index at that time. JDS Uniphase, a company that designs,
develops, manufactures, and distributes products for the fiberoptic
communications market, joined the Index on July 26, 2000, as the 29th largest
member of the Index on that date.
These weren't the only changes to the Index during the reporting period. Over 40
stocks were added to the Index and more than 40 were deleted between November 1,
1999, and October 31, 2000, either to better reflect the makeup of our economy
or because of mergers, acquisitions, bankruptcies, or other corporate actions.
LOOKING AHEAD
Despite a generally favorable economic outlook, corporations now have to contend
with high oil prices, higher borrowing costs, and extremely low unemployment.
Having recently seen several earnings disappointments, we anticipate continued
uncertainty, ongoing volatility, and trading within a range, at least for a
while.
Whatever the markets or the economy may bring, 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
15
<PAGE> 19
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
INDEXED EQUITY FUND VS S&P 500 INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
S&P 500 INDEX INSTITUTIONAL CLASS SHARES
------------- --------------------------
<S> <C> <C> <C>
1/2/91 $250000.00000 $250000.00000
91 $326169.00000 $324500.00000
92 $351004.00000 $347828.00000
93 $386397.00000 $380544.00000
94 $391491.00000 $383975.00000
95 $538653.00000 $525597.00000
96 $662317.00000 $644201.00000
97 $883274.00000 $856036.00000
98 $113568.00000 $110102.00000
99 $137482.00000 $133038.00000
00 as of 10/31/00 $134992.00000 $130455.00000
</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>
S&P 500 INDEX SERVICE CLASS SHARES
------------- --------------------
<S> <C> <C>
1/2/91 $250000.00000 $259000.00000
91 $326169.00000 $324500.00000
92 $351004.00000 $347828.00000
93 $386397.00000 $380544.00000
94 $391491.00000 $383975.00000
95 $538653.00000 $524887.00000
96 $662317.00000 $641470.00000
97 $883274.00000 $850611.00000
98 $113568.00000 $109081.00000
99 $137482.00000 $131529.00000
00 as of 10/31/00 $134992.00000 $128690.00000
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(*)
PERFORMANCE AS OF OCTOBER 31, 2000
-------------------------------------------------------------------------------------
ONE YEAR FIVE YEARS SINCE INCEPTION
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
Indexed Equity Fund Institutional Class 5.98% 21.40% 18.28%
Indexed Equity Fund Service Class(+) 5.72 21.10 18.12
Average Lipper S&P 500 index objective
fund(++) 5.48 21.12 18.54
S&P 500 Index(sec.) 6.09 21.67 19.03
</TABLE>
YEAR-BY-YEAR PERFORMANCE
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
TEN
MONTHS YEAR
YEAR END ENDED ENDED
DECEMBER 31 OCTOBER 31 OCTOBER 31
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
29.8% 7.19% 9.41% 0.90% 36.88% 22.57% 32.88% 28.62% 11.80% 5.98%
</TABLE>
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
(*) 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 will vary after this date based on differences in their expense
structures.
(++) Lipper Inc. is an independent fund performance monitor. Results are based
on total returns with capital gain and dividend distributions reinvested.
(sec.) "S&P 500(R)" is a trademark of The McGraw-Hill Companies, Inc. The S&P
500 is an unmanaged index and is widely regarded as the standard for
measuring large-cap U.S. stock market performance. Returns assume the
reinvestment of all income and capital gain distributions. An investment
cannot be made directly into an index.
16
<PAGE> 20
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (98.2%)+
SHARES VALUE
-----------------------------
<S> <C> <C>
AEROSPACE/DEFENSE (1.2%)
Boeing Co. (The)........... 109,699 $ 7,438,964
General Dynamics Corp. .... 24,620 1,761,869
Goodrich (B.F.) Co.
(The)..................... 13,216 541,030
Lockheed Martin Corp. ..... 52,155 1,869,757
Northrop Grumman Corp. .... 8,521 715,764
Raytheon Co. Class B....... 41,803 1,429,140
Rockwell International
Corp. .................... 23,177 911,146
United Technologies
Corp. .................... 57,598 4,021,060
--------------
18,688,730
--------------
AIRLINES (0.2%)
AMR Corp. (a).............. 19,232 629,848
Delta Air Lines, Inc. ..... 15,110 713,947
Southwest Airlines Co. .... 60,683 1,729,466
US Airways Group, Inc.
(a)....................... 8,113 306,266
--------------
3,379,527
--------------
ALUMINUM (0.3%)
Alcan Aluminum Ltd. ....... 40,908 1,291,159
Alcoa Inc. ................ 106,456 3,053,956
--------------
4,345,115
--------------
AUTO PARTS & EQUIPMENT (0.1%)
Cooper Tire & Rubber
Co. ...................... 9,106 99,597
Delphi Automotive Systems
Corp. .................... 69,539 1,090,893
Genuine Parts Co. ......... 21,828 465,209
Goodyear Tire & Rubber Co.
(The)..................... 19,306 357,161
Visteon Corp. ............. 16,129 285,282
--------------
2,298,142
--------------
AUTOMOBILES (0.6%)
Ford Motor Co. ............ 229,623 5,998,901
General Motors Corp. ...... 65,492 4,068,690
--------------
10,067,591
--------------
BANKS--MAJOR REGIONAL (3.5%)
AmSouth Bancorp............ 48,481 675,704
Bank of New York Co., Inc.
(The)..................... 90,175 5,190,699
Bank One Corp. ............ 140,331 5,122,082
BB&T Corp. ................ 48,093 1,532,964
Comerica Inc. ............. 19,312 1,164,755
Fifth Third Bancorp........ 57,051 2,930,995
Firstar Corp. ............. 117,103 2,305,465
FleetBoston Financial
Corp. .................... 110,226 4,188,588
Huntington Bancshares
Inc. ..................... 30,185 433,909
KeyCorp.................... 53,134 1,311,746
Mellon Financial Corp. .... 60,527 2,920,428
National City Corp. ....... 74,125 1,584,422
Northern Trust Corp. ...... 27,191 2,321,432
Old Kent Financial
Corp. .................... 16,073 445,021
PNC Financial Services
Group, Inc. (The)......... 35,570 2,378,744
Regions Financial Corp. ... 27,931 658,124
</TABLE>
<TABLE>
SHARES VALUE
-----------------------------
<CAPTION>
<S> <C> <C>
BANKS--MAJOR REGIONAL (CONTINUED)
SouthTrust Corp. .......... 20,812 $ 673,789
State Street Corp. ........ 19,638 2,449,644
Summit Bancorp............. 21,215 795,563
SunTrust Banks, Inc. ...... 37,241 1,817,826
Synovus Financial Corp. ... 33,551 723,443
Union Planters Corp. ...... 16,709 564,973
U.S. Bancorp............... 90,311 2,184,397
Wachovia Corp. ............ 24,745 1,336,230
Wells Fargo Co. ........... 201,265 9,321,085
--------------
55,032,028
--------------
BANKS--MONEY CENTER (1.5%)
Bank of America Corp. ..... 200,811 9,651,478
Chase Manhattan Corp.
(The)..................... 160,038 7,281,729
First Union Corp. ......... 119,932 3,635,439
Morgan (J.P.) & Co.,
Inc. ..................... 19,476 3,223,278
--------------
23,791,924
--------------
BANKS--SAVINGS & LOANS (0.3%)
Charter One Financial,
Inc. ..................... 26,566 609,358
Golden West Financial
Corp. .................... 19,504 1,093,443
Washington Mutual, Inc. ... 65,857 2,897,708
--------------
4,600,509
--------------
BEVERAGES--ALCOHOLIC (0.4%)
Anheuser-Busch Cos.,
Inc. ..................... 110,600 5,059,950
Brown-Forman Corp.
Class B................... 8,500 517,437
Coors (Adolph) Co.
Class B................... 4,618 294,109
--------------
5,871,496
--------------
BEVERAGES--SOFT DRINKS (1.8%)
Coca-Cola Co. (The) (c).... 302,727 18,277,143
Coca-Cola Enterprises
Inc. ..................... 51,936 954,324
PepsiCo, Inc. ............. 176,297 8,539,386
--------------
27,770,853
--------------
BROADCAST/MEDIA (0.6%)
Clear Channel
Communications, Inc.
(a)....................... 71,534 4,296,511
Comcast Corp. Special Class
A (a)..................... 110,667 4,509,680
--------------
8,806,191
--------------
BUILDING MATERIALS (0.1%)
Masco Corp. ............... 54,955 1,026,972
Sherwin-Williams Co.
(The)..................... 20,182 437,697
Vulcan Materials Co. ...... 12,417 521,514
--------------
1,986,183
--------------
CHEMICALS (0.8%)
Air Products & Chemicals,
Inc. ..................... 28,330 1,057,063
Dow Chemical Co. (The)..... 82,089 2,513,976
Du Pont (E.I.) De Nemours &
Co. ...................... 127,428 5,782,046
Eastman Chemical Co. ...... 9,463 405,726
</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.
17
<PAGE> 21
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------------
<S> <C> <C>
CHEMICALS (CONTINUED)
Hercules Inc. ............. 12,417 $ 227,386
Praxair, Inc. ............. 19,506 726,598
Rohm & Haas Co. ........... 26,713 803,060
Union Carbide Corp. ....... 16,488 708,984
--------------
12,224,839
--------------
CHEMICALS--DIVERSIFIED (0.1%)
Avery Dennison Corp. ...... 13,862 700,031
Engelhard Corp. ........... 15,514 323,855
FMC Corp. (a).............. 3,703 281,428
PPG Industries, Inc. ...... 21,724 969,433
--------------
2,274,747
--------------
CHEMICALS--SPECIALTY (0.0%) (b)
Grace (W.R.) & Co. (a)..... 8,320 31,720
Great Lakes Chemical
Corp. .................... 6,670 222,611
Sigma-Aldrich Corp. ....... 10,387 371,335
--------------
625,666
--------------
COMMUNICATIONS--EQUIPMENT
MANUFACTURERS (7.0%)
ADC Telecommunications,
Inc. (a).................. 94,258 2,014,765
Andrew Corp. (a)........... 10,093 265,572
Avaya Inc. (a)............. 34,016 457,090
Cabletron Systems, Inc.
(a)....................... 22,480 609,770
Cisco Systems, Inc. (a).... 867,631 46,743,620
Comverse Technology, Inc.
(a)....................... 19,093 2,133,643
Corning Inc. .............. 107,992 8,261,388
JDS Uniphase Corp. (a)..... 114,391 9,308,568
Lucent Technologies
Inc. ..................... 408,204 9,516,256
Network Appliance,
Inc. (a).................. 38,329 4,561,151
Nortel Networks Corp. ..... 365,259 16,619,284
QUALCOMM, Inc. (a)......... 90,697 5,905,227
Scientific-Atlanta,
Inc. ..................... 19,529 1,336,516
Tellabs, Inc. (a).......... 49,918 2,492,780
--------------
110,225,630
--------------
COMPUTER SOFTWARE & SERVICES (7.9%)
Adobe Systems Inc. ........ 29,346 2,232,130
America Online Inc. (a).... 282,293 14,236,036
Autodesk, Inc. ............ 7,236 159,644
Automatic Data Processing,
Inc. ..................... 76,763 5,013,583
BMC Software, Inc. (a)..... 29,306 595,278
Ceridian Corp. (a)......... 17,941 448,525
Citrix Systems, Inc. (a)... 21,743 481,064
Computer Associates
International, Inc. ...... 72,827 2,321,361
Computer Sciences Corp.
(a)....................... 20,654 1,301,202
Compuware Corp. (a)........ 44,527 350,650
Electronic Data Systems
Corp. .................... 56,978 2,674,405
Equifax Inc. .............. 17,384 599,748
First Data Corp. .......... 50,423 2,527,453
Mercury Interactive
Corp. (a)................. 9,700 1,076,700
</TABLE>
<TABLE>
SHARES VALUE
-----------------------------
<CAPTION>
<S> <C> <C>
COMPUTER SOFTWARE & SERVICES (CONTINUED)
Microsoft Corp. (a)(c)..... 643,216 $ 44,301,502
Novell, Inc. (a)........... 40,614 365,526
Oracle Corp. (a)........... 688,248 22,712,184
Parametric Technology Corp.
(a)....................... 34,110 419,980
Paychex, Inc. ............. 45,939 2,604,167
PeopleSoft, Inc. (a)....... 33,900 1,479,416
Sabre Holdings Corp. (a)... 15,967 533,897
Sapient Corp. (a).......... 14,397 511,993
Siebel Systems, Inc. (a)... 50,944 5,345,936
VERITAS Software
Corp. (a)................. 49,181 6,935,288
Yahoo! Inc. (a)............ 67,204 3,939,835
--------------
123,167,503
--------------
COMPUTER SYSTEMS (6.6%)
Apple Computer, Inc. (a)... 39,869 779,937
Compaq Computer Corp. ..... 206,331 6,274,526
Dell Computer Corp. (a).... 316,066 9,323,947
EMC Corp. (a).............. 266,602 23,744,241
Gateway Inc. (a)........... 39,254 2,025,899
Hewlett-Packard Co. ....... 244,502 11,354,062
International Business
Machines Corp. ........... 215,241 21,201,238
Lexmark International
Group, Inc. (a)........... 16,054 658,214
NCR Corp. (a).............. 11,740 506,287
Palm, Inc. (a)............. 69,299 3,711,828
Seagate Technology,
Inc. (a).................. 28,014 1,957,478
Sun Microsystems, Inc.
(a)....................... 193,887 21,497,221
Unisys Corp. (a)........... 37,812 482,103
--------------
103,516,981
--------------
CONGLOMERATES (0.1%)
Textron Inc. .............. 17,681 891,785
--------------
CONTAINERS--METAL & GLASS (0.0%) (b)
Ball Corp. ................ 3,667 128,804
Crown Cork & Seal Co.,
Inc. ..................... 15,266 139,302
Owens-Illinois, Inc. (a)... 18,078 107,338
--------------
375,444
--------------
CONTAINERS--PAPER (0.0%) (b)
Bemis Co., Inc. ........... 6,596 170,672
Pactiv Corp. (a)........... 20,827 218,683
Temple-Inland Inc. ........ 6,421 287,340
--------------
676,695
--------------
COSMETICS/PERSONAL CARE (0.4%)
Alberto-Culver Co. Class
B......................... 6,856 230,104
Avon Products, Inc. ....... 29,073 1,410,040
Gillette Co. (The)......... 127,674 4,452,631
International Flavors &
Fragrances Inc. .......... 12,701 212,742
--------------
6,305,517
--------------
ELECTRIC POWER COMPANIES (1.9%)
Ameren Corp. .............. 16,800 667,800
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
18
<PAGE> 22
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------------
<S> <C> <C>
ELECTRIC POWER COMPANIES (CONTINUED)
American Electric Power
Co., Inc. ................ 39,842 $ 1,653,443
Cinergy Corp. ............. 19,589 599,913
CMS Energy Corp. .......... 13,552 365,904
Consolidated Edison,
Inc. ..................... 25,896 911,215
Constellation Energy Group,
Inc. ..................... 18,450 769,134
CP&L Energy, Inc. ......... 19,749 796,132
Dominion Resources,
Inc. ..................... 29,359 1,748,695
DTE Energy Co. ............ 17,601 635,836
Duke Energy Corp. ......... 45,008 3,890,379
Edison International....... 40,640 970,280
Entergy Corp. ............. 28,025 1,073,708
Exelon Corp. .............. 39,542 2,377,478
FirstEnergy Corp. ......... 28,498 737,386
Florida Progress Corp. .... 12,033 640,005
FPL Group, Inc. ........... 21,995 1,451,670
GPU, Inc. ................. 14,942 494,020
Niagara Mohawk Holdings
Inc. (a).................. 21,258 340,128
PG&E Corp. ................ 47,544 1,280,717
Pinnacle West Capital
Corp. .................... 10,580 459,569
PPL Corp. ................. 17,654 727,124
Public Service Enterprise
Group Inc. ............... 26,718 1,108,797
Reliant Energy, Inc. ...... 36,464 1,506,419
Southern Co. (The)......... 79,970 2,349,119
TXU Corp. ................. 32,493 1,204,272
Xcel Energy Inc. .......... 41,446 1,059,463
--------------
29,818,606
--------------
ELECTRICAL EQUIPMENT (5.0%)
American Power Conversion
Corp. (a)................. 23,687 306,451
Cooper Industries, Inc. ... 11,521 440,678
Emerson Electric Co. ...... 52,560 3,859,875
General Electric Co. (c)... 1,211,381 66,398,821
Grainger (W.W.), Inc. ..... 11,641 371,784
Molex Inc. ................ 24,077 1,300,158
Power-One, Inc. (a)........ 9,000 638,438
Sanmina Corp. (a).......... 18,479 2,112,381
Solectron Corp. (a)........ 73,678 3,241,832
Thomas & Betts Corp. ...... 7,128 107,811
--------------
78,778,229
--------------
ELECTRONICS--DEFENSE (0.0%) (b)
PerkinElmer, Inc. ......... 5,990 715,805
--------------
ELECTRONICS--INSTRUMENTATION (0.2%)
Agilent Technologies, Inc.
(a)....................... 55,333 2,562,610
Tektronix, Inc. ........... 5,882 419,092
--------------
2,981,702
--------------
ELECTRONICS--SEMICONDUCTORS (5.5%)
Adaptec, Inc. (a).......... 12,651 200,044
Advanced Micro Devices,
Inc. (a).................. 38,103 862,080
Altera Corp. (a)........... 48,800 1,997,750
Analog Devices, Inc. (a)... 43,294 2,814,110
</TABLE>
<TABLE>
SHARES VALUE
-----------------------------
<CAPTION>
<S> <C> <C>
ELECTRONICS--SEMICONDUCTORS (CONTINUED)
Applied Materials, Inc.
(a)....................... 98,774 $ 5,247,369
Broadcom Corp. (a)......... 27,114 6,029,476
Conexant Systems, Inc.
(a)....................... 26,624 700,544
Intel Corp. ............... 820,927 36,941,715
KLA-Tencor Corp. (a)....... 22,817 771,500
Linear Technology Corp. ... 38,338 2,475,197
LSI Logic Corp. (a)........ 37,086 1,219,202
Maxim Integrated Products,
Inc. (a).................. 34,408 2,281,680
Micron Technology,
Inc. (a).................. 68,152 2,368,282
Motorola, Inc. ............ 266,633 6,649,161
National Semiconductor
Corp. (a)................. 20,862 542,412
Novellus Systems, Inc.
(a)....................... 16,128 660,240
Teradyne, Inc. (a)......... 21,328 666,500
Texas Instruments Inc. .... 210,911 10,347,821
Xilinx, Inc. (a)........... 40,213 2,912,929
--------------
85,688,012
--------------
ENGINEERING & CONSTRUCTION (0.0%) (b)
Fluor Corp. ............... 9,446 330,610
--------------
ENTERTAINMENT (2.2%)
Seagram Co. Ltd. (The)..... 53,156 3,036,536
Time Warner Inc. .......... 161,793 12,281,707
Viacom Inc. Class B (a).... 185,404 10,544,853
Walt Disney Co. (The)...... 253,738 9,086,992
--------------
34,950,088
--------------
FINANCIAL--MISCELLANEOUS (5.3%)
AFLAC Inc. ................ 32,435 2,369,782
American Express Co. ...... 162,679 9,760,740
American General Corp. .... 30,348 2,443,014
Associates First Capital
Corp. Class A............. 89,887 3,337,055
CIT Group, Inc. (The)...... 32,258 562,499
Citigroup Inc. ............ 549,960 28,941,645
Fannie Mae................. 123,113 9,479,701
Franklin Resources Inc. ... 30,095 1,289,270
Freddie Mac................ 84,951 5,097,060
MBIA Inc. ................. 12,185 885,697
MBNA Corp. ................ 104,254 3,916,041
Moody's Corp. ............. 19,775 520,330
Morgan Stanley Dean Witter
& Co. .................... 137,605 11,051,402
Price (T. Rowe) Associates,
Inc. ..................... 14,752 690,578
Stilwell Financial,
Inc. ..................... 27,229 1,220,199
USA Education Inc. ........ 19,109 1,067,715
--------------
82,632,728
--------------
FOOD (1.2%)
Campbell Soup Co. ......... 51,698 1,512,166
ConAgra Foods, Inc. ....... 65,146 1,392,496
General Mills, Inc. ....... 35,906 1,499,076
Heinz (H.J.) Co. .......... 43,108 1,807,842
Hershey Foods Corp. ....... 16,937 919,891
Kellogg Co. ............... 50,107 1,271,465
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
19
<PAGE> 23
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------------
<S> <C> <C>
FOOD (CONTINUED)
Nabisco Group Holdings
Corp. .................... 40,323 $ 1,164,327
Quaker Oats Co. (The)...... 16,007 1,305,571
Ralston-Ralston Purina
Group..................... 37,860 918,105
Sara Lee Corp. ............ 106,733 2,301,430
Unilever N.V............... 69,959 3,554,792
Wrigley (Wm.) Jr. Co. ..... 13,986 1,107,516
--------------
18,754,677
--------------
FOOD & HEALTH CARE DISTRIBUTORS (0.4%)
Cardinal Health, Inc. ..... 33,719 3,194,875
McKesson HBOC, Inc. ....... 34,717 974,246
SUPERVALU Inc. ............ 14,359 220,770
SYSCO Corp. ............... 41,152 2,147,620
--------------
6,537,511
--------------
GOLD & PRECIOUS METALS MINING (0.1%)
Barrick Gold Corp. ........ 48,455 648,085
Homestake Mining Co. ...... 32,301 133,242
Newmont Mining Corp. ...... 20,748 281,395
Placer Dome Inc. .......... 40,569 329,623
--------------
1,392,345
--------------
HARDWARE & TOOLS (0.1%)
Black & Decker Corp.
(The)..................... 10,520 395,815
Snap-on Inc. .............. 7,273 185,916
Stanley Works (The)........ 10,833 288,429
--------------
870,160
--------------
HEALTH CARE--DIVERSIFIED (3.3%)
Abbott Laboratories........ 189,519 10,008,972
Allergan, Inc. ............ 15,898 1,336,426
American Home Products
Corp. .................... 159,510 10,128,885
Bristol-Myers Squibb
Co. ...................... 240,334 14,645,353
Johnson & Johnson.......... 169,985 15,659,868
--------------
51,779,504
--------------
HEALTH CARE--DRUGS (5.8%)
King Pharmaceuticals,
Inc. (a).................. 20,297 909,559
Lilly (Eli) & Co. ......... 137,971 12,331,158
Merck & Co., Inc. ......... 281,470 25,314,708
Pfizer, Inc. .............. 771,912 33,336,950
Pharmacia Corp. ........... 158,608 8,723,440
Schering-Plough Corp. ..... 179,684 9,287,417
Watson Pharmaceuticals,
Inc. (a).................. 11,906 744,869
--------------
90,648,101
--------------
HEALTH CARE--HMOS (0.3%)
Aetna Inc. ................ 17,350 1,003,047
Humana Inc. (a)............ 20,695 250,927
UnitedHealth Group
Inc. (a).................. 19,652 2,149,438
Wellpoint Health Networks
Inc. (a).................. 7,624 891,531
--------------
4,294,943
--------------
HEALTH CARE--HOSPITAL MANAGEMENT (0.3%)
HCA-The Healthcare Co. .... 68,756 2,745,943
</TABLE>
<TABLE>
SHARES VALUE
-----------------------------
<CAPTION>
<S> <C> <C>
HEALTH CARE--HOSPITAL MANAGEMENT (CONTINUED)
Tenet Healthcare Corp.
(a)....................... 38,540 $ 1,515,103
--------------
4,261,046
--------------
HEALTH CARE--MEDICAL PRODUCTS (1.2%)
Bard (C.R.), Inc. ......... 6,194 259,374
Bausch & Lomb Inc. ........ 6,502 250,733
Baxter International
Inc. ..................... 35,498 2,917,492
Becton, Dickinson & Co. ... 31,293 1,048,316
Biomet, Inc. .............. 20,867 755,125
Boston Scientific Corp.
(a)....................... 48,785 777,511
Guidant Corp. (a).......... 37,486 1,984,415
Medtronic, Inc. ........... 146,523 7,958,030
PE Corp.-PE Biosystems
Group..................... 25,545 2,988,765
St. Jude Medical, Inc.
(a)....................... 10,356 569,580
--------------
19,509,341
--------------
HEALTH CARE--MISCELLANEOUS (0.8%)
ALZA Corp. (a)............. 14,147 1,145,023
Amgen Inc. (a)............. 125,647 7,279,673
Biogen, Inc. (a)........... 18,290 1,100,829
HEALTHSOUTH Corp. (a)...... 47,631 571,572
Manor Care, Inc. (a)....... 12,601 210,279
MedImmune, Inc. (a)........ 25,726 1,681,837
Quintiles Transnational
Corp. (a)................. 14,260 198,749
--------------
12,187,962
--------------
HEAVY DUTY TRUCKS & PARTS (0.1%)
Cummins Engine Co.,
Inc. ..................... 5,233 177,922
Dana Corp. ................ 18,667 414,174
Eaton Corp. ............... 8,897 605,552
Navistar International
Corp. (a)................. 7,640 252,598
PACCAR Inc. ............... 9,443 397,196
--------------
1,847,442
--------------
HOMEBUILDING (0.0%) (b)
Centex Corp. .............. 7,331 271,247
Kaufman & Broad Home
Corp. .................... 5,063 150,624
Pulte Corp. ............... 5,039 167,862
--------------
589,733
--------------
HOTEL/MOTEL (0.2%)
Carnival Corp. ............ 73,905 1,833,768
Harrah's Entertainment,
Inc. (a).................. 15,074 431,493
Hilton Hotels Corp. ....... 45,067 428,140
Marriott International,
Inc. Class A.............. 29,347 1,188,554
--------------
3,881,955
--------------
HOUSEHOLD--FURNISHINGS & APPLIANCES (0.1%)
Armstrong Holdings,
Inc. ..................... 4,976 14,306
Leggett & Platt, Inc. ..... 24,221 396,619
Maytag Corp. .............. 9,613 275,172
Whirlpool Corp. ........... 8,969 390,152
--------------
1,076,249
--------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
20
<PAGE> 24
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------------
<S> <C> <C>
HOUSEHOLD PRODUCTS (1.4%)
Clorox Co. (The)........... 29,005 $ 1,294,348
Colgate-Palmolive Co. ..... 70,490 4,141,993
Fort James Corp. .......... 25,156 828,576
Kimberly-Clark Corp. ...... 65,733 4,338,378
Procter & Gamble Co.
(The)..................... 159,955 11,426,785
--------------
22,030,080
--------------
HOUSEWARES (0.1%)
Fortune Brands, Inc. ...... 19,545 575,356
Newell Rubbermaid Inc. .... 32,649 626,452
Tupperware Corp. .......... 7,206 123,403
--------------
1,325,211
--------------
INSURANCE BROKERS (0.4%)
Aon Corp. ................. 31,570 1,308,182
Marsh & McLennan Cos., Inc. 33,015 4,316,711
--------------
5,624,893
--------------
INSURANCE--LIFE (0.2%)
Conseco, Inc. ............. 40,236 279,137
Jefferson-Pilot Corp. ..... 12,744 876,150
Lincoln National Corp. .... 23,411 1,132,507
Torchmark Corp. ........... 15,789 525,971
UNUMProvident Corp. ....... 29,550 834,788
--------------
3,648,553
--------------
INSURANCE--MULTI-LINE (2.0%)
American International
Group, Inc. .............. 282,608 27,695,584
CIGNA Corp. ............... 19,226 2,344,611
Hartford Financial Services
Group, Inc. (The)......... 27,424 2,041,374
--------------
32,081,569
--------------
INSURANCE--PROPERTY & CASUALTY (0.7%)
Allstate Corp. (The)....... 91,417 3,679,534
Chubb Corp. (The).......... 21,576 1,821,824
Cincinnati Financial
Corp. .................... 19,853 729,598
Loews Corp. ............... 12,151 1,104,982
MGIC Investment Corp. ..... 13,081 891,143
Progressive Corp. (The).... 8,965 880,811
SAFECO Corp. .............. 15,782 381,727
St. Paul Cos., Inc.
(The)..................... 26,173 1,341,366
--------------
10,830,985
--------------
INVESTMENT BANK/BROKERAGE (1.1%)
Bear Stearns Cos., Inc.
(The)..................... 13,544 821,105
Lehman Brothers Holdings
Inc. ..................... 29,620 1,910,490
Merrill Lynch & Co.,
Inc. ..................... 98,140 6,869,800
Paine Webber Group Inc. ... 18,072 1,287,630
Schwab (Charles) Corp.
(The)..................... 168,830 5,930,154
--------------
16,819,179
--------------
LEISURE TIME (0.1%)
Brunswick Corp. ........... 10,869 211,266
Harley-Davidson, Inc. ..... 37,346 1,799,611
--------------
2,010,877
--------------
MACHINERY--DIVERSIFIED (0.3%)
Briggs & Stratton Corp. ... 2,735 97,605
Caterpillar Inc. .......... 43,048 1,509,371
</TABLE>
<TABLE>
SHARES VALUE
-----------------------------
<CAPTION>
<S> <C> <C>
MACHINERY--DIVERSIFIED (CONTINUED)
Deere & Co. ............... 28,845 $ 1,061,857
Ingersoll-Rand Co. ........ 20,000 755,000
Thermo Electron Corp.
(a)....................... 19,707 571,503
Timken Co. (The)........... 7,552 106,200
--------------
4,101,536
--------------
MANUFACTURING--DIVERSIFIED (1.5%)
Crane Co. ................. 7,500 196,406
Danaher Corp. ............. 17,487 1,103,867
Dover Corp. ............... 25,076 1,064,163
Honeywell International
Inc. ..................... 98,075 5,277,661
Illinois Tool Works
Inc. ..................... 36,834 2,046,589
ITT Industries, Inc. ...... 10,970 357,211
Johnson Controls, Inc. .... 10,614 632,860
Millipore Corp. ........... 5,432 285,180
Pall Corp. ................ 15,271 329,281
Parker-Hannifin Corp. ..... 13,413 554,963
Sealed Air Corp. (a)....... 10,476 504,158
Tyco International Ltd. ... 206,015 11,678,489
--------------
24,030,828
--------------
METALS--MINING (0.1%)
Freeport-McMoRan Copper &
Gold Inc. Class B (a)..... 19,737 156,662
Inco Ltd. (a).............. 22,416 346,047
Phelps Dodge Corp. ........ 9,576 447,678
--------------
950,387
--------------
MISCELLANEOUS (0.6%)
AES Corp. (The) (a)........ 55,843 3,155,129
American Greetings Corp.
Class A................... 8,001 145,518
Archer-Daniels-Midland
Co. ...................... 78,085 858,935
Minnesota Mining &
Manufacturing Co. ........ 48,332 4,670,080
TRW, Inc. ................. 14,960 628,320
--------------
9,457,982
--------------
NATURAL GAS DISTRIBUTORS & PIPELINES (1.1%)
Coastal Corp. (The)........ 26,446 1,995,020
Columbia Energy Group...... 9,912 713,045
Dynegy Inc. ............... 37,776 1,749,501
Eastern Enterprises........ 2,677 172,332
El Paso Energy Corp. ...... 28,517 1,787,659
Enron Corp. ............... 90,300 7,410,244
KeySpan Corp. ............. 16,436 578,342
NICOR Inc. ................ 5,721 202,023
ONEOK, Inc. ............... 3,630 143,839
Peoples Energy Corp. ...... 4,379 150,528
Sempra Energy.............. 25,190 521,118
Williams Cos., Inc.
(The)..................... 53,588 2,240,648
--------------
17,664,299
--------------
OFFICE EQUIPMENT & SUPPLIES (0.1%)
Pitney Bowes Inc. ......... 31,539 936,314
Xerox Corp. ............... 82,251 693,993
--------------
1,630,307
--------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
21
<PAGE> 25
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------------
<S> <C> <C>
OIL & GAS DRILLING (0.0%) (b)
Rowan Cos., Inc. (a)....... 10,247 $ 258,096
--------------
OIL & GAS--EXPLORATION & PRODUCTION (0.3%)
Anadarko Petroleum Corp. .. 29,188 1,869,491
Apache Corp. .............. 14,986 828,913
Burlington Resources
Inc. ..................... 26,345 948,420
Devon Energy Corp. ........ 15,519 782,158
Unocal Corp. .............. 30,012 1,024,160
--------------
5,453,142
--------------
OIL & WELL--EQUIPMENT & SERVICES (0.7%)
Baker Hughes Inc. ......... 40,626 1,396,519
Halliburton Co. ........... 54,794 2,030,803
McDermott International,
Inc. ..................... 7,239 70,128
Nabors Industries, Inc.
(a)....................... 17,800 906,020
Schlumberger Ltd. ......... 69,642 5,301,497
Transocean Sedco Forex
Inc. ..................... 25,715 1,362,895
--------------
11,067,862
--------------
OIL--INTEGRATED DOMESTIC (0.5%)
Amerada Hess Corp. ........ 11,139 690,618
Ashland Inc. .............. 8,739 286,202
Conoco Inc. Class B........ 77,078 2,095,558
Kerr-McGee Corp. .......... 11,590 756,972
Occidental Petroleum
Corp. .................... 42,853 851,703
Phillips Petroleum Co. .... 31,378 1,937,592
Sunoco Inc. ............... 10,935 327,367
Tosco Corp. ............... 17,870 511,529
USX-Marathon Group......... 38,301 1,041,308
--------------
8,498,849
--------------
OIL--INTEGRATED INTERNATIONAL (4.1%)
Chevron Corp. ............. 79,947 6,565,647
Exxon Mobil Corp. ......... 425,635 37,961,322
Royal Dutch Petroleum Co.
ADR (d)................... 262,059 15,559,753
Texaco Inc. ............... 67,555 3,989,967
--------------
64,076,689
--------------
PAPER & FOREST PRODUCTS (0.4%)
Boise Cascade Corp. ....... 7,023 201,472
Georgia-Pacific Group...... 21,064 566,095
International Paper Co. ... 59,565 2,181,568
Louisiana-Pacific Corp. ... 12,812 108,902
Mead Corp. (The)........... 12,592 364,381
Potlatch Corp. ............ 3,513 117,686
Westvaco Corp. ............ 12,444 354,654
Weyerhaeuser Co. .......... 26,128 1,226,383
Willamette Industries,
Inc. ..................... 13,706 497,699
--------------
5,618,840
--------------
PERSONAL LOANS (0.4%)
Capital One Financial
Corp. .................... 24,178 1,526,236
Countrywide Credit
Industries, Inc. ......... 13,863 518,996
Household International,
Inc. ..................... 57,836 2,909,874
</TABLE>
<TABLE>
SHARES VALUE
-----------------------------
<CAPTION>
<S> <C> <C>
PERSONAL LOANS (CONTINUED)
Providian Financial
Corp. .................... 17,429 $ 1,812,616
--------------
6,767,722
--------------
PHOTOGRAPHY/IMAGING (0.1%)
Eastman Kodak Co. ......... 37,879 1,699,820
Polaroid Corp. ............ 5,448 54,821
--------------
1,754,641
--------------
POLLUTION CONTROL (0.1%)
Allied Waste Industries,
Inc. (a).................. 23,217 214,757
Waste Management, Inc. .... 75,559 1,511,180
--------------
1,725,937
--------------
PUBLISHING (0.1%)
Harcourt General Inc. ..... 8,907 499,237
McGraw-Hill Cos., Inc.
(The)..................... 23,824 1,529,203
Meredith Corp. ............ 6,250 198,438
--------------
2,226,878
--------------
PUBLISHING--NEWSPAPER (0.3%)
Dow Jones & Co., Inc. ..... 10,963 645,447
Gannett Co., Inc. ......... 32,857 1,905,706
Knight-Ridder, Inc. ....... 9,552 479,988
New York Times Co. (The)
Class A................... 20,790 764,032
Tribune Co. ............... 37,733 1,398,479
--------------
5,193,652
--------------
RAILROADS (0.3%)
Burlington Northern
Santa Fe Corp. ........... 49,454 1,313,622
CSX Corp. ................. 27,016 683,843
Norfolk Southern Corp. .... 47,278 667,802
Union Pacific Corp. ....... 30,638 1,436,156
--------------
4,101,423
--------------
RESTAURANTS (0.5%)
Darden Restaurants,
Inc. ..................... 15,234 342,765
McDonald's Corp. .......... 161,467 5,005,477
Starbucks Corp. (a)........ 22,669 1,013,021
Tricon Global Restaurants,
Inc. (a).................. 18,175 545,250
Wendy's International,
Inc. ..................... 14,016 304,848
--------------
7,211,361
--------------
RETAIL STORES--APPAREL (0.3%)
Gap, Inc. (The)............ 103,701 2,676,782
Limited, Inc. (The)........ 52,994 1,338,099
TJX Cos., Inc. (The)....... 36,652 998,767
--------------
5,013,648
--------------
RETAIL STORES--DEPARTMENT (0.3%)
Dillard's, Inc. Class A.... 11,572 121,506
Federated Department
Stores, Inc. (a).......... 25,992 846,364
Kohl's Corp. (a)........... 40,298 2,183,648
May Department Stores Co.
(The)..................... 36,390 955,238
Nordstrom, Inc. ........... 16,608 272,994
Penney (J.C.) Co., Inc. ... 32,211 376,466
--------------
4,756,216
--------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
22
<PAGE> 26
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-----------------------------
<S> <C> <C>
RETAIL STORES--DRUGS (0.4%)
Longs Drug Stores Corp. ... 4,890 $ 106,969
Walgreen Co. .............. 123,278 5,624,559
--------------
5,731,528
--------------
RETAIL STORES--FOOD (0.5%)
Albertson's, Inc. ......... 52,094 1,233,977
Kroger Co. (The) (a)....... 102,672 2,316,537
Safeway Inc. (a)........... 61,188 3,346,219
Winn-Dixie Stores, Inc. ... 17,866 343,920
--------------
7,240,653
--------------
RETAIL STORES--GENERAL MERCHANDISE (1.9%)
Kmart Corp. (a)............ 59,353 352,409
Sears, Roebuck & Co. ...... 41,944 1,246,995
Target Corp. .............. 111,650 3,084,331
Wal-Mart Stores, Inc. ..... 545,646 24,758,687
--------------
29,442,422
--------------
RETAIL STORES--SPECIALTY (1.7%)
AutoZone, Inc. (a)......... 16,350 438,384
Bed Bath & Beyond Inc.
(a)....................... 32,736 844,998
Best Buy Co., Inc. (a)..... 25,213 1,265,378
Circuit City Stores-Circuit
City Group................ 24,925 330,256
Consolidated Stores Corp.
(a)....................... 13,589 161,369
Costco Wholesale Corp.
(a)....................... 54,325 1,989,653
CVS Corp. ................. 48,199 2,551,535
Dollar General Corp. ...... 40,609 629,440
Home Depot, Inc. (The)..... 282,782 12,159,626
Lowe's Cos., Inc. ......... 47,171 2,155,125
Office Depot, Inc. (a)..... 39,028 324,420
RadioShack Corp. .......... 22,811 1,360,106
Staples Inc. (a)........... 58,404 832,257
Tiffany & Co. ............. 17,964 766,838
Toys "R" Us, Inc. (a)...... 26,489 455,280
--------------
26,264,665
--------------
SHOES (0.1%)
NIKE, Inc. Class B......... 33,470 1,336,708
Reebok International Ltd.
(a)....................... 7,001 150,959
--------------
1,487,667
--------------
SPECIALIZED SERVICES (0.5%)
Block (H&R), Inc. ......... 12,181 434,710
Cendant Corp. (a).......... 88,473 1,061,676
Convergys Corp. (a)........ 18,886 822,721
Ecolab Inc. ............... 16,020 627,784
IMS Health Inc. ........... 36,343 858,603
Interpublic Group of Cos.,
Inc. (The)................ 36,965 1,587,185
National Service
Industries, Inc. ......... 5,011 102,412
Omnicom Group Inc. ........ 21,722 2,003,855
--------------
7,498,946
--------------
SPECIALTY PRINTING (0.0%) (b)
Deluxe Corp. .............. 8,941 201,731
Donnelley (R.R.) & Sons
Co. ...................... 15,045 323,468
--------------
525,199
--------------
</TABLE>
<TABLE>
SHARES VALUE
-----------------------------
<CAPTION>
<S> <C> <C>
STEEL (0.1%)
Allegheny Technologies
Inc. ..................... 10,266 $ 207,887
Bethlehem Steel Corp.
(a)....................... 16,250 46,719
Nucor Corp. ............... 10,489 363,837
USX-U.S. Steel Group....... 10,928 174,165
Worthington Industries,
Inc. ..................... 10,649 101,831
--------------
894,439
--------------
TELECOMMUNICATIONS--LONG DISTANCE (2.1%)
AT&T Corp. ................ 459,027 10,643,688
Global Crossing Ltd. (a)... 107,696 2,544,318
Nextel Communications, Inc.
Class A (a)............... 92,757 3,565,347
Sprint Corp. (FON Group)... 107,278 2,735,589
Sprint Corp. (PCS Group)
(a)....................... 111,981 4,269,276
WorldCom, Inc. (a)......... 351,445 8,346,819
--------------
32,105,037
--------------
TELEPHONE (4.3%)
ALLTEL Corp. .............. 38,909 2,507,199
BellSouth Corp. ........... 230,131 11,118,204
CenturyTel, Inc. .......... 17,299 666,011
Qwest Communications
International Inc. (a).... 203,081 9,874,814
SBC Communications Inc. ... 414,388 23,905,008
Verizon Communications
Inc. ..................... 332,278 19,209,822
--------------
67,281,058
--------------
TEXTILES--APPAREL MANUFACTURERS (0.1%)
Liz Claiborne, Inc. ....... 6,714 285,345
Russell Corp. ............. 4,039 64,624
Springs Industries, Inc.
Class A................... 2,244 52,874
V.F. Corp. ................ 14,080 384,560
--------------
787,403
--------------
TOBACCO (0.7%)
Philip Morris Cos. Inc. ... 275,364 10,085,207
UST Inc. .................. 20,069 506,742
--------------
10,591,949
--------------
TOYS (0.1%)
Hasbro, Inc. .............. 21,009 225,847
Mattel, Inc. .............. 51,733 669,296
--------------
895,143
--------------
TRANSPORTATION--MISCELLANEOUS (0.1%)
FedEx Corp. (a)............ 35,411 1,659,359
Ryder System, Inc. ........ 7,362 145,400
--------------
1,804,759
--------------
Total Common Stocks
(Cost $992,701,415)....... 1,538,932,355(e)
--------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
23
<PAGE> 27
INDEXED EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS (1.7%)
<S> <C> <C>
PRINCIPAL
AMOUNT VALUE
-----------------------------
COMMERCIAL PAPER (1.1%)
Aetna Services Inc.
6.57%, due 11/17/00 (c)... $ 200,000 $ 199,415
Allergan, Inc.
6.55%, due 11/21/00 (c)... 10,000,000 9,963,378
Consolidated Natural Gas
Co.
6.56%, due 11/13/00 (c)... 2,100,000 2,095,402
Dayton Power & Light Co.
6.55%, due 11/15/00 (c)... 800,000 797,957
Jefferson Smurfit Financial
Corp.
6.55%, due 11/15/00 (c)... 3,700,000 3,690,596
--------------
Total Commercial Paper
(Cost $16,746,748)........ 16,746,748
--------------
U.S. GOVERNMENT (0.6%)
United States Treasury
Bills
5.68%, due 1/4/01 (c)..... 8,100,000 8,013,104
5.72%, due 1/11/01 (c).... 2,000,000 1,976,147
--------------
Total U.S. Government
(Cost $9,989,251)......... 9,989,251
--------------
Total Short-Term
Investments
(Cost $26,735,999)........ 26,735,999
--------------
Total Investments
(Cost $1,019,437,414)
(f)....................... 99.9% 1,565,668,354(g)
Cash and Other Assets,
Less Liabilities.......... 0.1 1,809,313
----------- --------------
Net Assets................. 100.0% $1,567,477,667
=========== ==============
</TABLE>
<TABLE>
<CAPTION>
FUTURES CONTRACTS (-0.0%) (b)
CONTRACTS UNREALIZED
LONG (DEPRECIATION)(h)
------------------------------
<S> <C> <C>
Standard & Poor's 500
December 2000 ........... 79 $ (2,414)
--------------
Total Futures Contracts
(Settlement Value
$28,443,950) (e)......... $ (2,414)
==============
</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 approximately 100% of net
assets.
(f) The cost for federal income tax purposes is $1,020,824,754.
(g) At October 31, 2000 net unrealized appreciation was $544,843,600, 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 $621,860,982 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $77,017,382.
(h) Represents the difference between the value of the contracts at the time
they were opened and the value at October 31, 2000.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
24
<PAGE> 28
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $1,019,437,414)......................... $1,565,668,354
Cash........................................... 87,314
Receivables:
Investment securities sold................... 1,108,401
Dividends and interest....................... 1,058,248
Fund shares sold............................. 231,194
Variation margin on futures contracts........ 574,147
--------------
Total assets............................. 1,568,727,658
--------------
LIABILITIES:
Payables:
Fund shares redeemed......................... 681,210
MainStay Management.......................... 347,285
Custodian.................................... 91,748
Transfer agent............................... 16,955
Accrued expenses............................... 112,793
--------------
Total liabilities........................ 1,249,991
--------------
Net assets..................................... $1,567,477,667
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class.......................... $ 40,217
Institutional Service Class.................. 1,729
Additional paid-in capital..................... 908,061,786
Accumulated undistributed net investment
income....................................... 12,140,037
Accumulated undistributed net realized gain on
investments and futures contracts............ 101,005,372
Net unrealized appreciation on investments and
futures contracts............................ 546,228,526
--------------
Net assets..................................... $1,567,477,667
==============
Institutional Class
Net assets applicable to outstanding shares.... $1,503,223,818
==============
Shares of capital stock outstanding............ 40,217,152
==============
Net asset value per share outstanding.......... $ 37.38
==============
Institutional Service Class
Net assets applicable to outstanding shares.... $ 64,253,849
==============
Shares of capital stock outstanding............ 1,729,145
==============
Net asset value per share outstanding.......... $ 37.16
==============
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)................................ $ 18,266,920
Interest..................................... 1,935,648
--------------
Total income............................. 20,202,568
--------------
Expenses:
Management................................... 8,065,707
Custodian.................................... 207,057
Professional................................. 179,881
Service...................................... 164,074
Transfer agent............................... 80,901
Shareholder communication.................... 50,515
Directors.................................... 43,263
Registration................................. 7,289
Miscellaneous................................ 98,190
--------------
Total expenses before reimbursement...... 8,896,877
Expense reimbursement from Manager........... (3,878,398)
--------------
Net expenses............................. 5,018,479
--------------
Net investment income.......................... 15,184,089
--------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Security transactions........................ 259,512,977
Futures transactions......................... (2,063,252)
--------------
Net realized gain on
investments.................................. 257,449,725
--------------
Net change in unrealized
appreciation on investments:
Security transactions........................ (178,995,972)
Futures transactions......................... (305,322)
--------------
Net unrealized loss on
investments.................................. (179,301,294)
--------------
Net realized and unrealized gain on
investments.................................. 78,148,431
--------------
Net increase in net assets
resulting from operations.................... $ 93,332,520
==============
</TABLE>
------------
(a) Dividends recorded net of foreign withholding taxes of $80,163.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
25
<PAGE> 29
INDEXED EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 2000, the period January 1, 1999 through October
31, 1999* and the year ended December 31, 1998
<TABLE>
<CAPTION>
2000 1999* 1998
-------------- -------------- --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 15,184,089 $ 14,052,668 $ 16,035,836
Net realized gain on investments and futures
contracts............................................. 257,449,725 66,096,265 54,018,731
Net change in unrealized appreciation on investments and
futures contracts..................................... (179,301,294) 94,857,335 244,317,325
-------------- -------------- --------------
Net increase in net assets resulting from operations.... 93,332,520 175,006,268 314,371,892
-------------- -------------- --------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class................................... (16,584,619) -- (15,890,238)
Institutional Service Class........................... (512,101) -- (314,560)
From net realized gain on investments:
Institutional Class................................... (63,793,701) (13,798,796) (43,243,748)
Institutional Service Class........................... (2,462,123) (520,131) (1,050,731)
-------------- -------------- --------------
Total dividends and distributions to shareholders... (83,352,544) (14,318,927) (60,499,277)
-------------- -------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 207,596,882 239,078,730 355,359,146
Institutional Service Class........................... 34,149,450 32,503,215 23,308,027
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... 80,357,060 13,796,673 59,128,205
Institutional Service Class........................... 2,967,436 520,113 1,359,018
-------------- -------------- --------------
325,070,828 285,898,731 439,154,396
Cost of shares redeemed:
Institutional Class................................... (435,940,947) (240,105,604) (156,430,972)
Institutional Service Class........................... (34,869,927) (11,948,104) (7,935,488)
-------------- -------------- --------------
Increase (decrease) in net assets derived from capital
share transactions.................................. (145,740,046) 33,845,023 274,787,936
-------------- -------------- --------------
Net increase (decrease) in net assets................. (135,760,070) 194,532,364 528,660,551
NET ASSETS:
Beginning of period....................................... 1,703,237,737 1,508,705,373 980,044,822
-------------- -------------- --------------
End of period............................................. $1,567,477,667 $1,703,237,737 $1,508,705,373
============== ============== ==============
Accumulated undistributed net investment income at end of
period.................................................. $ 12,140,037 $ 14,052,668 $ --
============== ============== ==============
</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.
