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MAINSTAY VARIABLE ANNUITY
INVESTING IN
NYLIAC VARIABLE ANNUITY SEPARATE ACCOUNT--III
SUPPLEMENT DATED MAY 1, 1997 TO PROSPECTUS DATED MAY 1, 1997
This Supplement describes the minimum initial premium requirement and the
four additional Investment Divisions to which Policyowners may allocate Premium
under their MainStay Variable Annuity Policies ("Policies"). These Investment
Divisions are listed below.
<TABLE>
<S> <C>
- M Edinburgh Overseas Equity
- M Enhanced U.S. Equity
- M Frontier Capital Appreciation
- M Turner Core Growth
</TABLE>
These Investment Divisions invest in shares of four corresponding Portfolios of
M Fund, Inc. ("M Fund"), an open-end management investment company. This
Supplement provides information that a prospective investor should know before
investing. Please read it carefully and retain it for future reference. This
Supplement is not valid unless accompanied by the current prospectuses for both
the Policies ("Policy Prospectus") and the M Fund. Defined terms used but not
defined in this Supplement have the same meanings as in the Policy Prospectus.
The Policy Prospectus should be read in light of the addition of the four
Investment Divisions and the following changes:
1. The following sentence should be added to the definition of "Eligible
Portfolios ('Portfolios')" on page 3 of the Policy Prospectus.
The M Fund has four Portfolios available to the Separate Account: the M
Edinburgh Overseas Equity, M Enhanced U.S. Equity, M Frontier Capital
Appreciation and M Turner Core Growth Portfolios.
2. The definition of "Funds (each, individually, a 'Fund')" on page 4 of the
Policy Prospectus should be modified to include the M Fund, Inc. ("M Fund").
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
(A DELAWARE CORPORATION)
51 MADISON AVENUE
NEW YORK, NEW YORK 10010
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3. The following information should be added to the Fee Table on pages 6 and 7.
FEE TABLE
<TABLE>
<CAPTION>
M ENHANCED
M EDINBURGH U.S.
OVERSEAS EQUITY EQUITY
--------------- ----------
<S> <C> <C>
OWNER TRANSACTION EXPENSES
Maximum Contingent Deferred Sales Load(a)
(as a % of amount withdrawn)........................................................ 7% 7%
Transfer Fee.......................................................................... NYLIAC reserves the right to
charge up to $30 for each
transfer in excess of 12
transfers per Policy Year.
Annual Policy Fee..................................................................... Lesser of $30 per Policy or
2% of the Accumulation Value,
for Policies with less than
$20,000 of Accumulation
Value.
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a % of average account value)
Mortality and Expense Risk Fees....................................................... 1.25% 1.25%
Administration Fees................................................................... 0.15% 0.15%
Total Separate Account Annual
Expenses.......................................................................... 1.40% 1.40%
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average account value)
Advisory Fees......................................................................... 1.05% 0.55%
Administration Fees................................................................... -- --
Other Expenses........................................................................ 0.25% 0.25%
Total Portfolio Annual Expenses....................................................... 1.30%(h) 0.80%(h)
<CAPTION>
M FRONTIER M TURNER
CAPITAL APPRECIATION CORE GROWTH
-------------------- -----------
<S> <C> <C>
OWNER TRANSACTION EXPENSES
Maximum Contingent Deferred Sales Load(a)
(as a % of amount withdrawn)........................................................ 7% 7%
NYLIAC reserves the right to
Transfer Fee.......................................................................... charge up to $30 for each
transfer in excess of 12
transfers per Policy Year.
Annual Policy Fee..................................................................... Lesser of $30 per Policy or
2% of the Accumulation Value,
for Policies with less than
$20,000 of Accumulation
Value.
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a % of average account value)
Mortality and Expense Risk Fees....................................................... 1.25% 1.25%
Administration Fees................................................................... 0.15% 0.15%
Total Separate Account Annual
Expenses.......................................................................... 1.40% 1.40%
FUND ANNUAL EXPENSES AFTER REIMBURSEMENT
(as a % of average account value)
Advisory Fees......................................................................... 0.90% 0.45%
Administration Fees................................................................... -- --
Other Expenses........................................................................ 0.25% 0.25%
Total Portfolio Annual Expenses....................................................... 1.15%(h) 0.70%(h)
</TABLE>
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(a) The contingent deferred sales load percentage applicable to any amount
withdrawn declines by 1% each Payment Year from 7% during the first three
Payment Years to 4% in the sixth Payment Year, with no charge thereafter.
See "Surrender Charges" on page 26 of the prospectus for the Policies.
(h) M Financial Investment Advisers, Inc. has agreed to limit the operating
expenses of each Portfolio (except brokerage or other Portfolio transaction
expenses or expenses of litigation, indemnification, taxes or other
extraordinary expenses) to the extent that such expenses, as accrued for
each Portfolio, through December 31, 1997 exceed .25% of that Portfolio's
estimated daily net assets on an annualized basis. Absent such limits,
"Total Portfolio Annual Expenses" for the fiscal year ended December 31,
1996 would have been 7.34%, 12.45%, 8.19% and 8.51% for the M Edinburgh
Overseas Equity, M Enhanced U.S. Equity, M Frontier Capital Appreciation and
M Turner Core Growth Portfolios, respectively.
