<PAGE> 1
MainStay VP Series Fund, Inc. Prospectus May 1, 2000
- --------------------------------------------------------------------------------
-
<TABLE>
<S> <C>
MAINSTAY VP SERIES FUND, INC.
OFFERS 3 PORTFOLIOS
Growth
Growth Equity Portfolio............... page A-5
Income
Bond Portfolio........................ page A-6
Cash Management Portfolio............. page A-7
</TABLE>
(Neither) the Securities and Exchange
Commission nor any state securities
commission has approved or disapproved of
these securities or passed upon the
accuracy or adequacy of this prospectus.
Any representation to the contrary is a
criminal offense.
A-1
<PAGE> 2
WHAT'S INSIDE?
- --------------------------------------------------------------------------------
-
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE FUND AND THE SEPARATE ACCOUNTS.......................... A-3
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND
PRINCIPAL RISKS: AN OVERVIEW.............................. A-4
MORE ABOUT INVESTMENT STRATEGIES AND RISKS.................. A-8
THE FUND AND ITS MANAGEMENT................................. A-10
Investment Advisers.................................... A-10
Portfolio Managers -- Biographies...................... A-10
Administrator.......................................... A-10
PURCHASE AND REDEMPTION OF SHARES........................... A-11
TAXES, DIVIDENDS AND DISTRIBUTIONS.......................... A-11
Taxes.................................................. A-11
Dividends and Distributions............................ A-12
GENERAL INFORMATION......................................... A-12
Custodian.............................................. A-12
Performance and Yield Information...................... A-12
FINANCIAL HIGHLIGHTS........................................ A-13
</TABLE>
------------------------
A-2
<PAGE> 3
THE FUND AND THE SEPARATE ACCOUNTS
- --------------------------------------------------------------------------------
-
This Prospectus describes the shares offered by MainStay VP Series Fund, Inc.
(the "Fund"). The Fund, a diversified open-end management investment company, is
a Maryland corporation organized on June 3, 1983.
The Fund issues for investment three separate classes of capital stock, each of
which represents a separate portfolio of investments--the MainStay VP Cash
Management Portfolio ("Cash Management"), the MainStay VP Bond Portfolio
("Bond"), and the MainStay VP Growth Equity Portfolio ("Growth Equity") (each a
"Portfolio" and collectively the "Portfolios"). In many respects, each Portfolio
resembles a separate fund. At the same time, in certain important respects, the
Fund is treated as a single entity.
Shares of the Portfolios are currently offered to certain Separate Accounts to
fund variable annuity policies and variable life insurance policies issued by
New York Life Insurance and Annuity Corporation ("NYLIAC") (collectively,
"Policies" and individually, "Policy").
The terms "shareholder" or "shareholders" in this Prospectus refer to the
Separate Accounts, and the rights of the Separate Accounts as shareholders are
different from the rights of an owner of a Policy ("Owner"). The rights of an
Owner are described in the Policy. The current prospectus for the Policy (which
is attached at the front of this Prospectus) describes the rights of the
Separate Accounts as shareholders and the rights of an Owner. The Separate
Accounts invest in shares of the Portfolios in accordance with allocation
instructions received from Owners.
The current prospectus for the Policy describes the Policy and the relationship
between changes in the value of shares of the Portfolios and the benefits
payable under a Policy.
A-3
<PAGE> 4
Investment Objectives, Principal Investment Strategies
and Principal Risks: An Overview
This prospectus discusses 3 Portfolios which invest for varying combinations of
income and capital appreciation. Each of the Portfolios pursues somewhat
different strategies to achieve its objective, but all of the equity Portfolios
invest, under normal market conditions, primarily in equity securities and all
of the fixed income Portfolios invest, under normal market conditions, primarily
in debt or fixed income securities.
Publicly held corporations may raise needed cash by issuing or selling equity
securities to investors. When you buy stock in a corporation you become part
owner. The Portfolios may buy equity securities through principal stock
exchanges, such as the New York Stock Exchange or the American Stock Exchange,
or in the over-the-counter market. There are many different types of equity
securities, including stocks, convertible securities, American Depositary
Receipts and others. Investors buy equity securities to make money through
dividend payments and/or selling them for more than they paid.
Both governments and private companies may raise needed cash by issuing or
selling debt securities to investors. The Portfolios may buy debt securities
directly from those governments and companies or in the secondary trading
markets. There are many different types of debt securities, including bonds,
notes, debentures and others. Some pay fixed rates of return; others pay
variable rates. Interest may be paid at different intervals. Some debt
securities do not make regular interest payments, but instead are initially sold
at a discount to the principal amount to be paid at maturity. The amount of
interest paid is subject to many variables, including creditworthiness of the
issuer, length of maturity of the security, market factors, and the nature of
the debt instrument. Each of the Portfolios described in this prospectus invests
in particular types of debt securities, consistent with its own investment
objective and strategies which are described in the succeeding pages of this
prospectus.
NOT INSURED
An investment in the Portfolios is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Cash Management Portfolio seeks to preserve the value of
your investment at $1.00 per share, it is possible to lose money by investing in
the Portfolio.