26
<PAGE> 30
(THIS PAGE INTENTIONALLY LEFT BLANK)
27
<PAGE> 31
INDEXED EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- -------------
JANUARY 1, 1999
YEAR ENDED THROUGH YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999* DECEMBER 31, 1998
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period.................. $ 36.99 $ 36.80 $ 33.39 $ 33.28 $ 27.05 $ 26.99
---------- ---------- ---------- ---------- ---------- ----------
Net investment income....... 0.37 0.27 0.31 0.21 0.38 0.31
Net realized and unrealized
gain on investments........ 1.86 1.85 3.60 3.62 7.36 7.31
---------- ---------- ---------- ---------- ---------- ----------
Total from investment
operations................. 2.23 2.12 3.91 3.83 7.74 7.62
---------- ---------- ---------- ---------- ---------- ----------
Less dividends and
distributions:
From net investment income.. (0.38) (0.30) -- -- (0.38) (0.31)
From net realized gain on
investments................ (1.46) (1.46) (0.31) (0.31) (1.02) (1.02)
---------- ---------- ---------- ---------- ---------- ----------
Total dividends and
distributions.............. (1.84) (1.76) (0.31) (0.31) (1.40) (1.33)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of
period..................... $ 37.38 $ 37.16 $ 36.99 $ 36.80 $ 33.39 $ 33.28
========== ========== ========== ========== ========== ==========
Total investment return..... 5.98% 5.72% 11.80%(a) 11.60%(a) 28.62% 28.24%
Ratios (to average net
assets)/Supplemental Data:
Net investment income...... 0.95% 0.70% 1.06%+ 0.81%+ 1.29% 1.04%
Net expenses............... 0.30% 0.55% 0.30%+ 0.55%+ 0.30% 0.55%
Expenses (before
reimbursement)........... 0.54% 0.79% 0.55%+ 0.80%+ 0.56% 0.81%
Portfolio turnover rate..... 11% 11% 7% 7% 8% 8%
Net assets at end of period
(in 000's)................. $1,503,224 $ 64,254 $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) Total return is not annualized.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
28
<PAGE> 32
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
---------------------------------------------------------------------------------------------
1997 1996 1995
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 21.05 $ 21.01 $ 17.82 $ 17.81 $ 13.53 $ 13.53
---------- ---------- ---------- ---------- ---------- ----------
0.37 0.32 0.34 0.31 0.35 0.33
6.54 6.52 3.69 3.66 4.64 4.64
---------- ---------- ---------- ---------- ---------- ----------
6.91 6.84 4.03 3.97 4.99 4.97
---------- ---------- ---------- ---------- ---------- ----------
(0.37) (0.32) (0.34) (0.31) (0.34) (0.33)
(0.54) (0.54) (0.46) (0.46) (0.36) (0.36)
---------- ---------- ---------- ---------- ---------- ----------
(0.91) (0.86) (0.80) (0.77) (0.70) (0.69)
---------- ---------- ---------- ---------- ---------- ----------
$ 27.05 $ 26.99 $ 21.05 $ 21.01 $ 17.82 $ 17.81
========== ========== ========== ========== ========== ==========
32.88% 32.60% 22.57% 22.21% 36.88% 36.70%
1.56% 1.31% 1.96% 1.71% 2.21% 1.96%
0.30% 0.55% 0.44% 0.69% 0.50% 0.75%
0.56% 0.81% 0.59% 0.84% 0.59% 0.84%
3% 3% 8% 8% 4% 4%
$ 966,217 $ 13,828 $ 617,716 $ 5,865 $ 354,420 $ 969
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
29
<PAGE> 33
Value Equity Fund
--------------------------------------------------------------------------------
During the 12 months ended October 31, 2000, the U.S. stock market was buffeted
by a variety of forces. The Federal Reserve increased the targeted federal funds
rate four times--for a total of 1.25%--to slow the pace of the economy and keep
inflation in check. With the cost of capital rising for corporations, the market
focused more closely on earnings projections and was particularly unforgiving
when companies failed to meet expectations.
Both "old-economy" stocks, such as health care, retailers, and utilities, and
"new-economy" technology stocks had their ups and downs in the 12 months ended
October 31, 2000, but the two seemed to move on different trajectories.
Technology stocks soared into 2000 and rose through early April, when a negative
inflation report and the Microsoft antitrust decision seemed to derail "dot.com"
fever. More defensive old-economy stocks picked up as technology tumbled, and
among large-cap equities, value outpaced growth through much of the reporting
period. Smaller value stocks also did well in the third calender quarter of
2000. Wherever the markets may turn, recent experience underscores the soundness
of including value disciplines in a well-diversified portfolio.
PERFORMANCE REVIEW
For the 12 months ended October 31, 2000, MainStay Institutional Value Equity
Fund returned 11.31% for Institutional Class shares and 11.00% for Service Class
shares. Both share classes outperformed the 10.94% return of the average
Lipper(1) multi-cap value fund for the same period. During the 12-month period,
both share classes outperformed the 5.52% return of the Russell 1000 Value
Index.(2)
UNDERWEIGHTING TECHNOLOGY
One reason for the Fund's strong performance was its underweighted position in
technology relative to the S&P 500 throughout the reporting period. While that
hurt performance, as technology stocks rose to speculative highs early in 2000,
it helped the portfolio throughout the rest of the reporting period.
Only a few technology stocks met the Fund's value disciplines. Hard disc
manufacturer Seagate Technologies and software and services company Ceridian
both had a positive impact on the Fund's performance, and the Fund took profits
in these issues in the second half of its fiscal year. We purchased shares of
Electronic Data Systems for the Fund in the second and third calendar quarters
of 2000, as the stock was recovering from a precipitous price drop in June. This
purchase also had a positive impact on the Fund's performance.
Other technology-related holdings, including Motorola, Unisys, and IBM, had a
negative impact on performance. The Fund purchased Apple Computer near the end
of October, after an earnings warning caused a dramatic sell-off that brought
the price within the Fund's value disciplines.
Telecommunications stocks, which have close ties to technology holdings, did not
fulfill their promise in the 12 months ended October 31, 2000. AT&T and WorldCom
had particularly difficult years, CenturyTel declined, and Verizon
Communications ended both September and October with impressive rallies, but
failed to fully recover the ground the stock had lost since November 1, 1999.
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. THE FUND'S NET ASSET VALUE WILL FLUCTUATE AND YOU
COULD LOSE MONEY BY INVESTING IN THE FUND.
(1) Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with capital gain and dividend distributions reinvested.
(2) The Russell 1000 Value Index is an unmanaged index that measures the
performance of those Russell 1000 companies with lower price-to-book ratios
and lower forecasted growth values. The Russell 1000 is an unmanaged index
that measures the performance of the 1,000 largest companies in the Russell
3000(R) Index, which, in turn, is an unmanaged index that includes the 3,000
largest U.S. companies based on total market capitalization. Returns reflect
reinvestment of all dividends and capital gains. An investment cannot be
made directly into an index.
30
<PAGE> 34
ENERGY-RELATED HOLDINGS
The rising price of oil also contributed positively to the Fund's performance,
as a number of energy-related issues provided outstanding results. Among the
Fund's best-performing energy stocks were Coastal, Dynegy, and Valero Energy.
The Fund took some profits in the latter two names, but retained positions in
all three stocks, given their continuing potential. Tosco, Sunoco, and
Burlington Resources all contributed positively to performance, but Texaco and
Chevron detracted. Niagara Mohawk Holdings is a utility stock that languished
for much of the Fund's fiscal year, but provided a positive return after the
company agreed to an acquisition by a British transmission company.
RETAIL, CONSUMER, AND HEALTH CARE HOLDINGS
Retailers and consumer-related stocks were mixed, with Office Depot and Sears
recording losses, while McDonald's and The Gap provided positive returns for the
Fund since their purchase during the year. Proctor & Gamble, Kimberly-Clark,
Ralston-Purina, and H.J. Heinz all had a positive impact on performance, as did
Becton, Dickinson, whose consumer products range from ACE bandages to insulin
syringes.
Some other health care stocks performed well for the Fund, including Abbott
Laboratories and Tenet Healthcare. The Fund sold its position in Health
Management Associates at a gain for the year. The lackluster performance of
Manor Care led us to sell the Fund's entire position in the second half of the
fiscal year. Although the sale had a negative impact on performance, it allowed
us to put the assets to more productive use.
FINANCIAL POSITIONS
The Fund's decision to overweight financial stocks proved beneficial in a rising
interest rate environment. The Fund's positions in Citigroup, Washington Mutual,
and American General all contributed positively to performance, as did insurance
company holdings MGIC Investment and Allstate.
During the second half of its fiscal year, the Fund purchased Lincoln National,
J.P. Morgan, PNC Financial Services Group, and Goldman Sachs Group, all of which
also contributed to the Fund's positive results. The Fund sold its position in
AXA Financial, at a gain during the year, but held onto FleetBoston Financial,
despite slightly disappointing performance.
OTHER NOTEWORTHY HOLDINGS
Despite considerable volatility, Air Products and Chemicals had a strong showing
for the 12 months ended October 31, 2000. Defense contractor General Dynamics
also contributed positively to the Fund's performance, with a sharp and
sustained recovery from its decline in the early months of 2000. American
Standard, known for its plumbing and air conditioning products and automotive
braking systems, also had a positive impact on the Fund's results during the
reporting period.
Other stocks didn't fare as well. International Paper declined throughout much
of the year, and the Fund sold its packaging holdings to put those assets to
more productive use. Industrial company Ingersoll-Rand had disappointing
performance as interest rates rose and the company integrated acquisitions and
planned divestitures. We continue to hold the stock, believing the market has
undervalued its long-term potential.
Finally, Honeywell International, which makes a variety of aerospace,
automation, power, and transportation products, dropped in January and again in
June, but staged a substantial recovery in mid-October 2000 when merger talks
with United Technologies were confirmed. Even so, the stock was down slightly
for the year.
31
<PAGE> 35
LOOKING AHEAD
We remain optimistic about the potential for value equities, particularly as
rising interest rates and a slowing economy continue to impact the appeal of
growth stocks. We continue to believe that our disciplined, research-driven
stock selection process will be critical in distinguishing value opportunities
from situations where stocks are likely to remain low priced. While the specter
of inflation and rising interest rates continues, we believe the Federal Reserve
may hold off any further moves for the remainder of 2000.
Whatever the markets or the 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
32
<PAGE> 36
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
VALUE EQUITY FUND VS
RUSSELL 1000 VALUE INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Line Graph]
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
<TABLE>
<CAPTION>
VALUE EQUITY FUND RUSSELL 1000 VALUE INDEX
----------------- ------------------------
<S> <C> <C>
1/2/91 250000.00000 250000.00000
91 341500.00000 311505.00000
92 412219.00000 354515.00000
93 473637.00000 418783.00000
94 479424.00000 410454.00000
95 626473.00000 567879.00000
96 759502.00000 690786.00000
97 931372.00000 933820.00000
98 855946.00000 107984.00000
99 934826.00000 115908.00000
00 as of 10/31/00 102809.00000 122672.00000
</TABLE>
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
VALUE EQUITY FUND VS
RUSSELL 1000 VALUE INDEX
SERVICE CLASS SHARES
[Service Class Shares Line Graph]
<TABLE>
<CAPTION>
VALUE EQUITY FUND RUSSELL 1000 VALUE INDEX
----------------- ------------------------
<S> <C> <C>
1/2/91 250000.00000 250000.00000
91 341500.00000 311505.00000
92 412219.00000 354515.00000
93 473637.00000 418783.00000
94 479424.00000 410454.00000
95 619976.00000 567879.00000
96 756979.00000 690786.00000
97 925611.00000 933820.00000
98 848787.00000 107984.00000
99 924978.00000 115908.00000
00 as of 10/31/00 101428.00000 122672.00000
</TABLE>
Source: Lipper Inc, 10/31/00
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF OCTOBER 31, 2000
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ONE YEAR FIVE YEARS SINCE INCEPTION
--------------------------------------------------------------------------------------------------------
Value Equity Fund Institutional
Class 11.31% 12.18% 15.45%
Value Equity Fund Service Class(+) 11.00 11.89 15.29
Average Lipper multi-cap value
fund(++) 10.94 14.91 15.44
Russell 1000(R) Value Index(sec.) 5.52 18.40 17.56
</TABLE>
YEAR-BY-YEAR PERFORMANCE
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[BAR GRAPH]
<TABLE>
<CAPTION>
TEN
MONTHS YEAR
YEAR END ENDED ENDED
DECEMBER 31 OCTOBER 31 OCTOBER 31
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
36.6 20.71 14.90 1.22 29.42 22.41 22.63 -8.10 7.91 11.31
</TABLE>
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
(*) 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 will vary after this date based on differences in their expense
structures.
(++) Lipper Inc. is an independent fund performance monitor. Results are based
on total returns with capital gain and dividend distributions reinvested.
(sec.) The Russell 1000 Value Index is an unmanaged index that measures the
performance of those Russell 1000 companies with lower price-to-book
ratios and lower forecasted growth values. The Russell 1000 is an
unmanaged index that measures the performance of the 1,000 largest
companies in the Russell 3000(R) Index, which, in turn, is an unmanaged
index that includes the 3,000 largest U.S. companies based on total
market capitalization. Returns reflect reinvestment of all dividends and
capital gains. An investment cannot be made directly into an index.
33
<PAGE> 37
VALUE EQUITY FUND
PORTFOLIO OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (88.8%)+
SHARES VALUE
-------------------------
<S> <C> <C>
AEROSPACE/DEFENSE (2.3%)
General Dynamics Corp. ........ 102,400 $ 7,328,000
Raytheon Co. Class B........... 294,800 10,078,475
------------
17,406,475
------------
ALUMINUM (1.5%)
Alcoa Inc. .................... 400,672 11,494,278
------------
BANKS (8.1%)
Chase Manhattan Corp. (The).... 371,450 16,900,975
FleetBoston Financial Corp. ... 476,116 18,092,408
Morgan (J.P.) & Co. Inc. ...... 43,800 7,248,900
PNC Financial Services Group,
Inc. (The).................... 76,400 5,109,250
Washington Mutual, Inc. ....... 304,500 13,398,000
------------
60,749,533
------------
CHEMICALS (1.4%)
Air Products and Chemicals,
Inc. ......................... 277,100 10,339,294
------------
COMPUTER SOFTWARE & SERVICES (1.2%)
Electronic Data Systems
Corp. ........................ 189,400 8,889,963
------------
COMPUTER SYSTEMS (3.1%)
Apple Computer, Inc. (a)....... 191,100 3,738,394
International Business Machines
Corp. ........................ 89,700 8,835,450
Unisys Corp. (a)............... 850,900 10,848,975
------------
23,422,819
------------
CONSUMER PRODUCTS (1.0%)
Energizer Holdings, Inc. (a)... 375,633 7,418,752
------------
ELECTRIC POWER COMPANIES (5.3%)
DTE Energy Co. ................ 245,500 8,868,687
Edison International........... 383,300 9,151,288
Niagara Mohawk Holdings
Inc. (a)...................... 749,500 11,992,000
PG&E Corp...................... 372,700 10,039,606
------------
40,051,581
------------
ELECTRONICS--SEMICONDUCTORS (1.5%)
Motorola, Inc. ................ 444,300 11,079,731
------------
FINANCE (6.4%)
American General Corp. ........ 293,400 23,618,700
Citigroup Inc. ................ 322,133 16,952,249
Morgan Stanley Dean Witter &
Co. .......................... 93,600 7,517,250
------------
48,088,199
------------
</TABLE>
<TABLE>
SHARES VALUE
-------------------------
<CAPTION>
<S> <C> <C>
FOOD (5.6%)
ConAgra, Inc. ................. 720,500 $ 15,400,687
Heinz (H.J.) Co. .............. 310,900 13,038,369
Ralston-Ralston Purina Group... 548,400 13,298,700
------------
41,737,756
------------
HEALTH CARE--MEDICAL PRODUCTS (1.2%)
Becton, Dickinson & Co. ....... 267,500 8,961,250
------------
HEALTH CARE--MISCELLANEOUS (2.4%)
Abbott Laboratories............ 142,100 7,504,656
Tenet Healthcare Corp. (a)..... 268,400 10,551,475
------------
18,056,131
------------
HOUSEHOLD PRODUCTS (6.0%)
Clorox Co. (The)............... 403,900 18,024,037
Kimberly-Clark Corp............ 251,000 16,566,000
Procter & Gamble Co. (The)..... 144,000 10,287,000
------------
44,877,037
------------
INSURANCE (4.7%)
Allstate Corp. (The)........... 331,800 13,354,950
Lincoln National Corp. ........ 225,100 10,889,213
MGIC Investment Corp. ......... 166,100 11,315,562
------------
35,559,725
------------
INVESTMENT BANK/BROKERAGE (0.4%)
Goldman Sachs Group, Inc.
(The)......................... 29,600 2,954,450
------------
MACHINERY (1.6%)
Ingersoll-Rand Co. ............ 306,700 11,577,925
------------
MANUFACTURING (4.6%)
American Standard Cos. Inc.
(a)........................... 472,500 21,675,937
Honeywell International
Inc. ......................... 234,125 12,598,852
------------
34,274,789
------------
NATURAL GAS DISTRIBUTORS & PIPELINES (2.6%)
Coastal Corp. (The)............ 220,400 16,626,425
Dynegy Inc. Class A............ 62,300 2,885,269
------------
19,511,694
------------
OIL & GAS SERVICES (2.8%)
Burlington Resources Inc. ..... 260,700 9,385,200
Unocal Corp. .................. 317,000 10,817,625
Valero Energy Corp. ........... 26,200 866,238
------------
21,069,063
------------
OIL--INTEGRATED DOMESTIC (3.5%)
Sunoco, Inc. .................. 374,400 11,208,600
Tosco Corp. ................... 511,400 14,638,825
------------
25,847,425
------------
</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.
34
<PAGE> 38
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
OIL--INTEGRATED INTERNATIONAL (3.4%)
Chevron Corp. ................. 120,000 $ 9,855,000
Texaco Inc. ................... 260,300 15,373,969
------------
25,228,969
------------
PAPER & FOREST PRODUCTS (2.1%)
International Paper Co. ....... 430,400 15,763,400
------------
RESTAURANTS (1.7%)
McDonald's Corp. .............. 413,600 12,821,600
------------
RETAIL (3.8%)
Federated Department Stores,
Inc. (a)...................... 120,500 3,923,781
Gap, Inc. (The)................ 228,200 5,890,413
Office Depot, Inc. (a)......... 962,100 7,997,456
Sears, Roebuck & Co. .......... 202,800 6,029,244
TJX Cos. Inc. (The)............ 171,600 4,676,100
------------
28,516,994
------------
TELECOMMUNICATIONS (2.6%)
AT&T Corp. .................... 391,600 9,080,225
WorldCom, Inc. (a)............. 429,200 10,193,500
------------
19,273,725
------------
TELEPHONE (8.0%)
CenturyTel, Inc. .............. 367,600 14,152,600
SBC Communications Inc. ....... 427,700 24,672,944
Verizon Communications Inc. ... 360,200 20,824,062
------------
59,649,606
------------
Total Common Stocks
(Cost $600,650,320)........... 664,622,164
------------
<CAPTION>
SHORT-TERM INVESTMENTS (10.1%)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
COMMERCIAL PAPER (5.9%)
American Express Credit Corp.
6.51%, due 11/6/00 ........... $13,615,000 $ 13,602,679
Associates Corp.
6.63%, due 11/1/00 ........... 11,000,000 11,000,000
General Electric Capital Corp.
6.51%, due 11/8/00............ 10,000,000 9,987,328
6.52%, due 11/9/00............ 10,000,000 9,985,498
------------
Total Commercial Paper
(Cost $44,575,505)............ 44,575,505
------------
<CAPTION>
SHARES
-----------
<S> <C> <C>
INVESTMENT COMPANY (4.2%)
Merrill Lynch Premier
Institutional Fund............ 31,587,428 31,587,428
------------
Total Investment Company
(Cost $31,587,428)............ 31,587,428
------------
Total Short-Term Investments
(Cost $76,162,933)............ 76,162,933
------------
Total Investments
(Cost $676,813,253) (b)....... 98.9% 740,785,097(c)
Cash and Other Assets,
Less Liabilities.............. 1.1 7,914,873
----------- ------------
Net Assets..................... 100.0% $748,699,970
=========== ============
</TABLE>
------------
(a) Non-income producing security.
(b) The cost for federal income tax purposes is $680,969,938.
(c) At October 31, 2000 net unrealized appreciation was $59,815,159, 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 $93,298,288 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $33,483,129.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
35
<PAGE> 39
VALUE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $676,813,253)........................... $ 740,785,097
Cash......................................... 372
Receivables:
Investment securities sold................... 19,287,235
Fund shares sold............................. 4,557,275
Dividends.................................... 1,308,365
--------------
Total assets............................. 765,938,344
--------------
LIABILITIES:
Payables:
Investment securities purchased.............. 16,558,232
MainStay Management.......................... 505,436
Transfer agent............................... 66,639
Custodian.................................... 32,512
Fund shares redeemed......................... 20,643
Accrued expenses............................... 54,912
--------------
Total liabilities........................ 17,238,374
--------------
Net assets..................................... $ 748,699,970
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class.......................... $ 53,074
Institutional Service Class.................. 413
Additional paid-in capital..................... 665,369,240
Accumulated undistributed net investment
income....................................... 6,776,583
Accumulated net realized gain on investments... 12,528,816
Net unrealized appreciation on investments..... 63,971,844
--------------
Net assets..................................... $ 748,699,970
==============
Institutional Class
Net assets applicable to outstanding shares.... $ 742,923,765
==============
Shares of capital stock outstanding............ 53,073,731
==============
Net asset value per share outstanding.......... $ 14.00
==============
Institutional Service Class
Net assets applicable to outstanding shares.... $ 5,776,205
==============
Shares of capital stock outstanding............ 413,403
==============
Net asset value per share outstanding.......... $ 13.97
==============
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)................................ $ 12,653,868
Interest..................................... 1,773,154
--------------
Total income............................. 14,427,022
--------------
Expenses:
Management................................... 5,947,686
Transfer agent............................... 423,261
Professional................................. 91,844
Custodian.................................... 61,318
Shareholder communication.................... 27,161
Directors.................................... 18,702
Service...................................... 14,628
Registration................................. 12,672
Miscellaneous................................ 24,702
--------------
Total expenses........................... 6,621,974
--------------
Net investment income.......................... 7,805,048
--------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND
FOREIGN CURRENCY FORWARD CONTRACT TRANSACTIONS:
Net realized gain from:
Security transactions........................ 40,132,364
Foreign currency forward contract
transactions............................... 378,598
--------------
Net realized gain on investments and foreign
currency forward contract transactions....... 40,510,962
--------------
Net change in unrealized appreciation
(depreciation) on investments:
Security transactions........................ 26,472,572
Foreign currency forward contracts........... 137,346
--------------
Net unrealized gain on investments and foreign
currency forward contracts................... 26,609,918
--------------
Net realized and unrealized gain on
investments.................................. 67,120,880
--------------
Net increase in net assets resulting from
operations................................... $ 74,925,928
==============
</TABLE>
------------
(a) Dividends recorded net of foreign withholding taxes of $685.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
36
<PAGE> 40
MAINSTAY
INSTITUTIONAL FUNDS INC.
VALUE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 2000, the period January 1, 1999 through October
31, 1999* and the year ended December 31, 1998
<TABLE>
<CAPTION>
2000 1999* 1998
------------- ------------- -------------
<S> <C> <C> <C>
DECREASE IN NET ASSETS:
Operations:
Net investment income................................... $ 7,805,048 $ 5,516,523 $ 9,720,362
Net realized gain (loss) on investments and foreign
currency forward contracts............................ 40,510,962 (19,476,120) 129,651,994
Net change in unrealized appreciation (depreciation) on
investments and foreign currency forward contracts.... 26,609,918 72,567,551 (210,901,900)
------------- ------------- -------------
Net increase (decrease) in net assets resulting from
operations............................................ 74,925,928 58,607,954 (71,529,544)
------------- ------------- -------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class................................... (6,415,828) (11,708) (9,628,522)
Institutional Service Class........................... (42,011) (59) (90,474)
From net realized gain on investments:
Institutional Class................................... -- -- (153,210,452)
Institutional Service Class........................... -- -- (1,867,811)
Distribution in excess of net realized gain on
investments:
Institutional Class................................... -- -- (8,485,501)
Institutional Service Class........................... -- -- (103,063)
------------- ------------- -------------
Total dividends and distributions to shareholders... (6,457,839) (11,767) (173,385,823)
------------- ------------- -------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 38,902,953 42,954,878 85,177,154
Institutional Service Class........................... 724,538 934,186 1,986,558
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... 6,412,685 11,706 171,050,165
Institutional Service Class........................... 41,327 59 2,062,197
------------- ------------- -------------
46,081,503 43,900,829 260,276,074
Cost of shares redeemed:
Institutional Class................................... (111,666,061) (160,535,158) (197,456,599)
Institutional Service Class........................... (2,900,964) (3,977,132) (2,401,236)
------------- ------------- -------------
Increase (decrease) in net assets derived from capital
share transactions.................................. (68,485,522) (120,611,461) 60,418,239
------------- ------------- -------------
Net decrease in net assets............................ (17,433) (62,015,274) (184,497,128)
NET ASSETS:
Beginning of period....................................... 748,717,403 810,732,677 995,229,805
------------- ------------- -------------
End of period............................................. $ 748,699,970 $ 748,717,403 $ 810,732,677
============= ============= =============
Accumulated undistributed net investment income at end of
period.................................................. $ 6,776,583 $ 5,050,776 $ 7,156
============= ============= =============
</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.
37
<PAGE> 41
VALUE EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- -------------
JANUARY 1, 1999
YEAR ENDED THROUGH YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999* DECEMBER 31, 1998
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period.................. $ 12.69 $12.66 $ 11.76 $ 11.76 $ 16.36 $ 16.35
-------- ------ -------- -------- -------- --------
Net investment income....... 0.15 0.10 0.09 0.06 0.18 0.14
Net realized and unrealized
gain (loss) on
investments................ 1.27 1.28 0.84 0.84 (1.58) (1.57)
-------- ------ -------- -------- -------- --------
Total from investment
operations................. 1.42 1.38 0.93 0.90 (1.40) (1.43)
-------- ------ -------- -------- -------- --------
Less dividends and
distributions:
From net investment income.. (0.11) (0.07) (0.00)(a) (0.00)(a) (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.............. (0.11) (0.07) (0.00)(a) (0.00)(a) (3.20) (3.16)
-------- ------ -------- -------- -------- --------
Net asset value at end of
period..................... $ 14.00 $13.97 $ 12.69 $ 12.66 $ 11.76 $ 11.76
======== ====== ======== ======== ======== ========
Total investment return..... 11.31% 11.00% 7.91%(b) 7.65%(b) (8.10%) (8.30%)
Ratios (to average net
assets)/Supplemental Data:
Net investment income...... 1.12% 0.87% 0.84%+ 0.59%+ 1.04% 0.79%
Net expenses............... 0.94% 1.19% 0.96%+ 1.21%+ 0.98% 1.23%
Portfolio turnover rate..... 96% 96% 49% 49% 76% 76%
Net assets at end of period
(in 000's)................. $742,924 $5,776 $ 741,300 $ 7,418 $800,993 $ 9,740
</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.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
38
<PAGE> 42
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
---------------------------------------------------------------------------------------------
1997 1996 1995
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 15.87 $ 15.85 $ 14.43 $ 14.43 $ 11.58 $ 11.58
-------- -------- -------- -------- -------- --------
0.23 0.16 0.25 0.23 0.21 0.20
3.31 3.32 2.98 2.96 3.20 3.20
-------- -------- -------- -------- -------- --------
3.54 3.48 3.23 3.19 3.41 3.40
-------- -------- -------- -------- -------- --------
(0.23) (0.16) (0.25) (0.23) (0.21) (0.20)
(2.82) (2.82) (1.54) (1.54) (0.35) (0.35)
-- -- -- -- -- --
-------- -------- -------- -------- -------- --------
(3.05) (2.98) (1.79) (1.77) (0.56) (0.55)
-------- -------- -------- -------- -------- --------
$ 16.36 $ 16.35 $ 15.87 $ 15.85 $ 14.43 $ 14.43
======== ======== ======== ======== ======== ========
22.63% 22.28% 22.41% 22.10% 29.42% 29.32%
1.30% 1.05% 1.70% 1.45% 1.64% 1.39%
0.93% 1.18% 0.92% 1.17% 0.93% 1.18%
66% 66% 50% 50% 51% 51%
$984,220 $ 11,010 $821,725 $ 14,752 $603,749 $ 3,213
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
39
<PAGE> 43
Asset Manager Fund
--------------------------------------------------------------------------------
During the 12 months ended October 31, 2000, the U.S. stock market was buffeted
by a variety of forces. The Federal Reserve increased the targeted federal funds
rate four times--for a total of 1.25%--to slow the pace of the economy and keep
inflation in check. With the cost of capital rising for corporations, the market
focused more closely on earnings projections and was particularly unforgiving
when companies failed to meet expectations.
Domestic bonds and cash investments did relatively well during the 12 months
ended October 31, 2000. Rising short-term rates led to an inverted yield curve,
creating a variety of new opportunities for bond investors. In the third
calendar quarter of 2000, the bond market rallied as economic evidence indicated
that the Federal Reserve was becoming less likely to continue tightening the
money supply.
Given the strength of the U.S. dollar versus most other currencies,
international stock markets had mixed results in U.S. dollar terms. Canada and
Hong Kong were particularly strong, while Japan, Australia, and the United
Kingdom provided negative U.S. dollar returns over the 12-month period.
PERFORMANCE REVIEW
For the 12 months ended October 31, 2000, MainStay Institutional Asset Manager
Fund returned 11.18% for Institutional Class shares and 10.96% for Service Class
shares. Both share classes outperformed the 9.34% return of the average
Lipper(1) flexible portfolio fund for the same period. During the 12-month
period, the S&P 500 Index(2) returned 6.09%, the Salomon Smith Barney Broad
Investment Grade (BIG) Bond Index(3) returned 7.28%, and three-month Treasury
bills returned 5.84%.
Both of the Fund's share classes were rated four stars overall out of 3,948
domestic equity funds by Morningstar(4) as of October 31, 2000. Both share
classes were also rated four stars out of 3,948 domestic equity funds for the
three-year period then ended and four stars out of 2,458 domestic equity funds
for the five-year period then ended.
ALLOCATION DECISIONS
The Fund uses a tactical asset-allocation model that incorporates several
economic and technical factors to determine the appropriate asset mix within
allocation constraints outlined in the prospectus. During the reporting period,
the Fund was able to invest in U.S. real estate investment trusts, also known as
REITs, which were the Fund's best-performing asset class in the second calendar
quarter of 2000 and contributed positively to the Fund's performance for the
12-month period ended October 31, 2000.
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. THE FUND'S NET ASSET VALUE WILL FLUCTUATE AND YOU
COULD LOSE MONEY BY INVESTING IN THE FUND.
(1) Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with capital gain and dividend distributions reinvested.
(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. S&P does not sponsor,
endorse, sell, or promote the Fund or represent the advisability of
investing in MainStay Institutional Asset Manager Fund. The S&P 500 is an
unmanaged index and is widely regarded as the standard for measuring
large-cap U.S. stock market performance. Returns assume the reinvestment of
all income and capital gain distributions. An investment cannot be made
directly into an index.
(3) The Salomon Smith Barney Broad Investment Grade (BIG) Bond Index is an
unmanaged index that is considered representative of the U.S. bond market.
Total returns reflect the reinvestment of all income and capital gains. An
investment cannot be made directly into an index.
(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 10-year average annual
returns (if applicable) in excess of 90-day Treasury bill returns, and a
risk factor that reflects fund performance below 90-day Treasury bill
returns. The Overall Morningstar Rating(TM) represents a weighted average of
the three-, five-, and 10-year (if applicable) risk-adjusted performance.
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. Past performance is
no guarantee of future results.
40
<PAGE> 44
--------------------------------------------------------------------------------
During the reporting period, the Fund's allocations to Canada and Hong Kong
contributed to its strong performance relative to its peers. With a 29.11% U.S.
dollar return,(5) Canada was the strongest international market in which the
Fund invested. This was followed by Hong Kong (+13.94%), France (+6.93%), and
Germany (+3.60%), all in U.S. dollar terms. International markets in which the
Fund earned negative U.S. dollar returns during the reporting period included
Japan (-15.25%), United Kingdom (-7.11%), and Australia (-7.73%).
The Fund's asset allocation model kept common stock investments between 45% and
50% of net assets through most of the Fund's fiscal year. Bond allocations
varied slightly, with a higher allocation to U.S. government and agency bonds
going into 2000 than later in the year. At the end of 1999, the Fund had
approximately 5% of its net assets in mortgage-backed securities, which declined
to 4.8% by the end of the first calendar quarter of 2000, but later rose to 6.9%
of net assets at the end of June 2000, and did not stray far from that level
through the remainder of the Fund's fiscal year.
LOOKING AHEAD
Given recent indicators, we believe that corporate profit growth may be slower
going forward. Tightening moves by the Federal Reserve and other world central
banks have begun to impact global demand. Higher energy costs and tight labor
markets are also putting pressure on corporate profitability.
It looks as though the Federal Reserve may pull off the perfect "soft landing"
for the U.S. economy, by slowing economic growth just enough to cut off
inflationary pressures, while keeping unemployment stable. In light of this
trend, we believe we may have seen the last of Federal Reserve moves to increase
interest rates in 2000. We expect equity markets to continue to be somewhat
choppy and trade in a range through the end of the calendar year, and we believe
that U.S. markets for income securities should continue to hold their own in
this environment.
Whatever the economy or the markets may bring, 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
Portfolio Manager
Monitor Capital Advisors LLC
--------------------------------------------------------------------------------
(5) Foreign market and U.S. stock sector returns reflect major unmanaged indices
considered representative of the specific markets or sectors. Returns assume
the reinvestment of all income and capital gain distributions. An investment
cannot be made directly into an index.
41
<PAGE> 45
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
ASSET MANAGER FUND VS
AVERAGE LIPPER FLEXIBLE PORTFOLIO FUND AND
SALOMON SMITH BARNEY BIG BOND INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Line Graph]
<TABLE>
<CAPTION>
AVERAGE LIPPER FLEXIBLE SALOMON SMITH BARNEY BIG
ASSET MANAGER FUND PORTFOLIO FUND BOND INDEX
------------------ ---------------------------- ------------------------
<S> <C> <C> <C>
1/2/91 250000.00 250000.00 250000.00
91 294750.00 313558.00 289968.00
92 315660.00 338970.00 311935.00
93 343407.00 375676.00 342897.00
94 340450.00 367754.00 333138.00
95 431737.00 459083.00 394858.00
96 501515.00 521059.00 409133.00
97 635368.00 617234.00 448509.00
98 770743.00 702866.00 487598.00
99 861906.00 787208.00 483528.00
00 as of 10/31/00 904733.00 806040.00 521107.00
</TABLE>
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
ASSET MANAGER FUND VS
AVERAGE LIPPER FLEXIBLE PORTFOLIO FUND AND
SALOMON SMITH BARNEY BIG BOND INDEX
SERVICE CLASS SHARES
[Service Class Shares Line Graph]
<TABLE>
<CAPTION>
AVERAGE LIPPER FLEXIBLE SALOMON SMITH BARNEY BIG
ASSET MANAGER FUND PORTFOLIO FUND BOND INDEX
------------------ ----------------------- ------------------------
<S> <C> <C> <C>
1/2/91 250000.00 250000.00 250000.00
91 294750.00 313558.00 289968.00
92 315660.00 338970.00 311935.00
93 343407.00 375676.00 342897.00
94 340450.00 367754.00 333138.00
95 431341.00 459083.00 394858.00
96 499882.00 521059.00 409133.00
97 631366.00 617234.00 448509.00
98 763942.00 702866.00 487598.00
99 852031.00 787208.00 483528.00
00 as of 10/31/00 892717.00 806040.00 521107.00
</TABLE>
Source: Lipper Inc., 10/31/00
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN*
PERFORMANCE AS OF OCTOBER 31, 2000
----------------------------------------------------------------------------------------------------------------
ONE YEAR FIVE YEARS SINCE INCEPTION
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Asset Manager Fund Institutional Class 11.18% 17.24% 13.96%
Asset Manager Fund Service Class(+) 10.96 16.95 13.81
Average Lipper flexible portfolio fund(++) 9.34 13.10 13.31
Salomon Smith Barney BIG Bond Index(sec.) 7.28 6.32 7.75
</TABLE>
YEAR-BY-YEAR PERFORMANCE
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[BAR GRAPH]
<TABLE>
<CAPTION>
TEN
MONTHS YEAR
YEAR ENDED ENDED ENDED
DECEMBER 31 OCTOBER 31 OCTOBER 31
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
17.9 7.09 8.79 -0.86 26.81 16.16 26.69 21.31 5.58 11.18
</TABLE>
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
(*) 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 Inc. is an independent fund performance monitor. Results are based
on total returns with capital gain and dividend distributions reinvested.
(sec.) The Salomon Smith Barney Broad Investment Grade (BIG) Bond Index is an
unmanaged index that is considered to be representative of the U.S. bond
market. Returns reflect the reinvestment of all income and capital gains.
An investment cannot be made directly into an index.
42
<PAGE> 46
MAINSTAY
INSTITUTIONAL FUNDS INC.
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
LONG-TERM BONDS (19.8%)+
CORPORATE BONDS (6.3%)
PRINCIPAL
AMOUNT VALUE
-------------------------
<S> <C> <C>
AUTO--LEASES (0.3%)
Ford Motor Credit Co.
7.00%, due 9/25/01............ $ 1,600,000 $ 1,602,000
------------
AUTOMOBILES (0.2%)
Daimler-Benz North America
Corp. Series A
7.375%, due 9/15/06........... 1,000,000 1,000,000
------------
BANKS--REGIONAL (0.5%)
National Bank of Canada
Series B
8.125%, due 8/15/04 (d)....... 2,850,000 2,931,938
------------
BANKS--SUPRANATIONAL (0.3%)
International Bank for
Reconstruction & Development
(zero coupon), due 2/15/15
(d)........................... 2,197,000 807,397
8.875%, due 3/1/26............ 1,000,000 1,236,188
------------
2,043,585
------------
BEVERAGES--ALCOHOLIC (0.4%)
Bass North America Inc.
6.625%, due 3/1/03............ 2,250,000 2,219,063
------------
BROADCAST/MEDIA (0.2%)
Cox Communications Inc.
6.50%, due 11/15/02........... 1,000,000 988,750
------------
CHEMICALS (0.1%)
Aventis
7.75%, due 1/15/02 (d)........ 350,000 350,000
------------
COMMUNICATIONS--EQUIPMENT MANUFACTURERS (0.2%)
Nortel Networks Corp.
6.875%, due 10/1/02 (d)....... 1,000,000 996,250
------------
CONTAINERS--METAL & GLASS (0.6%)
Crown Cork & Seal Finance PLC
7.00%, due 12/15/06 (d)....... 5,000,000 3,412,500
------------
ELECTRIC POWER COMPANIES (0.6%)
Arkansas Power & Light Co.
6.00%, due 10/1/03............ 3,000,000 2,887,500
Tennessee Valley Authority
6.875%, due 12/15/43.......... 1,000,000 907,159
------------
3,794,659
------------
FINANCIAL--MISCELLANEOUS (0.2%)
Ambac Financial Group Inc.
9.375%, due 8/1/11............ 1,000,000 1,136,250
------------
</TABLE>
<TABLE>
PRINCIPAL
AMOUNT VALUE
-------------------------
<CAPTION>
<S> <C> <C>
INSURANCE--PROPERTY & CASUALTY (0.1%)
American Re Corp. Series B
7.45%, due 12/15/26........... $ 920,000 $ 876,300
------------
INVESTMENT BANK/BROKERAGE (0.1%)
Bear Stearns Cos., Inc. (The)
6.625%, due 1/15/04........... 500,000 490,000
Paine Webber Group, Inc.
7.75%, due 9/1/02............. 400,000 406,500
------------
896,500
------------
MANUFACTURING--DIVERSIFIED (0.3%)
Honeywell International Inc.
7.50%, due 3/1/10............. 1,000,000 1,031,249
Tyco International Group S.A.
6.125%, due 1/15/09........... 1,000,000 911,629
------------
1,942,878
------------
OIL & WELL--EQUIPMENT & SERVICES (0.1%)
Petroleum Geo-Services ASA
6.625%, due 3/30/08 (d)....... 1,000,000 933,750
------------
OIL--INTEGRATED DOMESTIC (0.1%)
Occidental Petroleum Corp.
10.125%, due 11/15/01......... 500,000 512,500
------------
OIL--INTEGRATED INTERNATIONAL (1.2%)
Imperial Oil Ltd.
8.30%, due 8/20/01 (d)........ 5,000,000 5,043,750
Societe Nationale Elf Aquitaine
8.00%, due 10/15/01 (d)....... 2,000,000 2,017,500
------------
7,061,250
------------
PAPER & FOREST PRODUCTS (0.1%)
Georgia-Pacific Corp.
9.125%, due 7/1/22............ 500,000 495,000
------------
TELECOMMUNICATIONS--LONG DISTANCE (0.2%)
Citizens Communications Co.
7.45%, due 1/15/04............ 1,000,000 985,000
------------
TELEPHONE (0.5%)
GTE South Inc. Series C
6.00%, due 2/15/08............ 1,300,000 1,194,397
New York Telephone Co.
6.125%, due 1/15/10........... 1,000,000 910,202
Southwestern Bell
Telephone Co.
7.20%, due 10/15/26........... 1,100,000 996,941
------------
3,101,540
------------
Total Corporate Bonds
(Cost $41,176,685)............ 37,279,713
------------
</TABLE>
------------
+ Percentages indicated are based on Fund net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
43
<PAGE> 47
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
U.S. GOVERNMENT &
FEDERAL AGENCIES (13.5%)
PRINCIPAL
AMOUNT VALUE
-------------------------
<S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION
(MORTGAGE PASS-THROUGH SECURITIES) (0.1%)
7.75%, due 10/1/07............ $ 288,142 $ 292,824
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION GOLD
(MORTGAGE PASS-THROUGH SECURITIES) (2.4%)
6.00%, due 1/1/26-1/1/28...... 891,301 836,423
6.50%, due 2/1/27-10/1/29..... 9,632,386 9,265,103
7.00%, due 3/1/26-7/1/30...... 3,551,045 3,482,465
7.50%, due 7/1/11-9/1/11...... 393,749 396,702
8.00%, due 10/1/11-11/1/11.... 373,566 380,686
------------
14,361,379
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (2.8%)
6.50%, due 11/1/03-7/1/29..... 8,182,187 7,875,490
7.00%, due 10/1/03-7/1/30..... 7,661,610 7,515,508
7.50%, due 7/1/11-10/1/11..... 268,321 270,248
8.00%, due 7/1/09-11/1/11..... 574,634 584,868
8.50%, due 6/1/26-10/1/26..... 102,858 105,076
9.00%, due 6/1/26-9/1/26...... 276,209 284,667
------------
16,635,857
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION I
(MORTGAGE PASS-THROUGH SECURITIES) (1.5%)
6.50%, due 2/15/29-8/15/29.... 3,073,256 2,967,598
7.00%, due 7/15/11-12/15/28... 4,413,375 4,367,726
7.50%, due 3/15/26-6/15/26.... 513,939 515,866
8.00%, due 8/15/26-10/15/26... 381,226 387,421
8.50%, due 11/15/26........... 147,146 150,961
9.00%, due 4/15/25-11/15/26... 123,997 128,337
------------
8,517,909
------------
RESOLUTION FUNDING CORPORATION (0.2%)
(zero coupon), due 10/15/10... 2,600,000 1,408,212
------------
UNITED STATES TREASURY BONDS (1.6%)
5.25%, due 2/15/29............ 3,650,000 3,322,084
6.125%, due 11/15/27.......... 1,500,000 1,532,340
6.25%, due 8/15/23............ 1,000,000 1,031,540
8.125%, due 5/15/21........... 1,000,000 1,247,630
10.625%, due 8/15/15.......... 1,000,000 1,449,310
11.875%, due 11/15/03......... 700,000 813,498
------------
9,396,402
------------
</TABLE>
<TABLE>
PRINCIPAL
AMOUNT VALUE
-------------------------
<CAPTION>
FEDERAL AGENCIES (13.5%)
PRINCIPAL
AMOUNT VALUE
-------------------------
<S> <C> <C>
UNITED STATES TREASURY NOTES (4.9%)
4.75%, due 11/15/08........... $10,000,000 $ 9,305,300
5.625%, due 12/31/02.......... 8,500,000 8,443,305
5.75%, due 8/15/03............ 2,300,000 2,291,375
6.00%, due 8/15/04............ 4,400,000 4,420,636
7.00%, due 7/15/06............ 2,100,000 2,213,736
7.50%, due 11/15/01-5/15/02... 2,000,000 2,032,290
------------
28,706,642
------------
Total U.S. Government & Federal
Agencies
(Cost $79,854,173)............ 79,319,225(f)
------------
Total Long-Term Bonds
(Cost $121,030,858)........... 116,598,938
------------
<CAPTION>
COMMON STOCKS (45.2%)
SHARES
-----------
<S> <C> <C>
AEROSPACE/DEFENSE (0.6%)
Boeing Co. (The)............... 18,964 1,285,996
General Dynamics Corp. ........ 4,240 303,425
Goodrich (B.F.) Co. (The)...... 2,289 93,706
Lockheed Martin Corp. ......... 9,048 324,371
Northrop Grumman Corp. ........ 1,522 127,848
Raytheon Co. Class B........... 7,313 250,013
Rockwell International
Corp. ........................ 3,962 155,756
United Technologies Corp. ..... 9,969 695,961
------------
3,237,076
------------
AIRLINES (0.1%)
AMR Corp. (a).................. 3,248 106,372
Delta Air Lines, Inc. ......... 2,628 124,173
Southwest Airlines Co. ........ 10,547 300,590
US Airways Group, Inc. (a)..... 1,366 51,566
------------
582,701
------------
ALUMINUM (0.1%)
Alcan Aluminum Ltd. ........... 7,039 222,169
Alcoa Inc. .................... 18,377 527,190
------------
749,359
------------
AUTO PARTS & EQUIPMENT (0.1%)
Cooper Tire & Rubber Co. ...... 1,564 17,106
Delphi Automotive Systems
Corp. ........................ 11,957 187,576
Genuine Parts Co. ............. 3,758 80,092
Goodyear Tire & Rubber Co.
(The)......................... 3,281 60,699
Visteon Corp. ................. 2,790 49,348
------------
394,821
------------
AUTOMOBILES (0.3%)
Ford Motor Co. ................ 39,811 1,040,062
General Motors Corp. .......... 11,364 705,989
------------
1,746,051
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
44
<PAGE> 48
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
BANKS--MAJOR REGIONAL (1.6%)
AmSouth Bancorp................ 8,217 $ 114,525
Bank of New York Co., Inc.
(The)......................... 15,619 899,069
Bank One Corp. ................ 24,338 888,337
BB&T Corp. .................... 8,334 265,646
Comerica Inc. ................. 3,281 197,885
Fifth Third Bancorp............ 9,879 507,534
Firstar Corp. ................. 20,238 398,436
FleetBoston Financial Corp. ... 19,101 725,838
Huntington Bancshares Inc. .... 5,232 75,210
KeyCorp........................ 9,209 227,347
Mellon Financial Corp. ........ 10,437 503,585
National City Corp. ........... 12,817 273,963
Northern Trust Corp. .......... 4,725 403,397
Old Kent Financial Corp. ...... 2,894 80,128
PNC Financial Services Group,
Inc. (The).................... 6,081 406,667
Regions Financial Corp. ....... 4,766 112,299
SouthTrust Corp. .............. 3,518 113,895
State Street Corp. ............ 3,401 424,241
Summit Bancorp................. 3,724 139,650
SunTrust Banks, Inc. .......... 6,366 310,740
Synovus Financial Corp. ....... 5,845 126,033
Union Planters Corp. .......... 2,884 97,515
U.S. Bancorp................... 15,655 378,655
Wachovia Corp. ................ 4,251 229,554
Wells Fargo Co. ............... 34,804 1,611,860
------------
9,512,009
------------
BANKS--MONEY CENTER (0.7%)
Bank of America Corp. ......... 34,790 1,672,094
Chase Manhattan Corp. (The).... 27,729 1,261,670
First Union Corp. ............. 20,783 629,985
Morgan (J.P.) & Co., Inc. ..... 3,384 560,052
------------
4,123,801
------------
BANKS--SAVINGS & LOANS (0.1%)
Charter One Financial, Inc. ... 4,574 104,916
Golden West Financial Corp. ... 3,325 186,408
Washington Mutual, Inc. ....... 11,386 500,984
------------
792,308
------------
BEVERAGES--ALCOHOLIC (0.2%)
Anheuser-Busch Cos., Inc. ..... 19,179 877,439
Brown-Forman Corp.
Class B....................... 1,514 92,165
Coors (Adolph) Co.