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4. The following information should be added to the Examples on pages 8 and 9.
EXAMPLES(1)
An Owner would pay the following expenses on a $1,000 investment in one of
the Investment Divisions listed, assuming a 5% annual return on assets:
1. If you surrender your Policy at the end of the applicable time
period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------- --------
<S> <C> <C>
M Edinburgh Overseas Equity.................................. $ 94.96 $ 160.73
M Enhanced U.S. Equity....................................... $ 90.17 $ 146.50
M Frontier Capital Appreciation.............................. $ 93.52 $ 156.48
M Turner Core Growth......................................... $ 89.21 $ 143.64
</TABLE>
2. If you annuitize your Policy at the end of the applicable time
period:
<TABLE>
<S> <C> <C>
M Edinburgh Overseas Equity.................................. $ 94.96 $ 94.02
M Enhanced U.S. Equity....................................... $ 90.17 $ 78.78
M Frontier Capital Appreciation.............................. $ 93.52 $ 89.47
M Turner Core Growth......................................... $ 89.21 $ 75.72
</TABLE>
3. If you do NOT surrender your Policy
<TABLE>
<S> <C> <C>
M Edinburgh Overseas Equity.................................. $ 30.75 $ 94.02
M Enhanced U.S. Equity....................................... $ 25.63 $ 78.78
M Frontier Capital Appreciation.............................. $ 29.21 $ 89.47
M Turner Core Growth......................................... $ 24.62 $ 75.72
</TABLE>
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(1) For purposes of calculating these Examples, the annual policy fee has been
expressed as an annual percentage of assets based on the average size of
Policies having an Accumulation Value of less than $20,000 on December 31,
1996. This calculation method reasonably estimates annual policy fees
applicable to Policies having an Accumulation Value of less than $20,000 but
does not reflect that no annual policy fees are applicable to Policies
having an Accumulation Value of $20,000 or greater. This means that the fees
would be slightly less if your Policy has an Accumulation Value of $20,000
or greater on the Policy Anniversary or date of surrender.
THESE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIONS OF PAST OR FUTURE
PERFORMANCE OR EXPENSES. THE ACTUAL EXPENSES PAID OR PERFORMANCE ACHIEVED MAY BE
GREATER OR LESS THAN THOSE SHOWN.
5. On page 12 of the Policy Prospectus, Question 5 (What are the minimum initial
and maximum additional Premium Payments?), should be replaced with the
following:
5. WHAT ARE THE MINIMUM INITIAL AND MAXIMUM ADDITIONAL PREMIUM PAYMENTS?
Unless we permit otherwise, the minimum initial Premium Payment is
$50,000. Additional Premium Payments on any Policy (of at least $500 or
such lower amount as we now permit) can be made at any interval or by
any method we make available. The available methods of payments we
permit are direct payments to NYLIAC, pre-authorized monthly deductions
from banks, credit unions or similar accounts and any other method
agreed to by us. The maximum aggregate amount of Premium Payments is
$1,000,000, without our prior approval.
Premium Payments under Qualified Policies may not be more than the
amount permitted by law for the plan indicated in the application for
the Policy. We reserve the right to limit the dollar amount of any
Premium Payment.
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6. The following sentence should be added to the introductory paragraph to the
"Condensed Financial Information" section on page 17 of the Policy Prospectus.
The accumulation unit value for each of the M Edinburgh Overseas Equity, M
Enhanced U.S. Equity, M Frontier Capital Appreciation and M Turner Core
Growth Investment Divisions as of May 1, 1997 (the date on which these
Investment Divisions are first being offered under the Separate Account) is
$10.00.
7. The following information should be added to the table of Funds, Investment
Advisers and Eligible Portfolios on page 19 of the Policy Prospectus.
<TABLE>
<CAPTION>
FUND INVESTMENT ADVISERS SUB-ADVISERS PORTFOLIOS
<S> <C> <C> <C>
M Fund, Inc. M Financial Investment Edinburgh Fund Managers plc M Edinburgh Overseas Equity
Advisers
M Fund, Inc. M Financial Investment Franklin Portfolio Associates M Enhanced U.S. Equity
Advisers LLC
M Fund, Inc. M Financial Investment Frontier Capital Management M Frontier Capital Appreciation
Advisers Company, Inc.
M Fund, M Financial Investment Turner Investment Partners, M Turner Core Growth
Inc........ Advisers Inc.
</TABLE>
Please refer to the accompanying prospectus of the M Fund, Inc. for a complete
description of the M Fund, the investment advisers and the Portfolios.
ISSUED BY: NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
DISTRIBUTED BY: NYLIFE DISTRIBUTORS, INC. (MEMBER NASD)
41002KCBM(597)
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