YOU COULD LOSE MONEY
Before considering one or more investments, you should understand that you could
lose money.
NAV WILL FLUCTUATE
The value of Portfolio shares, also known as the net asset value (NAV), will
fluctuate based on the value of the Portfolio's holdings. Security values
change. Investment in common stocks and other equity securities is particularly
subject to the risks of changing economic, stock market, industry and company
conditions and the risks inherent in management's ability to anticipate such
changes that can adversely affect the value of a Portfolio's holdings. In the
case of debt securities, security values change when interest rates change.
Generally when interest rates go up, the value of a debt security goes down and
when interest rates go down, the value of a debt security goes up. Other
factors, such as changes in how the market views the creditworthiness of an
issuer, changes in economic or market conditions, changes in relative values of
currencies, the risks inherent in management's ability to anticipate such
changes, and changes in the average maturity of a Portfolio's investment can
also affect security values and Portfolio share price.
MORE INFORMATION
The next section of this prospectus gives you more detailed information about
the investment objectives, policies, principal investment strategies, principal
risks, performance and expenses of each of the Portfolios offered in this
prospectus. Please review it carefully.
A-4
<PAGE> 5
GROWTH EQUITY PORTFOLIO
INVESTMENT OBJECTIVE -- The Growth Equity Portfolio's investment objective is to
seek long-term growth of capital, with income as a secondary consideration.
PRINCIPAL INVESTMENT STRATEGIES -- The Portfolio normally invests in common
stocks of larger capitalization, well managed companies which appear to have
better than average potential for capital appreciation.
INVESTMENT PROCESS -- The Portfolio will seek to identify companies which, in
the opinion of Madison Square Advisors LLC, the Portfolio's Adviser, are
considered to represent good value based on historical investment standards,
including price/book value ratios and price/earnings ratios. The Portfolio is
managed with a growth/value orientation which is determined by market
conditions. The Adviser uses a "top-down" approach which assesses the
macroeconomic environment to determine sector weightings.
PRINCIPAL RISKS -- Investment in common stocks and other equity securities is
particularly subject to the risk of changing economic, stock market, industry
and company conditions which can adversely affect the value of the Portfolio's
holdings.
The principal risk of growth stocks is that investors expect growth companies to
increase their earnings at a certain rate which is generally higher than the
rate expected for non-growth companies. If these expectations are not met, the
market price of the stock may decline significantly, even if earnings showed an
absolute increase. Growth company stocks also typically lack the dividend yield
that can cushion stock prices in market downturns.
The principal risk of investing in value stocks is that the value stocks in
which the Portfolio invests may never reach what the Adviser believes is their
full value or that they may even go down in value.
PAST PERFORMANCE
The bar chart and table indicate some of the risks of investing in the Portfolio
by showing changes in its performance over a ten year period and by showing how
the Portfolio's average annual total returns for one, five and ten years compare
to those of a broad-based securities market index. Separate account and contract
charges are not reflected in the bar chart. If they were, returns would be less
than those shown. As with all mutual funds, past performance is not necessarily
an indication of how the Portfolio will perform in the future.
<TABLE>
<CAPTION>
<S> <C> <C>
GROWTH EQUITY PORTFOLIO QUARTER/YEAR RETURN
Highest Return/Best Quarter 4/99 23.35
Lowest Return/Worst Quarter 3/90 -14.90
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
<S> <C> <C> <C>
1 YEAR 5 YEARS 10 YEARS
Growth Equity Portfolio 29.96 27.38 18.53
S&P 500 Index* 21.04 28.56 18.21
</TABLE>
* "S&P 500(R)" and "500" are trademarks of The McGraw-Hill Companies, Inc. The
S&P 500 Index is an unmanaged index and is widely regarded as the standard for
measuring large-cap U.S. stock market performance. Results assume the
reinvestment of all income and capital gain distributions.
[Growth Equity Fund Bar Chart]
<TABLE>
<S> <C>
90 -6.19
91 33.62
92 12.42
93 13.71
94 1.20
95 29.16
96 24.50
97 26.75
98 26.59
99 29.96
</TABLE>
A-5
<PAGE> 6
BOND PORTFOLIO
INVESTMENT OBJECTIVE -- The Bond Portfolio's investment objective is to seek the
highest income over the long term consistent with preservation of principal.
PRINCIPAL INVESTMENT STRATEGIES -- The Portfolio normally invests at least 75%
of its total assets in debt securities which have a rating within the four
highest grades as determined by either S&P or Moody's, in obligations (whether
or not rated) of the United States Government and its agencies and
instrumentalities or temporarily in money market instruments (including
repurchase agreements) and cash.
Madison Square Advisors LLC is the Portfolio's Adviser.
PRINCIPAL RISKS -- The value of debt securities fluctuate depending upon various
factors, including interest rates, issuer creditworthiness, market conditions
and maturity. Investments in the Portfolio are not guaranteed even though some
of the Portfolio's investments are guaranteed by the U.S. government or its
agencies or instrumentalities.