Class B....................... 775 49,358
------------
1,018,962
------------
BEVERAGES--SOFT DRINKS (0.8%)
Coca-Cola Co. (The)............ 52,458 3,167,152
Coca-Cola Enterprises Inc. .... 8,941 164,291
PepsiCo, Inc. ................. 30,453 1,475,067
------------
4,806,510
------------
</TABLE>
<TABLE>
SHARES VALUE
-------------------------
<CAPTION>
<S> <C> <C>
BROADCAST/MEDIA (0.3%)
Clear Channel Communications,
Inc. (a)...................... 12,331 $ 740,631
Comcast Corp. Special
Class A (a)................... 19,104 778,488
------------
1,519,119
------------
BUILDING MATERIALS (0.1%)
Masco Corp. ................... 9,495 177,438
Sherwin-Williams Co. (The)..... 3,455 74,930
Vulcan Materials Co. .......... 2,163 90,846
------------
343,214
------------
CHEMICALS (0.4%)
Air Products & Chemicals,
Inc. ......................... 4,881 182,122
Dow Chemical Co. (The)......... 14,182 434,324
Du Pont (E.I.) De Nemours &
Co. .......................... 22,015 998,931
Eastman Chemical Co. .......... 1,634 70,058
Hercules Inc. ................. 2,144 39,262
Praxair, Inc. ................. 3,406 126,873
Rohm & Haas Co. ............... 4,650 139,791
Union Carbide Corp. ........... 2,836 121,948
------------
2,113,309
------------
CHEMICALS--DIVERSIFIED (0.1%)
Avery Dennison Corp. .......... 2,384 120,392
Engelhard Corp. ............... 2,688 56,112
FMC Corp. (a).................. 677 51,452
PPG Industries, Inc. .......... 3,748 167,254
------------
395,210
------------
CHEMICALS--SPECIALTY (0.0%) (b)
Grace (W.R.) & Co. (a)......... 1,394 5,315
Great Lakes Chemical Corp. .... 1,113 37,146
Sigma-Aldrich Corp. ........... 1,785 63,814
------------
106,275
------------
COMMUNICATIONS--EQUIPMENT MANUFACTURERS (3.2%)
ADC Telecommunications,
Inc. (a)...................... 16,372 349,951
Andrew Corp. (a)............... 1,751 46,073
Avaya Inc. (a)................. 5,887 79,107
Cabletron Systems, Inc. (a).... 3,861 104,730
Cisco Systems, Inc. (a)........ 150,142 8,088,900
Comverse Technology, Inc. (a).. 3,325 371,569
Corning Inc. .................. 18,611 1,423,742
JDS Uniphase Corp. (a)......... 19,849 1,615,212
Lucent Technologies Inc. ...... 70,653 1,647,098
Network Appliance, Inc. (a).... 6,589 784,091
Nortel Networks Corp. ......... 63,225 2,876,738
QUALCOMM, Inc. (a)............. 15,696 1,021,957
Scientific-Atlanta, Inc. ...... 3,282 224,612
Tellabs, Inc. (a).............. 8,607 429,812
------------
19,063,592
------------
COMPUTER SOFTWARE & SERVICES (3.6%)
Adobe Systems Inc. ............ 5,112 388,831
America Online Inc. (a)........ 48,847 2,463,354
Autodesk, Inc. ................ 1,214 26,784
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
45
<PAGE> 49
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
COMPUTER SOFTWARE & SERVICES (CONTINUED)
Automatic Data Processing,
Inc. ......................... 13,224 $ 863,692
BMC Software, Inc. (a)......... 5,087 103,330
Ceridian Corp. (a)............. 3,066 76,650
Citrix Systems, Inc. (a)....... 3,820 84,518
Computer Associates
International, Inc. .......... 12,582 401,051
Computer Sciences Corp. (a).... 3,590 226,170
Compuware Corp. (a)............ 7,747 61,008
Electronic Data Systems
Corp. ........................ 9,837 461,724
Equifax Inc. .................. 3,027 104,432
First Data Corp. .............. 8,627 432,428
Mercury Interactive
Corp. (a)..................... 1,708 189,588
Microsoft Corp. (a)............ 111,288 7,664,961
Novell, Inc. (a)............... 7,022 63,198
Oracle Corp. (a)............... 119,000 3,927,000
Parametric Technology
Corp. (a)...................... 5,837 71,868
Paychex, Inc. ................. 7,919 448,908
PeopleSoft, Inc. (a)........... 5,924 258,527
Sabre Holdings Corp. (a)....... 2,783 93,057
Sapient Corp. (a).............. 2,480 88,195
Siebel Systems, Inc. (a)....... 8,847 928,382
VERITAS Software Corp. (a)..... 8,500 1,198,633
Yahoo! Inc. (a)................ 11,610 680,636
------------
21,306,925
------------
COMPUTER SYSTEMS (3.0%)
Apple Computer, Inc. (a)....... 6,935 135,666
Compaq Computer Corp. ......... 35,798 1,088,617
Dell Computer Corp. (a)........ 54,685 1,613,208
EMC Corp. (a).................. 46,184 4,113,263
Gateway Inc. (a)............... 6,777 349,761
Hewlett-Packard Co. ........... 42,218 1,960,498
International Business Machines
Corp. ........................ 37,300 3,674,050
Lexmark International Group,
Inc. (a)...................... 2,737 112,217
NCR Corp. (a).................. 2,034 87,716
Palm, Inc. (a)................. 12,009 643,232
Seagate Technology, Inc. (a)... 4,892 341,829
Sun Microsystems, Inc. (a)..... 33,525 3,717,084
Unisys Corp. (a)............... 6,572 83,793
------------
17,920,934
------------
CONGLOMERATES (0.0%)(b)
Textron Inc. .................. 3,074 155,045
------------
CONTAINERS--METAL & GLASS (0.0%) (b)
Ball Corp. .................... 625 21,953
Crown Cork & Seal Co., Inc. ... 2,585 23,588
Owens-Illinois, Inc. (a)....... 3,108 18,454
------------
63,995
------------
</TABLE>
SHARES VALUE
-------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
CONTAINERS--PAPER (0.0%) (b)
Bemis Co., Inc. ............... 1,170 $ 30,274
Pactiv Corp. (a)............... 3,583 37,622
Temple-Inland Inc. ............ 1,146 51,283
------------
119,179
------------
COSMETICS/PERSONAL CARE (0.2%)
Alberto-Culver Co. Class B..... 1,181 39,637
Avon Products, Inc. ........... 4,999 242,452
Gillette Co. (The)............. 22,160 772,830
International Flavors &
Fragrances Inc. .............. 2,169 36,331
------------
1,091,250
------------
ELECTRIC POWER COMPANIES (0.9%)
Ameren Corp. .................. 2,906 115,514
American Electric Power Co.,
Inc. ......................... 6,861 284,732
Cinergy Corp. ................. 3,432 105,105
CMS Energy Corp. .............. 2,352 63,504
Consolidated Edison, Inc. ..... 4,512 158,766
Constellation Energy Group,
Inc. ......................... 3,146 131,149
CP&L Energy, Inc. ............. 3,387 136,538
Dominion Resources, Inc. ...... 5,062 301,505
DTE Energy Co. ................ 3,083 111,373
Duke Energy Corp. ............. 7,788 673,175
Edison International........... 6,938 165,645
Entergy Corp. ................. 4,786 183,364
Exelon Corp. .................. 6,837 411,067
FirstEnergy Corp. ............. 4,922 127,357
Florida Progress Corp. ........ 2,122 112,864
FPL Group, Inc. ............... 3,770 248,820
GPU, Inc. ..................... 2,628 86,888
Niagara Mohawk Holdings Inc.
(a)........................... 3,612 57,792
PG&E Corp. .................... 8,203 220,968
Pinnacle West Capital Corp. ... 1,856 80,620
PPL Corp. ..................... 3,033 124,922
Public Service Enterprise Group
Inc. ......................... 4,633 192,269
Reliant Energy, Inc. .......... 6,246 258,038
Southern Co. (The)............. 13,816 405,845
TXU Corp. ..................... 5,620 208,291
Xcel Energy Inc. .............. 7,217 184,485
------------
5,150,596
------------
ELECTRICAL EQUIPMENT (2.3%)
American Power Conversion
Corp. (a)..................... 4,074 52,707
Cooper Industries, Inc. ....... 1,946 74,435
Emerson Electric Co. .......... 9,123 669,970
General Electric Co. (c)....... 209,582 11,487,735
Grainger (W.W.), Inc. ......... 2,128 67,963
Molex Inc. .................... 4,164 224,856
Power-One, Inc. (a)............ 1,600 113,500
Sanmina Corp. (a).............. 3,238 370,144
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
46
<PAGE> 50
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
ELECTRICAL EQUIPMENT (CONTINUED)
Solectron Corp. (a)............ 12,684 $ 558,096
Thomas & Betts Corp. .......... 1,103 16,683
------------
13,636,089
------------
ELECTRONICS--DEFENSE (0.0%) (b)
PerkinElmer, Inc. ............. 1,062 126,909
------------
ELECTRONICS--INSTRUMENTATION (0.1%)
Agilent Technologies,
Inc. (a)...................... 9,604 444,786
Tektronix, Inc. ............... 969 69,041
------------
513,827
------------
ELECTRONICS--SEMICONDUCTORS (2.5%)
Adaptec, Inc. (a).............. 2,151 34,013
Advanced Micro Devices,
Inc. (a)...................... 6,592 149,144
Altera Corp. (a)............... 8,397 343,752
Analog Devices, Inc. (a)....... 7,534 489,710
Applied Materials, Inc. (a).... 17,084 907,588
Broadcom Corp. (a)............. 4,660 1,036,267
Conexant Systems, Inc. (a)..... 4,697 123,590
Intel Corp. ................... 141,981 6,389,145
KLA-Tencor Corp. (a)........... 3,998 135,182
Linear Technology Corp. ....... 6,600 426,112
LSI Logic Corp. (a)............ 6,406 210,597
Maxim Integrated Products,
Inc. (a)...................... 5,957 395,024
Micron Technology, Inc. (a).... 11,838 411,370
Motorola, Inc. ................ 46,127 1,150,292
National Semiconductor
Corp. (a)..................... 3,645 94,770
Novellus Systems, Inc. (a)..... 2,820 115,444
Teradyne, Inc. (a)............. 3,639 113,719
Texas Instruments Inc. ........ 36,550 1,793,234
Xilinx, Inc. (a)............... 6,959 504,093
------------
14,823,046
------------
ENGINEERING & CONSTRUCTION (0.0%) (b)
Fluor Corp. ................... 1,578 55,230
------------
ENTERTAINMENT (1.0%)
Seagram Co. Ltd. (The)......... 9,201 525,607
Time Warner Inc. .............. 27,983 2,124,190
Viacom Inc. Class B (a)........ 32,040 1,822,275
Walt Disney Co. (The).......... 43,913 1,572,634
------------
6,044,706
------------
FINANCIAL--MISCELLANEOUS (2.4%)
AFLAC Inc. .................... 5,624 410,903
American Express Co. .......... 28,165 1,689,900
American General Corp. ........ 5,312 427,616
Associates First Capital Corp.
Class A....................... 15,526 576,403
CIT Group, Inc.(The)........... 5,524 96,325
Citigroup Inc. ................ 95,135 5,006,479
Fannie Mae..................... 21,256 1,636,712
Franklin Resources Inc. ....... 5,189 222,297
Freddie Mac.................... 14,653 879,180
</TABLE>
<TABLE>
SHARES VALUE
-------------------------
<CAPTION>
<S> <C> <C>
FINANCIAL--MISCELLANEOUS (CONTINUED)
MBIA Inc. ..................... 2,039 $ 148,210
MBNA Corp. .................... 18,044 677,778
Moody's Corp. ................. 3,432 90,304
Morgan Stanley Dean Witter &
Co. .......................... 23,761 1,908,305
Price (T. Rowe) Associates,
Inc. ......................... 2,597 121,572
Stilwell Financial, Inc. ...... 4,765 213,532
USA Education Inc. ............ 3,329 186,008
------------
14,291,524
------------
FOOD (0.6%)
Campbell Soup Co. ............. 8,944 261,612
ConAgra Foods, Inc. ........... 11,310 241,751
General Mills, Inc. ........... 6,123 255,635
Heinz (H.J.) Co. .............. 7,410 310,757
Hershey Foods Corp. ........... 2,910 158,049
Kellogg Co. ................... 8,615 218,606
Nabisco Group Holdings Corp. .. 6,942 200,450
Quaker Oats Co. (The).......... 2,750 224,297
Ralston-Ralston Purina Group... 6,465 156,776
Sara Lee Corp. ................ 18,406 396,880
Unilever N.V................... 12,129 616,305
Wrigley (Wm.) Jr. Co. ......... 2,446 193,693
------------
3,234,811
------------
FOOD & HEALTH CARE DISTRIBUTORS (0.2%)
Cardinal Health, Inc. ......... 5,843 553,624
McKesson HBOC, Inc. ........... 5,979 167,786
SUPERVALU Inc. ................ 2,676 41,144
SYSCO Corp. ................... 7,032 366,982
------------
1,129,536
------------
GOLD & PRECIOUS METALS MINING (0.0%)(b)
Barrick Gold Corp. ............ 8,353 111,721
Homestake Mining Co. .......... 5,567 22,964
Newmont Mining Corp. .......... 3,612 48,988
Placer Dome Inc. .............. 6,931 56,314
------------
239,987
------------
HARDWARE & TOOLS (0.0%)(b)
Black & Decker Corp. (The)..... 1,764 66,370
Snap-on Inc. .................. 1,210 30,931
Stanley Works (The)............ 1,811 48,218
------------
145,519
------------
HEALTH CARE--DIVERSIFIED (1.5%)
Abbott Laboratories............ 32,804 1,732,461
Allergan, Inc. ................ 2,743 230,583
American Home Products
Corp. ........................ 27,576 1,751,076
Bristol-Myers Squibb Co. ...... 41,606 2,535,366
Johnson & Johnson.............. 29,417 2,710,041
------------
8,959,527
------------
HEALTH CARE--DRUGS (2.7%)
King Pharmaceuticals,
Inc. (a)...................... 3,509 157,247
Lilly (Eli) & Co. ............. 23,936 2,139,280
Merck & Co., Inc. ............. 48,698 4,379,776
Pharmacia Corp. ............... 27,495 1,512,225
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
47
<PAGE> 51
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
HEALTH CARE--DRUGS (CONTINUED)
Pfizer, Inc. .................. 133,501 $ 5,765,575
Schering-Plough Corp. ......... 31,086 1,606,758
Watson Pharmaceuticals, Inc.
(a)........................... 2,050 128,253
------------
15,689,114
------------
HEALTH CARE--HMOS (0.1%)
Aetna Inc. .................... 2,994 173,091
Humana Inc. (a)................ 3,608 43,747
UnitedHealth Group Inc. (a).... 3,366 368,156
Wellpoint Health Networks Inc.
(a)........................... 1,356 158,567
------------
743,561
------------
HEALTH CARE--HOSPITAL MANAGEMENT (0.1%)
HCA-The Healthcare Co. ........ 11,811 471,702
Tenet Healthcare Corp. (a)..... 6,633 260,760
------------
732,462
------------
HEALTH CARE--MEDICAL PRODUCTS (0.6%)
Bard (C.R.), Inc. ............. 1,069 44,764
Bausch & Lomb Inc. ............ 1,076 41,493
Baxter International Inc. ..... 6,138 504,467
Becton, Dickinson & Co. ....... 5,405 181,068
Biomet, Inc. .................. 3,670 132,808
Boston Scientific Corp. (a).... 8,436 134,449
Guidant Corp. (a).............. 6,429 340,335
Medtronic, Inc. ............... 25,330 1,375,736
PE Corp.-PE Biosystems Group... 4,428 518,076
St. Jude Medical, Inc. (a)..... 1,751 96,305
------------
3,369,501
------------
HEALTH CARE--MISCELLANEOUS (0.4%)
ALZA Corp. (a)................. 2,465 199,511
Amgen Inc. (a)................. 21,725 1,258,692
Biogen, Inc. (a)............... 3,134 188,628
HEALTHSOUTH Corp. (a).......... 8,228 98,736
Manor Care, Inc. (a)........... 2,167 36,162
MedImmune, Inc. (a)............ 4,490 293,534
Quintiles Transnational Corp.
(a)........................... 2,459 34,272
------------
2,109,535
------------
HEAVY DUTY TRUCKS & PARTS (0.1%)
Cummins Engine Co., Inc. ...... 847 28,798
Dana Corp. .................... 3,223 71,510
Eaton Corp. ................... 1,494 101,686
Navistar International Corp.
(a)........................... 1,251 41,361
PACCAR Inc. ................... 1,642 69,067
------------
312,422
------------
HOMEBUILDING (0.0%) (b)
Centex Corp. .................. 1,233 45,621
Kaufman & Broad Home Corp. .... 950 28,262
Pulte Corp. ................... 863 28,749
------------
102,632
------------
</TABLE>
<TABLE>
SHARES VALUE
-------------------------
<CAPTION>
<S> <C> <C>
HOTEL/MOTEL (0.1%)
Carnival Corp. ................ 12,655 $ 314,002
Harrah's Entertainment, Inc.
(a)........................... 2,525 72,278
Hilton Hotels Corp. ........... 7,820 74,299
Marriott International, Inc.
Class A....................... 5,117 207,238
------------
667,817
------------
HOUSEHOLD--FURNISHINGS & APPLIANCES (0.0%) (b)
Armstrong Holdings, Inc. ...... 833 2,395
Leggett & Platt, Inc. ......... 4,191 68,628
Maytag Corp. .................. 1,631 46,687
Whirlpool Corp. ............... 1,560 67,860
------------
185,570
------------
HOUSEHOLD PRODUCTS (0.7%)
Clorox Co. (The)............... 5,022 224,107
Colgate-Palmolive Co. ......... 12,220 718,047
Fort James Corp. .............. 4,316 142,158
Kimberly-Clark Corp. .......... 11,339 748,374
Procter & Gamble Co. (The)..... 27,653 1,975,461
------------
3,808,147
------------
HOUSEWARES (0.0%) (b)
Fortune Brands, Inc. .......... 3,354 98,734
Newell Rubbermaid Inc. ........ 5,666 108,716
Tupperware Corp. .............. 1,216 20,824
------------
228,274
------------
INSURANCE BROKERS (0.2%)
Aon Corp. ..................... 5,452 225,917
Marsh & McLennan Cos., Inc. ... 5,698 745,014
------------
970,931
------------
INSURANCE--LIFE (0.1%)
Conseco, Inc. ................. 6,902 47,883
Jefferson-Pilot Corp. ......... 2,242 154,137
Lincoln National Corp. ........ 4,016 194,274
Torchmark Corp. ............... 2,758 91,876
UNUMProvident Corp. ........... 5,100 144,075
------------
632,245
------------
INSURANCE--MULTI-LINE (0.9%)
American International Group,
Inc. ......................... 48,944 4,796,512
CIGNA Corp. ................... 3,376 411,703
Hartford Financial Services
Group, Inc. (The)............. 4,752 353,727
------------
5,561,942
------------
INSURANCE--PROPERTY & CASUALTY (0.3%)
Allstate Corp. (The)........... 15,761 634,380
Chubb Corp. (The).............. 3,745 316,218
Cincinnati Financial Corp. .... 3,386 124,436
Loews Corp. ................... 2,066 187,877
MGIC Investment Corp. ......... 2,270 154,644
Progressive Corp. (The)........ 1,501 147,473
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
48
<PAGE> 52
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
INSURANCE--PROPERTY & CASUALTY (CONTINUED)
SAFECO Corp. .................. 2,765 $ 66,878
St. Paul Cos., Inc. (The)...... 4,595 235,494
------------
1,867,400
------------
INVESTMENT BANK/BROKERAGE (0.5%)
Bear Stearns Cos., Inc.
(The)......................... 2,324 140,892
Lehman Brothers Holdings
Inc. ......................... 5,142 331,659
Merrill Lynch & Co., Inc. ..... 17,027 1,191,890
Paine Webber Group Inc. ....... 3,133 223,226
Schwab (Charles) Corp. (The)... 29,237 1,026,950
------------
2,914,617
------------
LEISURE TIME (0.1%)
Brunswick Corp. ............... 1,887 36,679
Harley-Davidson, Inc. ......... 6,534 314,857
------------
351,536
------------
MACHINERY--DIVERSIFIED (0.1%)
Briggs & Stratton Corp. ....... 449 16,024
Caterpillar Inc. .............. 7,415 259,988
Deere & Co. ................... 4,949 182,185
Ingersoll-Rand Co. ............ 3,465 130,804
Thermo Electron Corp. (a)...... 3,494 101,326
Timken Co. (The)............... 1,283 18,042
------------
708,369
------------
MANUFACTURING--DIVERSIFIED (0.7%)
Crane Co. ..................... 1,267 33,180
Danaher Corp. ................. 2,974 187,734
Dover Corp. ................... 4,365 185,240
Honeywell International
Inc. ......................... 16,947 911,960
Illinois Tool Works Inc. ...... 6,409 356,100
ITT Industries, Inc. .......... 1,827 59,492
Johnson Controls, Inc. ........ 1,794 106,967
Millipore Corp. ............... 967 50,767
Pall Corp. .................... 2,584 55,718
Parker-Hannifin Corp. ......... 2,370 98,059
Sealed Air Corp. (a)........... 1,778 85,566
Tyco International Ltd. ....... 35,678 2,022,501
------------
4,153,284
------------
METALS--MINING (0.0%) (b)
Freeport-McMoRan Copper & Gold
Inc. Class B (a).............. 3,373 26,773
Inco Ltd. (a).................. 3,860 59,589
Phelps Dodge Corp. ............ 1,646 76,950
------------
163,312
------------
MISCELLANEOUS (0.3%)
AES Corp. (The) (a)............ 9,655 545,507
American Greetings Corp. Class
A............................. 1,406 25,572
Archer-Daniels-Midland Co. .... 13,467 148,137
Minnesota Mining &
Manufacturing Co. ............ 8,355 807,302
TRW, Inc. ..................... 2,613 109,746
------------
1,636,264
------------
</TABLE>
<TABLE>
SHARES VALUE
-------------------------
<CAPTION>
<S> <C> <C>
NATURAL GAS DISTRIBUTORS & PIPELINES (0.5%)
Coastal Corp. (The)............ 4,576 $ 345,202
Columbia Energy Group.......... 1,698 122,150
Dynegy Inc. ................... 6,558 303,718
Eastern Enterprises............ 544 35,020
El Paso Energy Corp. .......... 4,930 309,049
Enron Corp. ................... 15,683 1,286,986
KeySpan Corp. ................. 2,838 99,862
NICOR Inc. .................... 996 35,171
ONEOK, Inc. ................... 666 26,390
Peoples Energy Corp. .......... 743 25,541
Sempra Energy.................. 4,320 89,370
Williams Cos., Inc. (The)...... 9,267 387,477
------------
3,065,936
------------
OFFICE EQUIPMENT & SUPPLIES (0.1%)
Pitney Bowes Inc. ............. 5,482 162,747
Xerox Corp. ................... 14,113 119,078
------------
281,825
------------
OIL & GAS DRILLING (0.0%) (b)
Rowan Cos., Inc. (a)........... 1,986 50,022
------------
OIL & GAS--EXPLORATION & PRODUCTION (0.2%)
Anadarko Petroleum Corp. ...... 5,112 327,424
Apache Corp. .................. 2,605 144,089
Burlington Resources Inc. ..... 4,611 165,996
Devon Energy Corp. ............ 2,661 134,114
Unocal Corp. .................. 5,123 174,822
------------
946,445
------------
OIL & WELL--EQUIPMENT & SERVICES (0.3%)
Baker Hughes Inc. ............. 6,964 239,388
Halliburton Co. ............... 9,389 347,980
McDermott International,
Inc. ......................... 1,220 11,819
Nabors Industries, Inc. (a).... 3,100 157,790
Schlumberger Ltd. ............. 12,040 916,545
Transocean Sedco Forex Inc. ... 4,477 237,281
------------
1,910,803
------------
OIL--INTEGRATED DOMESTIC (0.2%)
Amerada Hess Corp. ............ 1,956 121,272
Ashland Inc. .................. 1,518 49,714
Conoco Inc. Class B............ 13,262 360,561
Kerr-McGee Corp. .............. 1,967 128,470
Occidental Petroleum Corp. .... 7,560 150,255
Phillips Petroleum Co. ........ 5,434 335,549
Sunoco Inc. ................... 1,872 56,043
Tosco Corp. ................... 3,050 87,306
USX-Marathon Group............. 6,574 178,731
------------
1,467,901
------------
OIL--INTEGRATED INTERNATIONAL (1.9%)
Chevron Corp. ................. 13,798 1,133,161
Exxon Mobil Corp. ............. 73,769 6,579,272
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
49
<PAGE> 53
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
OIL--INTEGRATED INTERNATIONAL (CONTINUED)
Royal Dutch Petroleum Co.
ADR (e)....................... 45,405 $ 2,695,922
Texaco Inc. ................... 11,695 690,736
------------
11,099,091
------------
PAPER & FOREST PRODUCTS (0.2%)
Boise Cascade Corp. ........... 1,184 33,966
Georgia-Pacific Group.......... 3,663 98,443
International Paper Co. ....... 10,183 372,952
Louisiana-Pacific Corp. ....... 2,238 19,023
Mead Corp. (The)............... 2,212 64,010
Potlatch Corp. ................ 635 21,273
Westvaco Corp. ................ 2,090 59,565
Weyerhaeuser Co. .............. 4,543 213,237
Willamette Industries, Inc. ... 2,323 84,354
------------
966,823
------------
PERSONAL LOANS (0.2%)
Capital One Financial Corp. ... 4,161 262,663
Countrywide Credit Industries,
Inc. ......................... 2,437 91,235
Household International,
Inc. ......................... 9,955 500,861
Providian Financial Corp. ..... 3,046 316,784
------------
1,171,543
------------
PHOTOGRAPHY/IMAGING (0.1%)
Eastman Kodak Co. ............. 6,509 292,091
Polaroid Corp. ................ 991 9,972
------------
302,063
------------
POLLUTION CONTROL (0.1%)
Allied Waste Industries, Inc.
(a)........................... 4,093 37,860
Waste Management, Inc. ........ 13,117 262,340
------------
300,200
------------
PUBLISHING (0.1%)
Harcourt General Inc. ......... 1,457 81,665
McGraw-Hill Cos., Inc. (The)... 4,090 262,527
Meredith Corp. ................ 1,094 34,734
------------
378,926
------------
PUBLISHING--NEWSPAPER (0.2%)
Dow Jones & Co., Inc. ......... 1,845 108,624
Gannett Co., Inc. ............. 5,624 326,192
Knight-Ridder, Inc. ........... 1,686 84,722
New York Times Co. (The)
Class A....................... 3,535 129,911
Tribune Co. ................... 6,475 239,980
------------
889,429
------------
RAILROADS (0.1%)
Burlington Northern Santa Fe
Corp. ........................ 8,535 226,711
CSX Corp. ..................... 4,620 116,944
Norfolk Southern Corp. ........ 8,167 115,359
Union Pacific Corp. ........... 5,299 248,390
------------
707,404
------------
</TABLE>
<TABLE>
SHARES VALUE
-------------------------
<CAPTION>
<S> <C> <C>
RESTAURANTS (0.2%)
Darden Restaurants, Inc. ...... 2,655 $ 59,738
McDonald's Corp. .............. 27,886 864,466
Starbucks Corp. (a)............ 3,941 176,113
Tricon Global Restaurants,
Inc. (a)...................... 3,138 94,140
Wendy's International, Inc. ... 2,387 51,917
------------
1,246,374
------------
RETAIL STORES--APPAREL (0.1%)
Gap, Inc. (The)................ 17,921 462,586
Limited, Inc. (The)............ 9,218 232,755
TJX Cos., Inc. (The)........... 6,286 171,293
------------
866,634
------------
RETAIL STORES--DEPARTMENT (0.1%)
Dillard's, Inc. Class A........ 1,948 20,454
Federated Department Stores,
Inc. (a)...................... 4,446 144,773
Kohl's Corp. (a)............... 6,960 377,145
May Department Stores Co.
(The)......................... 6,239 163,773
Nordstrom, Inc. ............... 2,868 47,143
Penney (J.C.) Co., Inc. ....... 5,591 65,345
------------
818,633
------------
RETAIL STORES--DRUGS (0.2%)
Longs Drug Stores Corp. ....... 860 18,812
Walgreen Co. .................. 21,316 972,543
------------
991,355
------------
RETAIL STORES--FOOD (0.2%)
Albertson's, Inc. ............. 8,931 211,553
Kroger Co. (The) (a)........... 17,605 397,213
Safeway Inc. (a)............... 10,603 579,851
Winn-Dixie Stores, Inc. ....... 3,091 59,502
------------
1,248,119
------------
RETAIL STORES--GENERAL MERCHANDISE (0.9%)
Kmart Corp. (a)................ 10,250 60,860
Sears, Roebuck & Co. .......... 7,203 214,145
Target Corp. .................. 19,222 531,008
Wal-Mart Stores, Inc. ......... 94,438 4,285,124
------------
5,091,137
------------
RETAIL STORES--SPECIALTY (0.8%)
AutoZone, Inc. (a)............. 2,820 75,611
Bed Bath & Beyond Inc. (a)..... 5,857 151,184
Best Buy Co. Inc. (a).......... 4,358 218,717
Circuit City Stores-Circuit
City Group.................... 4,243 56,220
Consolidated Stores Corp.
(a)........................... 2,358 28,001
Costco Wholesale Corp. (a)..... 9,429 345,337
CVS Corp. ..................... 8,285 438,587
Dollar General Corp. .......... 6,966 107,973
Home Depot, Inc. (The)......... 48,907 2,103,001
Lowe's Cos., Inc. ............. 8,097 369,932
Office Depot, Inc. (a)......... 6,643 55,220
RadioShack Corp. .............. 3,976 237,069
Staples Inc. (a)............... 9,960 141,930
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
50
<PAGE> 54
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
RETAIL STORES--SPECIALTY (CONTINUED)
Tiffany & Co. ................. 3,090 $ 131,904
Toys "R" Us, Inc. (a).......... 4,527 77,808
------------
4,538,494
------------
SHOES (0.0%) (b)
NIKE, Inc. Class B............. 5,712 228,123
Reebok International Ltd.
(a)........................... 1,198 25,832
------------
253,955
------------
SPECIALIZED SERVICES (0.2%)
Block (H&R), Inc. ............. 2,099 74,908
Cendant Corp. (a).............. 15,311 183,732
Convergys Corp. (a)............ 3,265 142,232
Ecolab Inc. ................... 2,712 106,276
IMS Health Inc. ............... 6,264 147,987
Interpublic Group of Cos., Inc.
(The)......................... 6,393 274,499
National Service Industries,
Inc. ......................... 836 17,086
Omnicom Group Inc. ............ 3,726 343,724
------------
1,290,444
------------
SPECIALTY PRINTING (0.0%) (b)
Deluxe Corp. .................. 1,491 33,641
Donnelley (R.R.) & Sons Co. ... 2,600 55,900
------------
89,541
------------
STEEL (0.0%) (b)
Allegheny Technologies Inc. ... 1,710 34,627
Bethlehem Steel Corp. (a)...... 2,769 7,961
Nucor Corp. ................... 1,777 61,640
USX-U.S. Steel Group........... 1,931 30,775
Worthington Industries,
Inc. ......................... 1,859 17,777
------------
152,780
------------
TELECOMMUNICATIONS--LONG DISTANCE (0.9%)
AT&T Corp. .................... 79,577 1,845,192
Global Crossing Ltd. (a)....... 18,625 440,015
Nextel Communications, Inc.
Class A (a)................... 16,073 617,806
Sprint Corp. (FON Group)....... 18,572 473,586
Sprint Corp. (PCS Group) (a)... 19,478 742,599
WorldCom, Inc. (a)............. 60,796 1,443,905
------------
5,563,103
------------
TELEPHONE (2.0%)
ALLTEL Corp. .................. 6,664 429,412
BellSouth Corp. ............... 39,738 1,919,842
CenturyTel, Inc. .............. 3,001 115,538
Qwest Communications
International Inc. (a)........ 35,138 1,708,585
SBC Communications Inc. ....... 71,704 4,136,425
Verizon Communications Inc. ... 57,475 3,322,773
------------
11,632,575
------------
TEXTILES--APPAREL MANUFACTURERS (0.0%) (b)
Liz Claiborne, Inc. ........... 1,149 48,832
Russell Corp. ................. 668 10,688
</TABLE>
<TABLE>
SHARES VALUE
-------------------------
<CAPTION>
<S> <C> <C>
TEXTILES--APPAREL MANUFACTURERS (CONTINUED)
Springs Industries, Inc. Class
A............................. 337 $ 7,941
V.F. Corp. .................... 2,436 66,533
------------
133,994
------------
TOBACCO (0.3%)
Philip Morris Cos. Inc. ....... 47,612 1,743,789
UST Inc. ...................... 3,495 88,249
------------
1,832,038
------------
TOYS (0.0%)(b)
Hasbro, Inc. .................. 3,609 38,797
Mattel, Inc. .................. 8,984 116,230
------------
155,027
------------
TRANSPORTATION--MISCELLANEOUS (0.1%)
FedEx Corp. (a)................ 6,042 283,128
Ryder System, Inc. ............ 1,301 25,695
------------
308,823
------------
Total Common Stocks
(Cost $197,382,973)........... 266,173,324(g)
------------
<CAPTION>
SHORT-TERM
INVESTMENTS (34.5%)
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
COMMERCIAL PAPER (30.4%)
AEP Credit Inc.
6.49%, due 11/7/00 (c)........ $30,000,000 29,967,397
6.49%, due 11/9/00 (c)........ 3,200,000 3,195,363
Aetna Services Inc.
6.58%, due 11/20/00 (c)....... 30,900,000 30,793,443
Allergan, Inc.
6.55%, due 11/3/00 (c)........ 1,200,000 1,199,561
Artesia North America Inc.
6.50%, due 11/14/00 (c)....... 5,000,000 4,988,209
Consolidated Natural Gas Co.
6.55%, due 11/1/00 (c)........ 17,397,000 17,397,000
6.56%, due 11/13/00 (c)....... 700,000 698,467
Dayton Power & Light Co.
6.54%, due 11/14/00 (c)....... 30,000,000 29,928,801
General Mills Inc.
6.60%, due 11/2/00 (c)........ 20,700,000 20,696,184
6.60%, due 11/6/00 (c)........ 4,700,000 4,695,670
JMG Funding L.P.
6.51%, due 11/2/00 (c)........ 6,837,000 6,835,758
National Fuel Gas Co.
6.53%, due 11/9/00 (c)........ 4,500,000 4,493,460
6.55%, due 11/2/00 (c)........ 2,900,000 2,899,471
Progress Capital Holdings Inc.
6.50%, due 12/7/00 (c)........ 11,400,000 11,325,712
Repsol International Finance
B.V.
6.53%, due 12/11/00(c)........ 10,070,000 9,996,751
------------
Total Commercial Paper
(Cost $179,111,247)........... 179,111,247
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
51
<PAGE> 55
ASSET MANAGER FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
-------------------------
<S> <C> <C>
U.S. GOVERNMENT (4.1%)
United States Treasury Bills
6.07%, due 1/4/01 (c)......... $16,600,000 $ 16,420,414
6.02%, due 1/11/01 (c)........ 8,000,000 7,904,587
------------
Total U.S. Government
(Cost $24,325,001)............ 24,325,001
------------
Total Short-Term Investments
(Cost $203,436,248)........... 203,436,248
Total Investments
(Cost $521,850,079) (h)....... 99.5% 586,208,510(i)
Cash and Other Assets,
Less Liabilities.............. 0.5 3,098,947
----------- -----------
Net Assets..................... 100.0% $589,307,457
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
FUTURES CONTRACTS (-0.3%)
<S> <C> <C>
UNREALIZED
CONTRACTS APPRECIATION/
LONG (DEPRECIATION) (j)
-----------------------------
AUSTRALIA (-0.1%)
Australian All Ordinaries
Index
December 2000............. 389 $ (426,300)
CANADA (-0.3%)
Standard & Poor's Toronto
Stock Exchange 60 Index
December 2000............. 221 (1,695,299)
FRANCE (0.1%)
French CAC 40 Index
December 2000............. 317 520,609
GERMANY (0.1%)
German DAX Index
December 2000............. 200 492,414
</TABLE>
<TABLE>
UNREALIZED
CONTRACTS APPRECIATION/
LONG (DEPRECIATION) (j)
-----------------------------
<CAPTION>
<S> <C> <C>
JAPAN (-0.1%)
TOPIX Index
December 2000............. 40 $ (460,876)
UNITED STATES (0.0%)(b)
Standard & Poor's 500 Index
December 2000............. 55 (60,300)
United States Treasury Bond
December 2000 (30 Year)... 49 84,916
United States Treasury Note
December 2000 (5 Year).... 226 21,224
December 2000 (10 Year)... 69 37,576
-----------
Total Futures Contracts
(Settlement Value
$139,932,321) (f)(g)...... $(1,486,036)
===========
</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) 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 19.3% of net assets.
(g) The combined market value of common stocks and settlement value of Standard
& Poor's 500 Index futures contracts represents 48.5% of net assets.
(h) The cost for federal income tax purposes is $522,065,090.
(i) At October 31, 2000 net unrealized appreciation was $64,143,420, 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 $79,196,801 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $15,053,381.
(j) Represents the difference between the value of the contracts at the time
they were opened and the value at October 31, 2000.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
52
<PAGE> 56
MAINSTAY
INSTITUTIONAL FUNDS INC.
ASSET MANAGER FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $521,850,079)............................. $586,208,510
Cash............................................. 49,043
Receivables:
Variation margin on futures contracts.......... 2,585,744
Dividends and interest......................... 1,807,477
Investment securities sold..................... 482,681
Fund shares sold............................... 258,002
------------
Total assets............................... 591,391,457
------------
LIABILITIES:
Payable to broker for futures contracts
(identified cost $764,730)..................... 782,363
Payables:
Fund shares redeemed........................... 766,895
MainStay Management............................ 325,164
Transfer agent................................. 84,787
Custodian...................................... 71,243
Accrued expenses................................. 53,548
------------
Total liabilities.......................... 2,084,000
------------
Net assets....................................... $589,307,457
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class............................ $ 36,899
Institutional Service Class.................... 1,847
Additional paid-in capital....................... 477,069,790
Accumulated undistributed net investment
income......................................... 15,725,652
Accumulated undistributed net realized gain on
investments.................................... 33,618,507
Net unrealized appreciation on investments and
futures contracts.............................. 62,872,395
Net unrealized depreciation on foreign currency
transactions................................... (17,633)
------------
Net assets....................................... $589,307,457
============
Institutional Class
Net assets applicable to outstanding shares...... $561,328,959
============
Shares of capital stock outstanding.............. 36,898,954
============
Net asset value per share outstanding............ $ 15.21
============
Institutional Service Class
Net assets applicable to outstanding shares...... $ 27,978,498
============
Shares of capital stock outstanding.............. 1,847,463
============
Net asset value per share outstanding............ $ 15.14
============
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)................................... $ 4,192,606
Interest........................................ 20,669,377
-----------
Total income................................ 24,861,983
-----------
Expenses:
Management...................................... 3,772,959
Transfer agent.................................. 493,665
Interest........................................ 224,905
Custodian....................................... 146,265
Professional.................................... 83,311
Service......................................... 71,558
Shareholder communication....................... 23,496
Directors....................................... 15,347
Registration.................................... 12,497
Miscellaneous................................... 58,268
-----------
Total expenses.............................. 4,902,271
-----------
Net investment income............................. 19,959,712
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Security transactions........................... 18,458,627
Futures transactions............................ 15,688,090
Foreign currency transactions................... (746,561)
-----------
Net realized gain on investments and foreign
currency transactions........................... 33,400,156
-----------
Net change in unrealized appreciation
(depreciation) on investments:
Security transactions........................... 7,594,835
Futures transactions............................ (1,964,575)
Foreign currency transactions................... 475,926
-----------
Net unrealized gain on investments and foreign
currency transactions........................... 6,106,186
-----------
Net realized and unrealized gain on investments
and foreign currency transactions............... 39,506,342
-----------
Net increase in net assets resulting from
operations...................................... $59,466,054
===========
</TABLE>
------------
(a) Dividends recorded net of foreign withholding taxes of $12,513.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
53
<PAGE> 57
ASSET MANAGER FUND
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 2000, the period January 1, 1999 through October
31, 1999* and the year ended December 31, 1998
<TABLE>
<CAPTION>
2000 1999* 1998
--------------- -------------- --------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income................................... $ 19,959,712 $ 15,236,926 $ 12,613,417
Net realized gain on investments and foreign currency
transactions.......................................... 33,400,156 16,206,043 89,514,209
Net change in unrealized appreciation (depreciation) on
investments and foreign currency transactions......... 6,106,186 (2,377,664) (11,001,243)
--------------- -------------- --------------
Net increase in net assets resulting from operations.... 59,466,054 29,065,305 91,126,383
--------------- -------------- --------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class................................... (17,828,416) (183,826) (12,168,160)
Institutional Service Class........................... (897,201) (5,609) (369,777)
From net realized gain on investments:
Institutional Class................................... (15,767,517) (49,743,906) (61,223,905)
Institutional Service Class........................... (853,676) (2,839,920) (2,048,254)
--------------- -------------- --------------
Total dividends and distributions to shareholders... (35,346,810) (52,773,261) (75,810,096)
--------------- -------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 100,176,381 43,269,895 62,917,440
Institutional Service Class........................... 3,338,870 15,707,216 6,958,317
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... 33,591,726 49,927,732 73,392,054
Institutional Service Class........................... 1,727,228 2,845,529 2,416,225
--------------- -------------- --------------
138,834,205 111,750,372 145,684,036
Cost of shares redeemed:
Institutional Class................................... (109,142,334) (57,515,045) (65,656,399)
Institutional Service Class........................... (7,450,382) (4,882,440) (2,755,471)
--------------- -------------- --------------
Increase in net assets derived from capital share
transactions........................................ 22,241,489 49,352,887 77,272,166
--------------- -------------- --------------
Net increase in net assets............................ 46,360,733 25,644,931 92,588,453
NET ASSETS:
Beginning of period....................................... 542,946,724 517,301,793 424,713,340
--------------- -------------- --------------
End of period............................................. $ 589,307,457 $ 542,946,724 $ 517,301,793
=============== ============== ==============
Accumulated undistributed net investment income at end of
period.................................................. $ 15,725,652 $ 15,190,768 $ 188,741
=============== ============== ==============
</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.
54
<PAGE> 58
(THIS PAGE INTENTIONALLY LEFT BLANK)
55
<PAGE> 59
ASSET MANAGER FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- -------------
JANUARY 1, 1999
YEAR ENDED THROUGH YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999* DECEMBER 31, 1998
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period.................. $ 14.57 $ 14.50 $ 15.36 $ 15.33 $ 14.83 $ 14.81
-------- -------- -------- -------- -------- --------
Net investment income....... 0.51 0.50 0.41 0.39 0.43 0.39
Net realized and unrealized
gain on
investments................ 1.08 1.05 0.41 0.38 2.70 2.69
Net realized and unrealized
gain (loss) on foreign
currency transactions...... (0.01) (0.01) (0.03) (0.03) 0.02 0.02
-------- -------- -------- -------- -------- --------
Total from investment
operations................. 1.58 1.54 0.79 0.74 3.15 3.10
-------- -------- -------- -------- -------- --------
Less dividends and
distributions:
From net investment
income..................... (0.50) (0.46) (0.01) (0.00)(a) (0.43) (0.39)
From net realized gain on
investments................ (0.44) (0.44) (1.57) (1.57) (2.19) (2.19)
In excess of net realized
gain on investments........ -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total dividends and
distributions.............. (0.94) (0.90) (1.58) (1.57) (2.62) (2.58)
-------- -------- -------- -------- -------- --------
Net asset value at end of
period..................... $ 15.21 $ 15.14 $ 14.57 $ 14.50 $ 15.36 $ 15.33
======== ======== ======== ======== ======== ========
Total investment return..... 11.18% 10.96% 5.58%(b) 5.31%(b) 21.31% 21.00%
Ratios (to average net
assets)/Supplemental Data:
Net investment income...... 3.45% 3.20% 3.40%+ 3.15%+ 2.64% 2.39%
Net expenses............... 0.83% 1.08% 0.78%+ 1.03%+ 0.80% 1.05%
Expenses (before
reimbursement)........... 0.83% 1.08% 0.78%+ 1.03%+ 0.80% 1.05%
Portfolio turnover rate..... 49% 49% 18% 18% 55% 55%
Net assets at end of period
(in 000's)................. $561,329 $ 27,978 $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.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
56
<PAGE> 60
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
---------------------------------------------------------------------------------------------
1997 1996 1995
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 13.19 $ 13.19 $ 11.79 $ 11.79 $ 10.67 $ 10.67
-------- -------- -------- -------- -------- --------
0.34 0.31 0.38 0.34 0.48 0.47
3.15 3.13 1.53 1.53 2.39 2.39
(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
-------- -------- -------- -------- -------- --------
(0.34) (0.31) (0.38) (0.34) (0.48) (0.47)
(1.51) (1.51) (0.13) (0.13) (1.18) (1.18)
-- -- -- -- (0.08) (0.08)
-------- -------- -------- -------- -------- --------
(1.85) (1.82) (0.51) (0.47) (1.74) (1.73)
-------- -------- -------- -------- -------- --------
$ 14.83 $ 14.81 $ 13.19 $ 13.19 $ 11.79 $ 11.79
======== ======== ======== ======== ======== ========
26.69% 26.30% 16.16% 15.89% 26.81% 26.70%
2.27% 2.02% 2.99% 2.74% 4.03% 3.78%
0.76% 1.01% 0.70% 0.95% 0.70% 0.95%
0.76% 1.01% 0.75% 1.00% 0.77% 1.02%
19% 19% 103% 103% 261% 261%
$414,824 $ 9,889 $323,790 $ 5,508 $273,351 $ 3,536
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
57
<PAGE> 61
International Equity Fund
--------------------------------------------------------------------------------
For the 12 months ended October 31, 2000, international equity markets generally
provided disappointing returns for U.S. investors. Several markets in the
Pacific Rim provided negative results in local currency terms, with even weaker
returns when those figures were translated into U.S. dollars.
In local currency terms, performance was considerably better in Australia,
Canada, and major European markets, with many nations providing double-digit
returns for the reporting period. Yet most of these returns were considerably
reduced--and many turned negative--when the strength of the U.S. dollar was
taken into account.
During the year, Japan tried to jump-start its economy with a fiscal stimulus
package. Europe continued its corporate and economic restructuring, and central
banks around the world continued to tighten money supplies to keep economic
growth and inflation at reasonable levels. Several markets remained volatile and
uncertain through much of the year, and various sectors--including technology
and telecommunications--experienced setbacks, as value stocks and "old-economy"
sectors regained ground they had previously lost. For U.S. investors, however,
the big story during the year ended October 31, 2000, wasn't about economic
policy, industry trends, or investment styles. Rather it was the strength of the
U.S. dollar and the impact it had on international stock returns.
PERFORMANCE REVIEW
For the 12 months ended October 31, 2000, MainStay Institutional International
Equity Fund returned -9.44% for Institutional Class shares and -9.62% for
Service Class shares. Both share classes underperformed the 2.70% return of the
average Lipper(1) international fund for the same period. During the 12-month
period, both share classes also underperformed the -2.90% return of the EAFE
Index.(2)
Belgium was the worst-performing market in which the Fund invested, returning
-18.10% in U.S. dollar terms during the Fund's fiscal year,(3) followed by
Ireland (-13.73%), Singapore (-12.98%), and Japan (-11.61%). Despite positive
local currency returns, stocks in the U.K., Switzerland, and Australia also
provided negative returns in U.S. dollar terms for the reporting period.
JAPANESE AND PACIFIC EQUITIES
Anticipating positive results from Japan's fiscal reform package, the Fund
strengthened its allocation to Japanese equities early in 2000. The move had an
unfortunate effect as the Japanese market continued to lose ground. We primarily
focused the Fund's holdings among large companies with worldwide distribution,
such as Sony, NEC, and TDK, which generally managed to hold their ground in a
declining Japanese market. We also hoped to take advantage of consolidation
potential in the pharmaceutical industry and sought promising opportunities
among local companies poised to benefit from industry expansion and the nation's
economic recovery.
While we believe our selections were appropriate, in the second calendar quarter
of 2000, it became clear that more time would be needed for the stock market to
embrace Japan's economic and fiscal reforms. The Fund has reduced its Japanese
holdings from an overweighted to an underweighted position relative to the
benchmark. We have continued to evaluate negative market sentiment, looking for
possible trouble spots as well as potential opportunities.
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT 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.
Investments in foreign securities may be subject to greater risks than domestic
investments. These risks include currency fluctuations, changes in U.S. or
foreign tax or currency laws, and changes in monetary policies and economic and
political conditions in foreign countries.
(1) Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with capital gain and dividend distributions reinvested.
(2) The Morgan Stanley Capital International Europe, Australasia, and Far East
Index--the EAFE Index--is an unmanaged index generally considered to be
representative of the international stock market. Returns assume the
reinvestment of all income and capital gain distributions. An investment
cannot be made directly into an index.
(3) Returns shown are for the respective markets as reported by Morgan Stanley
Capital International. The results of Fund investments in specific markets
may differ.
58
<PAGE> 62
For the 12 months ended October 31, 2000, Singapore provided negative returns in
both local currency and U.S. dollar terms. Australia continued to benefit from
its commodity-rich economy and saw tourism revenues increase dramatically during
the Olympics. Unfortunately, currency translations hurt equity returns, with
Australian stocks providing +16.39% in local currency terms but -5.36% in U.S.
dollar terms. The Fund's investments in Singapore and Australia detracted from
performance during the Fund's fiscal year.
EUROPEAN RESULTS
With the U.S. dollar rising strongly against the euro for most of the year, even
the strongest core European markets saw their returns dramatically reduced for
U.S. investors. In France, U.S. dollar returns (+7.06%) were less than one
quarter of returns in the local currency, and in Germany, U.S. dollar returns
(+1.09%) were less than one-twentieth of local returns.
Scandinavian markets, including Finland (+25.29%), Denmark (+14.92%), Norway
(+11.46%), and Sweden (+11.08%), were the European leaders in U.S. dollar terms,
followed by Italy at 11.06%. The Fund benefited from its investments in each of
these countries. The Fund also favored Portugal and Ireland, which showed signs
of better-than-average economic growth. While both markets had positive results
in local currency terms, Portugal was down 8.19% and Ireland lost 13.73% in U.S.
dollar terms, which detracted from the Fund's performance.
In October, Nokia reported extremely strong third-quarter results, well ahead of
market expectations. DaimlerChrysler's third-quarter figures, on the other hand,
were disappointing, with operating profits down 79% from the previous year.
Fortunately, the Fund had underweighted DaimlerChrysler relative to the EAFE
Index. Throughout Europe, the Fund has reduced its technology weightings in
favor of banks.
LOOKING AHEAD
While the Fund suffered from its exposure to the euro, we believe that the stage
has been set for the U.S. dollar to plateau and weaken over the coming quarters.
Structural reform in Europe, concerted central-bank intervention, and
prospective Federal Reserve easing alongside further European tightening bode
well for the euro and currencies in Europe's periphery. We believe most major
foreign currencies are extremely undervalued relative to the U.S. dollar and
anticipate that continued strength in the U.S. stock market could trigger a
significant dollar correction.
The recent style shift from growth to value stocks has increased our interest in
"old-economy" equities, and we will continue to seek opportunities in
established companies that we believe have solid fundamentals and strong
long-term potential. We also believe that companies with potential for
consolidation, cost reduction, or organic growth are likely to continue to
attract investor attention in any market environment.
Whatever the markets, currencies, 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
59
<PAGE> 63
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
INTERNATIONAL EQUITY FUND VS
MSCI EAFE INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND MSCI EAFE INDEX
------------------------- ---------------
<S> <C> <C>
7/31/92 250000 250000
92 236565 250373
93 295768 331890
94 320490 357734
95 343479 397839
96 384995 421866
97 405952 429381
98 496921 515256
99 640064 654213
00 as of 10/31/00 500501 563350
</TABLE>
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 7/31/92.*
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
INTERNATIONAL EQUITY FUND VS
MSCI EAFE INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND MISCI EAFE INDEX
------------------------- ----------------
<S> <C> <C>
7/31/92 250000 250000
92 236565 250373
93 295768 331890
94 320490 357734
95 342463 397839
96 382164 421866
97 400803 429381
98 489775 515256
99 628971 654213
00 as of 10/31/00 491180 563350
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(+)
PERFORMANCE AS OF OCTOBER 31, 2000
-----------------------------------------------------------------------------------------------------------------
ONE YEAR FIVE YEARS SINCE INCEPTION
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
International Equity Fund Institutional Class* -9.44% 9.52% 8.77%
International Equity Fund Service Class* -9.62 9.18 8.52
Average Lipper international fund(++) 2.70 9.93 10.39
MSCI EAFE Index(sec.) -2.90 8.65 10.35
</TABLE>
YEAR-BY-YEAR PERFORMANCE
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
TEN
MONTHS YEAR
YEAR END ENDED ENDED
DECEMBER 31 OCTOBER 31 OCTOBER 31
1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ----
<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 -9.44
</TABLE>
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
The inception date of MainStay Institutional International Equity Fund was
1/1/95.
(*) The inception date of MainStay Institutional 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 MainStay Institutional
International Equity Fund's commencement of operations on 1/1/95. MacKay
Shields LLC, MainStay Institutional 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
MainStay Institutional 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 MainStay Institutional 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.
(+) 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.
(++) Lipper Inc. is an independent fund performance monitor. Results are based
on total returns with capital gain and dividend distributions reinvested.
(sec.) The Morgan Stanley Capital International Europe, Australasia, and Far
East Index--The EAFE Index--is an unmanaged index generally considered to
be representative of the international stock market. Returns assume the
reinvestment of all dividend and capital gain distributions. An
investment cannot be made directly into an index.
60
<PAGE> 64
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (94.4%)+
SHARES VALUE
-------------------------
<S> <C> <C>
AUSTRALIA (2.4%)
Brambles Industries, Ltd.
(business & public
services)..................... 11,070 $ 286,932
Broken Hill Proprietary Co.,
Ltd. (energy sources)......... 47,618 461,434
Commonwealth Bank of Australia,
Ltd. (banking)................ 20,347 302,702
National Australia Bank, Ltd.
(banking)..................... 54,880 762,159
News Corp., Ltd. (The)
(broadcasting & publishing)... 99,862 1,044,282
OneSteel, Ltd.
(metals-steel)................ 11,905 5,675
Telstra Corp., Ltd.
(telecommunications).......... 160,800 524,623
------------
3,387,807
------------
BELGIUM (1.2%)
Electrabel, S.A. (utilities-
electrical & gas)............. 2,391 518,611
Fortis AG (insurance).......... 30,047 919,390
Solvay, S.A. Class A
(chemicals)................... 6,424 326,699
------------
1,764,700
------------
DENMARK (0.2%)
Tele Danmark AS Class B
(telecommunications).......... 4,634 219,006
------------
FINLAND (2.7%)
Comptel Oyj
(telecommunications).......... 5,055 69,839
Nokia Oyj Class A (electrical &
electronics).................. 70,700 2,905,782
Outokumpu Oyj (metals-
nonferrous)................... 46,411 322,572
UPM-Kymmene Oyj (forest
products & paper)............. 19,750 558,283
------------
3,856,476
------------
FRANCE (11.8%)
Air Liquide, S.A.
(chemicals)................... 3,239 382,431
Alcatel, S.A. (electrical &
electronics).................. 18,200 1,109,154
AXA, S.A. (insurance).......... 5,677 750,646
Carrefour, S.A.
(merchandising)............... 18,006 1,207,217
Compagnie Generale d'Industrie
et de Participations, S.A.
(multi-industry).............. 11,900 498,271
France Telecom, S.A.
(telecommunications).......... 14,286 1,491,808
Groupe Danone, S.A. (food &
household products)........... 6,316 882,248
L'Oreal, S.A. (health &
personal care)................ 10,775 821,961
Lafarge, S.A. (building
materials & components)....... 3,913 288,550
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
FRANCE (CONTINUED)
Pernod-Ricard, S.A. (beverages
& tobacco).................... 4,877 $ 223,223
Pinault-Printemps-Redoute, S.A.
(merchandising)............... 2,204 392,864
PSA Peugeot Citroen
(automobiles)................. 4,110 755,950
Renault, S.A. (automobiles).... 7,793 387,074
Rhodia, S.A. (chemicals)....... 24,000 299,847
Sanofi-Synthelabo, S.A. (health
& personal care).............. 10,600 557,043
Schneider Electric, S.A.
(electrical & electronics).... 5,539 360,331
Scor, S.A. (insurance)......... 11,040 507,177
Societe Generale, S.A. Class A
(banking)..................... 8,080 458,172
STMicroelectronics N.V.
(electronic components &
instruments).................. 16,400 826,394
Suez Lyonnaise des Eaux, S.A.
(business & public
services)..................... 3,901 594,507
Suez Lyonnaise des Eaux, S.A.
Strip (business & public
services) (d)................. 4,160 35
Thomson CSF, S.A. (aerospace &
military technology).......... 10,048 450,533
Total Fina Elf, S.A. Class B
(energy sources) (c).......... 15,005 2,144,297
Total Fina Elf, S.A. Strip
(energy sources) (d).......... 5,445 46
Vivendi, S.A. (business &
public services) (c).......... 18,686 1,341,502
------------
16,731,281
------------
GERMANY (10.0%)
Allianz AG Registered
(insurance)................... 3,545 1,203,400
Bayer AG (chemicals)........... 20,792 900,552
DaimlerChrysler AG
(automobiles)................. 12,585 579,755
Deutsche Bank AG (banking)..... 10,541 866,652
Deutsche Telekom AG
(telecommunications) (c)...... 30,816 1,150,571
Dresdner Bank AG (banking)..... 16,646 690,644
E.ON AG (utilities-electrical &
gas).......................... 25,058 1,272,217
Epcos AG (electronic components
& instruments)................ 7,924 601,117
Infinion Technologies AG
(electronic components &
instruments).................. 3,300 138,456
Karstadt AG (merchandising).... 13,786 452,795
Metro AG (merchandising)....... 9,753 392,666
Muenchener Rueckversicherungs-
Gesellschaft AG Registered
(insurance)................... 1,369 431,656
</TABLE>
-----------------------------------------------------------
+ Percentages indicated are based on Fund net assets.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
61
<PAGE> 65
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
GERMANY (CONTINUED)
RWE AG (utilities-electrical &
gas).......................... 15,558 $ 625,063
SAP AG (business & public
services)..................... 6,414 1,048,703
Schering AG (health & personal
care) (c)..................... 29,625 1,649,739
Siemens AG (electrical &
electronics).................. 13,190 1,676,979
T-Online International AG
(business & public
services)..................... 21,340 444,960
------------
14,125,925
------------
GREECE (0.2%)
Hellenic Telecommunications
Organization S.A.
(telecommunications).......... 36,700 321,125
------------
HONG KONG (1.3%)
Cheung Kong (Holdings) Ltd.
(real estate)................. 82,000 906,836
China Unicom, Ltd.
(telecommunications).......... 80,000 160,531
Hang Seng Bank, Ltd.
(banking)..................... 68,000 799,965
------------
1,867,332
------------
IRELAND (1.7%)
Allied Irish Banks PLC
(banking)..................... 73,671 749,323
CRH PLC (building materials &
components)................... 71,041 1,076,634
Smurfit (Jefferson) Group PLC
(forest products & paper)..... 326,020 580,304
------------
2,406,261
------------
ITALY (3.4%)
Assicurazioni Generali S.p.A.
(insurance)................... 13,143 431,676
Banca Intesa S.p.A.
(banking)..................... 96,064 398,163
ENI S.p.A. (energy sources).... 203,632 1,101,180
Italcementi S.p.A. (building
materials & components)....... 61,850 490,690
Telecom Italia S.p.A.
(telecommunications).......... 53,107 614,435
Telecom Italia Mobile S.p.A.
(telecommunications).......... 151,266 1,284,696
Unicredito Italiano S.p.A.
(banking)..................... 107,565 547,033
------------
4,867,873
------------
JAPAN (19.8%)
Ajinomoto Co., Inc. (food &
household products)........... 32,000 357,528
Bank of Tokyo-Mitsubishi, Ltd.
(banking)..................... 85,000 1,018,965
Canon, Inc. (data processing &
reproduction)................. 11,000 436,195
Fujitsu, Ltd. (data processing
& reproduction)............... 43,000 765,535
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
JAPAN (CONTINUED)
Furukawa Electric Co., Ltd.
(industrial components)....... 11,000 $ 289,118
Hitachi, Ltd. (electrical &
electronics).................. 51,000 546,458
Honda Motor Co., Ltd.
(automobiles)................. 23,000 794,090
Ito-Yokado Co., Ltd.
(merchandising)............... 15,000 677,234
Japan Airlines Co., Ltd.
(transportation-airlines)..... 193,000 772,395
Matsushita Electric Industrial
Co., Ltd. (appliances &
household durables)........... 21,000 609,648
Mitsubishi Electric Corp.
(electrical & electronics).... 128,000 919,024
Mitsubishi Estate Co., Ltd.
(real estate)................. 30,000 318,698
Mitsubishi Heavy Industries,
Ltd. (machinery &
engineering).................. 84,000 326,171
Mitsui Fudosan Co., Ltd. (real
estate)....................... 33,000 399,527
Mizuho Holdings, Inc.
(financial services).......... 188 1,444,510
Murata Manufacturing Co., Ltd.
(electronic components &
instruments).................. 1,300 155,484
NEC Corp. (electrical &
electronics).................. 55,000 1,047,675
Nippon Mitsubishi Oil Corp.
(energy sources).............. 96,000 516,072
Nippon Steel Corp. (metals-
steel)........................ 137,000 222,072
Nippon Telegraph & Telephone
Corp. (telecommunications).... 125 1,136,737
Nomura Securities Co., Ltd.
(financial services).......... 34,000 720,826
NTT Data Corp. (business &
public services).............. 43 1,059,306
OKI Electric Industries Co.,
Ltd. (electrical &
electronics).................. 117,000 695,394
Olympus Optical Co., Ltd.
(electronic components &
instruments).................. 29,000 400,498
Pioneer Corp. (appliances &
household durables)........... 15,000 464,311
Rohm Co., Ltd. (electronic
components & instruments)..... 4,500 1,133,715
Sankyo Co., Ltd. (health &
personal care)................ 17,000 374,425
Sharp Corp. (appliances &
household durables)........... 22,000 280,052
Softbank Corp. (business &
public services).............. 3,717 222,964
Sony Corp. (appliances &
household durables)........... 14,000 1,118,009
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
62
<PAGE> 66
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
JAPAN (CONTINUED)
Sumitomo Bank, Ltd. (banking).. 53,000 $ 643,121
Sumitomo Electric Industries,
Ltd. (industrial components).. 18,000 332,161
Sumitomo Forestry Co., Ltd.
(building materials &
components)................... 49,000 309,183
Sumitomo Marine & Fire
Insurance Co., Ltd.
(insurance)................... 102,000 622,121
Takeda Chemical Industries,
Ltd. (health & personal
care)......................... 15,000 987,690
TDK Corp. (electronic
components & instruments)..... 4,000 402,952
Tokio Marine & Fire Insurance
Co., Ltd. (insurance)......... 60,000 662,673
Tokyo Electric Power Co., Inc.
(utilities-electrical &
gas).......................... 14,300 347,042
Tokyo Seimitsu Co., Ltd.
(electronic components &
instruments).................. 9,600 676,959
Toshiba Corp. (electrical &
electronics).................. 113,000 807,186
Tostem Corp. (building
materials & components)....... 17,000 247,541
Toyota Motor Corp.
(automobiles)................. 61,000 2,435,662
Trans Cosmos, Inc. (business &
public services).............. 1,000 72,257
Yamanouchi Pharmaceutical Co.,
Ltd. (health & personal
care)......................... 8,000 361,924
------------
28,131,108
------------
LUXEMBOURG (0.3%)
Carrier 1 International, S.A.
(telecommunications).......... 2,400 57,976
Thiel Logistik AG (business &
public services).............. 2,000 308,527
------------
366,503
------------
NETHERLANDS (5.2%)
ABN AMRO Holding N.V.
(banking)..................... 28,696 664,011
Akzo Nobel N.V. (chemicals).... 8,253 375,295
Heineken N.V. (beverages &
tobacco)...................... 8,534 462,939
ING Groep N.V. (financial
services)..................... 19,229 1,318,876
Koninklijke KPN N.V.
(telecommunications).......... 10,543 213,308
Koninklijke (Royal) Philips
Electronics N.V. (appliance &
household durables)........... 36,895 1,448,214
Royal Dutch Petroleum Co.
(energy sources).............. 21,495 1,273,339
TNT Post Group N.V. (business &
public services).............. 9,646 204,072
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
NETHERLANDS (CONTINUED)
Unilever CVA N.V. (food &
household products)........... 26,500 $ 1,327,470
Wolters Kluwer CVA N.V.
(broadcasting & publishing)... 4,914 110,459
------------
7,397,983
------------
NEW ZEALAND (0.1%)
Telecom Corp. of New Zealand,
Ltd. (telecommunications)..... 61,785 136,835
------------
NORWAY (0.0%)(B)
Stepstone ASA (business &
public services).............. 9,700 21,172
------------
PORTUGAL (1.8%)
Banco Comercial Portugues, S.A.
Registered (banking).......... 163,049 814,001
Banco Espirito Santo, S.A.
(banking)..................... 37,576 570,105
Electricidade de Portugal, S.A.
(utilities-electrical &
gas).......................... 110,190 298,871
Portugal Telecom, S.A.
Registered
(telecommunications).......... 54,392 484,078
Sonae SGPS, S.A. (forest
products & paper)............. 357,820 433,703
------------
2,600,758
------------
SINGAPORE (1.0%)
Singapore Press Holdings, Ltd.
(broadcasting & publishing)... 96,000 1,372,600
------------
SPAIN (3.8%)
Acciona, S.A. (construction &
housing)...................... 13,730 432,335
Acerinox, S.A.
(metals-steel)................ 10,831 301,024
Banco Bilbao Vizcaya, S.A.
Registered (banking).......... 51,428 684,370
Banco Santander Central
Hispano, S.A. (banking)....... 94,319 912,971
Endesa, S.A.
(utilities-electrical &
gas).......................... 26,605 432,968
Gas Natural SDG, S.A.
(utilities-electrical &
gas).......................... 11,422 195,562
Iberdrola, S.A. (utilities-
electrical & gas)............. 34,107 416,581
Promotora de Informaciones,
S.A. (broadcasting &
publishing)................... 2,300 44,253
Repsol, S.A. (energy
sources)...................... 26,868 426,317
Telefonica, S.A.
(telecommunications) (a)...... 73,879 1,407,069
Terra Networks, S.A. (business
& public services)............ 3,200 77,400
------------
5,330,850
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
63
<PAGE> 67
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
-------------------------
<S> <C> <C>
SWEDEN (3.4%)
AstraZeneca AB Series A (health
& personal care).............. 21,384 $ 1,007,306
ForeningsSparbanken AB
(banking)..................... 18,709 267,937
Hennes & Mauritz AB Series B
(merchandising)............... 10,878 203,012
Nordic Baltic Holding AB
(banking)..................... 69,493 524,231
Skandia Forsakrings AB
(insurance)................... 27,758 469,557
Svenska Handelsbanken Series A
(banking)..................... 21,663 339,429
Telefonaktiebolaget LM Ericsson
AB Series B (electrical &
electronics).................. 147,900 1,963,136
------------
4,774,608
------------
SWITZERLAND (6.2%)
Credit Suisse Group Registered
(banking)..................... 4,877 914,048
Nestle S.A. Registered (food &
household products)........... 844 1,748,458
Novartis AG Registered (health
& personal care).............. 1,221 1,851,771
Roche Holdings AG Genusscheine
(health & personal care)...... 172 1,570,681
Schweizerische
Rueckversicherungs
Gesellschaft Registered
(insurance)................... 375 739,323
UBS AG Registered (banking).... 9,536 1,320,542
Zurich Financial Services AG
(insurance)................... 1,412 683,246
------------
8,828,069
------------
UNITED KINGDOM (17.9%)
Abbey National PLC (banking)... 40,884 564,584
BAE Systems PLC (aerospace &
military technology).......... 40,577 230,678
Barclays PLC (banking)......... 46,561 1,333,289
Bass PLC (leisure & tourism)... 80,840 791,778
BG Group PLC (utilities-
electrical & gas)............. 100,169 401,455
Boots Co. PLC (merchandising).. 36,953 295,126
BP Amoco PLC (energy sources).. 171,316 1,454,044
British Airways PLC
(transportation-airlines)..... 90,125 403,080
British Sky Broadcasting Group
PLC (broadcasting & public
services) (a)................. 25,350 366,266
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
-------------------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
British Telecommunications PLC
(telecommunications).......... 53,335 $ 625,776
Cable & Wireless PLC
(telecommunications).......... 67,811 960,063
CGNU PLC (insurance)........... 35,752 478,659
Diageo PLC (beverages &
tobacco)...................... 74,670 705,324
EMI Group PLC (recreation &
other consumer goods)......... 109,572 821,002
Granada Compass PLC (leisure &
tourism)...................... 28,545 246,213
Great Universal Stores PLC
(The) (merchandising)......... 45,657 315,580
Imperial Chemical Industries
PLC (chemicals)............... 98,899 606,037
Innogy Holdings PLC (utilities-
electrical & gas)............. 26,680 77,484
International Power PLC
(utilities-electrical &
gas).......................... 26,680 107,702
Kingfisher PLC
(merchandising)............... 133,762 800,249
Lattice Group PLC (utilities-
electrical & gas)............. 100,169 213,819
Lloyds TSB Group PLC
(banking)..................... 165,522 1,687,283
Marconi PLC
(telecommunications).......... 51,432 649,752
Prudential Corp. PLC
(insurance)................... 44,272 595,942
Reed International PLC
(broadcasting & publishing)... 44,978 416,040
Rio Tinto PLC Registered
(metals-nonferrous)........... 32,305 523,046
Royal Bank of Scotland Group
PLC-Value Shares (banking).... 7,669 9,076
Royal Bank of Scotland Group
PLC (banking)................. 80,533 1,809,086
Sainsbury (J.) PLC
(merchandising)............... 52,947 297,734
Scottish Power PLC (utilities-
electrical & gas)............. 44,883 337,277
SmithKline Beecham PLC (health
& personal care).............. 179,306 2,317,287
Tesco PLC (merchandising)...... 160,414 612,040
Vodafone Group PLC
(telecommunications).......... 1,025,076 4,268,296
------------
25,321,067
------------
Total Common Stocks
(Cost $124,505,525)........... 133,829,339
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
64
<PAGE> 68
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
PURCHASED OPTIONS (0.3%)
NOTIONAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
UNITED STATES (0.3%)
U.S. Dollar Call/Euro Put
Strike price E0.86
Expire 11/3/00 (a)(e)(h)...... 5,625,000 $ 87,504
U.S. Dollar Call/Japanese Yen
Put
Strike Price Y107
Expire 1/18/01 (a)(e)(h)...... 16,600,000 349,802
------------
Total Purchased Options
(Cost $473,891)............... 437,306
------------
<CAPTION>
SHORT-TERM INVESTMENT (2.0%)
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
COMMERCIAL PAPER (2.0%)
UNITED STATES (2.0%)
Associates Corp.
6.63%, due 11/1/00
(financial services).......... $ 2,835,000 2,835,000
------------
Total Short-Term Investment
(Cost $2,835,000)............. 2,835,000
------------
Total Investments
(Cost $127,814,416) (f)....... 96.7% 137,101,645(g)
Cash and Other Assets, Less
Liabilities................... 3.3 4,700,173
----------- ------------
Net Assets..................... 100.0% $141,801,818
=========== ============
<CAPTION>
WRITTEN CALL OPTIONS (-0.0%)(b)
NOTIONAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
UNITED STATES (-0.0%)(B)
U.S. Dollar Call/Japanese Yen
Put
Strike price Y115
Expire 1/18/01 (a)(e)(h)...... (16,600,000) $ (23,817)
------------
Total Written Call Options
(Premium $106,240)............ $ (23,817)
============
</TABLE>
------------
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) Segregated or partially segregated for forward foreign currency contracts.
(d) Strip securities represent a secondary class of shares traded in the
foreign market.
(e) Fair valued security.
(f) The cost for federal income tax purposes is $129,223,755.
(g) At October 31, 2000 net unrealized appreciation for securities was
$7,877,890, based on cost for federal income tax purposes. This consisted
of aggregate gross unrealized appreciation for all investments on which
there was an excess of market value over cost of $21,704,815 and aggregate
gross unrealized depreciation for all investments on which there was an
excess of cost over market value of $13,826,925.
(h) The following abbreviations are used in the above portfolio:
E--Euro
Y--Japanese Yen
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
65
<PAGE> 69
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
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................ $ 681,211 0.5%
Appliances & Household
Durables.................. 3,920,233 2.8
Automobiles................. 4,952,530 3.5
Banking..................... 21,096,371 14.9
Beverages & Tobacco......... 1,391,486 1.0
Broadcasting & Publishing... 3,353,899 2.4
Building Materials &
Components................ 2,412,596 1.7
Business & Public
Services.................. 4,623,031 3.3
Chemicals................... 2,890,862 2.0
Data Processing &
Reproduction.............. 1,201,731 0.8
Electrical & Electronics.... 12,031,118 8.5
Electronic Components &
Instruments............... 4,335,575 3.1
Energy Sources.............. 7,454,212 5.3
Financial Services.......... 4,874,702 3.4
Food & Household Products... 4,315,705 3.0
Forest Products & Paper..... 1,138,586 0.8
Health & Personal Care...... 11,499,828 8.1
Industrial Components....... 621,279 0.4
Insurance................... 8,495,468 6.0
Leisure & Tourism........... 1,037,991 0.7
Machinery & Engineering..... 758,507 0.5
Merchandising............... 6,080,219 4.3
Metals-Nonferrous........... 845,617 0.6
Metals-Steel................ 528,772 0.4
Multi-Industry.............. 498,271 0.3
Real Estate................. 1,625,061 1.1
Recreation & Other Consumer
Goods..................... 821,002 0.6
Telecommunications.......... 16,835,832 11.9
Transportation-Airlines..... 1,175,475 0.8
Transportation-Road & Rail.. 213,819 0.2
Utilities-Electrical &
Gas....................... 4,953,350 3.5
------------ -----
136,664,339 96.4
Cash and Other Assets, Less
Liabilities............... 5,137,479 3.6
------------ -----
Net Assets.................. $141,801,818 100.0%
============ =====
</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.
66
<PAGE> 70
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $127,814,416)............................. $137,101,645
Cash denominated in foreign currencies
(identified cost $4,209,025)................... 4,179,856
Cash............................................. 104,476
Receivables:
Fund shares sold............................... 2,286,839
Dividends and interest......................... 369,064
Unrealized appreciation on foreign currency
forward contracts (Note 2J).................... 1,872,134
------------
Total assets............................... 145,914,014
------------
LIABILITIES:
Written call option, at value (premium received
$106,240) (Note 2K)............................ 23,817
Payables:
Investment securities purchased................ 733,649
MainStay Management............................ 100,820
Custodian...................................... 42,049
Fund shares redeemed........................... 20,297
Transfer agent................................. 10,141
Accrued expenses................................. 33,949
Unrealized depreciation on foreign currency
forward contracts (Note 2J).................... 3,147,474
------------
Total liabilities.......................... 4,112,196
------------
Net assets....................................... $141,801,818
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class............................ $ 12,353
Institutional Service Class.................... 43
Additional paid-in capital....................... 120,495,893
Accumulated undistributed net investment
income......................................... 404,214
Accumulated undistributed net realized gain on
investments.................................... 12,904,430
Net unrealized appreciation on investments and
written call option............................ 9,369,652
Net unrealized depreciation on translation of
other assets and liabilities in foreign
currencies and foreign currency forward
contracts...................................... (1,384,767)
------------
Net assets....................................... $141,801,818
============
Institutional Class
Net assets applicable to outstanding shares...... $141,315,659
============
Shares of capital stock outstanding.............. 12,352,816
============
Net asset value per share outstanding............ $ 11.44
============
Institutional Service Class
Net assets applicable to outstanding shares...... $ 486,159
============
Shares of capital stock outstanding.............. 43,037
============
Net asset value per share outstanding............ $ 11.30
============
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a).................................. $ 2,182,370
Interest....................................... 116,725
------------
Total income............................... 2,299,095
------------
Expenses:
Management..................................... 1,386,422
Custodian...................................... 120,526
Professional................................... 53,392
Transfer agent................................. 49,558
Registration................................... 12,582
Shareholder communication...................... 7,043
Directors...................................... 4,352
Service........................................ 1,422
Amortization of organization expense........... 377
Miscellaneous.................................. 46,782
------------
Total expenses............................. 1,682,456
------------
Net investment income............................ 616,639
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Security transactions.......................... 13,692,181
Option transactions............................ 391,143
Foreign currency transactions.................. (4,648,456)
------------
Net realized gain on investments and foreign
currency transactions.......................... 9,434,868
------------
Net change in unrealized appreciation
(depreciation) on:
Security transactions.......................... (24,164,419)
Written call option transactions............... 82,423
Translation of other assets and liabilities in
foreign currencies and foreign currency
forward contracts............................ (705,599)
------------
Net unrealized loss on investments and foreign
currency transactions.......................... (24,787,595)
------------
Net realized and unrealized loss on investments
and foreign currency transactions.............. (15,352,727)
------------
Net decrease in net assets resulting from
operations..................................... $(14,736,088)
============
</TABLE>
------------
(a) Dividends recorded net of foreign withholding taxes of $286,393.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
67
<PAGE> 71
INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 2000, the period January 1, 1999 through October
31, 1999* and the year ended December 31, 1998
<TABLE>
<CAPTION>
2000 1999* 1998
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 616,639 $ 1,194,047 $ 1,485,360
Net realized gain on investments and foreign currency
transactions.......................................... 9,434,868 9,830,190 3,539,335
Net change in unrealized appreciation (depreciation) on
investments and foreign currency transactions......... (24,787,595) 4,528,102 21,013,865
------------ ------------ ------------
Net increase (decrease) in net assets resulting from
operations............................................ (14,736,088) 15,552,339 26,038,560
------------ ------------ ------------
Dividends and distributions to shareholders:
From net investment income and net realized gain on
foreign currency transactions:
Institutional Class................................... -- -- (2,785,467)
Institutional Service Class........................... -- -- (12,219)
From net realized gain on investments:
Institutional Class................................... (6,179,521) -- --
Institutional Service Class........................... (21,785) -- --
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... (6,201,306) (399,139) (4,057,597)
------------ ------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 60,734,333 18,761,908 40,302,257
Institutional Service Class........................... 31,691 115,655 44,972
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... 6,178,334 397,290 4,039,873
Institutional Service Class........................... 21,782 1,740 17,705
------------ ------------ ------------
66,966,140 19,276,593 44,404,807
Cost of shares redeemed:
Institutional Class................................... (57,654,290) (21,946,803) (39,356,137)
Institutional Service Class........................... (171,481) (189,178) (105,878)
------------ ------------ ------------
Increase (decrease) in net assets derived from capital
share transactions.................................. 9,140,369 (2,859,388) 4,942,792
------------ ------------ ------------
Net increase (decrease) in net assets................. (11,797,025) 12,293,812 26,923,755
NET ASSETS:
Beginning of period....................................... 153,598,843 141,305,031 114,381,276
------------ ------------ ------------
End of period............................................. $141,801,818 $153,598,843 $141,305,031
============ ============ ============
Accumulated undistributed/(distribution in excess of) net
investment income at end of period...................... $ 404,214 $ (204,575) $ (1,496,798)
============ ============ ============
</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.
68
<PAGE> 72
(THIS PAGE INTENTIONALLY LEFT BLANK)
69
<PAGE> 73
INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- -------------
JANUARY 1, 1999
YEAR ENDED THROUGH YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999* DECEMBER 31, 1998
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period.................. $ 13.10 $ 12.97 $ 11.81 $ 11.72 $ 9.93 $ 9.85
-------- -------- -------- -------- -------- --------
Net investment income....... 0.05 0.02 0.10 0.05 0.13 0.11
Net realized and unrealized
gain (loss) on
investments................ (0.81) (0.79) 1.30 1.31 2.12 2.11
Net realized and unrealized
gain (loss) on foreign
currency transactions...... (0.37) (0.37) (0.08) (0.08) (0.03) (0.03)
-------- -------- -------- -------- -------- --------
Total from investment
operations................. (1.13) (1.14) 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................ (0.53) (0.53) -- -- -- --
In excess of net investment
income..................... -- -- (0.03) (0.03) (0.10) (0.10)
-------- -------- -------- -------- -------- --------
Total dividends and
distributions.............. (0.53) (0.53) (0.03) (0.03) (0.34) (0.32)
-------- -------- -------- -------- -------- --------
Net asset value at end of
period..................... $ 11.44 $ 11.30 $ 13.10 $ 12.97 $ 11.81 $ 11.72
======== ======== ======== ======== ======== ========
Total investment return..... (9.44)% (9.62)% 11.23%(b) 10.96%(b) 22.41% 22.20%
Ratios (to average net
assets)/Supplemental Data:
Net investment income...... 0.38% 0.13% 1.00%+ 0.75%+ 1.14% 0.89%
Net expenses............... 1.03% 1.28% 1.01%+ 1.26%+ 1.00% 1.25%
Expenses (before
reimbursement)........... 1.03% 1.28% 1.01%+ 1.26%+ 1.03% 1.28%
Portfolio turnover rate..... 39% 39% 35% 35% 51% 51%
Net assets at end of period
(in 000's)................. $141,316 $ 486 $152,928 $ 671 $140,630 $ 675
</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.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
70
<PAGE> 74
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
---------------------------------------------------------------------------------------------
1997 1996 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)(a) (0.00)(a)
-------- -------- -------- -------- -------- --------
(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.
71
<PAGE> 75
EAFE Index Fund
--------------------------------------------------------------------------------
For the 12 months ended October 31, 2000, international equity markets provided
mixed results in both local currency and U.S. dollar terms. Early in 2000, Japan
launched a fiscal stimulus package that failed to jumpstart the Japanese stock
market or dramatically strengthen the yen. This may help explain why the only
nations in the MSCI EAFE Index(1) that provided negative total returns in local
currency terms were in the Pacific Rim.
Europe saw strong total returns across the board in local currency terms, with
Scandinavian nations leading the way. Several core European markets also
provided strong returns in their respective local currencies. When those returns
were translated into U.S. dollars, however, the results were considerably lower.
In many cases, currency translation turned positive local returns into negative
results for U.S. investors.
Central banks throughout Europe continued to adjust interest rates in an effort
to keep inflation in check and economic growth on track. Unfortunately, the
euro, like the yen, the pound sterling, and most other major currencies,
continued to languish throughout most of the year, showing little promise of
changing direction. The strength of the U.S. dollar left many international
equity investors with a negative overall return in U.S. dollar terms.
PERFORMANCE REVIEW
For the 12 months ended October 31, 2000, MainStay Institutional EAFE Index Fund
returned -3.52% for Institutional Class shares and -3.63% for Service Class
shares. Both share classes underperformed the 2.70% return of the average
Lipper(2) international fund over the same period. Both share classes also
underperformed the -2.90% return of the MSCI EAFE Index for the 12 months ended
October 31, 2000. Investors should expect the Fund to lag the Index by a small
margin, since the Fund faces real-world fees and expenses that a hypothetical
index does not.
POSITIVE CONTRIBUTORS
Taking both weightings and total returns into account, France, Finland, and
Italy made the greatest positive contribution to the performance of the EAFE
Index during the 12-month reporting period. The strong performance of French
stocks was led by the television and telecommunications industries, including
companies such as Canal Plus (+108%) and Alcatel (+95%), both in U.S. dollar
terms. Finland's advance was driven by Nokia, which gained 48% in U.S. dollar
terms. Italy's strong performance was driven by its telecommunications industry
and in particular by companies like TIM Spa (+36%) and Telecom Italia (+33%),
both in U.S. dollar terms.
NEGATIVE PERFORMERS
Performance wasn't uniformly strong, however. Stocks in Japan, the United
Kingdom, and Switzerland took the greatest toll on the Fund's performance during
the 12-month reporting period. Japan declined 11.61% in U.S. dollar terms,
reflecting investor apprehension with respect to the Japanese economy. Both the
United Kingdom and Switzerland posted positive returns in local currency terms,
but given the relative weakness of their currencies, both provided negative
returns in U.S. dollar terms.
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
Investments in foreign securities may be subject to greater risks than domestic
investments. These risks include currency fluctuations, changes in U.S. or
foreign tax or currency laws, and changes in monetary policies and economic and
political conditions in foreign countries.
(1) The Morgan Stanley Capital International Europe, Australasia, and Far East
Index--the EAFE Index--is an unmanaged index generally considered to be
representative of the international stock market. Returns assume the
reinvestment of all income and capital gain distributions. An investment
cannot be made directly into an index.
(2) Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with capital gain and dividend distributions reinvested.
72
<PAGE> 76
LOOKING AHEAD
The stock markets of the EAFE Index continue to be impacted by the strength of
the U.S. dollar relative to most other major currencies. They have also felt the
effects of a turbulent technology sector and increased concerns over corporate
earnings. While oil prices continue to rise, inflationary pressures appear to
have eased, reducing the likelihood of continued interest rate hikes in the U.S.
Whatever the markets or the global economy may bring, the Fund will continue to
seek to provide investment results that correspond to the total return
performance (reflecting reinvestment of dividends) of common stocks in the
aggregate, as represented by the EAFE Index.
JEFFERSON C. BOYCE
STEPHEN B. KILLIAN
Portfolio Managers
Monitor Capital Advisors LLC
73
<PAGE> 77
$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 $250000.00 $250000.00
91 280302.00 275250.00
92 246168.00 241615.00
93 326316.00 311610.00
94 351726.00 332886.00
95 391158.00 362938.00
96 414781.00 386330.00
97 422170.00 387876.00
98 506603.00 462137.00
99 643226.00 583321.00
00 as of 10/31/00 553889.00 500754.00
</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 EAFE INDEX FUND
--------------- ---------------
<S> <C> <C>
1/2/91 $250000.00 $250000.00
91 280302.00 275250.00
92 246168.00 241615.00
93 326316.00 311610.00
94 351726.00 332886.00
95 391158.00 362938.00
96 414781.00 384641.00
97 422170.00 384936.00
98 506603.00 457403.00
99 643226.00 576151.00
00 as of 10/31/00 553889.00 494034.00
</TABLE>
Source: Lipper Inc., 10/31/00
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(*)
PERFORMANCE AS OF OCTOBER 31, 2000
-------------------------------------------------------------------------------------------------------
ONE YEAR FIVE YEARS SINCE INCEPTION
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EAFE Index Fund Institutional Class -3.52% 8.05% 7.31%
EAFE Index Fund Service Class(+) -3.63 7.81 7.17
Average Lipper international fund(++) 2.70 9.93 9.73
MSCI EAFE Index(sec.) -2.90 8.65 8.43
</TABLE>
YEAR-BY-YEAR PERFORMANCE
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
Ten Months Year
Ended Ended
Year end December 31 October 31 October 31
------------------------------------------------------------------------------------ -------------- ---------------
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10.10% -12.22% 28.97% 6.83% 9.03% 6.45% 0.40% 19.15% 12.31% -3.52%
</TABLE>
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
(*) 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 Inc. is an independent fund performance monitor. Results are based
on total returns with capital gain and dividend distributions reinvested.
(sec.) The Morgan Stanley Capital International Europe, Australasia, and Far
East Index--The EAFE Index--is an unmanaged index generally considered to
be representative of the international stock market. Results assume the
reinvestment of all dividend and capital gain distributions. An
investment cannot be made directly into an index.
74
<PAGE> 78
MAINSTAY
INSTITUTIONAL FUNDS INC.
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (95.6%)+
SHARES VALUE
---------------------
<S> <C> <C>
AUSTRALIA (2.2%)
AMP, Ltd. (insurance)........... 10,802 $ 97,342
Boral, Ltd. (building materials
& components) (a).............. 7,948 8,031
Brambles Industries, Ltd.
(business & public services)... 3,443 89,242
Broken Hill Proprietary Co.,
Ltd. (energy sources).......... 17,612 170,666
Coles Myer, Ltd.
(merchandising)................ 17,468 63,273
Commonwealth Bank of Australia,
Ltd. (banking)................. 10,560 157,101
Lend Lease Corp., Ltd. (real
estate)........................ 7,023 82,194
National Australia Bank, Ltd.
(banking)...................... 12,357 171,611
News Corp., Ltd. (The)
(broadcasting & publishing).... 16,945 177,198
OneSteel, Ltd. (metals-steel)... 4,403 2,099
Pacific Dunlop, Ltd. (multi-
industry)...................... 19,118 15,257
Rio Tinto, Ltd. (metals-
nonferrous).................... 4,656 63,894
Smith (Howard), Ltd. (multi-
industry)...................... 2,670 11,207
Telstra Corp., Ltd.
(telecommunications)........... 61,060 199,213
Westpac Banking Corp., Ltd.
(banking)...................... 19,507 133,169
WMC, Ltd. (metals-nonferrous)... 15,938 60,911
-----------
1,502,408
-----------
AUSTRIA (0.1%)
Bank Austria AG (banking)....... 1,315 71,055
Flughafen Wien AG (business &
public services)............... 293 10,676
Generali Holding Vienna AG
(insurance).................... 107 15,645
-----------
97,376
-----------
BELGIUM (0.5%)
Electrabel, S.A. (utilities-
electrical & gas).............. 451 97,822
Fortis AG (insurance) (a)....... 5,324 162,906
Fortis AG CVG (insurance)....... 700 2,889
Fortis AG Strip (insurance)
(c)............................ 6,300 53
KBC Bancassurance Holding N.V.
(banking)...................... 2,794 115,568
-----------
379,238
-----------
DENMARK (0.7%)
A/S Dampskibsselskabet Svendborg
Class B
(transportation-shipping)...... 8 105,682
Dampskibsselskabet af 1912 Class
B (transportation-shipping).... 11 105,226
</TABLE>
------------
+ Percentages indicated are based on Fund net assets.
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
DENMARK (CONTINUED)
Den Danske Bank Group
(banking)...................... 289 $ 41,798
FLS Industries AS Class B
(machinery & engineering)...... 435 6,787
Novo Nordisk AS Class B (health
& personal care)............... 665 140,859
Tele Danmark AS Class B
(telecommunications)........... 1,700 80,343
-----------
480,695
-----------
FINLAND (2.4%)
Kesko Oyj Class B (wholesale &
international trade)........... 1,300 10,854
Kone Oyj Corp. Class B
(machinery & engineering)...... 322 18,832
Nokia Oyj Class A (electrical &
electronics)................... 35,996 1,479,442
Pohjola Group Insurance Corp.
Class B (insurance)............ 329 11,938
Sonera Oyj
(telecommunications)........... 6,700 147,425
Wartsila Oyj Class B (multi-
industry)...................... 539 8,680
-----------
1,677,171
-----------
FRANCE (10.8%)
Accor, S.A. (leisure &
tourism)....................... 2,906 117,491
Air Liquide, S.A. (chemicals)... 1,263 149,123
Alcatel, S.A. (electrical &
electronics)................... 8,519 519,169
Aventis, S.A. (health & personal
care).......................... 5,871 422,983
AXA, S.A. (insurance)........... 2,745 362,960
Banque Nationale de Paris, S.A.
(banking)...................... 3,017 259,813
Bouygues, S.A. (construction &
housing)....................... 2,865 145,703
Canal Plus, S.A. (broadcasting &
publishing).................... 1,086 156,944
Cap Gemini, S.A. (business &
public services)............... 988 157,437
Carrefour, S.A.
(merchandising)................ 5,135 344,277
Compagnie de Saint Gobain, S.A.
(building materials &
components).................... 843 111,395
Dassault Systemes, S.A.
(business & public services)... 1,084 82,554
Establissements Economiques du
Casino Guichard-Perrachon, S.A.
(merchandising)................ 1,045 91,143
France Telecom, S.A.
(telecommunications)........... 7,602 793,835
Groupe Danone, S.A. (food &
household products)............ 1,134 158,402
L'Oreal, S.A. (health & personal
care).......................... 4,917 375,089
Lafarge, S.A. (building
materials & components)........ 1,237 91,218
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
75
<PAGE> 79
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
---------------------
<S> <C> <C>
FRANCE (CONTINUED)
Lagardere S.C.A., S.A. (multi-
industry)...................... 1,304 $ 73,943
LVMH (Louis Vuitton Moet
Hennessy), S.A. (recreation &
other consumer goods).......... 3,900 284,285
Michelin (CGDE), S.A. Class B
(industrial components)........ 2,173 62,807
Pinault-Printemps-Redoute, S.A.
(merchandising)................ 869 154,900
PSA Peugeot, S.A.
(automobiles).................. 489 89,941
Sagem, S.A. (electrical &
electronics)................... 382 69,937
Sanofi-Synthelabo, S.A. (health
& personal care)............... 5,980 314,257
Schneider Electric, S.A.
(electrical & electronics)..... 1,517 98,686
Societe Generale, S.A. Class A
(banking)...................... 3,009 170,624
STMicroelectronics N.V.
(electronic components &
instruments) (a)............... 6,844 344,868
Suez Lyonnaise des Eaux, S.A.
(business & public services)
(a)............................ 1,473 224,483
Suez Lyonnaise des Eaux, S.A.
Strip VVPR (business & public
services) (c).................. 204 2
Thomson CSF, S.A. (aerospace &
military technology)........... 1,614 72,369
Total Fina Elf, S.A. Class B
(energy sources)............... 5,552 793,412
Total Fina Elf, S.A. Strip
(energy sources) (c)........... 1,692 14
Valeo, S.A. (industrial
components).................... 1,153 50,135
Vivendi, S.A. (business & public
services)...................... 4,502 323,207
-----------
7,467,406
-----------
GERMANY (8.3%)
Adidas-Salomon AG (recreation &
other consumer goods).......... 650 29,889
AGIV AG (multi-industry)........ 904 8,459
Allianz AG Registered
(insurance).................... 1,706 579,126
BASF AG (chemicals)............. 5,584 219,611
Bayer AG (chemicals)............ 6,417 277,936
Bayerische Hypo-und Vereinsbank
AG (banking)................... 3,149 172,690
Beiersdorf AG (health & personal
care).......................... 1,196 117,593
DaimlerChrysler AG
(automobiles).................. 7,535 347,116
Deutsche Bank AG (banking)...... 4,500 369,978
Deutsche Lufthansa AG Registered
(transportation-airlines)...... 4,100 80,971
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
GERMANY (CONTINUED)
Deutsche Telekom AG
(telecommunications)........... 22,900 $ 855,013
Dresdner Bank AG (banking)...... 3,850 159,737
E.ON AG (utilities-electrical &
gas)........................... 5,387 273,485
Fresenius Medical Care AG
(business & public services)... 1,000 79,674
Heidelberger Zement AG (building
materials & components)........ 965 45,968
Hochtief AG (construction &
housing)....................... 986 21,228
Linde AG (machinery &
engineering)................... 1,700 74,207
Merck KGaA (health & personal
care).......................... 2,600 99,059
Metro AG (merchandising)........ 2,750 110,718
Munchener Ruckversicherungs-
Gesellschaf AG Registered
(insurance).................... 1,308 412,422
Preussag AG (multi-industry).... 2,350 76,488
RWE AG (utilities-electrical &
gas)........................... 3,339 134,149
SAP AG (business & public
services)...................... 1,400 228,903
Schering AG (health & personal
care).......................... 2,550 142,003
Siemens AG (electrical &
electronics)................... 4,558 579,505
Thyssen Krupp AG
(metals-steel)................. 5,700 81,649
Volkswagen AG (automobiles)..... 2,950 147,275
-----------
5,724,852
-----------
HONG KONG (2.0%)
Cathay Pacific Airways, Ltd.
(transportation-airlines)...... 34,409 62,429
Chinese Estates Holdings, Ltd.
(real estate) (a).............. 854 92
CLP Holdings, Ltd. (utilities-
electrical & gas).............. 17,932 83,692
Hang Lung Development Co., Ltd.
(real estate).................. 18,946 17,005
Hang Seng Bank, Ltd. (banking).. 14,830 174,463
Hong Kong & China Gas Co., Ltd.
(utilities-electrical & gas)... 60,652 76,602
Hopewell Holdings, Ltd. (multi-
industry)...................... 18,706 6,776
Hutchinson Whampoa, Ltd.
(multi-industry)............... 32,419 402,167
Johnson Electric Holdings, Ltd.
(electrical & electronics)..... 30,000 59,622
Miramar Hotel & Investment, Ltd.
(real estate).................. 28 21
New World Development Co., Ltd.
(real estate).................. 29,772 35,311
Pacific Century CyberWorks, Ltd.
(broadcasting & publishing)
(a)............................ 183,963 141,526
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
76
<PAGE> 80
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
---------------------
<S> <C> <C>
HONG KONG (CONTINUED)
Shangri-La Asia, Ltd. (leisure &
tourism)....................... 33,464 $ 33,039
Sun Hung Kai Properties, Ltd.
(real estate).................. 22,000 181,944
Swire Pacific, Ltd. Class A
(multi-industry)............... 18,385 113,387
-----------
1,388,076
-----------
IRELAND (0.3%)
Allied Irish Banks PLC
(banking)...................... 15,800 160,705
Irish Life & Permanent PLC
(insurance).................... 4,199 42,033
-----------
202,738
-----------
ITALY (4.4%)
Assicurazioni Generali S.p.A.
(insurance).................... 9,000 295,601
Banca Intesa S.p.A (banking).... 41,500 172,008
Bulgari S.p.A. (recreation &
other consumer goods).......... 4,298 50,528
Cementir S.p.A. (building
materials & components)........ 4,510 5,810
Enel S.p.A.
(utilities-electrical & gas)... 55,370 205,091
ENI S.p.A. (energy sources)..... 64,148 346,893
Fiat S.p.A. (automobiles)....... 5,056 117,422
Magneti Marelli S.p.A.
(industrial components) (e).... 8,000 36,623
Mediaset S.p.A. (broadcasting &
publishing).................... 10,600 153,187
Mediobanca S.p.A. (banking)..... 8,223 91,374
Olivetti S.p.A.
(telecommunications) (a)....... 41,500 125,576
Pirelli S.p.A. (industrial
components).................... 26,468 76,725
Riunione Adriatica di Sicurta
S.p.A. (insurance)............. 7,800 102,277
San Paolo-IMI S.p.A.
(banking)...................... 11,135 180,267
Snia S.p.A. (multi-industry).... 5,122 10,593
Telecom Italia S.p.A.
(telecommunications)........... 28,420 328,812
Telecom Italia Mobile (RNC)
S.p.A (telecommunications)..... 14,500 76,814
Telecom Italia Mobile S.p.A.
(telecommunications)........... 51,246 435,230
Unicredito Italiano S.p.A.