PAST PERFORMANCE
The bar chart and table indicate some of the risks of investing in the Portfolio
by showing changes in its performance over a ten year period and by showing how
the Portfolio's average annual total returns for one, five and ten years compare
to those of a broad-based securities market index. Separate account and contract
charges are not reflected in the bar chart. If they were, returns would be less
than those shown. As with all mutual funds, past performance is not necessarily
an indication of how the Portfolio will perform in the future.
<TABLE>
<CAPTION>
<S> <C> <C>
BOND PORTFOLIO QUARTER/YEAR RETURN
Highest Return/Best Quarter 2/95 6.37
Lowest Return/Worst Quarter 1/94 -2.97
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
<S> <C> <C> <C>
1 YEAR 5 YEARS 10 YEARS
Bond Portfolio -1.53 7.30 7.60
Merrill Lynch Corporate and*
Government Master Index -2.05 7.60 7.69
</TABLE>
* The Merrill Lynch Corporate and Government Master Index is an unmanaged index
consisting of issues of the U.S. Government and its agencies as well as
investment-grade corporate securities. Results assume the reinvestment of all
income and capital gains distributions.
[Bond Portfolio Bar Chart]
<TABLE>
<S> <C>
90 7.36
91 16.27
92 8.26
93 11.40
94 -3.39
95 18.31
96 2.05
97 9.65
98 9.12
99 -1.53
</TABLE>
A-6
<PAGE> 7
CASH MANAGEMENT PORTFOLIO
INVESTMENT OBJECTIVE -- The Cash Management Portfolio's investment objective is
to seek as high a level of current income as is considered consistent with the
preservation of capital and liquidity.
PRINCIPAL INVESTMENT STRATEGIES -- MacKay Shields LLC is the Portfolio's
Adviser. The Portfolio invests in short-term dollar-denominated securities,
maturing in 397 days (13 months) or less. The weighted average portfolio
maturity will not exceed 90 days. These securities may include U.S. government
securities; bank and bank holding company obligations such as CDs and bankers'
acceptances; commercial paper which is short-term; unsecured loans to
corporations; other corporate loans of one year or less; and dollar-denominated
loans to U.S. and foreign issuers and securities of foreign branches of U.S.
banks such as negotiable CDs, also known as Eurodollars. These securities may be
variable rate notes, floating rate notes and mortgage-related and asset-backed
securities. Mortgage-related securities (including mortgage-backed securities)
are debt securities whose values are based on underlying pools of mortgages.
These securities may be issued by U.S. governmental entities or private
investors. The values of asset-backed securities are based on underlying pools
of other receivables. Variable rate notes are debt securities that provide for
periodic adjustments in their interest rate. Floaters are debt securities with a
floating rate of interest that is tied to another interest rate such as a money
market index or Treasury bill rate. All securities purchased by the Portfolio
must meet the requirements of Rule 2a-7 of the Investment Company Act of 1940
which are designed to mitigate the risk of loss. There must be a reasonable
expectation that at any time until the final maturity of a floating or variable
rate instrument or the period remaining until the principal amount can be
recovered through demand, the market value of the floating or variable rate
instrument will approximate its amortized cost.
PRINCIPAL RISKS -- An investment in the Portfolio is NOT INSURED OR GUARANTEED
by the Federal Deposit Insurance Corporation or any other government agency.
Although the Portfolio seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the Portfolio. This
could occur because of highly unusual market conditions or a sudden collapse in
the creditworthiness of a company once believed to be an issuer of high-quality,
short-term securities.
Since the Portfolio invests in dollar denominated FOREIGN SECURITIES, it can be
subject to various risks of loss that are different from risks of investing in
securities of U.S. based issuers. These include political and economic
instability, less publicly available issuer information and changes in U.S. or
foreign tax or currency laws.
The Portfolio's principal investments include DERIVATIVES such as variable rate
instruments, floaters and mortgage-related and asset-backed securities. If the
Adviser is wrong about its creditworthiness assessments, expectations of changes
in interest rates or market conditions, as a result of an investment or its use
of derivatives the Portfolio could suffer a loss.
PAST PERFORMANCE
The bar chart and table indicate some of the risks of investing in the Portfolio
by showing changes in its performance over the life of the Portfolio and by
showing how the Portfolio's average annual total returns for one year, five
years and the life of the Portfolio compare to those of a broad-based securities
market index. Separate account and contract charges are not reflected in the bar
chart. If they were, returns would be less than those shown. As with all mutual
funds, past performance is not necessarily an indication of how the Portfolio
will perform in the future.
<TABLE>
<CAPTION>
<S> <C> <C>
CASH MANAGEMENT PORTFOLIO QUARTER/YEAR RETURN
Highest Return/Best Quarter 2/95 1.40
Lowest Return/Worst Quarter 1/94 0.70
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
<S> <C> <C> <C>
SINCE
1 YEAR 5 YEARS INCEPTION 1/29/93
Cash Management Portfolio 4.84 5.16 4.63
Lipper Money Market Funds
Index* 4.74 5.10 4.58
</TABLE>
* The Lipper Money Market Funds Index is an equally weighted performance index
adjusted for capital gains distributions and income dividends of the largest
qualifying funds in the investment objective. The funds invest in high-quality
financial instruments rated in the top two grades with a dollar-weighted
average maturity of less than 90 days.