(banking)...................... 40,119 204,029
-----------
3,014,860
-----------
JAPAN (24.3%)
Acom Co., Ltd. (financial
services)...................... 1,200 97,038
Advantest Corp. (electronic
components & instruments)...... 800 104,255
Ajinomoto Co., Inc. (food &
household products)............ 6,567 73,372
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
JAPAN (CONTINUED)
Arabian Oil Co., Ltd. (energy
sources) (a)................... 1,387 $ 5,182
Asahi Bank, Ltd. (banking)...... 21,986 86,580
Asahi Breweries, Ltd. (beverages
& tobacco)..................... 7,098 70,074
Asahi Chemical Industry Co.,
Ltd. (chemicals)............... 15,649 96,880
Asahi Glass Co., Ltd.
(miscellaneous-materials &
commodities)................... 12,000 123,084
Ashikaga Bank, Ltd. (banking)
(a)............................ 9,043 16,315
Bank of Tokyo-Mitsubishi, Ltd.
(banking) (d).................. 33,375 400,094
Bank of Yokohama, Ltd.
(banking)...................... 11,000 53,895
Bridgestone Corp. (industrial
components).................... 6,935 68,719
Brother Industries, Ltd.
(appliances & household
durables)...................... 601 1,205
Canon, Inc. (data processing &
reproduction).................. 7,288 288,999
Central Japan Railway Co.
(transportation-road & rail)... 20 121,801
Chiba Bank, Ltd. (banking)...... 600 2,489
Chugai Pharmaceutical Co., Ltd.
(health & personal care)....... 3,974 67,401
Chuo Mitsui Trust & Banking Co.
(banking)...................... 6,300 19,224
Citizen Watch Co., Ltd.
(recreation & other consumer
goods)......................... 4,678 45,883
Dai Nippon Printing Co., Ltd.
(business & public services)... 7,133 111,704
Daiei, Inc. (merchandising)
(a)............................ 11,467 19,533
Daikin Industries, Ltd.
(machinery & engineering)...... 4,000 77,294
Dainippon Ink & Chemical, Inc.
(chemicals).................... 11,203 36,217
Daiwa House Industry Co., Ltd.
(construction & housing)....... 6,667 41,824
Daiwa Securities Group Inc.
(financial services)........... 10,287 113,898
Denso Corp. (industrial
components) (d)................ 7,331 167,172
East Japan Railway Co.
(transportation-road & rail)... 29 166,520
Ebara Corp. (machinery &
engineering)................... 4,660 72,336
Eisai Co., Ltd. (health &
personal care)................. 2,677 82,374
Fanuc, Ltd. (electronic
components & instruments)...... 1,923 172,586
Fuji Photo Film, Ltd.
(recreation & other consumer
goods) (d)..................... 4,394 162,973
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
77
<PAGE> 81
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
---------------------
<S> <C> <C>
JAPAN (CONTINUED)
Fujitsu, Ltd. (data processing &
reproduction).................. 15,107 $ 268,952
Furukawa Electric Co., Ltd.
(industrial components)........ 5,558 146,083
Gunma Bank, Ltd. (banking)...... 6,766 34,389
Hitachi, Ltd. (electrical &
electronics) (d)............... 24,857 266,339
Hitachi Zosen Corp. (machinery &
engineering) (a)............... 19,634 14,924
Hokuriku Bank, Ltd. (banking)
(a)............................ 9,952 21,691
Honda Motor Co., Ltd.
(automobiles) (d).............. 7,345 253,591
Hoya Corp. (electronic
components & instruments)...... 1,200 99,126
Ito-Yokado Co., Ltd.
(merchandising)................ 3,375 152,378
Japan Airlines Co., Ltd.
(transportation-airlines)...... 17,138 68,587
Japan Energy Corp. (energy
sources)....................... 15,637 20,765
Japan Steel Works, Ltd.
(machinery & engineering) (a).. 5,176 4,456
Japan Tobacco, Inc. (beverages &
tobacco)....................... 18 123,633
Joyo Bank, Ltd. (banking)....... 13,550 46,286
Jusco Co., Ltd.
(merchandising)................ 3,000 56,322
Kajima Corp. (construction &
housing)....................... 12,910 33,577
Kamigumi Co., Ltd. (business &
public services)............... 3,456 15,825
Kansai Electric Power Co., Inc.
(utilities-electrical & gas)... 4,128 67,556
Kao Corp. (food & household
products)...................... 4,000 119,787
Kawasaki Heavy Industries, Ltd.
(machinery & engineering)
(a)............................ 19,050 19,714
Kawasaki Steel Corp. (metals-
steel) (a)..................... 39,815 39,015
Keihin Electric Express Railway
(transportation-road & rail)... 8,000 31,137
Kinki Nippon Railway Co., Ltd.
(transportation-road & rail)... 22,124 95,835
Kirin Brewery Co., Ltd.
(beverages & tobacco).......... 10,154 105,823
Komatsu, Ltd. (machinery &
engineering)................... 12,162 53,908
Konami Co., Ltd. (business &
public services)............... 1,100 92,679
Kubota Corp. (machinery &
engineering)................... 20,806 69,929
Kumagai Gumi Co., Ltd.
(construction & housing) (a)... 9,812 2,696
Kyocera Corp. (electronic
components & instruments)...... 1,490 193,765
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
JAPAN (CONTINUED)
Kyowa Hakko Kogyo (health &
personal care)................. 6,234 $ 49,840
Makita Corp. (electrical &
electronics)................... 2,448 17,823
Marubeni Corp. (wholesale &
international trade) (a)....... 20,723 48,394
Marui Co., Ltd.
(merchandising)................ 4,378 64,551
Matsushita Electric Industrial
Co., Ltd. (appliances &
household durables)............ 14,247 413,603
Mitsubishi Chemical Corp.
(chemicals).................... 25,833 81,620
Mitsubishi Corp. (wholesale &
international trade)........... 12,531 103,283
Mitsubishi Electric Corp.
(electrical & electronics)..... 18,000 129,238
Mitsubishi Estate Co., Ltd.
(real estate).................. 12,191 129,508
Mitsubishi Heavy Industries,
Ltd. (machinery & engineering)
(a)............................ 35,059 136,134
Mitsubishi Trust & Banking Corp.
(banking)...................... 11,031 89,404
Mitsui & Co., Ltd. (wholesale &
international trade)........... 14,822 98,411
Mitsui Fudosan Co., Ltd. (real
estate)........................ 8,129 98,417
Mitsui Marine & Fire Insurance
Co., Ltd. (insurance).......... 8,359 42,410
Mitsui O.S.K. Lines, Ltd.
(transportation-shipping)...... 266 585
Mitsukoshi, Ltd. (merchandising)
(a)............................ 6,758 24,075
Mizuho Holdings, Inc. (financial
services) (d).................. 45 343,532
Murata Manufacturing Co., Ltd.
(electronic components &
instruments)................... 1,900 227,247
NEC Corp. (electrical &
electronics)................... 12,416 236,508
NGK Insulators, Ltd. (industrial
components).................... 4,800 63,520
Nikon Corp. (electronic
components & instruments)...... 3,407 49,485
Nintendo Co., Ltd. (recreational
& other consumer goods)........ 1,200 198,362
Nippon Express Co., Ltd.
(transportation-road & rail)... 12,446 74,657
Nippon Fire & Marine Insurance,
Ltd. (insurance)............... 686 2,551
Nippon Light Metal Co., Ltd.
(metals-nonferrous)............ 7,577 5,968
Nippon Meat Packers, Inc. (food
& household products).......... 3,357 42,549
Nippon Mitsubishi Oil Corp.
(energy sources)............... 15,136 81,367
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
78
<PAGE> 82
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
---------------------
<S> <C> <C>
JAPAN (CONTINUED)
Nippon Steel Corp.
(metals-steel)................. 53,313 $ 86,419
Nippon Telegraph & Telephone
Corp. (telecommunications)..... 91 827,544
Nissan Motor Co., Ltd.
(automobiles) (a).............. 32,121 220,329
Nisshinbo Industries, Inc.
(textiles & apparel)........... 3,363 16,138
Nissin Food Products Co., Ltd.
(food & household products).... 1,884 49,432
NKK Corp. (metals-steel) (a).... 919 530
Nomura Securities Co., Ltd.
(financial services)........... 13,955 295,857
Obayashi Corp. (construction &
housing)....................... 10,799 44,702
Oji Paper Co., Ltd. (forest
products & paper).............. 10,490 61,003
Olympus Optical Co., Ltd.
(electronic components &
instruments) (a)............... 4,000 55,241
Orient Corp. (financial
services) (a).................. 4,483 7,185
Oriental Land Co., Ltd. (leisure
& tourism)..................... 1,200 72,531
Orix Corp. (financial
services)...................... 700 73,401
Osaka Gas Co. (utilities-
electrical & gas).............. 23,126 56,971
Penta-Ocean Construction Co.,
Ltd. (construction &
housing)....................... 10,000 11,631
Pioneer Corp. (appliances &
household durables)............ 2,078 64,323
Promise Co., Ltd. (financial
services)...................... 1,100 82,504
Rohm Co., Ltd. (electronic
components & instruments)...... 900 226,743
Sakura Bank, Ltd. (banking)..... 30,834 224,490
Sankyo Co., Ltd. (health &
personal care)................. 4,654 102,504
Sanrio Co., Ltd. (recreation &
other consumer goods).......... 861 12,616
Sanyo Electric Co., Ltd.
(appliances & household
durables)...................... 15,684 119,216
Sapporo Breweries, Ltd.
(beverages & tobacco).......... 5,692 17,567
Secom Co., Ltd. (business &
public services)............... 2,000 142,499
Sekisui House, Ltd.
(construction & housing)....... 10,000 105,683
Sharp Corp. (appliances &
household durables)............ 9,279 118,118
Shimizu Corp. (construction &
housing)....................... 11,055 30,170
Shin-Etsu Chemical Co., Ltd.
(chemicals).................... 3,830 157,137
Shionogi & Co., Ltd. (health &
personal care)................. 4,396 85,751
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
JAPAN (CONTINUED)
Shiseido Co., Ltd. (health &
personal care)................. 6,739 $ 87,019
Shizuoka Bank, Ltd. (banking)... 6,494 58,937
SMC Corp. (machinery &
engineering)................... 700 98,980
Softbank Corp. (business &
public services)............... 2,500 149,962
Sony Corp. (appliances &
household durables)............ 6,782 541,595
Sumitomo Bank, Ltd. (banking)
(d)............................ 22,242 269,892
Sumitomo Chemical Co., Ltd.
(chemicals).................... 19,403 95,599
Sumitomo Corp. (wholesale &
international trade)........... 9,864 86,721
Sumitomo Electric Industries
(industrial components)........ 6,982 128,841
Sumitomo Marine & Fire Insurance
Co., Ltd. (insurance).......... 8,126 49,562
Sumitomo Metal Industries, Ltd.
(metals-steel) (a)............. 50,343 27,662
Sumitomo Metal Mining Co.
(metals-nonferrous)............ 8,298 42,784
Taiheiyo Cement Corp. (building
materials & components)........ 12,783 19,901
Taisei Corp. (construction &
housing)....................... 13,713 19,591
Taisho Pharmaceutical Co., Ltd.
(health & personal care)....... 3,066 88,166
Taiyo Yuden Co., Ltd.
(electronic components &
instruments)................... 1,127 43,039
Takashimaya Co., Ltd.
(merchandising)................ 4,574 33,385
Takeda Chemical Industries, Ltd.
(health & personal care)....... 6,318 416,015
Takefuji Corp. (financial
services)...................... 2,000 197,813
Teikoku Oil Co., Ltd. (energy
sources)....................... 6,646 30,371
Tobu Railway Co., Ltd.
(transportation-road & rail)... 12,000 35,387
Tohoku Electric Power Co., Inc.
(utilities-electrical & gas)... 2,268 30,532
Tokai Bank, Ltd. (banking)...... 16,989 91,017
Tokio Marine & Fire Insurance
Co., Ltd. (insurance).......... 10,540 116,410
Tokyo Electric Power Co., Inc.
(utilities-electrical & gas)... 7,951 192,960
Tokyo Electron, Ltd. (electronic
components & instruments)...... 1,492 116,688
Tokyo Gas Co. (utilities-
electrical & gas).............. 21,091 55,048
Tokyo Steel Manufacturing Co.,
Ltd. (metals-steel)............ 194 791
Tokyu Corp. (transportation-
road & rail)................... 15,451 79,806
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
79
<PAGE> 83
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
---------------------
<S> <C> <C>
JAPAN (CONTINUED)
Toppan Printing Co., Ltd.
(business & public services)... 9,076 $ 80,126
Toray Industries, Inc.
(chemicals).................... 20,000 77,843
Toshiba Corp. (electrical &
electronics) (a)............... 25,000 178,581
Tostem Corp. (building materials
& components).................. 2,935 42,737
Toto, Ltd. (building materials &
components).................... 5,467 41,455
Toyo Seikan Kaisha, Ltd.
(miscellaneous-materials &
commodities)................... 3,445 58,366
Toyota Motor Corp. (automobiles)
(d)............................ 27,552 1,100,121
Ube Industries, Ltd.
(miscellaneous-materials &
commodities)................... 11,768 23,710
Uny Co., Ltd. (merchandising)... 2,346 28,746
Yamaha Corp. (recreation & other
consumer goods)................ 4,188 36,052
Yamanouchi Pharmaceutical Co.,
Ltd. (health & personal
care).......................... 3,000 135,722
Yamato Transport Co., Ltd.
(transportation-road & rail)... 4,000 80,774
-----------
16,795,673
-----------
MALAYSIA (0.0%) (B)
Malaysia International Shipping
Corp. Berhad Foreign Registered
(transportation-shipping)
(f)............................ 2,738 564
Malaysian Airline System Berhad
(transportation-airlines)
(f)............................ 206 179
Technology Resources Industries
Berhad (telecommunications)
(f)............................ 14,132 1,335
-----------
2,078
-----------
NETHERLANDS (5.4%)
ABN AMRO Holding N.V.
(banking)...................... 10,306 238,476
Aegon N.V. (insurance).......... 9,958 395,011
Akzo Nobel N.V. (chemicals)..... 3,703 168,389
ASM Lithography Holding N.V.
(electric components &
instruments) (a)............... 3,587 97,930
Elsevier N.V. (broadcasting &
publishing).................... 9,310 118,762
Heineken N.V. (beverages &
tobacco)....................... 3,341 181,237
ING Groep N.V. (financial
services)...................... 7,014 481,075
Koninklijke Ahold N.V.
(merchandising)................ 6,297 182,697
Koninklijke KPN N.V.
(telecommunications)........... 7,743 156,658
Koninklijke Nedlloyd Groep N.V.
(transportation-road & rail)... 319 5,921
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
NETHERLANDS (CONTINUED)
Koninklijke (Royal) Philips
Electronics N.V. (appliances &
household durables)............ 9,709 $ 381,102
Koninklijke Vopak N.V. (energy
equipment & service)........... 921 17,564
Royal Dutch Petroleum Co.
(energy sources)............... 16,080 952,560
TNT Post Group N.V. (business &
public services)............... 4,812 101,803
Unilever CVA N.V. (food &
household products)............ 4,366 218,707
-----------
3,697,892
-----------
NEW ZEALAND (0.1%)
Carter Holt Harvey Ltd. (forest
products & paper).............. 21,197 14,050
Fletcher Challenge Energy
(energy sources)............... 5,182 16,968
Fletcher Challenge Forests
(forest products & paper)
(a)............................ 20,290 2,980
-----------
33,998
-----------
NORWAY (0.3%)
Christiania Bank Og Kreditkasse
(banking)...................... 7,653 39,826
Elkem ASA Class A (metals-
nonferrous).................... 733 12,649
Norsk Hydro ASA (energy
sources)....................... 3,159 125,334
Orkla ASA Class A (multi-
industry)...................... 3,300 59,432
-----------
237,241
-----------
PORTUGAL (0.5%)
Banco Comercial Portugues, S.A.
Registered (banking)........... 18,581 92,763
Banco Espirito Santo, S.A.
Registered (banking)........... 3,016 45,759
Cimpor-Cementos de Portugal,
SGPS, S.A. (building materials
& components).................. 2,023 45,097
Electricidade de Portugal, S.A.
(utilities-electrical & gas)... 25,547 69,292
Portugal Telecom, S.A.
Registered
(telecommunications)........... 12,250 109,023
-----------
361,934
-----------
SINGAPORE (0.9%)
Chartered Semiconductor
Manufacturing, Ltd. (electric
components & instruments)
(a)............................ 11,000 47,622
City Developments, Ltd. (real
estate)........................ 12,348 56,975
DBS Group Holdings, Ltd.
(banking)...................... 11,224 132,348
Oversea-Chinese Banking Corp.,
Ltd. (banking)................. 12,000 76,559
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
80
<PAGE> 84
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
---------------------
<S> <C> <C>
SINGAPORE (CONTINUED)
Sembcorp Industries, Ltd.
(multi-industry)............... 29,512 $ 28,411
Singapore Airlines, Ltd. Foreign
Registered (transportation-
airlines)...................... 11,273 113,019
Singapore Telecommunications,
Ltd. (telecommunications)...... 48,258 79,995
United Overseas Bank, Ltd.
Foreign Registered (banking)... 10,452 77,400
-----------
612,329
-----------
SPAIN (2.9%)
Altadis, S.A. (beverages &
tobacco)....................... 5,259 78,675
Autopistas Concesionaria
Espanola, S.A. (business &
public services)............... 4,183 31,768
Banco Bilbao Vizcaya Argentaria,
S.A. Registered (banking)...... 24,471 325,644
Banco Santander Central Hispano,
S.A. (banking)................. 34,456 333,520
Endesa, S.A.
(utilities-electrical & gas)... 9,112 148,288
Gas Natural SDG, S.A.
(utilities-electrical & gas)... 5,267 90,179
Grupo Empresarial Ence, S.A.
(forest products & paper)...... 296 4,376
Iberdrola, S.A. (utilities-
electrical & gas).............. 10,181 124,350
Repsol, S.A. (energy sources)... 12,559 199,275
Telefonica, S.A.
(telecommunications) (a)....... 33,447 637,018
-----------
1,973,093
-----------
SWEDEN (2.9%)
Drott AB Series B (real
estate)........................ 1,000 11,727
Electrolux AB Series B
(appliances & household
durables)...................... 5,100 64,131
ForeningsSparbanken AB
(banking)...................... 6,100 87,360
Hennes & Mauritz AB Series B
(merchandising)................ 7,200 134,371
Mandamus AB (real estate)....... 130 772
NetCom AB Series B
(telecommunications) (a)....... 1,275 59,678
Nordic Baltic Holding AB
(banking)...................... 24,500 183,383
Securitas AB Series B (business
& public services)............. 4,500 95,658
Skandia Forsakrings AB
(insurance).................... 8,100 137,020
Skandinaviska Enskilda Banken AB
(banking)...................... 7,000 82,435
Skanska AB Series B
(construction & housing)....... 1,600 63,233
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
---------------------
<S> <C> <C>
SWEDEN (CONTINUED)
Svenska Cellulosa AB Series B
(forest products & paper)...... 3,450 $ 70,584
Svenska Handelsbanken Series A
(banking)...................... 6,300 98,712
Swedish Match AB (beverages &
tobacco)....................... 5,983 20,481
Telefonaktiebolaget LM Ericsson
AB Series B (electrical &
electronics)................... 56,836 754,407
Telia AB (telecommunications)
(a)............................ 12,200 75,489
Volvo AB Series B
(automobiles).................. 4,225 64,935
-----------
2,004,376
-----------
SWITZERLAND (6.0%)
ABB AG Bearer (electrical &
electronics)................... 2,496 221,754
Adecco, S.A. Registered
(business & public services)... 180 124,431
Alusuisse Lonza Group AG
Registered (multi-industry).... 90 47,050
Credit Suisse Group Registered
(banking)...................... 2,000 374,840
Givaudan, S.A. Registered (food
& household products) (a)...... 130 31,161
Holderbank Financiere Glarus AG
Bearer (building materials &
components).................... 80 84,044
Holderbank Financiere Glarus AG
Registered (building materials
& components).................. 150 44,130
Jelmoli Holdings, Ltd. Bearer
(merchandising)................ 10 12,513
Nestle, S.A. Registered (food &
household products)............ 285 590,415
Novartis AG Registered (health &
personal care)................. 540 818,965
Roche Holdings AG Bearer (health
& personal care)............... 14 151,243
Roche Holdings AG Genusscheine
(health & personal care)....... 54 493,121
Schindler Holding AG
Participating Certificates
(machinery & engineering)...... 10 15,188
Schindler Holding AG Registered
(machinery & engineering)...... 10 14,599
Schweizerische
Rueckversicherungs Gesellschaft
Registered (insurance)......... 90 177,437
Societe Generale de Surveillance
Holding, S.A. Bearer (business
& public services) (a)......... 15 18,353
Societe Generale de Surveillance
Holding, S.A. Registered
(business & public services)
(a)............................ 40 10,900
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
81
<PAGE> 85
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
---------------------
<S> <C> <C>
SWITZERLAND (CONTINUED)
Sulzer AG Registered (machinery
& engineering) (a)............. 50 $ 32,284
Swatch Group AG Registered
(recreation & other consumer
goods)......................... 200 54,391
Swisscom AG Registered
(telecommunications)........... 590 149,789
UBS AG Registered (banking)..... 3,050 422,363
Zurich Financial Services AG
(insurance).................... 508 245,962
-----------
4,134,933
-----------
UNITED KINGDOM (20.6%)
3i Group PLC (financial
services)...................... 5,545 126,012
Abbey National PLC (banking).... 10,900 150,523
Amvescap PLC (financial
services)...................... 6,198 138,601
ARM Holdings PLC (electrical &
electronics) (a)............... 8,403 82,973
AstraZeneca Group PLC (health &
personal care)................. 13,367 626,560
BAA PLC (business & public
services)...................... 13,374 111,278
BAE Systems PLC (aerospace &
military technology)........... 23,905 135,899
Barclays PLC (banking).......... 11,028 315,790
Bass PLC (leisure & tourism).... 13,174 129,031
BG Group PLC (utilities-
electrical & gas).............. 26,125 104,703
Boots Co. PLC (merchandising)... 11,654 93,075
BP Amoco PLC (energy sources)... 165,986 1,408,805
British Airways PLC
(transportation-airlines)...... 12,500 55,906
British American Tobacco PLC
(beverages & tobacco).......... 24,044 168,635
British Sky Broadcasting Group
PLC (broadcasting & publishing)
(a)............................ 14,898 215,251
British Telecommunications PLC
(telecommunications)........... 48,765 572,156
Cadbury Schwepps PLC (beverages
& tobacco)..................... 25,058 155,007
Centrica PLC
(utilities-electrical & gas)... 33,980 116,941
CGNU PLC (insurance)............ 15,772 211,161
Coats Viyella PLC (textiles &
apparel)....................... 9,814 6,413
Corus Group PLC (metal-steel)... 42,984 38,698
De La Rue PLC (business & public
services)...................... 1,624 8,180
Diageo PLC (beverages &
tobacco)....................... 29,495 278,606
GKN PLC (machinery &
engineering)................... 8,928 102,418
Glaxo Wellcome PLC (health &
personal care)................. 27,000 777,858
Granada Compass PLC (leisure &
tourism) (a)................... 21,154 182,463
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
----------------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Great Universal Stores PLC (The)
(merchandising)................ 10,800 $ 74,649
Halifax PLC (banking)........... 18,102 142,469
Hanson PLC (building materials &
components).................... 9,656 50,968
Hays PLC (business & public
services)...................... 19,723 107,757
Hilton Group PLC (leisure &
tourism)....................... 22,561 62,737
HSBC Holdings PLC (banking)..... 65,121 928,598
Imperial Chemical Industries PLC
(chemicals).................... 10,929 66,971
Innogy Holding PLC (energy
sources)....................... 11,590 33,660
International Power PLC
(utilities-electrical & gas)... 11,590 46,787
Invensys PLC (machinery &
engineering)................... 36,384 86,910
Kingfisher PLC
(merchandising)................ 12,822 76,709
Land Securities PLC (real
estate)........................ 7,747 79,871
LASMO PLC (energy sources)...... 22,009 46,820
Lattice Group PLC (utilities-
electrical & gas).............. 26,125 55,766
Legal & General Group PLC
(insurance).................... 46,200 115,054
Lloyds TSB Group PLC (banking).. 38,424 391,683
Logica PLC (business & public
services)...................... 3,775 111,771
Marconi PLC
(telecommunications)........... 21,458 271,084
Marks & Spencer PLC
(merchandising)................ 29,560 82,414
National Grid Group PLC
(utilities-electrical & gas)... 13,714 118,986
P&O Princess Cruises PLC
(leisure & tourism)............ 10,189 40,059
Pearson PLC (broadcasting &
publishing).................... 7,509 201,611
Peninsular & Oriental Steam
Navigation Co. Deferred Stock
(The)
(transportation-shipping)...... 10,189 42,019
Prudential Corp. PLC
(insurance).................... 14,366 193,380
Railtrack Group PLC (business &
public services)............... 5,324 82,412
Rank Group PLC (leisure &
tourism)....................... 12,294 30,527
Reed International PLC
(broadcasting & publishing).... 12,366 114,384
Rentokil Initial PLC (business &
public services)............... 30,309 69,978
Reuters Group PLC (business &
public services)............... 11,466 223,439
Rio Tinto PLC Registered
(metals-nonferrous)............ 9,760 158,023
Royal Bank of Scotland Group PLC
(banking)...................... 19,542 438,990
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
82
<PAGE> 86
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
SHARES VALUE
---------------------
<S> <C> <C>
UNITED KINGDOM (CONTINUED)
Sage Group PLC (The) (business &
public services)............... 12,436 $ 90,833
Sainsbury (J.) PLC
(merchandising)................ 18,817 105,812
Scottish Power PLC (utilities-
electrical & gas).............. 14,607 109,766
Sema Group PLC (business &
public services)............... 6,115 77,252
SmithKline Beecham PLC (health &
personal care)................. 42,262 546,179
Tesco PLC (merchandising)....... 55,953 213,482
Unilever PLC (food & household
products)...................... 24,347 164,839
Vodafone PLC
(telecommunications)........... 454,558 1,892,726
Williams PLC (electronic
components & instruments)...... 10,172 48,743
WPP Group PLC (business & public
services)...................... 8,020 107,724
-----------
14,216,785
-----------
Total Common Stocks (Cost
$54,866,774)................... 66,005,152(g)
-----------
PREFERRED STOCKS (0.5%)
AUSTRALIA (0.2%)
News Corp., Ltd.
A$ 0.075
(broadcasting & publishing)
(e)(k)......................... 18,003 161,394
-----------
GERMANY (0.3%)
RWE AG
E 0.92
(utilities-electrical & gas)
(e)(k)......................... 654 20,510
SAP AG
E 1.60
(business & public services)
(e)(k)......................... 1,000 202,153
-----------
222,663
-----------
Total Preferred Stocks (Cost
$276,724)...................... 384,057
-----------
</TABLE>
<TABLE>
<CAPTION>
WARRANTS (0.0%) (B)
SHARES VALUE
----------------------
<S> <C> <C>
HONG KONG (0.0%) (B)
Chinese Estates Holdings, Ltd.
Call Warrants
Strike price HK 1.02
Expire 11/24/00
(real estate) (a)(k)........... 6,885 $ 9
-----------
Total Warrants (Cost $0)........ 9
-----------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS (2.4%)
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
U.S. GOVERNMENT (2.4%)
United States Treasury Bills
6.02%, due 1/11/01 (d)......... $500,000 $ 494,037
6.06%, due 1/4/01 (d).......... 500,000 494,610
6.11%, due 1/4/01 (d).......... 700,000 692,397
-----------
Total Short-Term Investments
(Cost $1,681,044).............. 1,681,044
-----------
Total Investments (Cost
$56,824,542) (h)............... 98.5% 68,070,262(i)
Cash and Other Assets,
Less Liabilities............... 1.5 1,019,108
-------- -----------
Net Assets...................... 100.0% $69,089,370
======== ===========
</TABLE>
<TABLE>
<CAPTION>
FUTURES CONTRACTS (0.0%) (B)
UNREALIZED
CONTRACTS APPRECIATION
LONG (DEPRECIATION)(J)
------------------------------
<S> <C> <C>
FRANCE (0.0%) (B)
Euro, CAC 40 Index,
November 2000.......... 9 $ 7,676
GERMANY (0.0%) (B)
Euro, DAX Index, December
2000................... 3 22,945
JAPAN (0.0%) (B)
Japanese Yen, TOPIX
Index, December 2000... 2 (7,510)
UNITED KINGDOM (0.0%) (B)
Pound Sterling, FTSE 100
Index, December 2000... 6 7,808
-------
Total Futures Contracts
(Settlement Value
$1,761,490) (g)........ $30,919
=======
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
83
<PAGE> 87
EAFE INDEX FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
------------
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) Strip securities represent a secondary class of shares traded in the
foreign market.
(d) Segregated or partially segregated as collateral for futures contracts.
(e) Fair valued security.
(f) Malaysian securities, partially segregated due to repatriation
restrictions, are deemed illiquid. These positions are fair valued.
(g) The combined market value of common stocks and the settlement value of
Index futures contracts represents 98.1% of net assets.
(h) The cost for federal income tax purposes is $57,418,550.
(i) At October 31, 2000 net unrealized appreciation for securities was
$10,651,712, based on cost for federal income tax purposes. This consisted
of aggregate gross unrealized appreciation for all investments on which
there was an excess of market value over cost of $18,159,835 and aggregate
gross unrealized depreciation for all investments on which there was an
excess of cost over market value of $7,508,123.
(j) Represents difference between the value of the contracts at the time they
were opened and the value at October 31, 2000.
(k) The following abbreviations are used in the above portfolio:
A$--Australian Dollar
E --Euro Currency
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................. $ 208,267 0.3%
Appliances & Household
Durables................... 1,703,293 2.5
Automobiles.................. 2,340,729 3.4
Banking...................... 9,360,284 13.5
Beverages & Tobacco.......... 1,199,739 1.7
Broadcasting & Publishing.... 1,298,732 1.9
Building Materials &
Components................. 590,755 0.9
Business & Public Services... 3,364,665 4.9
Chemicals.................... 1,427,326 2.1
Construction & Housing....... 520,037 0.8
Data Processing &
Reproduction............... 557,952 0.8
Electrical & Electronics..... 4,472,230 6.5
Electronic Components &
Instruments................ 1,827,338 2.6
Energy Equipment & Service... 239,319 0.3
Energy Sources............... 4,232,093 6.1
Financial Services........... 1,796,767 2.6
Food & Household Products.... 1,448,663 2.1
Forest Products & Paper...... 152,991 0.2
Health & Personal Care....... 6,140,561 8.9
Industrial Components........ 800,625 1.2
Insurance.................... 3,771,149 5.5
Leisure & Tourism............ 627,819 0.9
Machinery & Engineering...... 898,899 1.3
Merchandising................ 2,119,024 3.1
Metals-Nonferrous............ 344,228 0.5
Metals-Steel................. 276,864 0.4
Miscellaneous-Materials &
Commodities................ 205,159 0.3
Multi-Industry............... 861,849 1.2
Real Estate.................. 693,844 1.0
Recreation & Other Consumer
Goods...................... 874,980 1.3
Telecommunications........... 8,016,282 11.6
Textile & Apparel............ 22,551 0.0*
Transportation-Airlines...... 381,091 0.5
Transportation-Road & Rail... 747,605 1.1
Transportation-Shipping...... 294,134 0.4
U.S. Government.............. 1,681,043 2.4
Utilities-Electrical & Gas... 2,223,712 3.2
Wholesale & International
Trade...................... 347,663 0.5
----------- -----
68,070,262 98.5
Cash and Other Assets,
Less Liabilities........... 1,019,108 1.5
----------- -----
Net Assets................... $69,089,370 100.0%
=========== =====
</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.
84
<PAGE> 88
MAINSTAY
INSTITUTIONAL FUNDS INC.
EAFE INDEX FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 2000
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $56,824,542)............................ $ 68,070,262
Cash denominated in foreign currencies
(identified cost $11,663).................... 11,260
Cash........................................... 90,693
Deposit with broker for futures contracts
(identified cost $284,714)................... 299,824
Receivables:
Fund shares sold............................. 488,320
Dividends and interest....................... 149,560
Investment securities sold................... 102,694
Variation margin on futures contracts........ 15,749
--------------
Total assets............................. 69,228,362
--------------
LIABILITIES:
Payables:
MainStay Management.......................... 45,094
Custodian.................................... 26,353
Fund shares redeemed......................... 20,598
Transfer agent............................... 4,953
Accrued expenses............................... 41,994
--------------
Total liabilities........................ 138,992
--------------
Net assets..................................... $ 69,089,370
==============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class.......................... $ 6,104
Institutional Service Class.................. 52
Additional paid-in capital..................... 55,763,995
Accumulated distribution in excess of net
investment income............................ (445,966)
Accumulated undistributed net realized gain on
investments and futures contracts............ 2,457,666
Net unrealized appreciation on investments and
futures contracts............................ 11,276,639
Net unrealized appreciation on translation of
other assets and liabilities in foreign
currencies................................... 30,880
--------------
Net assets..................................... $ 69,089,370
==============
Institutional Class
Net assets applicable to outstanding shares.... $ 68,512,939
==============
Shares of capital stock outstanding............ 6,103,839
==============
Net asset value per share outstanding.......... $ 11.22
==============
Institutional Service Class
Net assets applicable to outstanding shares.... $ 576,431
==============
Shares of capital stock outstanding............ 51,812
==============
Net asset value per share outstanding.......... $ 11.13
==============
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<S> <C>
INVESTMENT INCOME:
Income:
Dividends (a)................................ $ 1,044,540
Interest..................................... 290,975
--------------
Total income............................. 1,335,515
--------------
Expenses:
Management................................... 732,510
Custodian.................................... 79,270
Portfolio pricing............................ 68,891
Professional................................. 45,489
Transfer agent............................... 29,253
Registration................................. 15,985
Shareholder communication.................... 3,370
Directors.................................... 2,063
Service...................................... 1,423
Miscellaneous................................ 16,892
--------------
Total expenses before
reimbursement........................... 995,146
Expense reimbursement from Manager........... (262,388)
--------------
Net expenses............................. 732,758
--------------
Net investment income.......................... 602,757
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Security transactions........................ 2,382,828
Futures transactions......................... 169,653
Foreign currency transactions................ (509,297)
--------------
Net realized gain on investments and foreign
currency transactions........................ 2,043,184
--------------
Net change in unrealized appreciation
(depreciation) on investments:
Security transactions........................ (5,545,441)
Futures transactions......................... (6,539)
Translation of other assets and liabilities
in foreign currencies...................... 33,305
--------------
Net unrealized loss on investments and foreign
currency transactions........................ (5,518,675)
--------------
Net realized and unrealized loss on investments
and foreign currency
transactions................................. (3,475,491)
--------------
Net decrease in net assets resulting from
operations................................... $ (2,872,734)
==============
</TABLE>
------------
(a) Dividends recorded net of foreign withholding taxes of $145,060.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
85
<PAGE> 89
EAFE INDEX FUND
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 2000, the period January 1, 1999 through October
31, 1999* and the year ended December 31, 1998
<TABLE>
<CAPTION>
2000 1999* 1998
-------------- -------------- --------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income................................... $ 602,757 $ 675,093 $ 529,655
Net realized gain on investments and foreign currency
transactions.......................................... 2,043,184 5,252,577 4,414,644
Net change in unrealized appreciation (depreciation) on
investments and foreign currency transactions......... (5,518,675) 2,373,714 6,101,634
-------------- -------------- --------------
Net increase (decrease) in net assets resulting from
operations............................................ (2,872,734) 8,301,384 11,045,933
-------------- -------------- --------------
Dividends and distributions to shareholders:
From net investment income:
Institutional Class................................... -- -- (526,186)
Institutional Service Class........................... -- -- (3,469)
From net realized gain on investments and foreign
currency transactions:
Institutional Class................................... (5,693,950) (291,622) (3,871,228)
Institutional Service Class........................... (41,996) (2,418) (29,729)
In excess of net investment income:
Institutional Class................................... -- (51,926) (560,314)
Institutional Service Class........................... -- (339) (3,666)
-------------- -------------- --------------
Total dividends and distributions to shareholders... (5,735,946) (346,305) (4,994,592)
-------------- -------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 57,457,614 64,643,850 29,896,062
Institutional Service Class........................... 257,666 107,045 86,552
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... 5,373,871 323,542 4,948,383
Institutional Service Class........................... 41,286 2,757 36,795
-------------- -------------- --------------
63,130,437 65,077,194 34,967,792
Cost of shares redeemed:
Institutional Class................................... (53,357,726) (70,367,464) (30,946,559)
Institutional Service Class........................... (206,486) (118,913) (102,752)
-------------- -------------- --------------
Increase (decrease) in net assets derived from capital
share transactions.................................. 9,566,225 (5,409,183) 3,918,481
-------------- -------------- --------------
Net increase in net assets............................ 957,545 2,545,896 9,969,822
NET ASSETS:
Beginning of period....................................... 68,131,825 65,585,929 55,616,107
-------------- -------------- --------------
End of period............................................. $ 69,089,370 $ 68,131,825 $ 65,585,929
============== ============== ==============
Accumulated distribution in excess of net investment
income at end of period................................. $ (445,966) $ (571,381) $ (867,449)
============== ============== ==============
</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.
86
<PAGE> 90
(THIS PAGE INTENTIONALLY LEFT BLANK)
87
<PAGE> 91
EAFE INDEX FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- -------------
JANUARY 1, 1999
YEAR ENDED THROUGH YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999* DECEMBER 31, 1998
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period....... $ 12.59 $ 12.51 $ 11.27 $ 11.22 $ 10.24 $ 10.20
------- ------- ------- ------- ------- -------
Net investment income...... 0.11 0.09 0.11 0.09 0.11 0.08
Net realized and unrealized
gain (loss) on
investments............... (0.37) (0.36) 1.39 1.38 1.84 1.83
Net realized and unrealized
gain (loss) on foreign
currency transactions..... (0.05) (0.05) (0.11) (0.11) 0.00(a) 0.00(a)
------- ------- ------- ------- ------- -------
Total from investment
operations................ (0.31) (0.32) 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..... (1.06) (1.06) (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............. (1.06) (1.06) (0.07) (0.07) (0.92) (0.89)
------- ------- ------- ------- ------- -------
Net asset value at end of
period.................... $ 11.22 $ 11.13 $ 12.59 $ 12.51 $ 11.27 $ 11.22
======= ======= ======= ======= ======= =======
Total investment return.... (3.52)% (3.63)% 12.31%(b) 12.08%(b) 19.15% 18.83%
Ratios (to average net
assets)/Supplemental Data:
Net investment income..... 0.78% 0.53% 1.14%+ 0.89%+ 0.90% 0.65%
Net expenses.............. 0.95%(d) 1.20%(d) 0.94%+ 1.19%+ 0.94% 1.19%
Expenses (before
reimbursement).......... 1.29% 1.54% 1.32%+ 1.57%+ 1.38% 1.63%
Portfolio turnover rate.... 11% 11% 19% 19% 24% 24%
Net assets at end of period
(in 000's)................ $68,513 $ 576 $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) Less than one percent.
(d) The effect of non-reimbursable interest expense on the expense ratio was
0.01%.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
88
<PAGE> 92
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
---------------------------------------------------------------------------------------------
1997 1996 1995
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 14.00 $ 13.97 $ 13.56 $ 13.51 $ 12.63 $ 12.63
------- ------- ------- ------- ------- -------
0.22 0.19 0.16 0.12 0.13 0.14
(0.28) (0.29) 0.71 0.73 1.11 1.05
(0.00)(a) (0.00)(a) (0.00)(a) (0.00)(a) (0.10) (0.10)
------- ------- ------- ------- ------- -------
(0.06) (0.10) 0.87 0.85 1.14 1.09
------- ------- ------- ------- ------- -------
(0.22) (0.19) (0.16) (0.12) (0.04) (0.04)
(3.39) (3.39) (0.25) (0.25) (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)
------- ------- ------- ------- ------- -------
$ 10.24 $ 10.20 $ 14.00 $ 13.97 $ 13.56 $ 13.51
======= ======= ======= ======= ======= =======
0.40% 0.08% 6.45% 6.37% 9.03% 8.63%
1.04% 0.79% 1.11% 0.86% 1.01% 0.76%
0.94% 1.19% 0.94% 1.19% 1.03% 1.28%
1.26% 1.51% 1.23% 1.48% 1.24% 1.49%
6% 6% 4% 4% 6% 6%
$55,177 $ 439 $89,029 $ 396 $80,087 $ 257
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
89
<PAGE> 93
INTERNATIONAL BOND FUND
--------------------------------------------------------------------------------
International bond markets faced a number of difficulties during the 12 months
ended October 31, 2000. Monetary tightening by the U.S. Federal Reserve and
several of the world's other central banks tended to negatively impact bond
prices. The U.S. dollar's continuing strength versus other major international
currencies hurt bond returns for U.S. investors, even in markets that showed
positive results in local currency terms.
A Japanese fiscal stimulus package offered attractive promise early in 2000, but
provided little relief to bond investors. Europe continued to restructure its
companies, industries, and local economies as the European Union became well
established and the euro continued its downward slide through most of the year.
While global economic activity abated during the third calendar quarter of 2000,
oil prices surged to new highs, creating a dilemma for central bankers. The Bank
of England and the Federal Reserve Board chose to leave rates unchanged, while
the European Central Bank and Bank of Japan adjusted rates upward by 25 basis
points. While central banks now appear to be standing on the sidelines, the
impact for international bond investors has been negative throughout most of the
reporting period.
PERFORMANCE REVIEW
For the 12 months ended October 31, 2000, MainStay Institutional International
Bond Fund returned -13.34% for Institutional Class shares and -13.49% for
Service Class shares. Both share classes underperformed the -5.23% return of the
average Lipper(1) international income fund for the same period. During the
12-month period, both share classes underperformed the -9.70% return of the
Salomon Smith Barney Non-U.S. Dollar World Government Bond Index.(2)
Much of the Fund's underperformance was due to an underestimation of the
potential strength of the U.S. dollar versus other currencies. Anticipating a
turnaround in the euro throughout much of the year, the Fund was disappointed
not only by weak returns in local terms, but also in terms of currency
translations into U.S. dollars.
The Japanese and U.K. bond markets were strong performers in the last two months
of 1999, but the Fund was underweighted relative to the benchmark, which
detracted from performance. As we added Japanese holdings, we reduced duration,
anticipating excess supply from Japan's fiscal stimulus package. We also
established some tactical bond trades in related economies and took profits in
Danish bonds as the new year approached.
During the first calendar quarter of 2000, Australia, Canada, Sweden, and the
U.K. showed strong results in local currency terms. Despite sizeable holdings in
these countries, however, outside of Canada, currency weaknesses continued to
hurt the Fund's performance through the end of March 2000. Fearing additional
currency problems, the Fund neutralized its exposure to the yen. Nevertheless,
the Fund continued to maintain a bias toward the euro, which had a negative
impact throughout most of the remainder of the Fund's fiscal year.
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. THE FUND'S NET ASSET VALUE WILL FLUCTUATE AND YOU
COULD LOSE MONEY BY INVESTING IN THE FUND.
The Fund may invest in derivatives, which may increase the volatility of the
Fund's net asset value and may result in a loss to the Fund. Investments in
foreign securities may be subject to greater risks than domestic investments.
These risks include currency fluctuations, changes in U.S. or foreign tax or
currency laws, and changes in monetary policies and economic and political
conditions in foreign countries. High-yield securities ("junk bonds") are
generally considered speculative because they present a greater risk of loss
than higher-quality debt securities; these securities may also be subject to
greater price volatility. Nondiversified funds may invest a greater percentage
of their assets than other funds in a particular issuer, which may make them
more susceptible to risks associated with a single economic, political, or
regulatory occurrence.
(1) Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with capital gain and dividend distributions reinvested.
(2) The Salomon Smith Barney Non-U.S. Dollar World Government Bond Index is an
unmanaged index generally considered to be representative of the world bond
market. Total returns reflect reinvestment of all income and capital gains.
An investment cannot be made directly into an index.
90
<PAGE> 94
--------------------------------------------------------------------------------
Australia, Canada, and the U.K. continued to show strength in local currency
terms during the second calendar quarter of 2000. Seeking a measure of security
during this period, the Fund maintained a conservative risk profile with a
neutral yield-curve position, limited credit exposure outside of Japan, and
underweighted Japanese holdings relative to the benchmark.
Despite these measures, the third calendar quarter of 2000 saw a continuing
deterioration in most international bond markets, particularly when returns were
translated into U.S. dollars. Canada, which was strong throughout the year both
in local currency and U.S. dollar terms, continued to show strength, and Greece
and Denmark also had positive returns in local terms during the third quarter.
The decision to underweight Japanese bonds proved beneficial during this portion
of the Fund's fiscal year, as Japanese government bonds posted negative total
returns, even in local currency terms.
Currency exposure continued to plague the Fund in October, as the euro declined
4% relative to the U.S. dollar during the month. In October, the Fund purchased
Irish gilts and 10-year French government bonds, seeking to capture additional
yield. The Fund also entered the Australian government bond market, since
spreads had widened about 50 basis points relative to U.S. Treasuries, and we
believed that spreads may narrow in the months ahead.
LOOKING AHEAD
We believe that a currency turnaround will be the key to profitability in
international bonds going forward. The dollar's strength has been remarkable,
but slowing global economic growth has combined with higher oil prices, lower
technology spending, and weaker equity performance to create a multithreaded
cord that continues to pull international bond returns downward. If the dollar
begins to weaken, we believe that the scenario we've witnessed this year could
begin to unravel, giving international bond investors a more favorable outlook.
Whatever the economy, currencies, or the markets 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
91
<PAGE> 95
$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-U.S.
DOLLAR WORLD GOVERNMENT BOND
INTERNATIONAL BOND FUND INDEX
----------------------- -----------------------------
<S> <C> <C>
1/31/90 $250000.00 $250000.00
90 249944.00 291754.00
91 296770.00 311155.00
92 319553.00 325991.00
93 366070.00 375308.00
94 377438.00 397767.00
95 447112.00 475552.00
96 511145.00 494962.00
97 524554.00 473878.00
98 590275.00 608225.00
99 545092.00 577362.00
00 as of 10/31/00 484269.00 529153.00
</TABLE>
$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-U.S.
DOLLAR WORLD GOVERNMENT BOND
INTERNATIONAL BOND FUND INDEX
-------------------------------- -----------------------------
<S> <C> <C>
1/31/90 $250000.00 $250000.00
90 249944.00 291754.00
91 296770.00 311155.00
92 319553.00 325991.00
93 366070.00 375308.00
94 377438.00 397767.00
95 446358.00 475552.00
96 509186.00 494962.00
97 520728.00 473878.00
98 584776.00 608225.00
99 538889.00 577362.00
00 as of 10/31/00 478056.00 529153.00
</TABLE>
Source: Lipper Inc., 10/31/00
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/31/90.*
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(+)
PERFORMANCE AS OF OCTOBER 31, 2000
----------------------------------------------------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS SINCE INCEPTION
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
International Bond Fund Institutional Class* -13.34% 2.41% 6.63% 6.34%
International Bond Fund Service Class* -13.49 2.16 6.50 6.21
Average Lipper international income fund(++) -5.23 2.57 4.53 5.19
Salomon Smith Barney Non-U.S. Dollar World Government Bond Index(sec.) -9.70 0.77 6.31 7.22
</TABLE>
YEAR-BY-YEAR PERFORMANCE
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
Ten Months Year
ended ended
Year end December 31 October 31 October 31
------------------------------------------------------------------------------------------------ ---------- ----------
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
18.73% 7.68% 14.56% 3.11% 18.46% 14.32% 2.62% 12.53% -5.33% -13.34%
</TABLE>
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
The inception date of MainStay Institutional International Bond Fund was 1/1/95.
(*) The inception date of MainStay Institutional 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 MainStay Institutional
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 MainStay Institutional
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 MainStay Institutional 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.
(+) 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.
(++) Lipper Inc. is an independent fund performance monitor. Results are based
on total returns with capital gain and dividend distributions reinvested.
(sec.) 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. Returns reflect reinvestment of all income and capital
gains. An investment cannot be made directly into an index.
92
<PAGE> 96
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
LONG-TERM BONDS (95.4%)+
CORPORATE BONDS (13.6%)
PRINCIPAL
AMOUNT VALUE
-----------------------------
<S> <C> <C>
AUSTRIA (1.6%)
Oesterreichische
Kontrollbank AG
1.80%, due 3/22/10....... Y 75,000,000 $ 688,108
-----------
FRANCE (2.8%)
Societe Nationale des
Chemins de Fer
10.40%, due 12/10/01..... FF 9,120,000 1,236,311
-----------
GERMANY (1.7%)
DePfa Deutsche
Pfandbriefbank AG
Series G3
5.00%, due 2/3/05........ E 880,000 732,028
-----------
JAPAN (3.7%)
Inter-American Development
Bank
1.90%, due 7/8/09........ Y 174,000,000 1,611,838
-----------
UNITED KINGDOM (1.0%)
Orange PLC
8.625%, due 8/1/08....... L 287,000 438,618
-----------
UNITED STATES (2.8%)
Bayerische VBK New York
4.50%, due 6/24/02....... E 487,000 407,075
International Business
Machines Corp.
0.90%, due 4/14/03....... Y 89,000,000 814,215
-----------
1,221,290
-----------
Total Corporate Bonds
(Cost $6,554,535)........ 5,928,193
-----------
GOVERNMENTS &
FEDERAL AGENCIES (81.8%)
AUSTRALIA (1.6%)
Australian Government
Series 513
6.50%, due 5/15/13....... A$ 1,267,000 670,767
-----------
AUSTRIA (2.8%)
Republic of Austria
Series 98 2
4.30%, due 7/15/03....... E 1,478,000 1,223,315
-----------
BELGIUM (4.1%)
Kingdom of Belgium Series
10
8.75%, due 6/25/02 (c)... E 1,995,000 1,782,952
-----------
</TABLE>
------------
+ Percentages indicated are based on Fund net assets.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------------
<S> <C> <C>
CANADA (5.0%)
Canadian Government Series
WH31
6.00%, due 6/1/08........ C$ 1,233,000 $ 814,992
Series VR22
7.50%, due 3/1/01........ 1,320,000 871,227
Series VW17
8.00%, due 6/1/27........ 576,000 487,456
-----------
2,173,675
-----------
DENMARK (2.2%)
Kingdom of Denmark
6.00%, due 11/15/09...... DK 3,516,000 413,339
7.00%, due 12/15/04...... 4,587,000 550,110
-----------
963,449
-----------
FINLAND (2.3%)
Finnish Government
5.75%, due 2/23/11....... E 1,132,000 980,881
-----------
FRANCE (2.4%)
France Obligations
Assimilables du Tresor
4.00%, due 4/25/09....... E 1,370,000 1,056,704
-----------
GERMANY (10.2%)
Bundesobligation
Series 127
4.50%, due 5/19/03 (c)... E 1,525,000 1,274,301
Series 125
5.00%, due 11/12/02...... 597,000 504,980
Republic of Deutschland
Series 98
5.25%, due 1/4/08........ 1,713,000 1,454,118
5.625%, due 1/4/28....... 1,438,000 1,214,341
-----------
4,447,740
-----------
GREECE (1.8%)
Hellenic Republic
6.30%, due 1/29/09....... GRD 297,700,000 757,617
-----------
IRELAND (2.4%)
Irish Government
4.00%, due 4/18/10....... E 1,371,000 1,038,154
-----------
ITALY (4.9%)
Buoni Poliennali del
Tesoro
5.25%, due 12/15/05...... E 768,000 648,223
6.00%, due 5/1/31........ 1,224,000 1,043,896
6.50%, due 11/1/27....... 498,000 450,302
-----------
2,142,421
-----------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
93
<PAGE> 97
INTERNATIONAL BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
GOVERNMENTS &
FEDERAL AGENCIES (CONTINUED)
PRINCIPAL
AMOUNT VALUE
-----------------------------
<S> <C> <C>
JAPAN (23.8%)
Japanese Government Series
207
0.90%, due 12/22/08...... Y 181,800,000 $ 1,564,013
Series 47
2.20%, due 9/21/20....... 71,900,000 631,793
Series 181
3.40%, due 6/20/05....... 629,800,000 6,386,180
Series 157
4.50%, due 6/20/03....... 173,900,000 1,744,667
-----------
10,326,653
-----------
MEXICO (1.0%)
United Mexican States
11.50%, due 5/15/26...... $ 363,000 428,340
-----------
NETHERLANDS (3.0%)
Netherlands Government
3.75%, due 7/15/09....... E 1,744,000 1,317,830
-----------
NORWAY (1.5%)
Norwegian Government
9.50%, due 10/31/02...... NK 5,961,000 668,172
-----------
SPAIN (4.2%)
Bonos Y Obligacion del
Estado
4.50%, due 7/30/04....... E 1,055,000 869,641
5.15%, due 7/30/09....... 1,156,000 956,874
-----------
1,826,515
-----------
UNITED KINGDOM (8.6%)
United Kingdom Treasury
Bonds
5.75%, due 12/7/09....... L 1,119,000 1,693,140
6.00%, due 12/7/28....... 418,000 742,331
6.75%, due 11/26/04...... 466,000 704,961
9.00%, due 10/13/08...... 342,000 612,527
-----------
3,752,959
-----------
Total Governments &
Federal Agencies
(Cost $40,161,125)....... 35,558,144
-----------
Total Long-Term Bonds
(Cost $46,715,660)....... 41,486,337
-----------
</TABLE>
<TABLE>
<CAPTION>
PURCHASED OPTIONS (0.3%)
NOTIONAL
AMOUNT VALUE
-----------------------------
<S> <C> <C>
UNITED STATES (0.3%)
U.S. Dollar Call/Euro Put
Strike price E 0.86
Expire 11/3/00
(a)(d)(g)................ 1,782,500 $ 27,729
U.S. Dollar Call/Japanese
Yen Put
Strike price Y 107
Expire 1/18/01
(a)(d)(g).............. 4,610,000 97,144
-----------
Total Purchased Options
(Cost $134,172).......... 124,873
-----------
Total Investments
(Cost $46,849,832) (e)... 95.7% 41,611,210(f)
Cash and Other Assets,
Less Liabilities......... 4.3 1,850,643
--------------- -----------
Net Assets................ 100.0% $43,461,853
=============== ===========
WRITTEN CALL OPTION (0.0%) (B)
UNITED STATES (0.0%) (B)
U.S. Dollar Call/Japanese
Yen Put
Strike price Y 115
Expire 1/18/01
(a)(d)(g)................ (4,610,000) $ (6,614)
-----------
Total Written Call Option
(Premium $29,504)........ $ (6,614)
===========
</TABLE>
------------
(a) Non-income producing security.
(b) Less than one tenth of a percent.
(c) Segregated for foreign currency forward contracts.
(d) Fair valued security.
(e) The cost for federal income tax purposes is $46,998,426.
(f) At October 31, 2000 net unrealized depreciation for securities was
$5,387,216, based on cost for federal income tax purposes. This consisted
of aggregate gross unrealized appreciation for all investments on which
there was an excess of market value over cost of $6,963 and aggregate gross
unrealized depreciation for all investments on which there was an excess of
cost over market value of $5,394,179.
(g) The following abbreviations are used in the above portfolio:
A$ --Australian Dollar
C$ --Canadian Dollar
DK --Danish Krone
E --Euro
FF --French Franc
GRD--Greek Drachma
Y --Japanese Yen
NK --Norwegian Krone
L --Pound Sterling
$ --U.S. Dollar
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
94
<PAGE> 98
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL BOND FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 2000
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $46,849,832)............................... $41,611,210
Cash denominated in foreign currencies (identified
cost $2,042,573)................................ 1,945,205
Cash.............................................. 226,439
Receivables:
Interest........................................ 886,335
Unrealized appreciation on foreign currency
forward contracts (Note 2J)..................... 641,221
-----------
Total assets................................ 45,310,410
-----------
LIABILITIES:
Written call option, at value
(premium received $29,504) (Note 2K)............ 6,614
Payables:
Investment securities purchased................. 675,276
MainStay Management............................. 26,733
Custodian....................................... 11,381
Transfer agent.................................. 4,501
Accrued expenses.................................. 36,655
Unrealized depreciation on foreign currency
forward contracts (Note 2J)..................... 1,087,397
-----------
Total liabilities........................... 1,848,557
-----------
Net assets........................................ $43,461,853
===========
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class............................. $ 5,184
Institutional Service Class..................... 14
Additional paid-in capital........................ 51,383,346
Accumulated undistributed net investment income... 461,376
Accumulated net realized loss on investments...... (2,506,841)
Net unrealized depreciation on investments and
written call option............................. (5,215,732)
Net unrealized depreciation on translation of
other assets and liabilities in foreign
currencies and foreign currency forward
contracts....................................... (665,494)
-----------
Net assets........................................ $43,461,853
===========
Institutional Class
Net assets applicable to outstanding shares....... $43,347,552
===========
Shares of capital stock outstanding............... 5,183,848
===========
Net asset value per share outstanding............. $ 8.36
===========
Institutional Service Class
Net assets applicable to outstanding shares....... $ 114,301
===========
Shares of capital stock outstanding............... 13,726
===========
Net asset value per share outstanding............. $ 8.33
===========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<S> <C>
INVESTMENT INCOME:
Income:
Interest (a)..................................... $ 2,489,254
-----------
Expenses:
Management....................................... 389,421
Professional..................................... 42,855
Transfer agent................................... 27,295
Custodian........................................ 25,195
Registration..................................... 11,362
Shareholder communication........................ 2,045
Directors........................................ 1,344
Service.......................................... 307
Miscellaneous.................................... 26,784
-----------
Total expenses before
reimbursement............................... 526,608
Expense reimbursement from Manager............... (55,842)
-----------
Net expenses................................. 470,766
-----------
Net investment income.............................. 2,018,488
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Security transactions............................ (1,689,660)
Option transactions.............................. 69,266
Foreign currency transactions.................... (3,549,252)
-----------
Net realized loss on investments and foreign
currency transactions............................ (5,169,646)
-----------
Net change in unrealized appreciation
(depreciation) on investments:
Security transactions............................ (3,155,143)
Written call option transactions................. 22,890
Translation of other assets and liabilities in
foreign currencies and foreign currency forward
contracts...................................... (657,693)
-----------
Net unrealized loss on investments and foreign
currency transactions............................ (3,789,946)
-----------
Net realized and unrealized loss on investments and
foreign currency transactions.................... (8,959,592)
-----------
Net decrease in net assets resulting from
operations....................................... $(6,941,104)
===========
</TABLE>
------------
(a) Interest recorded net of foreign withholding taxes of $1,196.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
95
<PAGE> 99
INTERNATIONAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 2000, the period January 1, 1999 through October
31, 1999* and the year ended December 31, 1998
<TABLE>
<CAPTION>
2000 1999* 1998
------------ ----------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 2,018,488 $ 2,143,704 $ 3,089,685
Net realized gain (loss) on investments and foreign
currency transactions................................. (5,169,646) (2,365,648) 1,964,813
Net change in unrealized appreciation (depreciation) on
investments and foreign currency transactions......... (3,789,946) (3,059,163) 1,581,470
------------ ----------- -----------
Net increase (decrease) in net assets resulting from
operations............................................ (6,941,104) (3,281,107) 6,635,968
------------ ----------- -----------
Dividends and distributions to shareholders:
From net investment income and net realized gain on
foreign currency transactions:
Institutional Class................................... (857,901) (234,371) (3,476,092)
Institutional Service Class........................... (1,353) (851) (12,646)
From net realized gain on investments:
Institutional Class................................... -- (780,510) (645,156)
Institutional Service Class........................... -- (2,666) (2,456)
In excess of net investment income:
Institutional Class................................... -- (146,208) --
Institutional Service Class........................... -- (531) --
------------ ----------- -----------
Total dividends and distributions to shareholders... (859,254) (1,165,137) (4,136,350)
------------ ----------- -----------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 1,421,156 3,608,411 11,263,450
Institutional Service Class........................... 15,000 814 21,938
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions:
Institutional Class................................... 850,885 1,147,733 4,116,548
Institutional Service Class........................... 1,353 4,078 14,879
------------ ----------- -----------
2,288,394 4,761,036 15,416,815
Cost of shares redeemed:
Institutional Class................................... (9,729,595) (4,290,956) (3,932,796)
Institutional Service Class........................... (80,854) (22,173) (49,589)
------------ ----------- -----------
Increase (decrease) in net assets derived from capital
share transactions.................................. (7,522,055) 447,907 11,434,430
------------ ----------- -----------
Net increase (decrease) in net assets................. (15,322,413) (3,998,337) 13,934,048
NET ASSETS:
Beginning of period....................................... 58,784,266 62,782,603 48,848,555
------------ ----------- -----------
End of period............................................. $ 43,461,853 $58,784,266 $62,782,603
============ =========== ===========
Accumulated undistributed net investment income at end of
period.................................................. $ 461,376 $ 440,285 $ 235,222
============ =========== ===========
</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.
96
<PAGE> 100
(THIS PAGE INTENTIONALLY LEFT BLANK)
97
<PAGE> 101
INTERNATIONAL BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- -------------
JANUARY 1, 1999
YEAR ENDED THROUGH YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999* DECEMBER 31, 1998
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period.................. $ 9.80 $ 9.74 $ 10.56 $ 10.52 $ 10.05 $ 10.01
------- ------- ------- ------- ------- -------
Net investment income....... 0.38 0.33 0.35 0.37 0.56 0.53
Net realized and unrealized
gain (loss) on
investments................ (0.89) (0.86) (0.62) (0.65) 0.71 0.71
Net realized and unrealized
gain (loss) on foreign
currency transactions...... (0.78) (0.77) (0.30) (0.30) (0.01) (0.01)
------- ------- ------- ------- ------- -------
Total from investment
operations................. (1.29) (1.30) (0.57) (0.58) 1.26 1.23
------- ------- ------- ------- ------- -------
Less dividends and
distributions:
From net investment income
and net realized gain on
foreign currency
transactions............... (0.15) (0.11) (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.............. (0.15) (0.11) (0.19) (0.20) (0.75) (0.72)
------- ------- ------- ------- ------- -------
Net asset value at end of
period..................... $ 8.36 $ 8.33 $ 9.80 $ 9.74 $ 10.56 $ 10.52
======= ======= ======= ======= ======= =======
Total investment return..... (13.34%) (13.49%) (5.33%)(a) (5.50%)(a) 12.53% 12.30%
Ratios (to average net
assets)/Supplemental Data:
Net investment income...... 4.15% 3.90% 4.36%+ 4.11%+ 5.61% 5.36%
Net expenses............... 0.97%(b) 1.22%(b) 0.95%+ 1.20%+ 0.95% 1.20%
Expenses (before
reimbursement)........... 1.08% 1.33% 1.07%+ 1.32%+ 1.08% 1.33%
Portfolio turnover rate..... 175% 175% 251% 251% 299% 299%
Net assets at end of period
(in 000's)................. $43,348 $ 114 $58,585 $ 199 $62,549 $ 234
</TABLE>
------------
* The Fund changed its fiscal year end from December 31 to October 31.
+ Annualized.
(a) Total return is not annualized.
(b) The effect of non-reimbursable interest expense on the expense ratio was
0.02%.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
98
<PAGE> 102
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
---------------------------------------------------------------------------------------------
1997 1996 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.
99
<PAGE> 103
BOND FUND
--------------------------------------------------------------------------------
During the 12 months ended October 31, 2000, the U.S. bond market was affected
by a variety of forces. First was rapid economic growth, which the Federal
Reserve was committed to slowing. Next were a variety of inflationary threats,
including rising oil prices and continued low unemployment. Meanwhile, the
budget surplus prompted a Treasury buyback program that shifted supply and
demand dynamics in the Treasury market. Amid all of this, the Federal Reserve
raised the targeted federal funds rate four times--for a total of 1.25%. These
increases not only impacted the yield curve, but also made it more costly for
corporations to raise capital.
With the exception of convertible bonds, Treasury securities were the
best-performing income securities during the first ten months of 2000. Corporate
bonds, which had looked promising in the closing months of 1999, had mixed
results, while many investors felt the yields on mortgage-backed and
asset-backed securities were inadequate to justify the additional risks these
bonds involved. In October 2000, two government-sponsored enterprises, the
Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan
Mortgage Corporation (Freddie Mac), voluntarily agreed to improve the
transparency of their disclosure provisions. This move was well accepted by the
market and improved the outlook for agency securities going forward.
PERFORMANCE REVIEW
For the 12 months ended October 31, 2000, MainStay Institutional Bond Fund
returned 6.21% for Institutional Class shares and 5.96% for Service Class
shares. Both share classes underperformed the 6.29% return of the average
Lipper(1) intermediate U.S. government fund for the same period. During the
12-month period, both share classes underperformed the 7.30% return of the
Lehman Brothers Aggregate Index.(2)
The Fund was positioned defensively in the last two months of 1999, in
anticipation of possible Y2K difficulties that never arose. Even so, the Fund
benefited by stressing high-quality, liquid bonds through the first quarter of
2000. In that quarter, mortgage-backed securities and corporate bonds tended to
underperform, as demand for Treasuries increased with the government's buyback
program.
During the first quarter of 2000, two Federal Reserve tightening moves helped
increase short-term rates enough to dramatically invert the yield curve.
Although that took a toll on the Fund's performance, during the second quarter
of 2000, signs that the economy was slowing brought demand into better balance
with supply. The Fund sold some of its long-term corporate bond positions to
take profits during this period, which had a positive impact on the Fund's
performance. The Fund's utility rate-reduction bond investments were among the
best-performing asset-backed securities in the second quarter of 2000 and also
contributed positively to the Fund's results. The Fund's duration strategy
during this period helped the Fund.
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. THE FUND'S NET ASSET VALUE WILL FLUCTUATE AND YOU
COULD LOSE MONEY BY INVESTING IN THE FUND.
The Fund may invest in derivatives, which may increase the volatility of the
Fund's net asset value and may result in a loss to the Fund. Investments in
foreign securities may be subject to greater risks than domestic investments.
These risks include currency fluctuations, changes in U.S. or foreign tax or
currency laws, and changes in monetary policies and economic and political
conditions in foreign countries. Investments in the Fund are not guaranteed,
even though some of the Fund's investments are guaranteed by the U.S. government
or its agencies or instrumentalities.
(1) Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with capital gain and dividend distributions reinvested.
(2) The Lehman Brothers Aggregate Index ("the Aggregate Index") includes the
following other Lehman Brothers' indices: the Government Index, the
Corporate Index, the Mortgage-Backed Securities Index, and the Asset-Backed
Securities Index. To qualify for inclusion in the Aggregate Index,
securities must be U.S. dollar-denominated and investment grade, and have a
fixed-rate coupon, a remaining maturity or average life of at least one
year, and a par amount outstanding of at least $150 million.
100
<PAGE> 104
MARKET RALLY
The bond market rallied strongly in the third quarter of 2000, as it became
clear that the Federal Reserve's prior actions were having the desired effect.
Continually rising energy prices also helped to lower economic growth
expectations, although the potential impact on inflation remained a concern.
During the third quarter, the yield curve continued to shift, with the yield
spread between two-year and 30-year Treasuries declining by 38 basis points.
While this shift had a negative impact on Fund performance, stronger results
from the Fund's corporate, mortgage-backed, and asset-backed securities helped
strengthen third-quarter returns.
During October 2000, Treasuries remained strong performers, bolstered by a
projected budget surplus of $237 billion for fiscal 2000--nearly twice the level
a year before. The Fund's decision to remain overweighted in Treasury securities
had a positive impact on performance in October. We also chose to increase
exposure to agency securities, including Fannie Mae and Freddie Mac bonds, to
take advantage of wider spreads and recent initiatives that may increase demand,
while maintaining the Fund's underweighted position in corporate bonds.
LOOKING AHEAD
Recent interest-rate increases are beginning to be felt in both the "old" and
"new" sectors of the economy. While we don't believe this will lead to a
recession, we anticipate a moderation in growth and continued low inflation. We
believe this environment will be positive for Treasuries going into 2001. We
will continue to assess the impact of higher interest rates on corporate
earnings prospects and the mortgage market and will seek to adjust the portfolio
accordingly.
Whatever the markets or the economy may bring, the Fund will continue to seek to
maximize total return, consistent with liquidity, low risk to principal, and
investment in debt securities.
GARY GOODENOUGH
CHRISTOPHER HARMS
Portfolio Managers
MacKay Shields LLC
101
<PAGE> 105
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
BOND FUND VS LEHMAN BROTHERS AGGREGATE INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
LEHMAN BROTHERS AGGREGATE INDEX BOND FUND
------------------------------- ---------
<S> <C> <C>
1/2/91 $250000.00 $250000.00
91 290019.00 285000.00
92 311521.00 303207.00
93 341879.00 332738.00
94 331908.00 321737.00
95 393183.00 379249.00
96 407479.00 389872.00
97 446775.00 423268.00
98 485650.00 456821.00
99 481648.00 445518.00
00 as of 10/31/00 519339.00 477341.00
</TABLE>
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
BOND FUND VS LEHMAN BROTHERS AGGREGATE INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
LEHMAN BROTHERS AGGREGATE INDEX BOND FUND
------------------------------- ---------
<S> <C> <C>
1/2/91 $250000.00 $250000.00
91 290019.00 285000.00
92 311521.00 303207.00
93 341879.00 332738.00
94 331908.00 321737.00
95 393183.00 378212.00
96 407479.00 388121.00
97 446775.00 419984.00
98 485650.00 452463.00
99 481648.00 440162.00
00 as of 10/31/00 519339.00 470217.00
</TABLE>
Source: Lipper Inc., 10/31/00
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(*) AS OF
PERFORMANCE OCTOBER 31, 2000
-----------------------------------------------------------------------------------------------------------------
ONE YEAR FIVE YEARS SINCE INCEPTION
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bond Fund Institutional Class 6.21% 5.35% 6.79%
Bond Fund Service Class(+) 5.96 5.07 6.63
Average Lipper intermediate U.S. government
fund(++) 6.29 5.27 6.38
Lehman Brothers Aggregate Index(sec.) 7.30 6.33 7.72
</TABLE>
YEAR-BY-YEAR PERFORMANCE
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
Ten Month Year
ended ended
Year end December 31 October 31 October 31
---------------------------------------------------------------------------------------------- ---------- ----------
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<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% 6.21%
</TABLE>
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
(*) 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 will vary after this date based on differences in
their expense structures.
(++) Lipper Inc. is an independent fund performance monitor. Results are based
on total returns with capital gain and dividend distributions reinvested.
(sec.) The Lehman Brothers Aggregate Index (the "Aggregate Index") includes the
following other Lehman Brothers' indices: the Government Index, the
Corporate Index, the Mortgage-Backed Securities Index and the
Asset-Backed Securities Index. To qualify for inclusion in the Aggregate
Index, securities must be U.S. dollar-denominated and investment grade,
and have a fixed-rate coupon, a remaining maturity or average life of at
least one year, and a par amount outstanding of at least $150 million.
Previously the Bond Fund has used the Lehman Brothers Gov't/Corporate
Bond Index as a comparative broad-based securities market index.
102
<PAGE> 106
MAINSTAY
INSTITUTIONAL FUNDS INC.
BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
LONG-TERM INVESTMENTS (96.0%)+
ASSET-BACKED SECURITIES (9.2%)
PRINCIPAL
AMOUNT VALUE
---------------------------
<S> <C> <C>
AIRPLANE LEASES (1.7%)
AerCo Ltd.
Series 2A Class A3
7.08%, due 6/15/02 (a)(b)... $ 1,000,000 $ 1,000,300
Morgan Stanley Aircraft
Finance Series 2 Class A3
7.1394%, due 3/15/02
(a)(b)...................... 2,325,000 2,328,023
------------
3,328,323
------------
AUTO LEASES (4.2%)
AmSouth Auto Trust
Series 2000-1 Class A3
6.67%, due 7/15/04.......... 1,945,000 1,943,269
Capital Auto Receivables
Asset Trust
Series 2000-1 Class A2
6.81%, due 4/15/01.......... 1,560,000 1,560,125
Ford Credit Auto Owner Trust
Series 2000-D Class A3
7.15%, due 12/15/03......... 3,075,000 3,091,021
Premier Auto Trust
Series 1999-1 Class A3
5.69%, due 11/8/02.......... 1,656,218 1,646,463
------------
8,240,878
------------
AUTOMOBILES (1.0%)
DaimlerChrysler Auto Trust
Series 2000-B Class A3
7.53%, due 5/10/04 (b)...... 1,980,000 2,006,433
------------
EQUIPMENT LOANS (1.0%)
Case Equipment Loan Trust
Series 1999-A Class A4
5.77%, due 8/15/05.......... 1,650,000 1,623,369
Newcourt Equipment Trust
Securities
Series 1998-1 Class A3
5.24%, due 12/20/02 (b)..... 277,966 275,633
------------
1,899,002
------------
FINANCIAL--MISCELLANEOUS (1.3%)
Citibank Credit Card Issuance
Trust
Series 2000-C1 Class C1
7.45%, due 9/17/07.......... 2,590,000 2,583,939
------------
Total Asset-Backed Securities
(Cost $18,053,640).......... 18,058,575
------------
</TABLE>
------------
+ Percentages indicated are based on Fund net assets.
<TABLE>
<CAPTION>
CORPORATE BONDS (15.5%)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
BANKS--MAJOR REGIONAL (2.2%)
U.S. Bancorp
7.50%, due 6/1/26........... $ 1,580,000 $ 1,586,051
Wachovia Corp.
7.45%, due 7/15/05.......... 1,590,000 1,608,317
Wells Fargo Co.
7.20%, due 5/1/03........... 1,080,000 1,087,668
------------
4,282,036
------------
BANKS--MONEY CENTER (1.4%)
First Union Corp.
7.25%, due 2/15/03.......... 1,330,000 1,329,934
7.55%, due 8/18/05.......... 1,425,000 1,432,524
------------
2,762,458
------------
BROADCAST/MEDIA (1.1%)
Time Warner Entertainment Co.
10.15%, due 5/1/12.......... 1,810,000 2,154,841
------------
CONSUMER FINANCE (1.6%)
General Motors Acceptance
Corp.
7.50%, due 7/15/05.......... 3,195,000 3,227,972
------------
FINANCIAL SERVICES (0.3%)
Salomon, Smith Barney
Holdings Inc.
6.25%, due 5/15/03.......... 695,000 684,102
------------
FOREIGN GOVERNMENT (0.9%)
United Mexican States
9.875%, due 2/1/10.......... 1,835,000 1,895,555
------------
INVESTMENT BANK/BROKERAGE (3.3%)
Lehman Brothers Holdings, Inc.
7.875%, due 8/15/10......... 570,000 566,603
Morgan Stanley Dean Witter & Co.
Series C
7.375%, due 4/15/03......... 2,210,000 2,229,713
Paine Webber Group Inc.
6.375%, due 5/15/04......... 1,750,000 1,713,390
7.625%, due
12/1/09-2/15/14........... 1,890,000 1,916,876
------------
6,426,582
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
103
<PAGE> 107
BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
CORPORATE BONDS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
MACHINERY--DIVERSIFIED (0.6%)
Tenaska Georgia Partners LP
9.50%, due 2/1/30........... $ 1,070,000 $ 1,098,419
------------
OIL-INTEGRATED INTERNATIONAL (0.6%)
Chevron Corp.
6.625%, due 10/1/04......... 1,150,000 1,146,481
------------
REAL ESTATE INVESTMENT/MANAGEMENT (0.8%)
United Dominion Realty Trust, Inc.
8.625%, due 3/15/03......... 1,665,000 1,679,485
------------
RESIDENTIAL MORTGAGE LOAN (1.0%)
Abbey National PLC
7.95%, due 10/26/29......... 1,975,000 2,000,576
------------
TELECOMMUNICATIONS--LONG DISTANCE (1.7%)
Sprint Capital Corp.
5.875%, due 5/1/04.......... 1,095,000 1,045,265
6.125%, due 11/15/08........ 2,490,000 2,218,316
------------
3,263,581
------------
Total Corporate Bonds
(Cost $30,393,569).......... 30,622,088
------------
MORTGAGE-BACKED SECURITIES (1.6%)
COMMERCIAL MORTGAGE LOANS
(COLLATERALIZED MORTGAGE OBLIGATIONS) (1.6%)
GMAC Commercial Mortgage
Securities Inc.
1998-C2 Class A2
6.42%, due 5/15/35.......... 635,000 613,766
Merrill Lynch Mortgage
Investors, Inc.
Series 1995-C2 Class A1
6.8252%, due 6/15/21 (b).... 733,202 728,048
Salomon Brothers Mortgage
Securities VII
Series 2000-FL1 Class A
6.9188%, due 4/5/01
(a)(b).................... 954,343 954,343
Starwood Asset Receivables
Trust
Series 2000-1 Class A
6.92%, due 9/25/22 (a)(b)... 791,551 791,788
------------
3,087,945
------------
Total Mortgage-Backed
Securities
(Cost $3,079,134)........... 3,087,945
------------
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT &
FEDERAL AGENCIES (69.7%)
PRINCIPAL
AMOUNT VALUE
--------------------------
<S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION (7.6%)
6.625%, due 8/15/02......... $ 10,195,000 $ 10,228,847
7.00%, due 3/15/10.......... 4,610,000 4,701,047
------------
14,929,894
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (4.7%)
5.125%, due 2/13/04......... 9,735,000 9,343,653
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (9.9%)
6.50%, due 11/21/15 TBA
(d)....................... 18,920,000 18,541,600
7.00%, due 4/1/30........... 931,643 913,597
------------
19,455,197
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (24.5%)
6.00%, due 4/15/29.......... 4,533,013 4,273,770
6.50%, due 7/15/28-5/15/29
(c)....................... 23,868,330 23,062,774
6.50%, due 1/23/31 TBA
(d)....................... 1,920,000 1,853,702
7.50%, due 12/15/28-8/15/30
(c)....................... 18,863,568 18,944,805
------------
48,135,051
------------
UNITED STATES TREASURY BONDS (15.5%)
6.00%, due 2/15/26.......... 165,000 165,490
6.25%, due 8/15/23-5/15/30
(e)....................... 16,245,000 16,998,184
8.75%, due 8/15/20.......... 1,065,000 1,399,314
11.25%, due 2/15/15 (e)..... 4,945,000 7,415,918
12.00%, due 8/15/13 (e)..... 3,335,000 4,558,011
------------
30,536,917
------------
UNITED STATES TREASURY NOTES (7.1%)
5.25%, due 8/15/03.......... 1,825,000 1,794,778
5.75%, due 8/15/10 (e)...... 5,725,000 5,719,619
5.875%, due 11/30/01-
11/15/05.................. 4,550,000 4,530,815
7.00%, due 7/15/06.......... 1,790,000 1,886,946
------------
13,932,158
------------
UNITED STATES TREASURY (STRIPS)
(SECURED STRIPPED BONDS) (0.4%)
(zero coupon), due
11/15/27.................. 3,680,000 762,938
------------
Total U.S. Government &
Federal Agencies
(Cost $135,775,075)......... 137,095,808
------------
Total Long-Term Investments
(Cost $187,301,418)......... 188,864,416
------------
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
104
<PAGE> 108
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS (3.5%)
PRINCIPAL
AMOUNT VALUE
---------------------------
<S> <C> <C>
COMMERCIAL PAPER (2.5%)
Associates Corporation
6.63%, due 11/1/00.......... $ 4,865,000 $ 4,865,000
------------
SHARES
------------
INVESTMENT COMPANY (1.0%)
Merrill Lynch Premier Fund
Institutional Fund........... 1,877,628 1,877,628
------------
Total Short-Term Investments
(Cost $6,742,628)............ 6,742,628
------------
Total Investments
(Cost $194,044,046) (f)..... 99.5% 195,607,044(g)
Cash and Other Assets,
Less Liabilities............ 0.5 1,039,696
------------ ------------
Net Assets................... 100.0% $196,646,740
============ ============
</TABLE>
------------
(a) May be sold to institutional investors only.
(b) Floating rate. Rate shown is the rate in effect at October 31, 2000.
(c) Segregated as collateral for TBAs.
(d) TBA: Securities purchased on a forward commitment basis with an approximate
principal amount and maturity date. The actual principal amount and
maturity date will be determined upon settlement.
(e) Represents securities out on loan or a portion of which is out on loan.
(See Note 2(o))
(f) The cost for federal income tax purposes is $194,069,681.
(g) At October 31, 2000 net unrealized appreciation was $1,537,363, 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 $1,949,718 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $412,355.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
105
<PAGE> 109
BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $194,044,046)............................. $195,607,044
Cash............................................. 2,754
Collateral held for securities loaned at value
(Note 2(O)).................................... 24,604,659
Receivables:
Investment securities sold..................... 19,521,917
Interest....................................... 2,194,645
Fund shares sold............................... 4,639
------------
Total assets............................... 241,935,658
------------
LIABILITIES:
Securities lending collateral (Note 2(O))........ 24,604,659
Payables:
Investment securities purchased................ 20,435,883
MainStay Management............................ 119,845
Fund shares redeemed........................... 71,064
Custodian...................................... 15,958
Transfer agent................................. 5,254
Accrued expenses................................. 36,255
------------
Total liabilities.......................... 45,288,918
------------
Net assets....................................... $196,646,740
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class............................ $ 19,847
Institutional Service Class.................... 328
Additional paid-in capital....................... 204,639,472
Accumulated undistributed net investment
income......................................... 9,597,852
Accumulated net realized loss on investments..... (19,173,757)
Net unrealized appreciation on investments....... 1,562,998
------------
Net assets....................................... $196,646,740
============
Institutional Class
Net assets applicable to outstanding shares...... $193,465,612
============
Shares of capital stock outstanding.............. 19,846,882
============
Net asset value per share outstanding............ $ 9.75
============
Institutional Service Class
Net assets applicable to outstanding shares...... $ 3,181,128
============
Shares of capital stock outstanding.............. 327,983
============
Net asset value per share outstanding............ $ 9.70
============
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<S> <C>
INVESTMENT INCOME:
Income:
Interest........................................ $12,768,589
-----------
Expenses:
Management...................................... 1,404,681
Professional.................................... 46,859
Custodian....................................... 33,207
Transfer agent.................................. 31,010
Registration.................................... 12,437
Service......................................... 7,635
Shareholder communication....................... 7,338
Directors....................................... 4,955
Miscellaneous................................... 35,381
-----------
Total expenses before reimbursement......... 1,583,503
Expense reimbursement from Manager.............. (152,913)
-----------
Net expenses................................ 1,430,590
-----------
Net investment income............................. 11,337,999
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments.................. (3,469,851)
Net change in unrealized depreciation on
investments..................................... 3,816,897
-----------
Net realized and unrealized gain on investments... 347,046
-----------
Net increase in net assets resulting from
operations...................................... $11,685,045
===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
106
<PAGE> 110
MAINSTAY
INSTITUTIONAL FUNDS INC.
BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 2000, the period January 1, 1999 through October
31, 1999* and the year ended December 31, 1998
<TABLE>
<CAPTION>
2000 1999* 1998
------------ ------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 11,337,999 $ 8,543,342 $ 10,198,132
Net realized gain (loss) on investments................. (3,469,851) (8,369,780) 5,448,970
Net change in unrealized appreciation (depreciation) on
investments........................................... 3,816,897 (3,487,234) (1,510,793)
------------ ------------- -------------
Net increase (decrease) in net assets resulting from
operations............................................ 11,685,045 (3,313,672) 14,136,309
------------ ------------- -------------
Dividends to shareholders:
From net investment income:
Institutional Class................................... (10,180,230) (1,803) (9,963,260)
Institutional Service Class........................... (163,803) (39) (233,262)
------------ ------------- -------------
Total dividends to shareholders..................... (10,344,033) (1,842) (10,196,522)
------------ ------------- -------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 22,891,452 12,117,127 27,884,675
Institutional Service Class........................... 1,943,065 5,168,118 4,359,791
Net asset value of shares issued to shareholders in
reinvestment of dividends:
Institutional Class................................... 10,034,611 1,777 9,817,383
Institutional Service Class........................... 147,953 31 181,161
------------ ------------- -------------
35,017,081 17,287,053 42,243,010
Cost of shares redeemed:
Institutional Class................................... (15,307,943) (16,799,256) (43,075,789)
Institutional Service Class........................... (2,666,411) (5,601,072) (1,791,909)
------------ ------------- -------------
Increase (decrease) in net assets derived from capital
share transactions.................................. 17,042,727 (5,113,275) (2,624,688)
------------ ------------- -------------
Net increase (decrease) in net assets................. 18,383,739 (8,428,789) 1,315,099
NET ASSETS:
Beginning of period....................................... 178,263,001 186,691,790 185,376,691
------------ ------------- -------------
End of period............................................. $196,646,740 $ 178,263,001 $ 186,691,790
============ ============= =============
Accumulated undistributed net investment income at end of
period.................................................. $ 9,597,852 $ 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.
107
<PAGE> 111
BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- -------------
JANUARY 1, 1999
YEAR ENDED THROUGH YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999* DECEMBER 31, 1998
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period.................. $ 9.75 $ 9.69 $ 9.91 $ 9.88 $ 9.71 $ 9.68
-------- -------- -------- -------- -------- --------
Net investment income....... 0.57 0.55 0.47 0.47 0.57 0.54
Net realized and unrealized
gain (loss) on
investments................ (0.01) (0.01) (0.63) (0.66) 0.20 0.20
-------- -------- -------- -------- -------- --------
Total from investment
operations................. 0.56 0.54 (0.16) (0.19) 0.77 0.74
-------- -------- -------- -------- -------- --------
Less dividends from net
investment income.......... (0.56) (0.53) (0.00)(b) (0.00)(b) (0.57) (0.54)
-------- -------- -------- -------- -------- --------
Net asset value at end of
period..................... $ 9.75 $ 9.70 $ 9.75 $ 9.69 $ 9.91 $ 9.88
======== ======== ======== ======== ======== ========
Total investment return..... 6.21% 5.96% (1.61%)(a) (1.92%)(a) 7.93% 7.73%
Ratios (to average net
assets)/Supplemental Data:
Net investment income...... 6.05% 5.80% 5.55%+ 5.30%+ 5.57% 5.32%
Net expenses............... 0.75% 1.00% 0.75%+ 1.00%+ 0.75% 1.00%
Expenses (before
reimbursement)........... 0.83% 1.08% 0.85%+ 1.10%+ 0.86% 1.11%
Portfolio turnover rate..... 361% 361% 245% 245% 335% 335%
Net assets at end of period
(in 000's)................. $193,466 $ 3,181 $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.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
108
<PAGE> 112
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
---------------------------------------------------------------------------------------------
1997 1996 1995
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 9.51 $ 9.49 $ 9.85 $ 9.83 $ 8.93 $ 8.93
-------- -------- -------- -------- -------- --------
0.61 0.59 0.62 0.60 0.68 0.67
0.20 0.19 (0.34) (0.34) 0.92 0.90
-------- -------- -------- -------- -------- --------
0.81 0.78 0.28 0.26 1.60 1.57
-------- -------- -------- -------- -------- --------
(0.61) (0.59) (0.62) (0.60) (0.68) (0.67)
-------- -------- -------- -------- -------- --------
$ 9.71 $ 9.68 $ 9.51 $ 9.49 $ 9.85 $ 9.83
======== ======== ======== ======== ======== ========
8.57% 8.21% 2.80% 2.62% 17.88% 17.55%
6.21% 5.96% 6.10% 5.85% 6.62% 6.37%
0.75% 1.00% 0.75% 1.00% 0.75% 1.00%
0.85% 1.10% 0.86% 1.11% 0.86% 1.11%
338% 338% 398% 398% 470% 470%
$183,846 $ 1,531 $177,009 $ 1,597 $193,518 $ 749
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
109
<PAGE> 113
INDEXED BOND FUND
--------------------------------------------------------------------------------
During the 12 months ended October 31, 2000, several forces affected the
investment-grade bond market. In the first half of the reporting period, the
rate of economic growth and the potential for inflation led to ongoing concerns
about Federal Reserve interest-rate hikes. Over the course of the 12-month
period, the Federal Reserve raised the targeted federal funds rate four times,
for a total of 1.25%.
Fortunately, in the third calendar quarter of 2000, concern about rising
interest rates seemed to abate somewhat, as evidence began to suggest that the
economy was slowing, rate increases were reducing stock market exuberance, and
earlier tightening moves were having the desired effect. Although the stock
market faced some setbacks during the year, they were generally positive for
bonds, as fund flows increased and investors moved into Treasuries to address
quality concerns.
During the reporting period, the government's Treasury buyback program decreased
the supply of older Treasury issues, which helped strengthen prices. A
Congressional inquiry into the status of the federal guarantee for government
sponsored enterprises caused agency securities to falter a bit, and in general,
the rising cost of borrowing had a negative impact on corporate bonds.
PERFORMANCE REVIEW
For the 12 months ended October 31, 2000, MainStay Institutional Indexed Bond
Fund returned 7.27% for Institutional Class shares and 6.87% for Service Class
shares. Both share classes outperformed the 6.77% return of the average
Lipper(1) general U.S. government fund for the same period. During the 12-month
period, both share classes underperformed the 7.28% return of the Salomon Smith
Barney Broad Investment Grade (BIG) Bond Index.(2) Investors should expect the
Fund to lag the Index somewhat, since the Fund faces real-world fees and
expenses that a hypothetical index does not.
As of October 31, 2000, the Fund's portfolio closely tracked its benchmark, with
an effective duration of 4.82 years (versus 4.84 years for the Index), and an
average coupon of 6.74% (versus 6.88% for the Index).
STRENGTHS AND WEAKNESSES
Rising interest rates during much of the Fund's fiscal year led to stock market
volatility and widening yield spreads between corporate bonds and comparable
Treasury securities. With investors seeking a high-quality alternative to stock
investments, particularly after technology stocks tumbled in April and May,
demand for Treasuries was strong. This strength was compounded by the
government's buyback program, which further diminished supply. As the yield
curve flattened, Treasuries outperformed other sectors, returning 8.22% over the
12-month reporting period. The Fund's use of a slight barbell
strategy--emphasizing the short and long ends of the yield curve, instead of
spreading exposure equally across the maturity spectrum--had a positive impact
on performance as the yield curve flattened and longer-dated issues outperformed
intermediate-term bonds.
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
The Fund may invest in derivatives, which may increase the volatility of the
Fund's net asset value and may result in a loss to the Fund. Investments in
foreign securities may be subject to greater risks than domestic investments.
These risks include currency fluctuations, changes in U.S. or foreign tax or
currency laws, and changes in monetary policies and economic and political
conditions in foreign countries.
(1) Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with capital gain and dividend distributions reinvested.
(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.
Total returns reflect reinvestment of all income and capital gains. An
investment cannot be made directly into an index.
110
<PAGE> 114
--------------------------------------------------------------------------------
Corporate bonds turned in the weakest performance for the Fund's fiscal year,
returning 5.40%. Within the corporate sector, quality impacted performance, with
AAA-rated corporate bonds returning 7.16% for the 12 months ended October 31,
2000, compared to BBB-rated corporates,(3) which returned just 4.00% over the
same period. During the fiscal year, the Fund benefited from judicious selection
among corporate issuers, which helped avoid any serious credit downgrades.
As interest rates rose, mortgage-backed securities benefited from decreasing
supply and slower prepayment rates, returning 7.67% for the Fund's fiscal year.
Despite concerns over federal guarantees, certain government sponsored
enterprises undertook voluntary initiatives to improve the transparency of their
disclosure. This was generally well-received in the market and helped boost
agency security performance in October. For the 12 months ended October 31,
2000, agencies returned 7.48%.
LOOKING AHEAD
With earnings disappointments rocking the corporate sector, we believe many
market participants may prefer higher-quality debt at least for the next several
months. As the government continues to buy back Treasuries, the decreasing
supply may impact both liquidity and benchmarking. Many investors now consider
the 10-year Treasury to be the bellwether Treasury issue, while some feel that
agency or corporate issues may eventually replace Treasuries as the bellwether
issue.
As we move into the new year, new forces may begin to shape economic and market
expectations. Whatever happens to interest rates or bond prices, 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
--------------------------------------------------------------------------------
(3) Bonds rated AAA by Standard & Poor's have the highest quality rating, and
according to Standard & Poor's, the obligor's capacity to meet its financial
commitment on the obligation is extremely strong. According to Standard &
Poor's, 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.
111
<PAGE> 115
$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>
SALOMON SMITH BARNEY BIG BOND
INDEX INDEXED BOND FUND
----------------------------- -----------------------------------
<S> <C> <C>
1/2/91 $250000.00 $250000.00
91 289968.00 286750.00
92 311935.00 307085.00
93 342897.00 336674.00
94 333138.00 325086.00
95 394858.00 383841.00
96 409133.00 393620.00
97 448509.00 429101.00
98 487598.00 464316.00
99 483528.00 454206.00
00 as of 10/31/00 521107.00 490305.00
</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>
SALOMON SMITH BARNEY BIG BOND
INDEX INDEXED BOND FUND
----------------------------- -----------------------------------
<S> <C> <C>
1/2/91 $250000.00 $250000.00
91 289968.00 286750.00
92 311935.00 307085.00
93 342897.00 336674.00
94 333138.00 325086.00
95 394858.00 383515.00
96 409133.00 392477.00
97 448509.00 426819.00
98 487598.00 460362.00
99 483528.00 449489.00
00 as of 10/31/00 521107.00 483856.00
</TABLE>
Source: Lipper Inc., 10/31/00
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(*)
PERFORMANCE AS OF OCTOBER 31, 2000
--------------------------------------------------------------------------------------------------------------
ONE YEAR FIVE YEARS SINCE INCEPTION
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Indexed Bond Fund Institutional Class 7.27% 5.63% 7.08%
Indexed Bond Fund Service Class(+) 6.87 5.33 6.94
Average Lipper general U.S. government
fund(++) 6.77 5.24 6.60
Salomon Smith Barney BIG Bond Index(sec.) 7.28 6.32 7.75
</TABLE>
YEAR-BY-YEAR PERFORMANCE
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
Ten Months Year
ended ended
Year end December 31 October 31 October 31
----------------------------------------------------------------------------------------------- ----------- -----------
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<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% 7.27%
</TABLE>
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
(*) 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 will vary after this date based on differences in
their expense structures.
(++) Lipper Inc. is an independent fund performance monitor. Results are based
on total returns with capital gain and dividend distributions reinvested.
(sec.) The Salomon Smith Barney Broad Investment Grade (BIG) Bond Index is an
unmanaged index that is considered to be representative of the U.S. bond
market. Returns reflect the reinvestment of all income and capital gains.
An investment cannot be made directly into an index.
112
<PAGE> 116
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
LONG-TERM INVESTMENTS (98.0%)+
CORPORATE BONDS (19.4%)
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
AUTO LEASES (0.7%)
Ford Motor Credit Co.
7.875%, due 6/15/10............ $1,000,000 $ 1,008,400
------------
BEVERAGES--SOFT DRINKS (0.4%)
Coca-Cola Enterprises, Inc.
8.50%, due 2/1/22.............. 500,000 535,000
------------
BROADCAST/MEDIA (0.8%)
Cox Communications, Inc.
6.50%, due 11/15/02............ 1,200,000 1,186,500
------------
CHEMICALS (0.6%)
DuPont (E.I.) de Nemours & Co.
8.125%, due 3/15/04............ 800,000 829,000
------------
COMMERCIAL SERVICES SPECIALIZED (0.5%)
Hertz Corp.
7.00%, due 7/15/03............. 700,000 700,000
------------
CONGLOMERATES (1.4%)
Textron Inc.
6.375%, due 7/15/04............ 2,000,000 1,952,500
------------
ELECTRIC POWER COMPANIES (1.2%)
PP & L Resources, Inc.
7.30%, due 3/1/24.............. 1,000,000 910,000
Texas Utility Electric Co.
8.25%, due 4/1/04.............. 800,000 826,000
------------
1,736,000
------------
ELECTRONICS--SEMICONDUCTORS (1.2%)
Motorola, Inc.
8.40%, due 8/15/31............. 1,500,000 1,610,625
------------
ENTERTAINMENT (0.4%)
Walt Disney Co. (The)
6.75%, due 3/30/06............. 600,000 599,250
------------
FINANCE (2.9%)
American Express Credit Corp.
6.125%, due 11/15/01........... 2,000,000 1,987,500
Commercial Credit Co.
8.70%, due 6/15/10............. 450,000 486,000
General Electric Capital Corp.
7.50%, due 5/15/05............. 1,000,000 1,022,500
KFW International Finance, Inc.
9.125%, due 5/15/01............ 500,000 505,625
------------
4,001,625
------------
INSURANCE (2.1%)
Aetna Services Inc.
7.625%, due 8/15/26............ 3,000,000 2,898,750
------------
</TABLE>
------------
+ Percentages indicated are based on Fund net assets.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
INVESTMENT BANK/BROKERAGE (0.7%)
Salomon Smith Barney Holdings
6.875%, due 6/15/05............ $1,000,000 $ 983,750
------------
MACHINERY--DIVERSIFIED (0.4%)
Caterpillar, Inc.
9.00%, due 4/15/06............. 500,000 540,000
------------
OIL--INTEGRATED DOMESTIC (0.8%)
USX-Marathon Corp.
7.20%, due 2/15/04............. 1,100,000 1,095,875
------------
OIL--INTEGRATED INTERNATIONAL (0.3%)
Texaco Capital Inc.
9.75%, due 3/15/20............. 350,000 430,063
------------
PAPER & FOREST PRODUCTS (0.4%)
Scott Paper Co.
7.00%, due 8/15/23............. 650,000 591,500
------------
RETAIL STORES--APPAREL (1.2%)
Limited, Inc.
7.50%, due 3/15/23............. 1,900,000 1,598,375
------------
TELECOMMUNICATIONS--LONG DISTANCE (1.8%)
AT&T Corp.
8.625%, due 12/1/31............ 1,500,000 1,479,375
Sprint Corp.
9.50%, due 4/1/03.............. 1,000,000 1,048,750
------------
2,528,125
------------
TRANSPORTATION--MISCELLANEOUS (0.8%)
Ryder System Inc.
9.875%, due 5/15/17............ 1,000,000 1,093,750
------------
UTILITY--ELECTRIC & GAS (0.8%)
Duke Capital Corp.