[Cash Management Portfolio Bar Chart]
<TABLE>
<S> <C>
94 3.82
95 5.59
96 4.95
97 5.25
98 5.18
99 4.84
</TABLE>
A-7
<PAGE> 8
MORE ABOUT INVESTMENT STRATEGIES AND RISKS
- --------------------------------------------------------------------------------
-
Information about each Portfolio's principal investments, investment practices
and principal risks appears at the beginning of the prospectus. The information
below further describes the principal investments, investment practices and
risks pertinent to a Portfolio.
DERIVATIVE SECURITIES
The value of derivatives is based on certain underlying equity or fixed-income
securities, interest rates, currencies or indexes. They may be hard to sell and
are very sensitive to changes in the underlying security, interest rate,
currency or index, and as a result can be highly volatile. If an Adviser or
Sub-Adviser is wrong about its expectations of changes in interest rates or
market conditions, the use of derivatives could result in a loss.
In addition, the leverage associated with inverse floaters, a type of
derivative, may result in greater volatility in their market value than other
income-producing securities. With respect to mortgage-backed and asset-backed
securities, if interest rates fall, the underlying mortgages and debt may be
paid off reducing the value of a Portfolio's investments.
FOREIGN SECURITIES
Foreign investments could be more difficult to sell than U.S. investments. They
also may subject a Portfolio to risks different from investing in domestic
securities. Investments in foreign securities involve difficulties in receiving
or interpreting financial and economic information, possible imposition of
taxes, higher brokerage and custodian fees, possible currency exchange controls
or other government restrictions, including possible seizure or nationalization
of foreign deposits or assets. Foreign securities may also be less liquid and
more volatile than U.S. securities. There may also be difficulty in invoking
legal protections across borders. In addition, investment in emerging market
countries presents risks in greater degree than those presented by investment in
foreign issuers in countries with developed securities markets and more advanced
regulatory systems.
Some foreign securities are issued by companies organized outside the United
States and are traded only or primarily in trading markets outside the United
States. These foreign securities can be subject to most, if not all, of the
risks of foreign investing. Some foreign securities are issued by companies
organized outside the United States but are traded in U.S. securities markets
and are denominated in U.S. dollars. For example, American Depositary Receipts
and shares of some large foreign-based companies are traded on principal U.S.
exchanges. Other securities are not traded in the United States but are
denominated in U.S. dollars. These securities are not subject to all the risks
of foreign investing. For example, foreign trading market or currency risks will
not apply to dollar denominated securities traded in U.S. securities markets.
Many of the foreign securities in which the Portfolios invest will be
denominated in foreign currencies. Changes in foreign exchange rates will affect
the value of securities denominated or quoted in foreign currencies. Exchange
rate movements can be large and can endure for extended periods of time,
affecting either favorably or unfavorably the value of the Portfolios' assets. A
Portfolio may, however, engage in foreign currency transactions to attempt to
protect itself against fluctuations in currency exchange rates in relation to
the U.S. dollar. See "Risk Management Techniques."
LENDING OF PORTFOLIO SECURITIES
Portfolio securities may be lent to brokers, dealers and financial institutions
to realize additional income under guidelines adopted by the Board of Directors.
The risks in lending portfolio securities, as with other extensions of credit,
consist of possible loss of rights in the collateral should the borrower fail
financially. In determining whether to lend securities, a Portfolio's Adviser or
Sub-Adviser will consider all relevant facts and circumstances, including the
creditworthiness of the borrower.
MORTGAGE-BACKED AND
ASSET-BACKED SECURITIES
Mortgage-backed and asset-backed securities are derivative securities whose
value is based on underlying pools of loans that may include interests in pools
of lower-rated debt securities, consumer loans or mortgages, or complex
instruments such as collateralized mortgage obligations and stripped
mortgage-backed securities. The value of these securities may be significantly
affected by changes in interest rates, the market's perception of issuers and
the creditworthiness of the parties involved. The Adviser's or Sub-Adviser's
ability to correctly forecast interest rates and other economic factors
correctly will impact the success of investments in mortgage-backed and
asset-backed securities. Some securities may have a structure that makes their
reaction to interest rate changes and other factors difficult to predict, making
their value highly volatile. These securities may also be subject to prepayment
risk and if the security has been purchased at a premium the amount of some or
all of the premium may be lost in the event of prepayment.
RISK MANAGEMENT TECHNIQUES
Various techniques can be used to increase or decrease a Portfolio's exposure to
changing security prices, interest rates, currency exchange rates, commodity
prices or other
A-8
<PAGE> 9
factors that affect security values. These techniques may involve derivative
transactions such as buying and selling futures contracts and options on futures
contracts, entering into foreign currency transactions (such as forward foreign
currency exchange contracts and options on foreign currencies) and purchasing
put or call options on securities and securities indexes.
These practices can be used in an attempt to adjust the risk and return
characteristics of their portfolios of investments. When a Portfolio uses such
techniques in an attempt to reduce risk it is known as "hedging". If a
Portfolio's Adviser or Sub-Adviser judges market conditions incorrectly or
employs a strategy that does not correlate well with the Portfolio's
investments, these techniques could result in a loss, regardless of whether the
intent was to reduce risk or increase return. These techniques may increase the
volatility of a Portfolio and may involve a small investment of cash relative to
the magnitude of the risk assumed. In addition, these techniques could result in
a loss if the counterparty to the transaction does not perform as promised.