6.25%, due 7/15/05............. 1,200,000 1,164,000
------------
Total Corporate Bonds
(Cost $27,854,796)............. 27,083,088
------------
INTERNATIONAL
CORPORATE BONDS (2.0%)
BANKS (2.0%)
ABN Amro Bank, NV
Chicago Branch
7.55%, due 6/28/06............. 800,000 811,000
Bayerische Landesbank
Girozentrale New York Branch
6.20%, due 2/9/06.............. 1,900,000 1,826,375
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
113
<PAGE> 117
INDEXED BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<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.................... $1,000,000 $ 123,750
------------
Total International Corporate
Bonds
(Cost $2,815,378).............. 2,761,125
------------
U.S. GOVERNMENT &
FEDERAL AGENCIES (72.0%)
FEDERAL HOME LOAN BANK (MEDIUM TERM NOTE) (1.0%)
8.00%, due 9/11/01............. 1,400,000 1,416,478
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(0.8%)
(zero coupon), due 12/11/25.... 1,000,000 185,000
6.45%, due 4/29/09............. 1,100,000 1,047,178
------------
1,232,178
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(MORTGAGE PASS-THROUGH SECURITIES) (11.7%)
6.00%, due 9/1/02-3/1/29....... 1,251,320 1,208,258
6.50%, due 10/1/01-7/1/29...... 8,464,806 8,216,705
7.00%, due 8/1/03-1/1/30....... 4,623,153 4,550,920
7.50%, due 9/1/11-2/1/30....... 2,018,865 2,020,707
8.00%, due 7/1/26.............. 309,578 313,735
------------
16,310,325
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (2.2%)
(zero coupon), due 7/5/14...... 2,500,000 1,006,925
7.25%, due 1/15/10............. 2,000,000 2,072,420
------------
3,079,345
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE PASS-THROUGH SECURITIES) (15.2%)
5.50%, due 3/1/05.............. 1,092,261 1,041,744
6.00%, due 5/1/29.............. 4,728,559 4,434,490
6.50%, due 3/1/11-10/1/28...... 8,719,943 8,416,881
7.00%, due 5/1/11-1/1/28....... 2,289,062 2,255,177
7.50%, due 11/1/26-1/1/28...... 1,136,775 1,134,990
8.00%, due 7/1/07-1/1/28....... 2,769,487 2,804,401
9.50%, due 3/1/16-9/1/19....... 1,044,745 1,084,247
------------
21,171,930
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION I (MORTGAGE
PASS-THROUGH SECURITIES) (6.6%)
6.50%, due 2/15/29-8/15/29..... 5,208,202 5,029,144
7.00%, due 3/15/07-5/15/26..... 1,129,413 1,121,864
7.50%, due 8/15/08-1/15/30..... 2,442,573 2,455,348
8.00%, due 6/15/26-9/15/27..... 274,128 278,582
8.50%, due 7/15/26-11/15/26.... 307,971 315,956
------------
9,200,894
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-------------------------
<S> <C> <C>
TENNESSEE VALLEY AUTHORITY (0.7%)
Power Board 1994 Series A
7.85%, due 6/15/44........... $1,000,000 $ 1,016,250
------------
UNITED STATES TREASURY BONDS (12.1%)
5.25%, due 2/15/29............. 630,000 573,401
7.125%, due 2/15/23............ 600,000 682,488
7.25%, due 5/15/16............. 1,500,000 1,687,920
7.50%, due 11/15/16............ 800,000 921,416
7.625%, due 11/15/22........... 400,000 478,776
8.00%, due 11/15/21............ 1,000,000 1,235,930
8.125%, due 8/15/19-5/15/21.... 1,300,000 1,614,527
8.50%, due 2/15/20............. 400,000 512,520
8.75%, due 5/15/17-8/15/20..... 1,500,000 1,956,305
8.875%, due 2/15/19............ 600,000 788,820
9.375%, due 2/15/06............ 530,000 613,618
9.875%, due 11/15/15........... 600,000 827,892
10.375%, due 11/15/12.......... 500,000 623,415
11.25%, due 2/15/15............ 400,000 599,872
11.875%, due 11/15/03.......... 500,000 581,070
12.75%, due 11/15/10........... 400,000 515,692
13.125%, due 5/15/01........... 1,000,000 1,034,760
13.375%, due 8/15/01........... 1,200,000 1,263,180
14.25%, due 2/15/02............ 300,000 329,412
------------
16,841,014
------------
UNITED STATES TREASURY NOTES (20.3%)
4.75%, due 11/15/08............ 2,000,000 1,861,060
5.25%, due 5/15/04............. 3,000,000 2,940,090
5.625%, due 12/31/02........... 400,000 397,332
5.75%, due 8/15/03............. 1,600,000 1,594,000
6.00%, due 8/15/09............. 650,000 656,500
6.125%, due 8/15/07............ 1,400,000 1,419,866
6.25%, due 4/30/01-2/15/03..... 8,200,000 8,203,084
6.375%, due 8/15/02............ 1,000,000 1,006,170
6.50%, due 10/15/06............ 2,200,000 2,268,794
6.75%, due 5/15/05............. 3,000,000 3,110,160
7.00%, due 7/15/06............. 1,000,000 1,054,160
7.50%, due 11/15/01-2/15/05.... 3,750,000 3,830,234
------------
28,341,450
------------
UNITED STATES TREASURY (STRIPS)
(SECURED STRIPPED BOND) (1.4%)
(zero coupon), due 2/15/05..... 2,500,000 1,952,325
------------
Total U.S. Government &
Federal Agencies (Cost
$100,587,571).................. 100,562,189(b)
------------
YANKEE BONDS (4.6%)
BANKS (1.3%)
Australia & New Zealand Banking
Group, Ltd.
7.55%, due 9/15/06............. 700,000 709,625
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
114
<PAGE> 118
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
YANKEE BONDS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
-------------------------
<S> <C> <C>
BANKS (CONTINUED)
Inter-American Development Bank
6.80%, due 10/15/25............ $1,200,000 $ 1,174,500
------------
1,884,125
------------
COMMUNICATIONS EQUIPMENT (0.4%)
Nortel Networks Corp.
8.75%, due 6/12/01............. 500,000 504,375
------------
CONSUMER FINANCE (0.4%)
Japan Financial Corp.
8.70%, due 7/30/01............. 600,000 608,250
------------
FOREIGN GOVERNMENTS (2.5%)
Ontario (Province of)
6.00%, due 2/21/06............. 3,000,000 2,902,500
Quebec (Province of)
7.50%, due 7/15/23............. 600,000 595,500
------------
3,498,000
------------
Total Yankee Bonds
(Cost $6,481,629).............. 6,494,750
------------
Total Long-Term Investments
(Cost $137,739,374)............ 136,901,152
------------
SHORT-TERM INVESTMENTS (1.5%)
U.S. GOVERNMENT (1.5%)
United States Treasury Bills
6.02%, due 1/11/01 (a)......... 100,000 98,807
6.10%, due 1/4/01 (a).......... 2,000,000 1,978,516
------------
Total Short-Term Investments
(Cost $2,077,323).............. 2,077,323
------------
Total Investments
(Cost $139,816,697) (c)........ 99.5% 138,978,475(d)
Cash and Other Assets,
Less Liabilities............... 0.5 688,163
---------- ----------
Net Assets...................... 100.0% $139,666,638
========== ==========
</TABLE>
<TABLE>
<CAPTION>
FUTURES CONTRACTS (-0.0%)(e)
CONTRACTS UNREALIZED
LONG (DEPRECIATION)(f)
----------------------------
<S> <C> <C>
United States Treasury Note
December 2000 (5 Year)..... 6 $ (2,731)
United States Treasury Note
December 2000 (10 Year).... 2 (1,864)
United States Treasury Bond
December 2000 (30 Year).... 2 (239)
--------
Total Futures Contracts
(Settlement Value
$1,010,053) (b)............ $ (4,834)
========
</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 72.7% of net assets.
(c) The cost stated also represents the aggregate cost for federal income tax
purposes.
(d) At October 31, 2000 net unrealized depreciation was $838,222, based on cost
for federal income tax purposes. This consisted of aggregate gross
unrealized appreciation for all investments on which there was an excess of
market value over cost of $2,194,276 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $3,032,498.
(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, 2000.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
115
<PAGE> 119
INDEXED BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 2000
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $139,816,697)............................. $138,978,475
Cash............................................. 377
Receivables:
Interest....................................... 1,965,623
Fund shares sold............................... 1,120
------------
Total assets............................... 140,945,595
------------
LIABILITIES:
Payables:
Investment securities purchased................ 1,069,541
Fund shares redeemed........................... 115,150
MainStay Management............................ 43,362
Custodian...................................... 17,248
Transfer agent................................. 5,130
Variation margin on futures contracts.......... 1,425
Accrued expenses................................. 27,101
------------
Total liabilities.......................... 1,278,957
------------
Net assets....................................... $139,666,638
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class............................ $ 12,682
Institutional Service Class.................... 340
Additional paid-in capital....................... 137,966,564
Accumulated undistributed net investment
income......................................... 7,640,252
Accumulated net realized loss on investments and
futures contracts.............................. (5,110,144)
Net unrealized depreciation on investments and
futures contracts.............................. (843,056)
------------
Net assets....................................... $139,666,638
============
Institutional Class
Net assets applicable to outstanding shares...... $136,032,877
============
Shares of capital stock outstanding.............. 12,681,916
============
Net asset value per share outstanding............ $ 10.73
============
Institutional Service Class
Net assets applicable to outstanding shares...... $ 3,633,761
============
Shares of capital stock outstanding.............. 339,504
============
Net asset value per share outstanding............ $ 10.70
============
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Income:
Interest......................................... $ 9,949,938
-----------
Expenses:
Management....................................... 697,265
Professional..................................... 42,227
Custodian........................................ 40,073
Transfer agent................................... 34,975
Pricing Service.................................. 25,169
Registration..................................... 13,058
Service.......................................... 8,339
Shareholder communication........................ 5,473
Directors........................................ 3,755
Miscellaneous.................................... 13,777
-----------
Total expenses before
reimbursement............................... 884,111
Expense reimbursement from Manager............... (176,961)
-----------
Net expenses................................. 707,150
-----------
Net investment income.............................. 9,242,788
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized gain (loss) from:
Security transactions............................ (1,751,395)
Futures transactions............................. 5,255
-----------
Net realized loss on investments................... (1,746,140)
-----------
Net change in unrealized depreciation on
investments:
Security transactions............................ 2,035,882
Futures transactions............................. (7,861)
-----------
Net unrealized gain on investments................. 2,028,021
-----------
Net realized and unrealized gain on investments.... 281,881
-----------
Net increase in net assets resulting from
operations....................................... $ 9,524,669
===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
116
<PAGE> 120
MAINSTAY
INSTITUTIONAL FUNDS INC.
INDEXED BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 2000, the period January 1, 1999 through October
31, 1999* and the year ended December 31, 1998
<TABLE>
<CAPTION>
2000 1999* 1998
-------------- -------------- --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 9,242,788 $ 8,505,562 $ 9,484,561
Net realized loss on investments and futures
contracts............................................. (1,746,140) (1,634,425) (67,058)
Net change in unrealized appreciation (depreciation) on
investments and futures contracts..................... 2,028,021 (9,396,705) 2,292,755
-------------- -------------- --------------
Net increase (decrease) in net assets resulting from
operations............................................ 9,524,669 (2,525,568) 11,710,258
-------------- -------------- --------------
Dividends to shareholders:
From net investment income:
Institutional Class................................... (9,983,098) -- (9,236,677)
Institutional Service Class........................... (218,895) -- (219,665)
-------------- -------------- --------------
Total dividends to shareholders..................... (10,201,993) -- (9,456,342)
-------------- -------------- --------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 14,753,277 25,386,219 61,976,290
Institutional Service Class........................... 969,708 772,435 1,367,196
Net asset value of shares issued to shareholders in
reinvestment of dividends:
Institutional Class................................... 9,947,786 -- 9,210,122
Institutional Service Class........................... 218,891 -- 219,629
-------------- -------------- --------------
25,889,662 26,158,654 72,773,237
Cost of shares redeemed:
Institutional Class................................... (33,410,145) (33,747,011) (35,070,585)
Institutional Service Class........................... (907,953) (1,238,448) (768,339)
-------------- -------------- --------------
Increase (decrease) in net assets derived from capital
share transactions.................................. (8,428,436) (8,826,805) 36,934,313
-------------- -------------- --------------
Net increase (decrease) in net assets................. (9,105,760) (11,352,373) 39,188,229
NET ASSETS:
Beginning of period....................................... 148,772,398 160,124,771 120,936,542
-------------- -------------- --------------
End of period............................................. $ 139,666,638 $ 148,772,398 $ 160,124,771
============== ============== ==============
Accumulated undistributed net investment income at end of
period.................................................. $ 7,640,252 $ 8,560,517 $ --
============== ============== ==============
</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.
117
<PAGE> 121
INDEXED BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- -------------
JANUARY 1, 1999
YEAR ENDED THROUGH YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999* DECEMBER 31, 1998
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning
of period.................. $ 10.76 $ 10.74 $ 10.93 $ 10.92 $ 10.74 $ 10.74
-------- -------- -------- -------- -------- --------
Net investment income....... 0.72 0.67 0.62 0.61 0.69 0.66
Net realized and unrealized
gain (loss) on
investments................ 0.00(b) 0.01 (0.79) (0.79) 0.19 0.18
-------- -------- -------- -------- -------- --------
Total from investment
operations................. 0.72 0.68 (0.17) (0.18) 0.88 0.84
-------- -------- -------- -------- -------- --------
Less dividends and
distributions:
From net investment income.. (0.75) (0.72) -- -- (0.69) (0.66)
From net realized gain on
investments................ -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total dividends and
distributions.............. (0.75) (0.72) -- -- (0.69) (0.66)
-------- -------- -------- -------- -------- --------
Net asset value at end of
period..................... $ 10.73 $ 10.70 $ 10.76 $ 10.74 $ 10.93 $ 10.92
======== ======== ======== ======== ======== ========
Total investment return..... 7.27% 6.87% (1.56%)(a) (1.65%)(a) 8.21% 7.86%
Ratios (to average net
assets)/Supplemental Data:
Net investment income...... 6.63% 6.38% 6.42%+ 6.17%+ 6.37% 6.12%
Net expenses............... 0.50% 0.75% 0.50%+ 0.75%+ 0.50% 0.75%
Expenses (before
reimbursement)........... 0.63% 0.88% 0.62%+ 0.87%+ 0.65% 0.90%
Portfolio turnover rate..... 20% 20% 31% 31% 14% 14%
Net assets at end of period
(in 000's)................. $136,033 $ 3,634 $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) Less than one cent per share.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
118
<PAGE> 122
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
---------------------------------------------------------------------------------------------
1997 1996 1995
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 10.52 $ 10.52 $ 10.99 $ 10.99 $ 10.06 $ 10.06
-------- -------- -------- -------- -------- --------
0.73 0.70 0.76 0.74 0.82 0.81
0.22 0.22 (0.48) (0.48) 1.00 1.00
-------- -------- -------- -------- -------- --------
0.95 0.92 0.28 0.26 1.82 1.81
-------- -------- -------- -------- -------- --------
(0.73) (0.70) (0.75) (0.73) (0.82) (0.81)
-- -- -- -- (0.07) (0.07)
-------- -------- -------- -------- -------- --------
(0.73) (0.70) (0.75) (0.73) (0.89) (0.88)
-------- -------- -------- -------- -------- --------
$ 10.74 $ 10.74 $ 10.52 $ 10.52 $ 10.99 $ 10.99
======== ======== ======== ======== ======== ========
9.01% 8.75% 2.55% 2.34% 18.07% 17.97%
6.60% 6.35% 6.21% 5.96% 6.38% 6.13%
0.50% 0.75% 0.50% 0.75% 0.50% 0.75%
0.65% 0.90% 0.65% 0.90% 0.63% 0.88%
32% 32% 312% 312% 284% 284%
$117,922 $ 3,015 $109,482 $ 2,764 $163,219 $ 471
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
119
<PAGE> 123
Short-Term Bond Fund
--------------------------------------------------------------------------------
During the 12 months ended October 31, 2000, the Federal Reserve worked to slow
the rate of economic growth and keep inflation in check. To achieve these
objectives with oil prices rising, tight labor markets, and ongoing wage
pressures, the Federal Reserve raised the targeted federal funds rate four
times, for a total of 1.25%.
Short-term bond investors benefited from the higher yields that resulted from
the Federal Reserve's tightening moves. As the yield curve inverted, yields on
short-term securities rose substantially higher than those on longer-term bonds.
During the reporting period, a Treasury buyback program helped stabilize prices
and reduce supply among long-term government bonds.
After its May 16, 2000, rate hike, the Federal Reserve elected not to take
further tightening action. Widespread anticipation of the Fed's moves helped
keep bond markets stable and profitable for investors during the reporting
period.
PERFORMANCE REVIEW
For the 12 months ended October 31, 2000, MainStay Institutional Short-Term Bond
Fund returned 6.05% for Institutional Class shares and 5.78% for Service Class
shares. Institutional Class shares outperformed and Service Class shares
underperformed the 6.01% return of the average Lipper(1) short-term U.S.
government fund for the same period. During the 12-month period, both share
classes underperformed the 6.06% return of the Salomon Smith Barney 1-3 Year
Treasury Index.(2)
The Fund's Institutional Class shares were rated five stars overall and its
Service Class shares were rated four stars overall out of 1,208 taxable bond
funds by Morningstar(3) as of October 31, 2000. Both share classes were rated
five stars out of 1,208 taxable bond funds for the three-year period then ended,
and Institutional Class shares were rated five stars and Service Class shares
four stars out of 750 taxable bond funds for the five-year period then ended.
POSITIONING THE PORTFOLIO
With Y2K computer concerns on many investors' minds, the Fund concentrated on
maintaining a relatively defensive posture in November and December of 1999. At
the end of 1999, the Fund was over 95% invested in government, AAA-rated, or
cash equivalent securities. This defensive positioning provided investors with a
measure of security in an uncertain period.
During the first calendar quarter of 2000, the Fund maintained a high-quality
portfolio, with approximately 50% of assets invested in Treasury securities as
of March 31, 2000. This benefited the portfolio, as Treasuries were the best
performing asset class during this calendar quarter.
During the second calendar quarter, the Fund increased its commitment to
Treasuries, which continued to benefit shareholders. In search of
higher-yielding securities with high credit quality, nearly 40% of the portfolio
was invested in agency and AAA-rated asset-backed securities, which helped
performance.
By the end of September 2000, the Fund had reduced its commitment to Treasuries
to about 37% of the portfolio. Approximately 40% was invested in U.S. agency
securities, 10% in corporate securities, and 9% in asset-backed securities. The
Fund's decision to
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT 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.
Investments in the Fund are not guaranteed, even though some of the Fund's
investments are guaranteed as to the payment of principal and interest by the
U.S. government or its agencies or instrumentalities.
(1) Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with capital gain and dividend distributions reinvested.
(2) The Salomon Smith Barney 1-3 Year Treasury Index is an unmanaged index that
is generally considered to be representative of the U.S. short-term bond
market. Returns reflect reinvestment of all income and capital gains. An
investment cannot be made directly into an index.
(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 10-year average annual
returns (if applicable) in excess of 90-day Treasury bill returns, and a
risk factor that reflects fund performance below 90-day Treasury bill
returns. The Overall Morningstar Rating(TM) represents a weighted average of
the three-, five-, and 10-year (if applicable) risk-adjusted performance.
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. Past performance is
no guarantee of future results.
120
<PAGE> 124
overweight higher-yielding agency securities and other spread products
contributed positively to the Fund's performance during the third calendar
quarter.
After some concerns arose over federal guarantees on securities of various
government sponsored enterprises, in October, the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation voluntarily agreed to
make their disclosure provisions more transparent. These moves were well
accepted by investors and had a positive impact on the overall market for agency
securities. The Fund's strong commitment to agency securities during this period
contributed positively to the Fund's performance.
Throughout the reporting period, the quality of most of the securities in the
Fund's investment portfolio was very high. As opportunities arose, we continued
to seek spread advantages over Treasuries within the Fund's quality guidelines.
LOOKING AHEAD
Although we consider it unlikely that the Federal Reserve will tighten interest
rates again in 2000, we recognize that rising oil prices, low unemployment, and
wage pressures may continue to exert inflationary pressures, even as the growth
of the economy begins to slow.
Whatever the markets or the economy may bring, the Fund will continue to seek to
maximize total return, consistent with liquidity, preservation of capital, and
investment in short-term debt securities.
GARY GOODENOUGH
CLAUDE ATHAIDE
Portfolio Managers
MacKay Shields LLC
121
<PAGE> 125
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
SHORT-TERM BOND FUND VS
SALOMON SMITH BARNEY 1-3 YEAR TREASURY INDEX
INSTITUTIONAL CLASS SHARES
[Institutional Class Shares Graph]
<TABLE>
<CAPTION>
SALOMON SMITH BARNEY 1-3 YEAR
TREASURY INDEX SHORT-TERM BOND FUND
----------------------------- --------------------
<S> <C> <C>
1/2/91 250000 250000
91 279142 278250
92 296747 294765
93 312740 311468
94 314415 311813
95 348173 343849
96 365888 360374
97 390193 382476
98 417476 406824
99 430177 416592
00 as of 10/31/00 454837 440599
</TABLE>
THESE GRAPHS ASSUME A $250,000 INVESTMENT MADE ON 1/2/91.
$250,000 INVESTED IN MAINSTAY INSTITUTIONAL
SHORT-TERM BOND FUND VS
SALOMON SMITH BARNEY 1-3 YEAR TREASURY INDEX
SERVICE CLASS SHARES
[Service Class Shares Graph]
<TABLE>
<CAPTION>
SALOMON SMITH BARNEY 1-3 YEAR
TREASURY INDEX SHORT-TERM BOND FUND
----------------------------- --------------------
<S> <C> <C>
1/2/91 250000 250000
91 279142 278250
92 296747 294765
93 312740 311468
94 314415 311813
95 348173 343197
96 365888 358490
97 390193 379941
98 417476 402666
99 430177 411716
00 as of 10/31/00 454837 434072
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN(*)
PERFORMANCE AS OF OCTOBER 31, 2000
-----------------------------------------------------------------------------------
ONE YEAR FIVE YEARS SINCE INCEPTION
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
Short-Term Bond Fund Institutional Class 6.05% 5.40% 5.93%
Short-Term Bond Fund Service Class(+) 5.78 5.12 5.77
Average Lipper short U.S. government
fund(++) 6.01 5.09 5.56
Salomon Smith Barney 1-3 Year Treasury
Index(sec.) 6.06 5.82 6.27
</TABLE>
YEAR-BY-YEAR PERFORMANCE
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
TEN MONTHS YEAR
ENDED ENDED
YEAR ENDED DECEMBER 31 OCTOBER 31 OCTOBER 31
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11.3 5.94 5.67 0.11 10.27 4.81 6.13 6.37 2.12 6.05
</TABLE>
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE SO THAT UPON REDEMPTION, SHARES MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
(*) 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 will vary after this date based on differences in
their expense structures.
(++) Lipper Inc. is an independent fund performance monitor. Results are based
on total returns with capital gain and dividend distributions reinvested.
(sec.) The Salomon Smith Barney 1-3 Year Treasury Index is an unmanaged index
that is generally considered to be representative of the U.S. short-term
bond market. Returns reflect reinvestment of all income and capital
gains. An investment cannot be made directly into an index.
122
<PAGE> 126
MAINSTAY
INSTITUTIONAL FUNDS INC.
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
LONG-TERM INVESTMENTS (93.4%)+
ASSET-BACKED SECURITIES (9.0%)
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
AUTOMOBILES (1.1%)
DaimlerChrsyler Auto Trust Series
2000-B Class A3
7.53%, due 5/10/04 (b).......... $ 345,000 $ 349,606
-----------
EQUIPMENT LOANS (3.4%)
Case Equipment Loan Trust
Series 1999-A Class A4
5.77%, due 8/15/05.............. 1,110,000 1,092,085
-----------
LEISURE TIME (3.4%)
Harley-Davidson Eaglemark
Motorcycle Trust
Series 1999-1 Class A2
5.52%, due 2/15/05.............. 1,120,000 1,101,867
-----------
RECREATIONAL VEHICLES (1.1%)
Fleetwood Credit Corp.
Grantor Trust
Series 1996-A Class A
6.75%, due 10/17/11............. 353,872 350,347
-----------
Total Asset-Backed Securities
(Cost $2,928,102)............... 2,893,905
-----------
CORPORATE BONDS (8.2%)
BANKS -- MONEY CENTER (2.5%)
First Union Corp.
7.25%, due 2/15/03.............. 790,000 789,960
-----------
INVESTMENT BANK/BROKERAGE (3.6%)
Donaldson, Lufkin & Jenrette Inc.
5.875%, due 4/1/02.............. 745,000 733,050
Morgan Stanley Dean Witter & Co.
7.375%, due 4/15/03............. 415,000 418,702
-----------
1,151,752
-----------
NATURAL GAS DISTRIBUTION & PIPELINES (2.1%)
Enron Corp.
9.65%, due 5/15/01.............. 675,000 683,613
-----------
Total Corporate Bonds
(Cost $2,637,613)............... 2,625,325
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
-----------------------
U.S. GOVERNMENT &
FEDERAL AGENCIES (76.2%)
<S> <C> <C>
FEDERAL HOME LOAN BANK (11.9%)
5.125%, due 9/15/03............. $2,100,000 $ 2,028,222
5.25%, due 4/25/02.............. 1,850,000 1,818,976
-----------
3,847,198
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION (17.2%)
5.75%, due 7/15/03.............. 2,790,000 2,742,207
6.625%, due 8/15/02............. 2,785,000 2,794,246
-----------
5,536,453
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (12.3%)
5.125%, due 2/13/04............. 1,325,000 1,271,735
5.375%, due 3/15/02............. 2,745,000 2,705,802
-----------
3,977,537
-----------
UNITED STATES TREASURY BONDS (13.4%)
7.625%, due 2/15/07............. 2,875,000 2,918,125
10.75%, due 2/15/03-5/15/03
(a)........................... 1,255,000 1,389,945
-----------
4,308,070
-----------
UNITED STATES TREASURY NOTES (17.6%)
5.25%, due 8/15/03.............. 330,000 324,535
5.50%, due 2/28/03 (a).......... 2,360,000 2,337,863
6.00%, due 7/31/02 (a).......... 1,685,000 1,684,208
6.25%, due 1/31/02 (a).......... 1,330,000 1,330,213
-----------
5,676,819
-----------
UNITED STATES TREASURY (STRIPS)
(SECURED STRIPPED BOND) (3.8%)
(zero coupon), due 11/15/01..... 1,300,000 1,217,736
-----------
Total U.S. Government &
Federal Agencies
(Cost $24,502,195).............. 24,563,813
-----------
Total Long-Term Investments
(Cost $30,067,910).............. 30,083,043
-----------
</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.
123
<PAGE> 127
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
October 31, 2000
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS (6.1%)
PRINCIPAL
AMOUNT VALUE
-----------------------
<S> <C> <C>
COMMERCIAL PAPER (6.1%)
Associates Corporation
6.63%, due 11/1/00.............. $1,265,000 $ 1,265,000
Deutsche Bank Financial Inc.
6.49%, due 11/13/00............. 700,000 698,480
-----------
Total Short-Term Investments
(Cost $1,963,480)............... 1,963,480
-----------
Total Investments
(Cost $32,031,390) (c).......... 99.5% 32,046,523(d)
Cash and Other Assets, Less
Liabilities..................... 0.5 160,880
---------- -----------
Net Assets....................... 100.0% $32,207,403
========== ===========
</TABLE>
------------
(a) Represents securities out on loan or a portion which is out on loan. (See
Note 2(0))
(b) Floating rate. Rate shown is the rate in effect at October 31, 2000.
(c) The cost for federal income tax purposes is $32,051,280.
(d) At October 31, 2000 net unrealized depreciation was $4,757, 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 $82,343 and aggregate gross unrealized
depreciation for all investments on which there was an excess of cost over
market value of $87,100.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
124
<PAGE> 128
MAINSTAY
INSTITUTIONAL FUNDS INC.
SHORT-TERM BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (identified
cost $32,031,390)............................... $32,046,523
Cash.............................................. 4,732
Collateral held for securities loaned at value
(Note 2(O))..................................... 6,099,586
Receivables:
Investment securities sold...................... 1,509,816
Interest........................................ 368,326
MainStay Management............................. 6,659
Fund shares sold................................ 2,402
-----------
Total assets................................ 40,038,044
-----------
LIABILITIES:
Securities lending collateral (Note 2(O))......... 6,099,586
Payables:
Investment securities purchased................. 1,510,867
Fund shares redeemed............................ 172,710
Transfer agent.................................. 11,056
Custodian....................................... 6,387
Accrued expenses.................................. 30,035
-----------
Total liabilities........................... 7,830,641
-----------
Net assets........................................ $32,207,403
===========
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
1 billion shares authorized
Institutional Class............................. $ 3,327
Institutional Service Class..................... 114
Additional paid-in capital........................ 38,694,128
Accumulated undistributed net investment income... 1,738,529
Accumulated net realized loss on investments...... (8,243,828)
Net unrealized appreciation on investments........ 15,133
-----------
Net assets........................................ $32,207,403
===========
Institutional Class
Net assets applicable to outstanding shares....... $31,146,041
===========
Shares of capital stock outstanding............... 3,326,528
===========
Net asset value per share outstanding............. $ 9.36
===========
Institutional Service Class
Net assets applicable to outstanding shares....... $ 1,061,362
===========
Shares of capital stock outstanding............... 113,872
===========
Net asset value per share outstanding............. $ 9.32
===========
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Income:
Interest........................................ $ 2,258,838
-----------
Expenses:
Management...................................... 198,919
Transfer agent.................................. 49,181
Professional.................................... 32,427
Registration.................................... 14,409
Custodian....................................... 11,218
Pricing Service................................. 3,992
Service......................................... 2,595
Shareholder communication....................... 1,381
Directors....................................... 921
Miscellaneous................................... 14,316
-----------
Total expenses before
reimbursement.............................. 329,359
Expense reimbursement from Manager.............. (124,606)
-----------
Net expenses................................ 204,753
-----------
Net investment income............................. 2,054,085
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments.................. (720,917)
Net change in unrealized depreciation on
investments..................................... 627,496
-----------
Net realized and unrealized loss on investments... (93,421)
-----------
Net increase in net assets resulting from
operations...................................... $ 1,960,664
===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
125
<PAGE> 129
SHORT-TERM BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 2000, the period January 1, 1999 through October
31, 1999* and the year ended December 31, 1998
<TABLE>
<CAPTION>
2000 1999* 1998
------------ ------------ ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 2,054,085 $ 2,389,951 $ 2,578,509
Net realized gain (loss) on investments................. (720,917) (440,119) 26,879
Net change in unrealized appreciation (depreciation)
on investments........................................ 627,496 (830,282) 84,111
------------ ------------ ------------
Net increase in net assets resulting from operations.... 1,960,664 1,119,550 2,689,499
------------ ------------ ------------
Dividends to shareholders:
From net investment income:
Institutional Class................................... (2,613,821) -- (2,516,800)
Institutional Service Class........................... (84,430) -- (67,925)
------------ ------------ ------------
Total dividends to shareholders..................... (2,698,251) -- (2,584,725)
------------ ------------ ------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 23,159,642 28,062,583 17,781,967
Institutional Service Class........................... 159,369 298,883 791,418
Net asset value of shares issued to shareholders in
reinvestment of dividends:
Institutional Class................................... 2,613,817 -- 2,516,797
Institutional Service Class........................... 59,231 -- 67,923
------------ ------------ ------------
25,992,059 28,361,466 21,158,105
Cost of shares redeemed:
Institutional Class................................... (42,065,295) (23,230,166) (24,848,447)
Institutional Service Class........................... (168,072) (557,420) (1,081,302)
------------ ------------ ------------
Increase (decrease) in net assets derived from capital
share transactions.................................. (16,241,308) 4,573,880 (4,771,644)
------------ ------------ ------------
Net increase (decrease) in net assets................. (16,978,895) 5,693,430 (4,666,870)
NET ASSETS:
Beginning of period....................................... 49,186,298 43,492,868 48,159,738
------------ ------------ ------------
End of period............................................. $ 32,207,403 $ 49,186,298 $ 43,492,868
============ ============ ============
Accumulated undistributed net investment income at end of
period.................................................. $ 1,738,529 $ 2,382,682 $ --
============ ============ ============
</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.
126
<PAGE> 130
(THIS PAGE INTENTIONALLY LEFT BLANK)
127
<PAGE> 131
SHORT-TERM BOND FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------- ------------- ------------- -------------
JANUARY 1, 1999
YEAR ENDED THROUGH YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999* DECEMBER 31, 1998
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period..... $ 9.63 $ 9.59 $ 9.43 $ 9.41 $ 9.39 $ 9.38
------- ------- ------- ------- ------- -------
Net investment income..... 0.57(a) 0.54(a) 0.47 0.45 0.56 0.53
Net realized and
unrealized gain (loss)
on investments.......... (0.03) (0.03) (0.27) (0.27) 0.04 0.03
------- ------- ------- ------- ------- -------
Total from investment
operations.............. 0.54 0.51 0.20 0.18 0.60 0.56
------- ------- ------- ------- ------- -------
Less dividends from net
investment income....... (0.81) (0.78) -- -- (0.56) (0.53)
------- ------- ------- ------- ------- -------
Net asset value at end of
period.................. $ 9.36 $ 9.32 $ 9.63 $ 9.59 $ 9.43 $ 9.41
======= ======= ======= ======= ======= =======
Total investment return... 6.05% 5.78% 2.12%(b) 1.91%(b) 6.37% 5.98%
Ratios (to average net
assets)/Supplemental
Data:
Net investment income... 6.20% 5.95% 5.42%+ 5.17%+ 5.95% 5.70%
Net expenses............ 0.61%(c) 0.86%(c) 0.60% 0.85% 0.60% 0.85%
Expenses (before
reimbursement)........ 0.99% 1.24% 0.85%+ 1.10%+ 0.89% 1.14%
Portfolio turnover rate... 165% 165% 105% 105% 125% 125%
Net assets at end of
period (in 000's)....... $31,146 $ 1,061 $48,150 $ 1,036 $42,219 $ 1,273
</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 year.
(b) Total return is not annualized.
(c) The effect of non-reimbursable interest expense on the expense ratio was
0.01%.
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
128
<PAGE> 132
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
---------------------------------------------------------------------------------------------
1997 1996 1995
----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 9.48 $ 9.46 $ 9.68 $ 9.67 $ 9.37 $ 9.37
------- ------- ------- ------- ------- -------
0.67 0.64 0.66 0.64 0.65 0.64
(0.09) (0.08) (0.20) (0.21) 0.31 0.30
------- ------- ------- ------- ------- -------
0.58 0.56 0.46 0.43 0.96 0.94
------- ------- ------- ------- ------- -------
(0.67) (0.64) (0.66) (0.64) (0.65) (0.64)
------- ------- ------- ------- ------- -------
$ 9.39 $ 9.38 $ 9.48 $ 9.46 $ 9.68 $ 9.67
======= ======= ======= ======= ======= =======
6.13% 5.98% 4.81% 4.46% 10.27% 10.07%
6.24% 5.99% 5.85% 5.60% 6.38% 6.13%
0.60% 0.85% 0.60% 0.85% 0.60% 0.85%
0.82% 1.07% 0.79% 1.04% 0.82% 1.07%
153% 153% 195% 195% 171% 171%
$46,674 $ 1,485 $57,805 $ 1,316 $50,902 $ 1,128
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
129
<PAGE> 133
Money Market Fund
--------------------------------------------------------------------------------
During the 12 months ended October 31, 2000, the Federal Reserve raised the
targeted federal funds rate on four separate occasions--for a total increase of
1.25%. Since each of these rate hikes raised money market yields, the moves were
generally well received by money market investors.
The period from November 1999 through April 2000 was marked by concerns about
strong economic growth, tight labor markets, rising oil prices, and the possible
impact these forces might have on inflation. When the Federal Reserve increased
the targeted federal funds rate by 50 basis points on May 16, 2000, however,
many investors believed the worst was over. In the second half of the Fund's
fiscal year, economic growth slowed, inflationary pressures seemed to ease, and
short-term rates improved as concerns over further Fed tightening subsided.
PERFORMANCE REVIEW
For the 12 months ended October 31, 2000, MainStay Institutional Money Market
Fund returned 5.98% for Institutional Class shares, 5.72% for Service Class
shares, and 5.46% for Sweep Shares Class shares. As of October 31, 2000 the
Fund's 7-day current yield was 6.21%, 5.97%, and 5.72%, for the respective share
classes. All share classes underperformed the 5.99% return of the average
Lipper(1) institutional money market fund.
STRATEGIES AND SECTOR WEIGHTINGS
During the fiscal year ended October 31, 2000, the Fund's weighted average
maturity ranged from 30 days to 72 days. The Fund was able to profit from
shorter maturities when the Federal Reserve was raising rates, by quickly taking
advantage of rate changes. The Fund also managed to lock in higher rates with
longer maturities before the Fed halted its rate hikes and rates started to
drift downward. While not always perfectly timed, the Fund's duration changes
generally contributed positively to performance throughout the Fund's fiscal
year.
During the reporting period, the Fund was occasionally willing to give up
liquidity for higher income potential. This led to purchases of asset-backed
securities, asset-backed commercial paper, and floating-rate securities. We
continue to find that keeping a portion of the portfolio in these high-quality
alternatives tends to benefit the Fund's return in the long run.
Significant purchases during the year included floaters issued by Caterpillar
Financial Services, Heller Financial, Unilever Capital, and AT&T, as well as an
asset-backed security issued by Wesley Commercial and Residential Securities
Funding Trust I. All of these investments outperformed discounted commercial
paper over their respective holding periods.
LOOKING AHEAD
We intend to continue seeking opportunities to enhance the Fund's total return
by purchasing higher-yielding securities with 2001 maturities. In addition, we
will continue to look for alternatives to commercial paper that offer potential
to enhance income without sacrificing quality.
Whatever the markets or the economy may bring, the Fund will continue to seek a
high level of current income while preserving capital and maintaining liquidity.
MARK C. BOYCE
DAVID CLEMENT, CFA
Portfolio Managers
New York Life Investment Management LLC
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN. AN INVESTMENT IN THE FUND IS
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.
The Fund may invest in derivatives, which may result in a loss to the Fund.
(1) Lipper Inc. is an independent fund performance monitor. Results are based on
total returns with capital gain and dividend distributions reinvested.
130
<PAGE> 134
$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
INSTITUTIONAL MONEY MARKET FUND MARKET FUND
------------------------------- ----------------------------------
<S> <C> <C>
1/2/91 250000 250000
91 264886 264974
92 274574 274560
93 282505 282582
94 293461 293763
95 309973 310470
96 325805 326448
97 342990 343791
98 360986 362020
99 378626 379862
00 as of 10/31/00 397656 399082
</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
INSTITUTIONAL MONEY MARKET FUND MARKET FUND
------------------------------- ----------------------------------
<S> <C> <C>
1/2/91 250000 250000
91 264886 264974
92 274574 274560
93 282505 282582
94 293461 293763
95 309478 310470
96 324481 326448
97 340748 343791
98 357764 362020
99 373387 379862
00 as of 10/31/00 390538 399082
</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
INSTITUTIONAL MONEY MARKET FUND MARKET FUND
------------------------------- ----------------------------------
<S> <C> <C>
1/2/91 250000 250000
91 264886 264974
92 274574 274560
93 282505 282582
94 293461 293763
95 309478 310470
96 324481 326448
97 340748 343791
98 357737 362020
99 374287 379862
00 as of 10/31/00 392290 399082
</TABLE>
<TABLE>
<CAPTION>
PERFORMANCE
AVERAGE ANNUAL TOTAL RETURN(*)
AS OF OCTOBER 31, 2000
--------------------------------------------------------------------------------------------------
7-DAY
CURRENT
ONE YEAR FIVE YEARS SINCE INCEPTION YIELD(++)
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market Fund Institutional Class(+) 5.98% 5.30% 4.83% 6.21%
Money Market Fund Service Class(+) 5.72 5.04 4.69 5.97
Money Market Fund Sweep Shares Class(+) 5.46 4.95 4.64 5.72
Average Lipper institutional money market
fund(sec.) 5.99 5.39 5.01
</TABLE>
YEAR-BY-YEAR PERFORMANCE
--------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
TEN MONTHS YEAR
ENDED ENDED
YEAR ENDED DECEMBER 31 OCTOBER 31 OCTOBER 31
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5.95 3.66 2.89 3.88 5.63 5.11 5.27 5.25 3.96 5.98
</TABLE>
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DUE TO MARKET VOLATILITY,
CURRENT PERFORMANCE MAY BE LESS THAN THAT SHOWN.
Investments in MainStay Institutional 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 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 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 will vary after these dates based on differences in
their expense structures.
(++) MainStay Institutional Money Market Fund had an effective 7-day yield of
6.41% for the Institutional Class; 6.14% for the Service Class; and 5.88%
for the Sweep Shares Class; all as of 10/31/00. These yields reflect
certain expense limitations. Had these expense limitations not been in
effect, the effective 7-day yield and the current 7-day yield would have
been 6.31% and 6.12%, respectively, for the Institutional Class; 6.05%
and 5.87%, respectively, for the Service Class; and 5.78% and 5.62%,
respectively, for the Sweep Shares Class. These expense limitations are
voluntary and may be terminated or revised at any time.
(sec.) Lipper Inc. is an independent fund performance monitor. Results are based
on total returns with capital gain and dividend distributions reinvested.
131
<PAGE> 135
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS (100.1%)+
PRINCIPAL AMORTIZED
AMOUNT COST
-------------------------
<S> <C> <C>
ASSET-BACKED SECURITY (1.0%)
Wesley Commercial & Residential
Funding Trust I
Series 2000-1, Class A1
6.65%, due 3/29/01 (a)(b)(c).. $ 3,896,176 $ 3,896,176
------------
BANK NOTES (2.6%)
Huntington National Bank
6.691%, due 2/9/01 (b)(c)..... 5,000,000 5,000,748
Key Bank North America
6.972%, due 11/2/00 (b)(c).... 5,000,000 5,000,042
------------
10,000,790
------------
CERTIFICATES OF DEPOSIT (3.9%)
SunTrust Banks Inc.
6.54%, due 12/21/00 (c)....... 10,000,000 10,000,000
6.77%, due 4/18/01 (c)........ 5,000,000 5,000,437
------------
15,000,437
------------
COMMERCIAL PAPER (84.8%)
Abbey National North America
6.52%, due 1/16/01............ 10,000,000 9,862,356
6.65%, due 11/20/00........... 5,820,000 5,799,573
Albertson's Inc.
6.53%, due 11/13/00 (a)....... 7,300,000 7,284,110
Alcoa Inc.
6.46%, due 12/7/00............ 10,000,000 9,935,400
6.46%, due 12/14/00........... 8,000,000 7,938,271
Archer Daniels Midland Co.
6.48%, due 3/14/01............ 10,000,000 9,760,600
AT&T Corp.
6.62%, due 11/14/00........... 10,000,000 9,976,094
6.819%, due 7/13/01
(a)(b)(c)................... 10,000,000 10,000,000
British Telecommunications PLC
6.51%, due 12/5/00............ 5,400,000 5,366,799
6.53%, due 1/23/01............ 3,432,000 3,380,330
6.68%, due 2/12/01............ 5,860,000 5,748,002
Cardinal Health Inc.
6.54%, due 2/8/01 (a)......... 8,000,000 7,856,120
Compagnie de
Saint-Gobain S.A.
6.60%, due 1/9/01 (a)......... 10,000,000 9,873,500
Credit Suisse First Boston Inc.
6.47%, due 3/5/01 (a)......... 5,000,000 4,888,572
DaimlerChrysler North America
Holding Corp.
6.49%, due 11/20/00........... 4,400,000 4,384,929
6.52%, due 2/12/01............ 5,085,000 4,990,142
Den norske Bank ASA
6.51%, due 11/15/00........... 8,000,000 7,979,747
6.58%, due 1/11/01............ 10,000,000 9,870,228
Duke Capital Corp.
6.55%, due 11/13/00 (a)....... 3,750,000 3,741,812
6.60%, due 1/19/01 (a)........ 10,000,000 9,855,167
6.65%, due 11/1/00 (a)........ 2,432,000 2,432,000
----------
+ Percentages indicated are based on Fund net assets.
</TABLE>
<TABLE>
PRINCIPAL AMORTIZED
AMOUNT COST
-------------------------
<CAPTION>
<S> <C> <C>
COMMERCIAL PAPER (CONTINUED)
DuPont (E.I.) De Nemours & Co.
6.60%, due 11/27/00........... $ 5,000,000 $ 4,976,167
Fortune Brands Inc.
6.50%, due 11/14/00 (a)....... 6,907,000 6,890,788
6.51%, due 1/19/01 (a)........ 11,000,000 10,842,856
6.54%, due 1/18/01 (a)........ 1,000,000 985,830
General Dynamics Corp.
6.57%, due 1/16/01 (a)........ 10,000,000 9,861,300
6.64%, due 12/12/00 (a)....... 5,000,000 4,962,189
General Electric Capital Corp.
6.53%, due 1/19/01............ 1,200,000 1,182,804
Goldman Sachs Group Inc. (The)
6.52%, due 2/8/01............. 3,810,000 3,741,687
Knight-Ridder Inc.
6.53%, due 1/17/01 (a)........ 10,000,000 9,860,331
6.63%, due 11/29/00........... 10,000,000 9,948,433
Merrill Lynch & Co., Inc.
6.47%, due 12/4/00............ 7,000,000 6,958,484
6.83%, due 2/23/01............ 600,000 587,023
Newell Rubbermaid Inc.
6.49%, due 11/6/00 (a)........ 6,020,000 6,014,574
Northern States Power Co.
6.55%, due 12/20/00........... 8,656,000 8,578,829
Quebec (Province of)
6.52%, due 12/4/00............ 5,000,000 4,970,117
6.57%, due 11/1/00............ 5,000,000 5,000,000
Qwest Corp.
6.63%, due 11/6/00............ 6,000,000 5,994,475
Repsol International
Finance B.V.
6.70%, due 11/7/00............ 5,000,000 4,994,417
Salomon Smith Barney Holdings
Inc.
6.50%, due 11/14/00........... 10,000,000 9,976,528
Santander Central Hispano
Finance (Delaware) Inc.
6.58%, due 1/10/01............ 10,000,000 9,872,056
Schering Corp.
6.50%, due 12/5/00............ 5,245,000 5,212,802
Sempra Energy Holdings
6.48%, due 11/13/00 (a)....... 10,000,000 9,978,400
Solvay Finance (America) Inc.
6.48%, due 4/5/01 (a)......... 10,000,000 9,824,861
6.50%, due 2/6/01 (a)......... 5,000,000 4,860,500
Southwestern Public Service Co.
6.56%, due 11/9/00............ 9,000,000 8,986,880
SunTrust Banks Inc.
6.48%, due 11/17/00........... 5,000,000 4,985,600
Unilever Capital Corp.
6.683%, due 9/7/01
(a)(b)(c)................... 5,000,000 5,000,000
------------
325,971,683
------------
MEDIUM-TERM NOTES (5.2%)
Bank One Corp.
6.67%, due 1/3/01 (b)(c)...... 5,000,000 5,000,000
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
132
<PAGE> 136
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS (CONTINUED)
PRINCIPAL AMORTIZED
AMOUNT COST
-------------------------
<S> <C> <C>
MEDIUM-TERM NOTES (CONTINUED)
Caterpillar Financial Services
Corp.
Series F
6.784%, due 2/5/01 (b)(c)..... $ 5,000,000 $ 5,001,511
Heller Financial Inc.
Series I
6.885%, due 4/2/01 (b)(c)..... 10,000,000 9,997,892
------------
19,999,403
------------
U.S. GOVERNMENT (2.6%)
United States Treasury Bill
6.09%, due 11/9/00............ 10,000,000 9,986,466
------------
Total Short-Term Investments
(Amortized Cost $384,854,955)
(d)........................... 100.1% 384,854,955
Liabilities in Excess of Cash
and Other Assets.............. (0.1) (391,602)
----------- ------------
Net Assets..................... 100.0% $384,463,353
=========== ============
</TABLE>
------------
(a) May be sold to institutional investors only.
(b) Floating rate. Rate shown is the rate in effect at October 31, 2000.
(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>
Aerospace/Defense.............. $ 14,823,489 3.9%
Aluminum....................... 17,873,671 4.6
Auto Manufacturing............. 9,375,071 2.4
Banks.......................... 83,259,358 21.7
Building Products.............. 9,873,500 2.6
Chemicals...................... 4,976,167 1.3
Consumer Products.............. 24,734,047 6.4
Diversified Financial
Services...................... 1,182,804 0.3
Electric Power Companies....... 17,565,709 4.6
Finance........................ 29,684,764 7.7
Financial-Miscellaneous........ 3,896,176 1.0
Food........................... 17,044,710 4.4
Food & Health Care
Distributor................... 7,856,120 2.0
Governments-Foreign............ 9,970,117 2.6
Health Care-Drugs.............. 5,212,803 1.4
Investment Bank/Brokerage...... 21,263,722 5.5
Natural Gas Distributors &
Pipelines..................... 9,978,400 2.6
Oil-Integrated International... 4,994,417 1.3
Publishing-Newspapers.......... 19,808,764 5.2
Special Purpose Finance........ 21,028,979 5.5
Telecommunications-Long
Distance...................... 19,976,094 5.2
Telephone...................... 20,489,607 5.3
U. S. Government............... 9,986,466 2.6
------------ ------
384,854,955 100.1
Liabilities in Excess of
Cash and Other Assets......... (391,602) (0.1)
------------ ------
Net Assets..................... $384,463,353 100.0%
============ ======
</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.