SWAP AGREEMENTS
Certain of the Portfolios may enter into interest rate, index and currency
exchange rate swap agreements to attempt to obtain a desired return at a lower
cost than a direct investment in an instrument yielding that desired return.
Whether a Portfolio's use of swap agreements will be successful will depend on
whether the Adviser correctly predicts movements in interest rates, indexes and
currency exchange rates. Because they are two-party contracts and because they
may have terms of greater than seven days, swap agreements may be considered to
be illiquid. Moreover, with swap agreements the other party could go bankrupt
and a Portfolio could lose the value of the security it should have received in
the swap. See "Tax Status" in the SAI for information regarding the tax
considerations relating to swap agreements.
WHEN-ISSUED SECURITIES AND
FORWARD COMMITMENTS
Debt securities are often issued on a when-issued basis. The price (or yield) of
such securities is fixed at the time a commitment to purchase is made, but
delivery and payment for the when-issued securities take place at a later date.
During the period between purchase and settlement, no payment is made by the
Portfolio and no interest accrues to the Portfolio. The market value of the
when-issued securities on the settlement date may be more or less than the
purchase price payable at settlement date. Similarly, a Portfolio may commit to
purchase a security at a future date at a price determined at the time of the
commitment. The same procedures for when-issued securities will be followed.
RISKS OF INVESTING IN HIGH YIELD SECURITIES
("JUNK BONDS")
Debt securities rated lower than Baa by Moody's or BBB by S&P or, if not rated,
determined to be of equivalent quality by the Adviser are sometimes referred to
as junk bonds and are considered speculative.
Investment in high yield bonds involves special risks in addition to the risks
associated with investments in higher rated debt securities. High yield bonds
may be regarded as predominantly speculative with respect to the issuer's
continuing ability to meet principal and interest payments. Moreover, such
securities may, under certain circumstances, be less liquid than higher rated
debt securities.
TEMPORARY DEFENSIVE INVESTMENTS
In times of unusual or adverse conditions, for temporary defensive purposes each
Portfolio may invest outside the scope of its principal investment focus. During
this time, the Portfolio may not invest in accordance with its investment
objective or investment strategies. As a result, there is no assurance that the
Portfolio will achieve its investment objective. Under such conditions, each
Portfolio may invest without limit in money market and other investments and as
described in the next section of the prospectus. In addition, under such
conditions, the International Equity Portfolio may invest without limit in
equity securities of U.S. issuers and bonds and the High Yield Corporate Bond
Portfolio may invest without limit in securities rated A or higher by Moody's or
S&P and in U.S. government securities.
PORTFOLIO TURNOVER
Portfolio turnover measures the amount of trading a Portfolio does during the
year. The portfolio turnover for each Portfolio is found in the Financial
Highlights section. The use of certain investment strategies may generate
increased portfolio turnover. Portfolios with high turnover rates (over 100%)
often have higher transaction costs (which are paid by the Portfolio).
A-9
<PAGE> 10
THE FUND AND ITS MANAGEMENT
- --------------------------------------------------------------------------------
-
The Board of Directors supervises the business affairs and investments of each
Portfolio, which are managed on a daily basis by each Portfolio's Adviser or
Sub-Adviser.
INVESTMENT ADVISERS
MacKay Shields LLC, 9 West 57th Street, New York, NY 10019, is the investment
adviser to the Capital Appreciation, Cash Management, Convertible, Government,
High Yield Corporate Bond, International Equity, Total Return and Value
Portfolios. MacKay Shields is a wholly-owned subsidiary of New York Life Asset
Management LLC and an indirect wholly-owned subsidiary of New York Life. MacKay
Shields was incorporated in 1960 as an independent investment advisory firm and
was privately held until 1984 when it became an autonomously managed subsidiary
of New York Life. MacKay Shields became a Delaware limited liability company in
1999. As of December 31, 1999, MacKay Shields managed over $34 billion in
assets, primarily for institutional clients.
Madison Square Advisors LLC, 51 Madison Avenue, New York, NY 10010, is the
investment adviser to the Bond and Growth Equity Portfolios. Madison Square
Advisors is a wholly-owned subsidiary of New York Life Asset Management LLC and
an indirect subsidiary of New York Life. Madison Square became a Delaware
limited liability company in 1999. It replaced New York Life as investment
adviser to the Bond and Growth Equity Portfolios pursuant to a Substitution
Agreement dated May 1, 1999. The substitution had no effect on investment
personnel, investment strategies or fees of the Portfolio. As of December 31,
1999 Madison Square Advisors managed over $2.2 billion in assets.
Pursuant to the Investment Advisory Agreement for each Portfolio, MacKay Shields
or Madison Square Advisors is subject to the supervision of the Directors and,
in conformity with the stated policies of each Portfolio, continuously manages
the portfolio of each Portfolio that it advises, including the purchase,
retention and disposition of securities and other supervision of its assets, and
maintains certain records relating thereto.
For the fiscal year ended December 31, 1999, the Fund, on behalf of each
Portfolio, paid MacKay Shields or Madison Square Advisors an aggregate fee for
the investment advisory services performed at an annual percentage of the
average daily net assets of that Portfolio as follows:
<TABLE>
<CAPTION>
ANNUAL RATE
-----------
<S> <C>
Bond Portfolio.............................. .25%
Growth Equity Portfolio..................... .25%
</TABLE>
PORTFOLIO MANAGERS -- BIOGRAPHIES
JAMES AGOSTISI -- Mr. Agostisi has managed the Growth Equity Portfolio since
1994. Mr. Agostisi is a Director--Portfolio Management of Madison Square
Advisors. He is also a Director of New York Life Asset Management as of April
2000. He has 14 years of investment experience at New York Life and has been a
Director--Portfolio Management of Madison Square Advisors since its
establishment.
PATRICIA S. ROSSI -- Ms. Rossi has managed the Growth Equity Portfolio since
1995. Ms. Rossi is Managing Director--Portfolio Management of Madison Square
Advisors. She is also a Managing Director of New York Life Asset Management as
of April 2000. She joined New York Life in 1995 as Head of Public Equities and
has been a Managing Director--Portfolio Management of Madison Square Advisors
since its establishment. Ms. Rossi has over 20 years of investment management
and research experience. Prior to joining New York Life, Ms. Rossi was a
portfolio manager for the United Church of Christ--Pension Boards.
ALBERT R. CORAPI, JR -- Mr. Corapi has managed the Bond Portfolio since 1990. He
joined Madison Square Advisors as a Portfolio Manager in 1997. He is also a
Director of New York Life Asset Management as of April 2000. He joined the
Investment Department of New York Life in 1985.
ADMINISTRATOR
NYLIAC (the "Administrator"), 51 Madison Avenue, New York, NY 10010, a
corporation organized under the laws of the State of Delaware and a wholly-owned
subsidiary of New York Life, is the Administrator for the Portfolios. NYLIAC
has, pursuant to a subadministration agreement, retained MainStay Management
LLC, an indirect wholly-owned subsidiary of New York Life, to perform certain of
the services to be provided by NYLIAC pursuant to the terms of the
Administration Agreement.
Under the Administration Agreement for each Portfolio, NYLIAC administers the
Portfolios' business affairs, subject to the supervision of the Directors and,
in connection therewith, furnishes the Portfolios with office facilities and is
responsible for ordinary clerical, recordkeeping and bookkeeping services and
for the financial and accounting records required to be maintained by the
Portfolios, excluding those maintained by the Portfolios' Custodian, except
those as to which the Administrator has supervisory functions, and other than
those being maintained by the Advisers.
A-10
<PAGE> 11
The Fund, on behalf of each Portfolio, pays the Administrator a monthly fee for
the services performed and the facilities furnished by the Administrator at an
annual rate of .20% of the average daily net assets of each Portfolio.
The payment of the investment management and the administration fees, as well as
other operating expenses, will affect the Indexed Equity Portfolio's ability to
track the S&P 500 exactly.
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------------
-
Shares in each of the Portfolios are offered to and are redeemed by the Separate
Accounts at a price equal to their respective net asset value per share. No
sales or redemption charge is applicable to the purchase or redemption of the
Portfolios' shares.
The Fund determines the net asset value per share of each Portfolio on each day
the New York Stock Exchange is open for trading. Net asset value per share is
calculated as of the close of the New York Stock Exchange (normally 4:00 p.m.
Eastern time) for each Portfolio for purchases and redemptions of shares of each
Portfolio by dividing the current market value (amortized cost in the case of
the Cash Management Portfolio) of total Portfolio assets, less liabilities, by
the total number of shares of that Portfolio outstanding.
Certain Portfolios invest in securities that are primarily listed on foreign
securities exchanges that trade on weekdays or other days when the Fund does not
price shares. As a result, the net asset value of those Portfolios' shares may
change on days when shareholders will not be able to purchase or redeem their
shares.
In some cases, the Policies may be sold to policy owners who independently
utilize the services of a third party advisor offering asset allocation and/or
market timing services. NYLIAC may honor transfer and withdrawal instructions
from such asset allocation and market timing services if it has received
authorization to do so from the policy owner participating in the service.
We do not endorse, approve or recommend such services in any way and you should
be aware that fees paid for such services are separate from and in addition to
fees paid under the Policies.
Because the amounts associated with some of these transactions may be unusually
large, they may disrupt the management of a portfolio. Accordingly, the
portfolios reserve the right to not accept transfer instructions which are
submitted by any person, asset allocation and/or market timing services on
behalf of Policy owners. We will exercise this right only in accordance with
uniform procedures that we may establish from time to time and that will not
unfairly discriminate against similarly situated policyowners.
TAXES, DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
-
TAXES
Each Portfolio intends to elect to qualify as a "regulated investment company"
under the provisions of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). If each Portfolio qualifies as a "regulated investment
company" and complies with the appropriate provisions of the Code, each
Portfolio will be relieved of federal income tax on the amounts distributed.