133
<PAGE> 137
MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (amortized
cost $384,854,955)............................. $384,854,955
Cash............................................. 937
Receivables:
Interest....................................... 642,998
Fund shares sold............................... 4,551
------------
Total assets............................... 385,503,441
------------
LIABILITIES:
Payables:
Fund shares redeemed........................... 710,254
MainStay Management............................ 134,388
Custodian...................................... 20,893
Transfer agent................................. 9,363
Accrued expenses................................. 164,771
Dividend payable................................. 419
------------
Total liabilities.......................... 1,040,088
------------
Net assets....................................... $384,463,353
============
COMPOSITION OF NET ASSETS:
Capital stock (par value of $.001 per share)
12 billion shares authorized
Institutional Class............................ $ 160,965
Institutional Service Class.................... 1,586
Sweep Shares Class............................. 221,936
Additional paid-in capital....................... 384,102,830
Accumulated net realized loss on investments..... (23,964)
------------
Net assets....................................... $384,463,353
============
Institutional Class
Net assets applicable to outstanding shares...... $160,942,412
============
Shares of capital stock outstanding.............. 160,965,491
============
Net asset value per share outstanding............ $ 1.00
============
Institutional Service Class
Net assets applicable to outstanding shares...... $ 1,586,211
============
Shares of capital stock outstanding.............. 1,586,224
============
Net asset value per share outstanding............ $ 1.00
============
Sweep Shares Class
Net assets applicable to outstanding shares...... $221,934,730
============
Shares of capital stock outstanding.............. 221,935,602
============
Net asset value per share outstanding............ $ 1.00
============
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Income:
Interest........................................ $25,808,975
-----------
Expenses:
Management...................................... 2,043,547
Distribution--Sweep Shares Class................ 500,137
Service--Sweep Shares Class..................... 500,137
Service--Institutional Service Class............ 5,350
Shareholder communication....................... 77,291
Professional.................................... 62,631
Transfer agent.................................. 55,296
Custodian....................................... 46,134
Registration.................................... 19,753
Directors....................................... 11,025
Pricing Service................................. 3,513
Miscellaneous................................... 22,854
-----------
Total expenses before
reimbursement.............................. 3,347,668
Expense reimbursement from Manager.............. (292,200)
-----------
Net expenses................................ 3,055,468
-----------
Net investment income............................. 22,753,507
-----------
REALIZED LOSS ON INVESTMENTS:
Net realized loss on investments.................. (1,976)
-----------
Net increase in net assets resulting from
operations...................................... $22,751,531
===========
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
134
<PAGE> 138
MAINSTAY
INSTITUTIONAL FUNDS INC.
MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 2000, the period January 1, 1999 through October
31, 1999* and the year ended December 31, 1998
<TABLE>
<CAPTION>
2000 1999* 1998
------------- ------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................... $ 22,753,507 $ 13,213,728 $ 14,014,435
Net realized gain (loss) on investments................. (1,976) 5,267 (22,863)
------------- ------------- -------------
Net increase in net assets resulting from operations.... 22,751,531 13,218,995 13,991,572
------------- ------------- -------------
Dividends to shareholders:
From net investment income:
Institutional Class................................... (11,924,948) (8,402,982) (10,021,538)
Institutional Service Class........................... (116,606) (487,323) (3,989,833)
Sweep Shares Class.................................... (10,711,953) (4,323,423) (3,064)
------------- ------------- -------------
Total dividends to shareholders..................... (22,753,507) (13,213,728) (14,014,435)
------------- ------------- -------------
Capital share transactions:
Net proceeds from sale of shares:
Institutional Class................................... 326,707,269 478,066,197 267,338,520
Institutional Service Class........................... 1,354,957 10,416,347 92,388,730
Sweep Shares Class.................................... 209,404,730 251,505,734 7,085,440
Net asset value of shares issued to shareholders in
reinvestment of dividends:
Institutional Class................................... 11,872,113 8,988,009 10,079,609
Institutional Service Class........................... 96,890 810,782 3,866,077
Sweep Shares Class.................................... 10,711,953 4,313,813 --
------------- ------------- -------------
560,147,912 754,100,882 380,758,376
Cost of shares redeemed:
Institutional Class................................... (424,349,335) (434,683,773) (273,376,385)
Institutional Service Class........................... (5,495,191) (109,362,209) (56,718,408)
Sweep Shares Class.................................... (150,449,192) (110,508,066) (128,810)
------------- ------------- -------------
Increase (decrease) in net assets derived from capital
share transactions.................................. (20,145,806) 99,546,834 50,534,773
------------- ------------- -------------
Net increase (decrease) in net assets................. (20,147,782) 99,552,101 50,511,910
NET ASSETS:
Beginning of period....................................... 404,611,135 305,059,034 254,547,124
------------- ------------- -------------
End of period............................................. $ 384,463,353 $ 404,611,135 $ 305,059,034
============= ============= =============
</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.
135
<PAGE> 139
MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
(Selected per share data and ratios)
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL
INSTITUTIONAL SERVICE SWEEP SHARES INSTITUTIONAL SERVICE SWEEP SHARES
CLASS CLASS CLASS CLASS CLASS CLASS
------------- ------------- ------------ ------------- ------------- ------------
JANUARY 1, 1999
YEAR ENDED THROUGH
OCTOBER 31, 2000 OCTOBER 31, 1999*
-------------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
Net investment income..... 0.06 0.06 0.05 0.04 0.04 0.04
-------- -------- -------- -------- -------- --------
Less dividends and
distributions:
From net investment
income................... (0.06) (0.06) (0.05) (0.04) (0.04) (0.04)
From net realized gain on
investments.............. -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total dividends and
distributions............ (0.06) (0.06) (0.05) (0.04) (0.04) (0.04)
-------- -------- -------- -------- -------- --------
Net asset value at end of
period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total investment return... 5.98% 5.72% 5.46% 3.96%(b) 3.74%(b) 3.53%(b)
Ratios (to average net
assets)/Supplemental
Data:
Net investment
income................. 5.81% 5.56% 5.31% 4.68%+ 4.43%+ 4.18%+
Net expenses............. 0.50% 0.75% 1.00% 0.50%+ 0.75%+ 1.00%+
Expenses (before
reimbursement)......... 0.57% 0.82% 1.07% 0.62%+ 0.87%+ 1.12%+
Net assets at end of
period (in 000's)........ $160,942 $ 1,586 $221,935 $246,713 $ 5,630 $152,268
<CAPTION>
INSTITUTIONAL
INSTITUTIONAL SERVICE
CLASS CLASS
------------- -------------
YEAR ENDED
DECEMBER 31, 1998
-----------------------------
<S> <C> <C>
Net asset value at
beginning of period...... $ 1.00 $ 1.00
-------- --------
Net investment income..... 0.05 0.05
-------- --------
Less dividends and
distributions:
From net investment
income................... (0.05) (0.05)
From net realized gain on
investments.............. -- --
-------- --------
Total dividends and
distributions............ (0.05) (0.05)
-------- --------
Net asset value at end of
period................... $ 1.00 $ 1.00
======== ========
Total investment return... 5.25% 4.99%
Ratios (to average net
assets)/Supplemental
Data:
Net investment
income................. 5.12% 4.87%
Net expenses............. 0.50% 0.75%
Expenses (before
reimbursement)......... 0.63% 0.88%
Net assets at end of
period (in 000's)........ $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.
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
136
<PAGE> 140
MAINSTAY
INSTITUTIONAL FUNDS INC.
<TABLE>
<CAPTION>
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
SWEEP SHARES INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE INSTITUTIONAL SERVICE
CLASS CLASS CLASS CLASS CLASS CLASS CLASS
------------------ ------------- ------------- ------------- ------------- ------------- -------------
DECEMBER 8, 1998** YEAR ENDED DECEMBER 31
THROUGH ---------------------------------------------------------------------------------------------
DECEMBER 31, 1998 1997 1996 1995
------------------ ----------------------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1.00 $ 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 0.05
-------- -------- -------- -------- -------- -------- --------
(0.00)(a) (0.05) (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) (0.05)
-------- -------- -------- -------- -------- -------- --------
$ 1.00 $ 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% 5.46%
4.62%+ 5.18% 4.93% 5.00% 4.75% 5.48% 5.23%
1.00%+ 0.50% 0.75% 0.50% 0.75% 0.50% 0.75%
1.13%+ 0.61% 0.86% 0.67% 0.92% 0.73% 0.98%
$ 6,957 $190,319 $ 64,228 $110,760 $ 34,664 $ 67,869 $ 2,784
</TABLE>
The notes to the financial statements are an integral part of, and should be
read in conjunction with, the financial statements.
137
<PAGE> 141
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, 2000, the Company has eleven separate investment
portfolios: Growth Equity Fund, Indexed Equity Fund, Value Equity Fund, Asset
Manager Fund, International Equity Fund, EAFE Index Fund, International Bond
Fund, Bond Fund, Indexed Bond Fund, Short-Term Bond Fund and Money Market Fund
(individually or collectively referred to as a "Fund" or the "Funds"). The
International Equity Fund and the International Bond 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 each
class of each Fund. The shares classes are substantially the same, except that
the Institutional Service Class shares and the Money Market Fund Sweep Shares
Class each bears 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 shares of the 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 Institutional Service
Class shares commenced on January 1, 1995. 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 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 VALUE EQUITY FUND seeks maximum long-term total return from a
combination of capital growth and income.
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 (selected to parallel the performance of the S&P
500 Index, the S&P MidCap 400 Index, the S&P SmallCap 600 Index and the Morgan
Stanley REIT Index), fixed income securities (selected to parallel the
performance of the Salomon Smith Barney Broad Investment Grade Bond Index), and
money market investments.
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 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, Australasia and Far East 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 BOND FUND seeks to maximize total return, consistent with liquidity, low
risk to principal and investment in debt securities.
The INDEXED BOND FUND seeks to provide investment results that correspond to
the total return performance of fixed income securities in the aggregate, as
represented by the Salomon Smith Barney Broad Investment Grade Bond Index.
The SHORT-TERM BOND FUND seeks to maximize total return, consistent with
liquidity, preservation of capital and investment in short-term debt securities.
138
<PAGE> 142
MAINSTAY
INSTITUTIONAL FUNDS INC.
The MONEY MARKET FUND seeks to provide a high level of current income while
preserving capital and maintaining liquidity.
There are certain risks involved in investing in foreign securities that are
in addition to the usual risks inherent in domestic instruments. These risks
include those resulting from future adverse political and economic developments
and possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions.
--------------------------------------------------------------------------------
NOTE 2--Significant Accounting Policies:
--------------------------------------------------------------------------------
The following is a summary of significant accounting policies followed by
the Company:
(A)
VALUATION OF FUND SHARES. The net asset value per share of each Class of shares
of each Fund is calculated on each day the New York Stock Exchange (the
"Exchange") is open for trading as of the close of regular trading on the
Exchange, except for the Money Market Fund, which is calculated at noon every
day the Exchange is open. The net asset value per share of each Class of shares
is determined by taking the current market value of total assets attributable to
that Class, except for the Money Market Fund, which is based on the amortized
cost method of valuation, subtracting the liabilities attributable to that
Class, and dividing the result by the outstanding shares of that Class.
The Money Market Fund seeks to maintain a net asset value of $1.00 per
share, although there is no assurance that it will be able to do so.
(B)
SECURITIES VALUATION. Portfolio securities of the Money Market Fund are valued
at their amortized cost, which approximates market value. The amortized cost
method involves valuing a security at its cost on the date of purchase and
thereafter assuming a constant amortization to maturity of the difference
between such cost and the value on maturity date.
Portfolio securities of each of the other Funds are stated at value
determined (a) by appraising common and preferred stocks which are traded on the
Exchange at the last sale price on that day or, if no sale occurs, the mean
between the closing bid price and asked price; (b) by appraising common and
preferred stocks traded on other United States national securities exchanges or
foreign securities exchanges as nearly as possible in the manner described in
(a) by reference to their principal exchange, including the National Association
of Securities Dealers National Market System; (c) by appraising over-the-counter
securities quoted on the National Association of Securities Dealers ("NASDAQ")
system (but not listed on the National Market System) at the bid price supplied
through such system; (d) by appraising over-the-counter securities not quoted on
the NASDAQ system and securities listed or traded on certain foreign exchanges
whose operations are similar to the U.S. over-the-counter market at prices
supplied by a pricing agent selected by a Fund's subadvisor if such prices are
deemed to be representative of market values at the regular close of business of
the Exchange; (e) by appraising debt securities at prices supplied by a pricing
agent selected by a Fund's subadvisor, whose prices reflect broker/dealer
supplied valuations and electronic data processing techniques if those prices
are deemed by a Fund's subadvisor to be representative of market values at the
regular close of business of the Exchange; (f) by appraising options and futures
contracts at the last sale price on the market where any such 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
139
<PAGE> 143
NOTES TO FINANCIAL STATEMENTS (Continued)
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 may 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 capital 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.
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, 2000 are not
affected.
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED
ACCUMULATED ACCUMULATED NET REALIZED
UNDISTRIBUTED UNDISTRIBUTED GAIN (LOSS)
NET NET REALIZED ON FOREIGN
INVESTMENT GAIN (LOSS) CURRENCY ADDITIONAL
INCOME (LOSS) ON INVESTMENTS TRANSACTIONS PAID-IN CAPITAL
------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C>
Growth Equity Fund......................... $ 6,397,906 $ -- $ -- $ (6,397,906)
Indexed Equity Fund........................ $ -- $(155,161,465) $ -- $155,161,465
Value Equity Fund.......................... $ 378,598 $ (378,598) $ -- $ --
Asset Manager Fund......................... $ (699,211) $ 699,211 $ -- $ --
International Equity Fund.................. $ (7,850) $ (887,760) $4,648,456 $ (3,752,846)
EAFE Index Fund............................ $ (477,342) $ 19,812 $ 509,297 $ (51,767)
International Bond Fund.................... $(1,138,143) $ (69,267) $3,549,252 $ (2,341,842)
Bond Fund.................................. $ 6,878 $ (6,878) $ -- $ --
Indexed Bond Fund.......................... $ 38,940 $ (38,940) $ -- $ --
Short-Term Bond Fund....................... $ 13 $ (13) $ -- $ --
</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), gain from redemption
in kind, and net operating losses.
140
<PAGE> 144
MAINSTAY
INSTITUTIONAL FUNDS INC.
(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 a Fund 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. Discounts on short-term
securities are accreted on the straight line method. 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)
EXPENSES. Expenses with respect to any two or more Funds are allocated in
proportion to the net assets of the respective Funds when the expenses are
incurred except where direct allocations of expenses can be made.
The investment income and expenses (other than expenses incurred under the
Shareholder Services Plans and the Distribution Plan), and realized and
unrealized gains and losses on investments of a Fund are allocated to separate
classes of shares based upon their relative net assets on the date the income is
earned or expenses and realized and unrealized gains and losses are incurred.
(H)
USE OF ESTIMATES. The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
(I)
FOREIGN CURRENCY TRANSACTIONS. The books and records of the Company are kept in
U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the
mean between the buying and selling rates last quoted by any major U.S. bank at
the following dates:
(i) market value of investment securities, other assets and
liabilities--at the valuation date.
(ii) income and expenses--at the date of such transactions.
The assets and liabilities are presented at the exchange rates and market
values at the close of the year. 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 year.
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 Funds' books, and the U.S. dollar equivalent amount actually received or
paid. Net currency gains or losses from valuing such foreign currency
denominated assets and liabilities at year-end exchange rates are reflected in
unrealized foreign exchange gains or losses. Realized gains and losses from
certain foreign currency transactions are treated as ordinary income for federal
income tax purposes.
141
<PAGE> 145
NOTES TO FINANCIAL STATEMENTS (Continued)
INTERNATIONAL EQUITY FUND
Foreign currency held at October 31, 2000:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
-------------------------------------------- ----------- -----------
<S> <C> <C> <C> <C>
Australian Dollar A$ 16,080 $ 8,431 $ 8,333
Danish Krone DK 39,620 4,978 4,512
Euro E 892,097 788,294 756,142
Hong Kong Dollar HK 28,338 3,634 3,633
Japanese Yen Y 354,575,083 3,270,105 3,247,199
New Zealand Dollar N$ 58,438 26,301 23,194
Norwegian Krone NK 175 21 19
Pound Sterling L 74,773 78,437 108,578
Singapore Dollar S$ 14,304 8,314 8,148
Swedish Krona SK 45,961 4,549 4,587
Swiss Franc CF 27,891 15,961 15,511
---------- ----------
$4,209,025 $4,179,856
========== ==========
</TABLE>
EAFE INDEX FUND
Foreign currency held at October 31, 2000:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
------------------------------------------- ----------- -----------
<S> <C> <C> <C> <C>
Australian Dollar A$ 488 $ 257 $ 252
Euro E 2,697 2,277 2,286
Pound Sterling L 2,904 4,539 4,217
Swiss Franc CF 8,100 4,590 4,505
---------- ----------
$ 11,663 $ 11,260
========== ==========
</TABLE>
INTERNATIONAL BOND FUND
Foreign currency held at October 31, 2000:
<TABLE>
<CAPTION>
CURRENCY COST VALUE
------------------------------------------- ----------- -----------
<S> <C> <C> <C> <C>
Canadian Dollar C$ 134 $ 89 $ 87
Danish Krone DK 159,074 20,549 18,115
Euro E 2,115,154 1,886,561 1,792,807
Japanese Yen Y 4,012,890 37,702 36,750
New Zealand Dollar N$ 335 174 133
Norwegian Krone NK 566,295 60,889 60,889
Pound Sterling L 25,083 36,609 36,424
---------- ----------
$2,042,573 $1,945,205
========== ==========
</TABLE>
(J)
FOREIGN CURRENCY FORWARD CONTRACTS. A foreign currency forward contract is an
agreement to buy or sell currencies of different countries on a specified future
date at a specified rate. During the period the forward contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking to market" such contract on a daily basis to reflect the
market value of the contract at the end of each day's trading. When the forward
contract is closed, the Fund records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transaction and
the Fund's basis in the contract. Foreign currency forward contracts are used
for hedging purposes or to seek to enhance investment returns: (see Note 5).
The use of foreign currency forward contracts involves, to varying degrees,
elements of market risk in excess of the amount recognized in the statement of
assets and liabilities. The contract amount reflects the extent of the Fund's
involvement in these financial instruments. Risks arise from the possible
movements in the
142
<PAGE> 146
MAINSTAY
INSTITUTIONAL FUNDS INC.
foreign exchange rates underlying these instruments. The unrealized appreciation
(depreciation) on forward contracts reflects the Fund's exposure at year-end to
credit loss in the event of a counterparty's failure to perform its obligations.
INTERNATIONAL EQUITY FUND
Foreign currency forward contracts open at October 31, 2000:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT AMOUNT CONTRACT AMOUNT APPRECIATION/
SOLD PURCHASED (DEPRECIATION)
---------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
FOREIGN CURRENCY SALE CONTRACTS
----------------------------------
Australian Dollar vs. U.S. Dollar, expiring
12/5/00............................................ A$ 13,381,670 $ 7,526,403 $ 589,537
Euro vs. U.S. Dollar, expiring 11/6/00............... E 1,140,000 $ 985,074 18,538
Euro vs. U.S. Dollar, expiring 11/6/00............... E 3,203,645 $ 2,700,000 (16,174)
Euro vs. U.S. Dollar, expiring 11/6/00............... E 15,510,321 $ 13,525,000 374,754
Japanese Yen vs. U.S. Dollar, expiring 11/28/00...... Y 858,643,900 $ 8,158,563 254,027
Japanese Yen vs. U.S. Dollar, expiring 11/28/00...... Y 800,452,200 $ 7,710,000 341,167
Pound Sterling vs. U.S. Dollar, expiring 11/6/00..... L 2,390,000 $ 3,631,199 160,288
Pound Sterling vs. U.S. Dollar, expiring 11/6/00..... L 732,000 $ 1,036,534 (26,523)
Swiss Franc vs. U.S. Dollar, expiring 11/10/00....... CF 2,110,000 $ 1,238,519 63,882
</TABLE>
<TABLE>
<CAPTION>
CONTRACT AMOUNT CONTRACT AMOUNT
PURCHASED SOLD
---------------- ----------------
<S> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
---------------------------------
Australian Dollar vs. U.S. Dollar, expiring
12/5/00............................................ A$ 13,381,670 $ 7,710,000 (773,135)
Australian Dollar vs. U.S. Dollar, expiring
1/25/01............................................ A$ 6,520,000 $ 3,438,257 (56,654)
Euro vs. U.S. Dollar, expiring 11/6/00............... E 25,827,018 $ 23,988,412 (2,091,273)
Japanese Yen vs. U.S. Dollar, expiring 11/28/00...... Y 548,456,300 $ 5,110,000 (61,000)
Japanese Yen vs. U.S. Dollar, expiring 11/28/00...... Y 126,960,000 $ 1,178,940 (10,166)
Pound Sterling vs. U.S. Dollar, expiring 11/6/00..... L 1,795,000 $ 2,536,874 69,941
Swiss Franc vs. U.S. Dollar, expiring 11/10/00....... CF 1,975,000 $ 1,208,099 (108,617)
-----------
Net unrealized depreciation on foreign currency forward contracts: $(1,271,408)
===========
</TABLE>
143
<PAGE> 147
NOTES TO FINANCIAL STATEMENTS (Continued)
INTERNATIONAL BOND FUND
Foreign currency forward contracts open at October 31, 2000:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT AMOUNT CONTRACT AMOUNT APPRECIATION/
SOLD PURCHASED (DEPRECIATION)
---------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
FOREIGN CURRENCY SALE CONTRACTS
----------------------------------
Australian Dollar vs. U.S. Dollar, expiring
12/5/00............................................ A$ 3,922,522 $ 2,206,183 $ 172,809
Australian Dollar vs. U.S. Dollar, expiring
1/25/01............................................ A$ 1,270,000 $ 664,172 5,485
Canadian Dollar vs. U.S. Dollar, expiring 11/28/00... C$ 870,000 $ 587,719 17,743
Danish Krone vs. U.S. Dollar, expiring 11/22/00...... DK 2,900,000 $ 354,004 23,490
Euro vs. U.S. Dollar, expiring 11/6/00............... E 4,569,954 $ 3,985,000 110,417
Japanese Yen vs. U.S. Dollar, expiring 11/28/00...... Y 237,766,125 $ 2,262,500 73,664
Japanese Yen vs. U.S. Dollar, expiring 11/28/00...... Y 234,892,750 $ 2,262,500 100,115
Norwegian Krone vs. U.S. Dollar, expiring 12/22/00... NK 6,676,000 $ 707,541 (9,610)
Pound Sterling vs. U.S. Dollar, expiring 11/6/00..... L 2,010,000 $ 3,053,853 134,802
</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
12/5/00............................................ A$ 3,922,522 $ 2,260,000 (226,626)
Australian Dollar vs. U.S. Dollar, expiring
1/25/01............................................ A$ 2,635,000 $ 1,389,541 (22,896)
Euro vs. U.S. Dollar, expiring 11/6/00............... E 7,944,225 $ 7,421,971 (686,552)
Euro vs. U.S. Dollar, expiring 11/6/00............... E 533,941 $ 450,000 2,696
Japanese Yen vs. U.S. Dollar, expiring 11/28/00...... Y 286,300,000 $ 2,734,479 (98,848)
Swedish Krona vs. U.S. Dollar, expiring 1/17/01...... SK 6,300,000 $ 641,443 (8,727)
Swiss Franc vs. U.S. Dollar, expiring 11/10/00....... CF 470,000 $ 287,497 (25,848)
-----------
Net unrealized depreciation on foreign currency forward contracts: $ (437,886)
===========
</TABLE>
(K)
PURCHASED AND WRITTEN OPTIONS. Certain Funds may write covered call and put
options on their portfolio securities or foreign currencies. Premiums are
received and are recorded as liabilities. The liabilities are subsequently
adjusted to reflect the current value of the options written. Premiums received
from writing options which expire are treated as realized gains. Premiums
received from writing options which are exercised or are cancelled in closing
purchase transactions are added to the proceeds or netted against the amount
paid on the transaction to determine the realized gain or loss. By writing a
covered call option, a Fund foregoes in exchange for the premium the opportunity
for capital appreciation above the exercise price should the market price of the
underlying security or foreign currency increase. By writing a covered put
option, a Fund, in exchange for the premium, accepts the risk of a decline in
the market value of the underlying security or foreign currency below the
exercise price.
Certain Funds may purchase call and put options on its portfolio securities
or foreign currencies. A Fund may purchase call options to protect against an
increase in the price of the security or foreign currency it anticipates
purchasing. A 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. A Fund may also purchase
options to seek to enhance returns. 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.
144
<PAGE> 148
MAINSTAY
INSTITUTIONAL FUNDS INC.
INTERNATIONAL EQUITY FUND
Written option activity for the year ended October 31, 2000 was as follows:
<TABLE>
<CAPTION>
NOTIONAL
AMOUNT PREMIUM
----------- ----------
<S> <C> <C>
Options outstanding at October 31, 1999..................... -- --
Options--written............................................ (90,245,000) $(574,777)
Options--buybacks........................................... 27,700,000 288,157
Options--expired............................................ 45,945,000 180,380
----------- ---------
Options outstanding at October 31, 2000..................... (16,600,000) $(106,240)
=========== =========
</TABLE>
INTERNATIONAL BOND FUND
Written option activity for the year ended October 31, 2000 was as follows:
<TABLE>
<CAPTION>
NOTIONAL
AMOUNT PREMIUM
----------- ----------
<S> <C> <C>
Options outstanding at October 31, 1999..................... -- --
Options--written............................................ (26,912,000) $(174,280)
Options--buybacks........................................... 8,710,000 86,200
Options--expired............................................ 13,592,000 58,576
----------- ---------
Options outstanding at October 31, 2000..................... (4,610,000) $ (29,504)
=========== =========
</TABLE>
(L)
CONCENTRATION. At October 31, 2000, substantially all of the International
Equity Fund's, EAFE Index Fund's and International Bond Fund's net assets
consisted of securities of issuers which are denominated in foreign currencies.
Changes in currency exchange rates will affect the value of and investment
income from such securities.
As of October 31, 2000, the EAFE Index Fund and the International Bond Fund
invested approximately 24.3% and 31.0%, respectively, of its net assets in
issuers in Japan. The issuers' abilities to meet their obligations may be
affected by economic or political developments in Japan.
Substantially all of the International Equity Fund's, EAFE Index Fund's and
International Bond Fund's net assets consist of securities which are generally
subject to greater price volatility, limited capitalization and liquidity, and
higher rates of inflation than securities of companies based in the United
States. In addition, issuers of certain securities may be subject to substantial
governmental involvement in the economy and social, economic and political
uncertainty.
(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 the value of a securities
index foreign currency or interest rate. 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. A 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 or to seek to enhance returns: (see Note
5).
145
<PAGE> 149
NOTES TO FINANCIAL STATEMENTS (Continued)
(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, 2000, the Bond Fund and Short-Term Bond Fund had portfolio
securities with a fair market value of $23,589,133 and $5,851,569, 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 and Short-Term Bond
Fund, in the form of U.S. Government obligations, had a value of $344,511 and
$53,120, respectively, at October 31, 2000.
Net income earned on securities lending amounted to $110,598 and $19,656,
net of broker fees and rebates, for the Bond Fund and Short-Term Bond Fund,
respectively, for the year ended October 31, 2000 and is included as interest
income on the Statement of Operations.
146
<PAGE> 150
MAINSTAY
INSTITUTIONAL FUNDS INC.
BOND FUND
Investments made with cash collateral at October 31, 2000:
<TABLE>
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
CASH & CASH EQUIVALENTS
AIM Institutional Funds Group............................... 861,999 $ 861,999
Cash with Security Lending Agent............................ 2,578
-----------
864,577
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
SHORT-TERM COMMERCIAL PAPER
CVS Corp.
6.74%, due 12/27/00....................................... $4,435,000 4,388,984
Stellar Funding Group Inc.
6.65%, due 11/1/00........................................ 6,350,000 6,350,000
-----------
10,738,984
-----------
CORPORATE BOND
Public Service Enterprise Group
6.91%, due 11/22/00....................................... 5,000,000 5,001,098
-----------
REPURCHASE AGREEMENT
Prudential Securities Inc.
6.75%, due 11/1/00
(Collateralized by
$8,110,352 Government National Mortgage Association
5.50%, due 2/28/28 Market Value $8,160,000)............. 8,000,000 8,000,000
-----------
Total investments made with cash collateral................. $24,604,659
===========
</TABLE>
Non-cash collateral received and held by the Fund at October 31, 2000:
<TABLE>
<S> <C> <C>
United States Treasury Note
3.625%, due 7/15/02....................................... 90,000 $ 99,253
United States Treasury Bonds
6.125%, due 11/15/27...................................... 55,000 57,973
6.25%, due 8/15/23........................................ 65,000 67,824
6.85%, due 8/15/25........................................ 45,000 50,822
11.25%, due 2/15/15....................................... 45,000 68,639
-----------
Total non-cash collateral................................... $ 344,511
===========
Total collateral............................................ $24,949,170
===========
</TABLE>
147
<PAGE> 151
NOTES TO FINANCIAL STATEMENTS (Continued)
SHORT-TERM BOND FUND
Investments made with cash collateral at October 31, 2000:
<TABLE>
<CAPTION>
SHARES VALUE
---------- ----------
<S> <C> <C>
CASH & CASH EQUIVALENTS
AIM Institutional Funds Group............................... 634,235 $ 634,235
Cash with Security Lending Agent............................ 15,131
----------
649,366
----------
PRINCIPAL
AMOUNT
----------
SHORT-TERM COMMERCIAL PAPER
Frigate Funding Corp.
6.67%, due 11/1/00........................................ $1,570,000 1,570,000
Pegasus Three Limited
6.56%, due 11/1/00........................................ 1,380,000 1,380,000
----------
2,950,000
----------
CORPORATE BOND
Public Service Enterprise
6.56%, due 11/22/00....................................... 1,000,000 1,000,220
----------
REPURCHASE AGREEMENT
Prudential Securities Inc.
6.75%, due 11/1/00
(Collateralized by
$1,520,691 Government National Mortgage Association
7.375%, due 2/28/28 Market Value $1,530,000)............ 1,500,000 1,500,000
----------
Total investments made with cash collateral................. $6,099,586
==========
Non-cash collateral received and held by the Fund at October
31, 2000:
United States Treasury Bonds
6.75%, due 8/15/26........................................ 20,000 $ 22,300
7.875%, due 2/15/21....................................... 25,000 30,820
----------
Total non-cash collateral................................... $ 53,120
==========
Total collateral............................................ $6,152,706
==========
</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. Through March 31,
2000, New York Life served as subadvisor to the Money Market Fund under a
Sub-Advisory Agreement with the Manager. Effective April 1, 2000, New York Life
Investment Management LLC ("NYLIM"), an indirect wholly-owned subsidiary of New
York Life, replaced New York Life as subadvisor. 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. Through March 31, 2000, the Manager
delegated certain of its administrative responsibilities to New York Life
pursuant to a Sub-Administration Agreement between the Manager and New York
Life. New York Life no longer serves as sub-administrator or receives fees from
the Manager.
148
<PAGE> 152
MAINSTAY
INSTITUTIONAL FUNDS INC.
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>
Growth Equity Fund............. .85%
Indexed Equity Fund............ .50%
Value Equity Fund.............. .85%
Asset Manager Fund............. .65%
International Equity Fund...... .85%
EAFE Index Fund................ .95%
International Bond Fund........ .80%
Bond Fund...................... .75%
Indexed Bond Fund.............. .50%
Short-Term Bond Fund........... .60%
Money Market Fund.............. .50%
</TABLE>
Pursuant to the terms of the Sub-Advisory Agreements between the Manager and
each of the above referenced subadvisors, the Manager pays each Fund's
respective subadvisor a monthly fee at an annual rate of average daily net
assets of that Fund as follows:
<TABLE>
<S> <C>
Growth Equity Fund............. .25%
Indexed Equity Fund............ .10%
Value Equity Fund.............. .25%
Asset Manager Fund............. .15%
International Equity Fund...... .35%
EAFE Index Fund................ .15%
International Bond Fund........ .30%
Bond Fund...................... .20%
Indexed Bond Fund.............. .10%
Short-Term Bond Fund........... .15%
Money Market Fund.............. .10%
</TABLE>
Pursuant to the terms of the Sub-Administration Agreement between the
Manager and New York Life, the Manager paid New York Life a monthly fee through
March 31, 2000 at an annual rate of average daily net assets of each Fund as
follows:
<TABLE>
<S> <C>
Growth Equity Fund............. .50%
Indexed Equity Fund............ .30%
Value Equity Fund.............. .50%
Asset Manager Fund............. .40%
International Equity Fund...... .40%
EAFE Index Fund................ .70%
International Bond Fund........ .40%
Bond Fund...................... .45%
Indexed Bond Fund.............. .30%
Short-Term Bond Fund........... .35%
Money Market Fund.............. .30%
</TABLE>
The Manager voluntarily agreed to assume a portion of the Fund's operating
expenses for the year ended October 31, 2000 and, 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>
Indexed Equity Fund............ .30%
EAFE Index Fund................ .94%
International Bond Fund........ .95%
Bond Fund...................... .75%
Indexed Bond Fund.............. .50%
Short-Term Bond Fund........... .60%
Money Market Fund.............. .50%
</TABLE>
In connection with the voluntary expense limitations, the Manager assumed
the following expenses for the year ended October 31, 2000:
<TABLE>
<S> <C>
Indexed Equity Fund**....... $3,878,398
EAFE Index Fund............. 262,388
International Bond Fund..... 55,842
Bond Fund................... 152,913
Indexed Bond Fund........... $176,961
Short-Term Bond Fund........ 124,606
Money Market Fund........... 292,200
</TABLE>
------------
** For the Indexed Equity Fund, the Manager assumed $3,071,827. Monitor Capital,
the subadvisor, assumed $806,571.
The Growth Equity Fund, Value Equity Fund, Asset Manager Fund and the
International Equity Fund did not have a voluntary expense limitation for the
year ended October 31, 2000; the Manager has voluntarily agreed to assume a
portion of these Funds' operating expenses through October 31, 2001 to the
extent the total expenses (excluding service fees and distribution fees) on an
annualized basis exceed 0.93%, 0.94%, 0.83% and 1.03%, respectively.
These voluntary expense limitations will remain in effect through October
31, 2001, 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
149
<PAGE> 153
NOTES TO FINANCIAL STATEMENTS (Continued)
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.
(C)
SERVICE AND DISTRIBUTION FEES. In accordance with the Shareholder Services
Plans for the Institutional Service Class shares and the Money Market Fund Sweep
Shares Class, the Manager 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, the Manager 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. Prior to April 1, 2000, New York Life provided these
services and received these fees.
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. Pursuant to the Distribution Plan, NYLIFE
Securities Inc., an indirect wholly-owned subsidiary of New York Life, NYLIFE
Distributors, 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 LLC ("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 year ended October 31, 2000
were as follows:
<TABLE>
<S> <C>
Growth Equity Fund............ $542,486
Indexed Equity Fund........... 80,901
Value Equity Fund............. 423,261
Asset Manager Fund............ 493,665
International Equity Fund..... 49,558
EAFE Index Fund............... 29,253
International Bond Fund....... 27,295
Bond Fund..................... 31,010
Indexed Bond Fund............. 34,975
Short-Term Bond Fund.......... 49,181
Money Market Fund............. 55,296
</TABLE>
(E)
DIRECTORS FEES. Directors, other than those affiliated with the Manager, 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 Company has been advised that at October 31, 2000 affiliates of
New York Life owned a significant number of shares of the Funds with the
following market values:
<TABLE>
<S> <C>
Growth Equity Fund....... $1,065,618,112
Indexed Equity Fund...... 1,416,822,505
Value Equity Fund........ 661,830,241
Asset Manager Fund....... 457,547,081
International Equity
Fund................... 111,650,463
EAFE Index Fund.......... 44,568,709
International Bond
Fund................... 42,707,624
Bond Fund................ 162,841,955
Indexed Bond Fund........ 109,875,650
Short-Term Bond Fund..... 20,290,754
Money Market Fund........ 113,339,910
</TABLE>
From time to time, a Fund 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.
150
<PAGE> 154
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
year ended October 31, 2000, these fees were as follows:
<TABLE>
<S> <C>
Growth Equity Fund............. $46,009
Indexed Equity Fund............ 59,888
Value Equity Fund.............. 25,926
Asset Manager Fund............. 21,465
International Equity Fund...... 5,986
EAFE Index Fund................ 2,830
</TABLE>
<TABLE>
<S> <C>
International Bond Fund........ $ 1,780
Bond Fund...................... 6,850
Indexed Bond Fund.............. 5,105
Short-Term Bond Fund........... 1,154
Money Market Fund.............. 15,188
</TABLE>
--------------------------------------------------------------------------------
NOTE 4 -- Federal Income Tax:
--------------------------------------------------------------------------------
At October 31, 2000, 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>
CAPITAL LOSS
AVAILABLE THROUGH AMOUNT (000'S)
----------------- --------------
<S> <C> <C>
International Bond Fund.............................. 2007 $ 518
2008 1,840
-------
$ 2,358
=======
Bond Fund............................................ 2002 $ 5,265
2004 1,625
2007 8,597
2008 3,661
-------
$19,148
=======
Indexed Bond Fund.................................... 2004 $ 1,439
2005 44
2006 111
2007 1,728
2008 1,793
-------
$ 5,115
=======
Short-Term Bond Fund................................. 2001 $ 101
2002 4,478
2003 1,770
2004 485
2005 173
2007 473
2008 744
-------
$ 8,224
=======
Money Market Fund.................................... 2006 $ 22
2008 2
-------
$ 24
=======
</TABLE>
The Value Equity Fund utilized $25,638,272 of capital loss carryforwards during
the current year.
151
<PAGE> 155
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
NOTE 5 -- Financial Investments:
--------------------------------------------------------------------------------
The Value Equity Fund's, Asset Manager Fund's, International Equity Fund's,
EAFE Index Fund's and International Bond Fund's use of foreign currency forward
contracts involves, to varying degrees, elements of market risk in excess of the
amount recognized in the statement of assets and liabilities. The contract
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 forward contracts reflects each Fund's exposure at year-end
to credit loss in the event of a counterparty's failure to perform its
obligations.
The Asset Manager Fund and EAFE Index Fund use foreign currency forward
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 Value Equity Fund, International Equity Fund and International Bond Fund
enter into foreign currency forward contracts in order to protect against
uncertainty in the level of future foreign currency exchange rates, or to seek
to enhance the Funds' investment returns in the case of the International Equity
Fund and the International Bond Fund.
The Indexed Equity Fund's, Asset Manager Fund's, EAFE Index 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 Indexed Equity Fund and EAFE Index 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 a syndicate of banks 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, to the Bank of New York,
which acts as agent to the syndicate. 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 year ended October 31, 2000.
152
<PAGE> 156
(THIS PAGE INTENTIONALLY LEFT BLANK)
153
<PAGE> 157
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
NOTE 7-- Purchases and Sales of Securities (in 000's):
--------------------------------------------------------------------------------
During the year ended October 31, 2000, purchases and sales of securities,
other than securities subject to repurchase transactions and short-term
securities, were as follows:
<TABLE>
<CAPTION>
Growth Equity Fund Indexed Equity Fund Value Equity Fund Asset Manager Fund
Purchases Sales Purchases Sales Purchases Sales Purchases Sales
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government
securities $ -- $ -- $ -- $ -- $ -- $ -- $ 31,775 $ 40,658
All others 595,773 577,992 175,055 414,239(b) 634,393 739,453 210,754 143,708
-----------------------------------------------------------------------------------------
Total $595,773 $577,992 $175,055 $414,239 $634,393 $739,453 $242,529 $184,366
=========================================================================================
</TABLE>
--------------------------------------------------------------------------------
NOTE 8-- Capital Share Transactions (in 000's):
--------------------------------------------------------------------------------
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
Growth Equity Fund
---------------------------------------------------------------------------------------------
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- -------------
January 1, 1999
Year ended through Year ended
October 31, 2000 October 31, 1999 December 31, 1998
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 4,147 176 5,302 365 4,734 119
Shares issued in
reinvestment of
dividends and
distributions 2,612 61 287 7 1,838 28
---------------------------------------------------------------------------------------------
6,759 237 5,589 372 6,572 147
Shares redeemed (3,627) (288) (5,914) (127) (4,977) (93)
---------------------------------------------------------------------------------------------
Net increase
(decrease) 3,132 (51) (325) 245 1,595 54
=============================================================================================
<CAPTION>
Indexed Equity Fund
---------------------------------------------------------------------------------------------
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- -------------
January 1, 1999
Year ended through Year ended
October 31, 2000 October 31, 1999 December 31, 1998
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 5,528 909 6,739 902 11,881 806
Shares issued in
reinvestment of
dividends and
distributions 2,125 79 403 15 1,778 41
---------------------------------------------------------------------------------------------
7,653 988 7,142 917 13,659 847
Shares redeemed (11,815) (934) (6,855) (337) (5,280) (264)
---------------------------------------------------------------------------------------------
Net increase
(decrease) (4,162) 54 287 580 8,379 583
=============================================================================================
</TABLE>
<TABLE>
<CAPTION>
International Equity Fund
---------------------------------------------------------------------------------------------
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- -------------
January 1, 1999
Year ended through Year ended
October 31, 2000 October 31, 1999 December 31, 1998
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 4,561 2 1,534 10 3,583 4
Shares issued in
reinvestment of
dividends and
distributions 431 2 32 --(a) 343 2
---------------------------------------------------------------------------------------------
4,992 4 1,566 10 3,926 6
Shares redeemed (4,317) (13) (1,792) (15) (3,477) (10)
---------------------------------------------------------------------------------------------
Net increase
(decrease) 675 (9) (226) (5) 449 (4)
=============================================================================================
<CAPTION>
EAFE Index Fund
---------------------------------------------------------------------------------------------
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- -------------
January 1, 1999
Year ended through Year ended
October 31, 2000 October 31, 1999 December 31, 1998
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 4,644 21 5,615 9 2,636 8
Shares issued in
reinvestment of
dividends and
distributions 417 3 27 --(a) 442 3
---------------------------------------------------------------------------------------------
5,061 24 5,642 9 3,078 11
Shares redeemed (4,326) (16) (6,050) (9) (2,690) (10)
---------------------------------------------------------------------------------------------
Net increase
(decrease) 735 8 (408) -- 388 1
=============================================================================================
</TABLE>
<TABLE>
<CAPTION>
Indexed Bond Fund
---------------------------------------------------------------------------------------------
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- -------------
January 1, 1999
Year ended through Year ended
October 31, 2000 October 31, 1999 December 31, 1998
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,427 94 2,351 72 5,611 123
Shares issued in
reinvestment of
dividends and
distributions 1,001 22 -- -- 847 20
---------------------------------------------------------------------------------------------
2,428 116 2,351 72 6,458 143
Shares redeemed (3,258) (88) (3,139) (115) (3,138) (69)
---------------------------------------------------------------------------------------------
Net increase
(decrease) (830) 28 (788) (43) 3,320 74
=============================================================================================
<CAPTION>
Short-Term Bond Fund
---------------------------------------------------------------------------------------------
Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- -------------
January 1, 1999
Year ended through Year ended
October 31, 2000 October 31, 1999 December 31, 1998
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 2,557 18 2,968 32 1,826 81
Shares issued in
reinvestment of
dividends and
distributions 295 7 -- -- 268 7
---------------------------------------------------------------------------------------------
2,852 25 2,968 32 2,094 88
Shares redeemed (4,527) (19) (2,446) (59) (2,584) (111)
---------------------------------------------------------------------------------------------
Net increase
(decrease) (1,675) 6 522 (27) (490) (23)
=============================================================================================
</TABLE>
------------
* Sweep Shares Class first offered on December 8, 1998.
(a) Less than one thousand.
(b) Included in the proceeds of sales for Indexed Equity Fund is $235,523,090
representing the value of securities disposed of in payment of redemption
in-kind.
154
<PAGE> 158
MAINSTAY
INSTITUTIONAL FUNDS INC.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International International
Equity Fund EAFE Index Fund Bond Fund Bond Fund Indexed Bond Fund Short-Term Bond Fund
Purchases Sales Purchases Sales Purchases Sales Purchases Sales Purchases Sales Purchases Sales
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ -- $ -- $ -- $ -- $ -- $ 2,350 $559,593 $483,574 $ 19,032 $ 24,347 $ 44,593 $ 65,076
61,230 65,189 11,986 7,555 81,880 176,775 142,017 175,309 8,696 10,657 9,170 7,419
---------------------------------------------------------------------------------------------------------------------------------
$ 61,230 $ 65,189 $ 11,986 $ 7,555 $ 81,880 $179,125 $701,610 $658,883 $ 27,728 $ 35,004 $ 53,763 $ 72,495
=================================================================================================================================
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Value Equity Fund Asset Manager Fund
--------------------------------------------------------------------------------------------- -----------------------------
Institutional Institutional Institutional Institutional Institutional Institutional Institutional Institutional
Class Service Class Class Service Class Class Service Class Class Service Class
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
January 1, 1999
Year ended through Year ended Year ended
October 31, 2000 October 31, 1999 December 31, 1998 October 31, 2000
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3,057 59 3,537 73 5,203 125 6,691 225
513 3 4 --(a) 14,874 179 2,333 120
---------------------------------------------------------------------------------------------------------------------------------
3,570 62 3,541 73 20,077 304 9,024 345
(8,905) (235) (13,226) (315) (12,155) (150) (7,404) (503)
---------------------------------------------------------------------------------------------------------------------------------
(5,335) (173) (9,685) (242) 7,922 154 1,620 (158)
=================================================================================================================================
<CAPTION>
Asset Manager Fund
-------------------------------------------------------------
Institutional Institutional Institutional Institutional
Class Service Class Class Service Class
------------- ------------- ------------- -------------
January 1, 1999
through Year ended
October 31, 1999 December 31, 1998
-------------------------------------------------------------
<S> <C> <C> <C> <C>
2,735 1,009 3,875 443
3,585 205 4,797 158
-------------------------------------------------------------
6,320 1,214 8,672 601
(3,630) (307) (4,061) (169)
-------------------------------------------------------------
2,690 907 4,611 432
=============================================================
</TABLE>
<TABLE>
<CAPTION>
International Bond Fund 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
Year ended through Year ended Year ended
October 31, 2000 October 31, 1999 December 31, 1998 October 31, 2000
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
156 2 367 --(a) 1,062 2 2,483 209
90 --(a) 116 --(a) 392 2 1,103 16
---------------------------------------------------------------------------------------------------------------------------------
246 2 483 --(a) 1,454 4 3,586 225
(1,043) (8) (427) (2) (369) (5) (1,647) (283)
---------------------------------------------------------------------------------------------------------------------------------
(797) (6) 56 (2) 1,085 (1) 1,939 (58)
=================================================================================================================================
<CAPTION>
Bond Fund
-------------------------------------------------------------
Institutional Institutional Institutional Institutional
Class Service Class Class Service Class
------------- ------------- ------------- -------------
January 1, 1999
through Year ended
October 31, 1999 December 31, 1998
-------------------------------------------------------------
<S> <C> <C> <C> <C>
1,239 528 2,773 435
--(a) --(a) 998 19
-------------------------------------------------------------
1,239 528 3,771 454
(1,728) (576) (4,316) (178)
-------------------------------------------------------------
(489) (48) (545) 276
=============================================================
</TABLE>
<TABLE>
<CAPTION>
Money Market Fund
-----------------------------------------------------------------------------------------------------------
Institutional Institutional Sweep Shares Institutional Institutional Sweep Shares Institutional
Class Service Class Class Class Service Class Class Class
------------- ------------- ------------ ------------- ------------- ------------ -------------
January 1, 1999 Period ended
Year ended through December 31,
October 31, 2000 October 31, 1999 1998
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
326,707 1,355 209,405 478,066 10,416 251,505 267,338
11,872 97 10,712 8,988 811 4,314 10,080
-----------------------------------------------------------------------------------------------------------
338,579 1,452 220,117 487,054 11,227 255,819 277,418
(424,349) (5,495) (150,449) (434,684) (109,362) (110,508) (273,376)
-----------------------------------------------------------------------------------------------------------
(85,770) (4,043) 69,668 52,370 (98,135) 145,311 4,042
===========================================================================================================
<CAPTION>
Money Market Fund
----------------------------
Institutional Sweep Shares
Service Class Class*
------------- ------------
<S> <C> <C>
92,389 7,086
3,866 --
----------------------------
96,255 7,086
(56,718) (129)
----------------------------
39,537 6,957
============================
</TABLE>
155
<PAGE> 159
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, 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, 2000, the results of each
of their operations for the year then ended, and the changes in each of their
net assets and the financial highlights for each of the periods indicated, in
conformity with accounting principles generally accepted in the United States of
America. 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 auditing standards generally accepted in the United States of
America, 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, 2000 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
1177 Avenue of the Americas
New York, New York
December 8, 2000
156
<PAGE> 160
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 A. FLANAGAN
Treasurer and Secretary
MANAGER
MainStay Management LLC
SUBADVISORS
New York Life Investment Management
LLC
MacKay Shields LLC
Monitor Capital Advisors LLC
DISTRIBUTOR
NYLIFE Distributors Inc.
TRANSFER AGENT
MainStay Shareholder Services LLC
CUSTODIAN
The Bank of New York
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
LEGAL COUNSEL
Dechert Price & Rhoads
*As of October 31, 2000.
<PAGE> 161
This report may only be distributed to Fund shareholders or when
accompanied or preceded by a current Fund prospectus.
Subadvisors
MacKay Shields LLC
Monitor Capital Advisors LLC
New York Life Asset Management Operating Company LLC
[MAINSTAY INVESTMENTS LOGO]
Distributed by NYLIFE Distributors Inc., member NASD,
300 Interpace Parkway, Building A, Parsippany, NJ 07054
02-010-1000