Federal tax laws impose a four percent nondeductible excise tax on each
regulated investment company with respect to an amount, if any, by which such
company does not meet specified distribution requirements. Each Portfolio
intends to comply with such distribution requirements and therefore does not
expect to incur the four percent nondeductible excise tax.
In order for the Separate Accounts to comply with regulations under Section
817(h) of the Code, each Portfolio will diversify its investments so that on the
last day of each quarter of a calendar year, no more than 55% of the value of
each Separate Accounts' proportionate share of the assets owned by each of the
regulated investment companies in which it owns shares is represented by any one
investment, no more than 70% is represented by any two investments, no more than
80% is represented by any three investments, and no more than 90% is represented
by any four investments. For this purpose, securities of a single issuer are
treated as one investment and each U.S. Government agency or instrumentality is
treated as a separate issuer. Any security issued, guaranteed, or insured (to
the extent so guaranteed or insured) by the U.S. Government or an agency or
instrumentality of the U.S. Government is treated as a security issued by the
U.S. Government or its agency or instrumentality, whichever is applicable.
Since the sole shareholders of the Fund will be separate accounts, no discussion
is included herein as to the federal income tax consequences at the shareholder
level. For information concerning the federal income tax consequences to
purchasers of the Policies, see the attached prospectus for the Policy.
DIVIDENDS AND DISTRIBUTIONS
The Cash Management Portfolio (which seeks to maintain a constant net asset
value of $1.00 per share) will declare a dividend of its net investment income
daily and
A-11
<PAGE> 12
distribute such dividend monthly; a shareholder of that Portfolio begins to earn
dividends on the next business day following the receipt of the shareholder's
investment by the Portfolio. Each Portfolio other than the Cash Management
Portfolio declares and distributes a dividend of net investment income, if any,
annually. Shareholders of each Portfolio, other than the Cash Management
Portfolio, will begin to earn dividends on the first business day after the
shareholder's purchase order has been received. Distributions reinvested in
shares will be made after the first business day of each month following
declaration of the dividend. Each Portfolio will distribute its net long-term
capital gains, if any, after utilization of any capital loss carryforwards after
the end of each fiscal year. The Portfolios may declare an additional
distribution of investment income and capital gains in October, November or
December (which would be paid before February 1 of the following year) to avoid
the excise tax on income not distributed in accordance with the applicable
timing requirements.
GENERAL INFORMATION
- --------------------------------------------------------------------------------
-
CUSTODIAN
For the Cash Management Portfolio, The Bank of New York, 90 Washington Street,
New York, New York 10286 is the custodian of the Portfolio's assets. For the
Bond and Growth Equity Portfolios, The Chase Manhattan Bank, N.A. (formerly
Chemical Bank), 3 Chase Metro Tech Center, Brooklyn, New York 11245 is the
custodian of the Portfolios' assets.
PERFORMANCE AND YIELD INFORMATION
From time to time, the Fund may advertise yields and total returns for the
Portfolios. In addition, the Fund may advertise the effective yield of the Cash
Management Portfolio. These figures will be based on historical information and
are not intended to indicate future performance. Information on the calculation
of performance data is included in the SAI.
A-12
<PAGE> 13
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
-
The following financial highlights table is intended to help you understand the
Portfolios' financial performance for the past five years or, if shorter, the
period of a Portfolio's operations. Certain information reflects financial
results for a single portfolio share. The total returns in the table represent
the rate that an investor would have earned on an investment in that portfolio
(assuming reinvestment of all dividends and distributions). This information has
been audited by PricewaterhouseCoopers LLP, whose report, along with the Fund's
financial statements, are included in the Fund's Statement of Additional
Information, which is available upon request.
<TABLE>
<CAPTION>
CASH MANAGEMENT
PORTFOLIO
---------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31,
---------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------
Net investment income (loss)................................ 0.05 0.05 0.05 0.05 0.05
Net realized and unrealized gain (loss) on investments...... -- -- -- -- --
-------- -------- -------- -------- -------
Total from investment operations............................ 0.05 0.05 0.05 0.05 0.05
-------- -------- -------- -------- -------
Less dividends and distributions:
From net investment income................................ (0.05) (0.05) (0.05) (0.05) (0.05)
From net realized gain on investments..................... -- -- -- -- --
-------- -------- -------- -------- -------
Total dividends and distributions........................... (0.05) (0.05) (0.05) (0.05) (0.05)
-------- -------- -------- -------- -------
NET ASSET VALUE AT END OF PERIOD............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== =======
Total investment return#.................................... 4.84% 5.18% 5.25% 4.95% 5.59%
RATIOS (TO AVERAGE NET ASSETS)/SUPPLEMENTAL DATA:
Net investment income (loss).............................. 4.79% 5.05% 5.13% 4.92% 5.44%
Net expenses.............................................. 0.51% 0.54% 0.54% 0.62% 0.62%
Expenses (before reimbursement)........................... 0.51% 0.54% 0.54% 0.64% 0.94%
Portfolio turnover rate..................................... -- -- -- -- --
Net assets at end of period (in 000's)...................... $454,470 $231,552 $140,782 $118,347 $87,839
</TABLE>
- ------------
# The total investment return quotations reflected above do not reflect
expenses incurred by the Separate Accounts or in connection with the
Policies. Including such expenses in these quotations would have reduced
such returns for all periods shown. Total return is not annualized.
A-13
<PAGE> 14
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
-
<TABLE>
<CAPTION>
GROWTH EQUITY PORTFOLIO
------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------
1999 1998 1997 1996 1995
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF
YEAR............................. $ 23.62 $ 20.31 $ 18.63 $ 17.22 $ 14.69
---------- -------- -------- -------- --------
Net investment income.............. 0.16 0.19 0.16 0.18 0.22
Net realized and unrealized gain
(loss) on investments............ 6.89 5.21 4.74 4.06 4.06
---------- -------- -------- -------- --------
Total from investment operations... 7.05 5.40 4.90 4.24 4.28
---------- -------- -------- -------- --------
Less dividends and distributions:
From net investment income....... (0.16) (0.19) (0.16) (0.18) (0.22)
From net realized gain on
investments.................... (2.73) (1.90) (3.06) (2.65) (1.53)
---------- -------- -------- -------- --------
Total dividends and
distributions.................... (2.89) (2.09) (3.22) (2.83) (1.75)
---------- -------- -------- -------- --------
NET ASSET VALUE AT END OF YEAR..... $ 27.78 $ 23.62 $ 20.31 $ 18.63 $ 17.22
========== ======== ======== ======== ========
Total investment return #.......... 29.96% 26.59% 26.75% 24.50% 29.16%
RATIOS (TO AVERAGE NET
ASSETS)/SUPPLEMENTAL DATA:
Net investment income............ 0.63% 0.84% 0.80% 0.98% 1.29%
Net expenses..................... 0.49% 0.51% 0.50% 0.58% 0.62%
Expenses (before
reimbursement)................. 0.49% 0.51% 0.50% 0.58% 0.91%
Portfolio turnover rate............ 71% 69% 103% 104% 104%
Net assets at end of year (in
000's)........................... $1,312,905 $996,736 $759,054 $564,685 $427,507
<CAPTION>
BOND PORTFOLIO
-------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF
YEAR............................. $ 13.23 $ 13.14 $ 12.83 $ 13.42 $ 12.09
-------- -------- -------- -------- --------
Net investment income.............. 0.78 0.74 0.88 0.87 0.88
Net realized and unrealized gain
(loss) on investments............ (0.99) 0.46 0.35 (0.59) 1.33
-------- -------- -------- -------- --------
Total from investment operations... (0.21) 1.20 1.23 0.28 2.21
-------- -------- -------- -------- --------
Less dividends and distributions:
From net investment income....... (0.78) (0.74) (0.88) (0.87) (0.88)
From net realized gain on
investments.................... (0.00)(a) (0.37) (0.04) -- --
-------- -------- -------- -------- --------
Total dividends and
distributions.................... (0.78) (1.11) (0.92) (0.87) (0.88)
-------- -------- -------- -------- --------
NET ASSET VALUE AT END OF YEAR..... $ 12.24 $ 13.23 $ 13.14 $ 12.83 $ 13.42
======== ======== ======== ======== ========
Total investment return #.......... (1.53%) 9.12% 9.65% 2.05% 18.31%
RATIOS (TO AVERAGE NET
ASSETS)/SUPPLEMENTAL DATA:
Net investment income............ 5.86% 5.86% 6.42% 6.31% 6.55%
Net expenses..................... 0.50% 0.52% 0.50% 0.58% 0.62%
Expenses (before
reimbursement)................. 0.50% 0.52% 0.50% 0.58% 0.91%
Portfolio turnover rate............ 161% 206% 187% 103% 81%
Net assets at end of year (in
000's)........................... $287,361 $277,392 $228,949 $226,375 $235,030
</TABLE>
- ------------
# The total investment return quotations reflected above do not reflect
expenses incurred by the Separate Accounts or in connection with the
Policies. Including such expenses in these quotations would have reduced
such returns for all periods shown.
(a) Less than one cent per share.
A-14
<PAGE> 15
MORE INFORMATION ABOUT THE PORTFOLIOS IS AVAILABLE FREE UPON REQUEST:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
Provides more details about the Portfolios. A current SAI is incorporated by
reference into the prospectus and has been filed with the SEC.
ANNUAL/SEMIANNUAL REPORTS
Provides additional information about the Portfolios' investments and include
discussions of market conditions and investment strategies that significantly
affected the Portfolios' performance during the last fiscal year.
TO OBTAIN INFORMATION:
Write to MainStay VP Series Fund, Inc., 51 Madison Avenue, New York, NY, 10010,
or call 1-800-598-2019.
You can obtain information about the Portfolios (including the SAI) by visiting
the SEC's Public Reference Room in Washington, D.C. (phone 1-202-942-8090). You
may visit the SEC's website at http://www.sec.gov or you may send your written
request and a duplicating fee to the SEC's Public Reference Section, Washington,
D.C. 20549-6009, after paying a duplicating fee, send an electronic request to
[email protected].
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN, OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR THE INVESTMENT ADVISERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
RECYCLE.LOGO
The Mainstay VP Series Fund, Inc.
SEC File Number: 811-03833
